<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 1995
--------------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to _________
Commission File Number 1-8342
-----------
PICO PRODUCTS, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
NEW YORK 15-0624701
- ----------------------------------------- -------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
12500 Foothill Blvd.
Lakeview Terrace, California 91342
- ------------------------------------------- ------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (818) 897-0028
---------------
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
requirement for the past 90 days.
YES X NO
--------- ---------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of June 9, 1995.
Common Stock, $0.01 par value 3,637,046
- ------------------------------ ---------------------
Class Number of Shares
This report consists of 30 pages.
<PAGE>
PICO PRODUCTS, INC.
INDEX
Page No.
--------
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -
April 30, 1995 and July 31, 1994 3-4
Condensed Consolidated Statements
of Income - Three and Nine Months
Ended April 30, 1995 and 1994 5
Condensed Consolidated Statements
of Cash Flows - Nine Months Ended
April 30, 1995 and 1994 6
Notes to Condensed Consolidated Financial
Statements 7-10
Item 2. Management's Discussion and Analysis
of Results of Operations and Financial
Condition 11-13
PART II OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 6. Exhibits and Reports on Form 8-K 14
<PAGE>
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PICO PRODUCTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
April 30, July 31,
1995 1994
------------ ------------
ASSETS
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 559,544 $ 441,609
Accounts receivable (less allowance
for doubtful accounts: April 30,
1995, $350,000; July 31, 1994,
$295,000) 4,950,403 4,417,712
Inventories (Note 2) 8,609,322 7,170,944
Prepaid expenses and other current
assets 102,665 381,242
------------ ------------
Total Current Assets 14,221,934 12,411,507
Property, Plant and Equipment:
Buildings 217,255 217,255
Leasehold improvements 313,244 308,310
Machinery and equipment 3,195,773 3,043,880
------------ ------------
3,726,272 3,569,445
Less accumulated depreciation 2,932,722 2,774,336
------------ ------------
793,550 795,109
Other Assets:
Patents and licenses (less accumulated
amortization: April 30, 1995,
$54,715; July 31, 1994, $1,170,757)
(Note 6) 166,495 241,407
Excess of cost over net assets of
businesses acquired (less accumulated
amortization: April 30, 1995,
$330,630; July 31, 1994, $308,850) 246,805 268,585
Deposits and other miscellaneous assets 109,857 136,405
------------ ------------
523,157 646,397
------------ ------------
$15,538,641 $13,853,013
------------ ------------
------------ ------------
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE>
PICO PRODUCTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(continued)
(Unaudited)
<TABLE>
<CAPTION>
April 30, July 31,
1995 1994
------------ ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
Current Liabilities:
Notes payable $ 6,241,772 $ 5,787,282
Accounts payable 3,032,903 1,886,757
Accrued expenses:
Legal and accounting 93,581 201,051
Payroll and payroll taxes 372,288 619,018
Other accrued expenses 293,269 261,214
Other liabilities (Note 5) 462,065 403,699
Current portion of long-term debt 364,230 101,547
------------ ------------
Total Current Liabilities 10,860,108 9,260,568
Long-Term Debt 305,165 631,654
Commitments and Contingencies (Note 5) - -
Shareholders' Equity:
Preferred shares, $.01 par value;
authorized 500,000 shares;
no shares issued - -
Common shares, $.01 par value;
authorized 15,000,000 shares;
issued and outstanding 3,637,046
shares at April 30, 1995 and
3,632,046 at July 31, 1994 36,370 36,320
Additional paid-in capital 21,565,255 21,561,555
Accumulated deficit (17,146,358) (17,535,970)
Cumulative translation adjustment (81,899) (101,114)
------------ ------------
Total Shareholders' Equity 4,373,368 3,960,791
------------ ------------
$15,538,641 $13,853,013
------------ ------------
------------ ------------
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE>
PICO PRODUCTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended April 30, Ended April 30,
-------------------------- --------------------------
1995 1994 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Sales $7,790,384 $7,770,781 $23,889,327 $22,717,002
Cost of sales 5,908,862 5,913,131 18,162,668 17,478,647
Selling and
administrative
expenses 1,642,426 1,679,185 5,096,295 4,621,330
----------- ----------- ----------- -----------
Income from operations 239,096 178,465 630,364 617,025
Other income
(Notes 3, 6) 24,829 164,517 275,728 448,513
Interest expense (181,129) (124,201) (490,092) (381,773)
----------- ----------- ----------- -----------
Income before income
taxes 82,796 218,781 416,000 683,765
Income tax provision
(Note 4) 26,388 0 26,388 0
----------- ----------- ----------- -----------
Net income $ 56,408 $ 218,781 $ 389,612 $ 683,765
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Net income per common
and common
equivalent share:
Primary $ 0.01 $ 0.05 $ 0.09 $ 0.16
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Fully diluted $ 0.01 $ 0.05 $ 0.09 $ 0.16
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Weighted average common
and equivalent
shares outstanding:
Primary 4,229,296 4,345,732 4,262,885 4,297,483
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Fully diluted 4,229,296 4,345,732 4,262,885 4,319,164
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE>
PICO PRODUCTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
April 30,
---------------------------
1995 1994
------------ ------------
<S> <C> <C>
Cash Flows From Operating Activities:
Net income $ 389,612 $ 683,765
Adjustments to reconcile net income
to net cash used by
operating activities:
Depreciation and amortization 296,122 401,957
Changes in operating assets
and liabilities (791,149) (1,292,688)
------------ ------------
Net cash used by operating activities (105,415) (206,966)
------------ ------------
Cash Flows From Investing Activities:
Capital expenditures (170,334) (64,787)
------------ ------------
Cash Flows From Financing Activities:
Net borrowings under a line of
credit agreement 454,490 519,759
Principal payments on long-term debt (63,806) (565,756)
Change in restricted cash - 209,993
Proceeds from exercise of stock options 3,000 34,000
------------ ------------
Net cash provided by financing activities 393,684 197,996
------------ ------------
Net increase (decrease) in cash and cash
equivalents 117,935 (73,757)
Cash and cash equivalents at
beginning of period 441,609 209,415
------------ ------------
Cash and cash equivalents at
end of period $ 559,544 $ 135,658
------------ ------------
------------ ------------
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ 476,070 $ 379,241
Income taxes 15,138 -
</TABLE>
The Company financed its new management information system, totaling
$247,561, during the nine months ended April 30, 1994.
See notes to condensed consolidated financial statements.
<PAGE>
PICO PRODUCTS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) GENERAL
The Company's primary industry is the manufacturing and distribution of
equipment and parts for the cable television (CATV) and satellite master antenna
television (SMATV) markets. The accompanying unaudited condensed consolidated
financial statements include all adjustments which are, in the opinion of the
Company's management, necessary to present fairly the Company's financial
position as of April 30, 1995, and the results of its operations and its cash
flows for the three and nine month periods ended April 30, 1995 and 1994. All
significant intercompany accounts and transactions have been eliminated. All
such adjustments are of a normal recurring nature.
The Company has made certain reclassifications to the condensed consolidated
financial statements for the three and nine month periods ended April 30, 1994
to conform with classifications used in the condensed consolidated financial
statements for the three and nine month periods ended April 30, 1995.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to the rules and regulations of the
Securities and Exchange Commission. These condensed consolidated financial
statements should be read in conjunction with the financial statements and
related notes contained in the Company's Annual Report on Form 10-K for the
fiscal year ended July 31, 1994.
The results of operations for the interim periods shown in this Report are not
necessarily indicative of the results to be expected for the fiscal year.
(2) INVENTORIES
The composition of inventories was as follows:
<TABLE>
<CAPTION>
April 30, July 31,
1995 1994
----------- -----------
<S> <C> <C>
Raw materials $2,167,406 $ 2,229,884
Work in process 285,913 86,551
Finished goods 6,156,003 4,854,509
----------- -----------
$8,609,322 $ 7,170,944
----------- -----------
----------- -----------
</TABLE>
<PAGE>
(3) OTHER INCOME
Other income consisted of the following:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
April 30, April 30,
----------------------- ----------------------
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Royalty income $ 17,516 $160,464 $256,657 $435,962
Interest income 7,313 4,053 19,071 12,551
-------- -------- -------- --------
$ 24,829 $164,517 $275,728 $448,513
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
(4) INCOME TAXES
A provision for U.S. Federal and State alternative minimum tax has been
established for the three and nine month periods ended April 30, 1995. However,
neither regular U.S. Federal and State income taxes nor foreign income taxes
have been provided for the three and nine month periods ended April 30, 1995 and
1994 due to the Company's U.S. Federal and State net operating loss carryforward
positions and tax holidays granted the Company's foreign subsidiaries.
(5) LITIGATION AND CONTINGENCIES
In November 1991, Arrow Communication Laboratories, Inc. (Arcom) of Syracuse,
New York initiated a lawsuit in the Supreme Court in the County of Onondaga,
New York. The suit, which was amended in June 1992, alleges that Arcom has a
paid-up license with respect to the Company's patent for positive trapping
systems, that Arcom is entitled to unspecified damages based on overpayment of
royalty amounts, and that Arcom has incurred damages in excess of $250,000 as
a result of a Company press release announcing termination of the license
agreement. The suit also asserts that Arcom is entitled to punitive damages of
$3,000,000. The Company responded by denying all liability and asserting
certain common law and statutory defenses.
In December 1993, in response to a summary judgment motion filed by the Company,
the New York State Court rejected Arcom's claim that it had a paid-up license.
Instead, the Court held that when Arcom "defaulted in making royalty payments
on or about November 15, 1991, the license terminated by its own terms 30
days later as asserted by the Company in its termination letter dated January
13, 1992." Following the New York State Court's summary judgment decision, the
Company initiated a patent infringement lawsuit against Arcom in the United
States District Court for the Northern District of New York. In its suit,
the Company asked the Federal Court to award it treble damages for willful
infringement plus attorney's fees. The Company also filed a motion for a
preliminary injunction against further infringement by
<PAGE>
Arcom. At a court hearing on February 15, 1994, the parties agreed, and it was
ordered by the Court, that Arcom would post as security amounts equal to the
royalties due to the Company for the manufacture and sale of product covered by
the license agreement from December 15, 1991, the date that the license would
have terminated, until the expiration of the patent in February 1995. Through
May 31, 1995 Arcom has made cash payments of $462,065 covering royalties through
February 14, 1995. The Company has not included these amounts in income in any
fiscal period but has recorded a current liability for $462,065 at April 30,
1995. In addition, Arcom posted an irrevocable letter of credit in an amount
deemed sufficient to permit recovery of a significant portion of the Company's
damages if it were to prevail on its willful infringement claim. In exchange,
the Company withdrew its request for a preliminary injunction. In the event
that the Company does not prevail on its infringement claims, the Company has
agreed to refund all security payments made by Arcom.
In July 1994, the Appellate Division, Fourth Department of the New York Supreme
Court ruled that parts of the license agreement relating to Arcom's paid-up
license claims involve questions of fact that must be resolved at trial.
Management anticipates that a trial will be scheduled late in 1995 or early in
1996. Management believes that the outcome of this matter will not have a
material adverse effect on the Company's consolidated financial statements.
On March 6, 1995, a subsidiary of the Company received a Joint Request for
Information (the "Information Request") from the United States Environmental
Protection Agency, Region II (the "EPA"), under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended ("CERCLA"), with
respect to the release and/or threatened release of hazardous substances,
hazardous wastes, pollutants or contaminants into the environment at the
Onondaga Lake Site, Syracuse, Onondaga County, New York. The Company has
learned that the EPA added the Onondaga Lake Site to the Superfund National
Priorities List on December 6, 1994, and has completed an onsite assessment of
the degree of hazard. The EPA has indicated that the Company is only one of 26
companies located in the vicinity of Onondaga Lake or its tributaries that have
received a similar Information Request.
The Information Request relates to the activities of the Company's Printed
Circuit Board Division, which was sold to a third party in 1992, and which
conducted operations within the specified area. Under the Agreement of Sale
with the buyer, the Company retained liability for environmental obligations
which occurred prior to the sale.
The Company has provided all information requested by the EPA. The Information
Request does not designate the Company as a potentially responsible party, nor
has the EPA indicated the basis upon which it would designate the Company as a
potentially responsible party. The Company is therefore unable to state
whether there is any material
<PAGE>
likelihood of liability on its part, and, if there were to be any such
liability, the basis of any sharing of such liability with others.
The Company is involved, from time to time, in certain other legal actions
arising in the normal course of business. Management believes that the outcome
of other litigation will not have material adverse affect on the Company's
consolidated financial statements.
(6) PATENT EXPIRATION
On February 14, 1995, the Company's patent for positive trapping systems
expired. As of April 30, 1995, the Company has fully amortized the cost of this
patent and has written off the patent's cost and accumulated amortization from
its books and records. Royalty income from license holders of the Company's
patent totaled $17,516 and $256,657 for the three and nine month periods ended
April 30, 1995.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
The following discussion compares the operations of the Company for the three
and nine month periods ended April 30, 1995 with the operations for the three
and nine month periods ended April 30, 1994, as shown by the unaudited condensed
consolidated statements of income included in this quarterly report.
RESULTS OF OPERATIONS
Although sales increased by approximately $1.2 million, or 5%, for the nine
months ended April 30, 1995 compared to the nine months ended April 30, 1994,
sales for the quarter ended April 30, 1995 were flat compared to the same period
of the previous fiscal year. The Company's sales and profits would have been
higher for the quarter had product been received when initially scheduled.
However, delays in receipt of raw material and finished product from offshore
vendors, and delays in receiving letters of credit and government documentation
for shipments to customers in South America, resulted in shipments being delayed
into the fourth quarter. The Company's order backlog, however, at April 30,
1995 was $5.0 million compared to $3.6 million at April 30, 1994 and represents
a strong demand for the Company's products.
The Company's Pico Macom subsidiary recorded sales increases of approximately 7%
in the nine months ended April 30, 1995, compared to the nine months ended April
30, 1994, but recorded a slight sales decrease of 1% in the quarter ended April
30, 1995, compared to the same period for the previous year. As stated
previously, delays in receipt of product shipments from vendors caused the sales
decrease. Although the Company's CATV division recorded a sales decrease of
approximately 9% for the nine months ended April 30, 1995 compared to the same
period of the prior year, the CATV division's sales in the third quarter
increased by 4% compared to the third quarter of the prior fiscal year. This
increase reflected a strong demand for cable security devices during the third
quarter in the United States and overseas.
Cost of sales increased by approximately $684,000, or 4%, for the nine months
ended April 30, 1995 compared with the nine months ended April 30, 1994, and
cost of sales was even for the fiscal quarter ended April 30, 1995 compared with
the same fiscal quarter in the previous year. Cost of sales as a percentage of
sales decreased by 1% (from 77% to 76%) for the nine months ended April 30, 1995
compared with the nine months ended April 30, 1994, and cost of sales as a
percentage of sales was even for the fiscal quarter ended April 30, 1995
compared with the same fiscal quarter in the previous year. The dollar increase
in cost of sales for the nine month period was primarily attributable to the
increase in sales volume. The decrease in cost of sales as a percentage of sales
for the nine month period was primarily due to a change in product mix between
Pico Macom and the CATV Division.
<PAGE>
Selling and administrative expenses increased by approximately $475,000, or 10%,
for the nine months ended April 30, 1995 compared to the nine months ended April
30, 1994. The primary reasons for these increases were increased investment in
product development and expenditures related to development of new markets in
Asia, and the opening of a new Asia regional office in Hong Kong. The Hong Kong
regional office is in full operation. Selling and administrative expenses for
the third quarter were slightly lower compared to the same period of the
previous year. While product development expenses and marketing expenses in
Asia continued into the third quarter at a rate consistent with the first six
months of the fiscal year, the Company experienced a reduction in patent
amortization, legal and management incentive expenses compared to the third
quarter of the previous year. Management anticipates that expenditures for
product development and development of new markets in Asia will continue for
the remainder of the fiscal year.
Other income was $25,000 for the third quarter ended April 30, 1995, compared
with $165,000 for the same quarter in the previous year, a decrease of 85%.
Other income decreased by approximately $173,000, or 39%, for the nine months
ended April 30, 1995 compared to the nine month period in the previous year.
The decreases in other income for both the three and nine month periods
primarily related to expiration of the Company's patent for positive trapping
systems in February, 1995.
Interest expense increased by approximately $108,000, or 28% for the nine months
ended April 30, 1995 compared with the nine months ended April 30, 1994, and
interest expense increased by $57,000, or 46%, for the fiscal quarter ended
April 30, 1995 compared with the fiscal quarter ended April 30, 1994. The
increase was primarily due to higher borrowing levels on the Company's bank line
of credit to support the Company's working capital requirements, and due to
several increases in the prime rate during the nine months ended April 30, 1995.
A provision for U.S. Federal and State alternative minimum tax has been
established for the three and nine month periods ended April 30, 1995. However,
neither regular U.S. Federal and State income taxes nor foreign income taxes
have been provided for the three and nine month periods ended April 30, 1995 and
1994 due to the Company's U.S. Federal and State net operating loss carryforward
positions and tax holidays granted the Company's foreign subsidiaries.
LIQUIDITY AND CAPITAL RESOURCES
As of April 30, 1995, the Company had working capital of approximately
$3,362,000 and a ratio of current assets to current liabilities of approximately
1.3:1, compared with working capital of approximately $3,151,000 and a ratio of
1.3:1 as of July 31, 1994. During the nine months ended April 30, 1995, the
Company recorded negative cash flow from operating activities primarily as a
result of increased inventory purchases.
<PAGE>
The Company's growth depends on its ability to supply a diverse line of products
compatible with cable systems in the United States, Asia and South America.
Further, as discussed earlier, the Company is investing resources in new product
development. The result has been an increase in inventory while the Company
continues to have a large backlog of orders due to the delay in the delivery of
product from Asian vendors and the delay in receiving letters of credit and
import documents for shipments to South American customers where the Company has
existing purchase orders.
During the nine months ended April 30, 1995 and 1994, cash used for capital
expenditures was approximately $170,000 and $65,000, respectively. During the
first nine months of fiscal year 1994, the Company financed approximately
$250,000 for the acquisition of a new management information system.
At April 30, 1995, Pico Macom had a $10,000,000 revolving bank line of credit
which provides for interest at the prime rate (9.0% at April 30, 1995) plus
1.25%. The bank line of credit is used to fund operating expenses, product
purchases, and letters of credit for import purchases. The line is structured as
a $10,000,000 line of credit with a sub-limit of $1,500,000 for outstanding
letters of credit. The amount available is based on various percentages of
eligible accounts receivable and inventories as defined in the agreement, which
expires on May 25, 1996. The credit facility is subject to certain financial
tests and covenants. At April 30, 1995, Pico Macom had approximately $6,242,000
in revolving loans and approximately $196,000 in letters of credit outstanding,
and the unused portion of the borrowing base was approximately $1,358,000.
Despite the expiration of the Company's patent for positive trapping systems in
February 1995, management believes that continued profitable operations along
with the current credit arrangements will provide sufficient cash to fund the
Company's operational needs for the balance of the fiscal year 1995. Should the
Company identify opportunities that require cash beyond that generated
internally or available from its credit line, the Company would seek to increase
its current credit line. Alternatively, the Company would consider seeking other
sources of cash, including, but not limited to, a public offering or a private
placement.
Profitability of operations is subject to various uncertainties including
general economic conditions, favorable settlement of ongoing litigation and the
actions of actual or potential competitors and customers. The Company's future
depends on the growth of the cable TV market in the United States and
internationally. In the United States, a number of factors could affect the
future profitability of the Company, including changes in the regulatory climate
for cable TV, changes in the competitive structure of the cable and
telecommunications industries or changes in the technology base of the industry.
Internationally, the Company's profitability depends on its ability to penetrate
new markets in the face of competition from other United States and foreign
companies.
<PAGE>
PART II OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS.
Incorporated by reference from financial statement footnote number 5 of Part I.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
10(N) Employment Agreement between Pico Macom, Inc. and
Norman Reinhardt, dated March 22, 1995.
10(O) Amendment to the Exclusive Manufacturing/Marketing Agreement
between Good Mind Industries and Pico Macom, Inc., dated April
26, 1989.
11.1 Computation of Per Share Earnings.
27 Financial Data Schedule (included only in the EDGAR
filing).
(b) Reports on Form 8-K:
None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PICO PRODUCTS, INC.
REGISTRANT
DATE: June 9, 1995 Joseph T. Kingsley
----------------------------
Senior Vice President of Finance
Chief Financial Officer
<PAGE>
FORM 10-Q
QUARTER ENDED APRIL 30, 1995
EXHIBITS
10(N) Employment Agreement between Pico Macom, Inc. and Norman Reinhardt,
dated March 22, 1995. (12 pages)
10(O) Amendment to the Exclusive Manufacturing/Marketing Agreement between
Good Mind Industries and Pico Macom, Inc., dated April 26, 1989.
11.1 Computation of Per Share Earnings
27 Financial Data Schedule (included only in the EDGAR filing).
<PAGE>
EXHIBIT 10(N)
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the "Agreement") dated as of March 22, 1995,
between PICO MACOM, INC., a Delaware corporation ("Employer"), and NORMAN
REINHARDT ("Employee").
BACKGROUND. Employee is currently employed by Employer as its Vice
President -- Technology and Product Development. Employer and Employee
mutually agree to continue the employment of Employee as Vice President --
Technology and Product Development upon the terms and conditions hereinafter
set forth.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
convenants and agreements hereinafter set forth, the parties hereto, intending
to be legally bound hereby, agree as follows:
1. EMPLOYMENT. Employer hereby employs Employee, and Employee hereby
accepts such employment and agrees to perform his duties and responsibilities
hereunder, in accordance with the terms and conditions hereinafter set forth.
1.1 EMPLOYMENT TERM. The employment term of this Agreement shall be
for a period of one year (the "Employment Term"). The initial Employment Term
shall commence on the date hereof and shall continue until and end on the first
anniversary date of this Agreement, unless terminated prior thereto in
accordance with Section 7 hereof.
1.2 RENEWAL. This Agreement shall be automatically renewed for
successive one year terms at the expiration of each Employment Term unless
written notice to the contrary is provided by either the Employer or the
Employee at least sixty days prior to the expiration of such Employment Term.
1.3 DUTIES AND RESPONSIBILITIES.
(a) During the Employment Term, Employee shall serve as Vice
President -- Technology and Product Development of Employer and shall perform
all duties and accept all responsibilities incidental to such position or as
may be assigned to him by Employer's Board of Directors, and he shall cooperate
fully with the Board of Directors and other executive officers of the Employer.
<PAGE>
(b) Notwithstanding the provisions of Section 1.3(a) hereof,
Employer's Board of Directors may alter the titles, duties and responsibilities
of Employee as long as Employee is retained in an executive capacity with
Employer.
(c) Employee represents and covenants to Employer that he is
subject to or a party to only those employment agreements, non-competition
covenants, and non-disclosure agreements listed on Exhibit "A" hereto. Employee
represents and covenants to Employer that neither those documents nor any other
similar agreement, covenant, understanding or restriction to which Employee is
subject would prohibit Employee from executing this Agreement and performing
his duties and responsibilities hereunder, or would in any manner, directly or
indirectly, limit or affect the duties and responsibilities which may now or in
the future be assigned to Employee by Employer.
1.4 EXTENT OF SERVICE. During the Employment Term, Employee agrees
to use his best efforts to carry out his duties and responsibilities under
Section 1.3 hereof and to devote his full time, attention and energy thereto.
The foregoing shall not be construed as preventing Employee from making
investments in other business or enterprises provided that Employee agrees not
to become engaged in any other business activity which may interfere with his
ability to discharge his duties and responsibilities to Employer. Employee
further agrees not to work either on a part time or independent contracting
basis for any other business or enterprise during the Employment Term without
the prior written consent of the Board of Directors of Employer.
1.5 BASE COMPENSATION. For all the services rendered by Employee
hereunder, Employer shall pay Employee an annual salary at the rate of $95,000
for the one-year Employment Term, plus such additional amounts, if any, as may
be approved by the Employer's Board of Directors, less withholding required by
law or agreed to by Employee, payable in installments at such times as Employer
customarily pays its other executive officers.
1.6 BENEFITS.
(a) During the Employment Term, Employee shall be entitled to
fifteen working days of paid vacation during the Employment Term in accordance
with Employer's then existing vacation policy.
<PAGE>
(b) Employee shall be entitled to all normal and usual benefits
provided by Employer to its employees, including, but not limited to,
participation in profit sharing, disability, health, dental, hospitalization and
retirement plans and such other benefits as the Board of Directors of Employer
may from time to time determine based upon the benefits paid to other officers
of Employer.
1.7 CHANGE IN CONTROL.
(a) For purposes of this paragraph 1.7, "Change in Control"
shall mean (i) a merger or consolidation of Employer or Employer's parent, Pico
Products, Inc., a New York corporation ("Products"), with any entity other than
an entity with which Employer or Products is affiliated at the date of execution
of this Agreement; (ii) a sale of substantially all of the assets of Employer to
any person or entity other than a person or entity with which Employer or
Products is affiliated at the date of execution of this Agreement; or (iii)
individuals who were members of the Board of Directors of Products on the date
of execution of this Agreement no longer constitute a majority of the Product's
Board of Directors.
(b) In the event of a Change in Control, Employee may elect to
terminate this Agreement for Good Cause. For purposes of this Agreement, "Good
Cause" shall mean:
(i) the assignment to Employee of any duties inconsistent
with his positions, duties, responsibilities and status with Employer as in
effect immediately prior to such Change in Control;
(ii) a change in Employee's reporting responsibilities,
titles or offices as in effect immediately prior to such Change in Control;
(iii) a reduction in Employee's base salary as in effect
immediately prior to such Change in Control; or
(iv) a relocation of Employee's office to a city other than
the city where Employee was based immediately prior to such Change in Control.
(c) Employee shall provide written notice to Employer of his
election to terminate this Agreement for Good
<PAGE>
Cause, and shall specify in such written notice the date upon which this
Agreement shall terminate.
(d) If Employee terminates this Agreement following a Change in
Control for any reason other than Good Cause, Employer shall pay Employee his
base salary through the effective date of termination.
(e) If Employee elects to terminate this Agreement for Good
Cause:
(i) Employer shall pay Employee, as severance compensation,
an amount equal to twelve times Employee's base monthly cash compensation. Such
severance compensation shall be paid in twelve equal monthly installments,
commencing thirty days after the date of termination of this Agreement; and
(ii) Employer shall continue to provide Employee with all
health, dental, hospitalization and disability benefits which Employee received
pursuant to Section 1.6(b) hereof, for a period of twelve months following the
termination of this Agreement.
1.8 SEVERANCE COMPENSATION. If Employer terminates this Agreement,
other than pursuant to Section 7 hereof:
(a) Employer shall pay Employee an amount equal to twelve times
Employee's base monthly cash compensation. Such severance compensation shall be
payable in twelve equal monthly installments, commencing thirty days after the
date of termination of this Agreement; and
(b) Employer shall continue to provide Employee with all health,
dental, hospitalization and disability benefits which Employee received pursuant
to Section 1.6(b) hereof, for a period of twelve months following the
termination of this Agreement.
2. EXPENSES. Employee shall be reimbursed for the reasonable business
expenses incurred by him in connection with his performance of services
hereunder during the Employment Term upon presentation of an itemized account
and written proof of such expenses.
<PAGE>
3. DEVELOPMENTS. Employee will disclose promptly in writing to Employer
all inventions, ideas, discoveries, and improvement, whether or not patentable,
conceived by Employee during the period of Employee's employment with Employer,
or a parent or subsidiary thereof, whether alone or with others, and whether or
not during regular business hours, or on Employer premises or with the aid of
Employer materials, which pertain in any way to Employee's work with Employer or
to any business activity which is or at the time of such conception may be
carried on by Employer or a parent or subsidiary thereof. All such inventions,
ideas, discoveries, and improvements are the property of Employer to which
Employee hereby assigns and transfers forever all Employee's rights, titles and
interests.
Employee, upon request by Employer and at Employer's sole expense,
will prepare and execute applications for patents for such inventions, ideas,
discoveries, and improvements, both in the United States and in foreign
countries, and will do everything necessary to ensure the issuance of such
patents, irrespective of whether required to be done during or after the
termination of Employee's period of employment with Employer. Employee will be
eligible for any Employer awards normally given to Employees for submission of
patents.
Any inventions, ideas, discoveries, and improvements conceived or made
by Employee prior to the execution of this Agreement and not intended to be
included within its provisions are listed or described on Exhibit "B" attached
to this Agreement, and the absence of any such list or description indicates
that there are no inventions, ideas, discoveries, or improvements not covered by
this Agreement.
Employee has read the attached provisions of California law (Chapter
2, Div. 3 Labor Code Sec. 1 Art 3.5, Sections 2870, 2871 and 2872) and
understands that under its provisions Employee may retain ownership of certain
inventions that Employee may make during the term of employment. Such
inventions shall not be subject to the terms of this Agreement. Any such
inventions which Employee desires to retain as Employee's property will be
reported and disclosed to the Employer with the understanding, however, that the
Employer may require Employee to disclose such information about such
inventions, as in Employer's opinion is necessary to enable it to determine if
the invention qualifies under this law for retention as Employee's property. It
is further understood that information disclosed by Employee will be held in
confidence by Employer. However, Employer need not treat any such disclosed
information as confidential if it has
<PAGE>
previously been known to it, or if at the time of Employee's disclosure or
thereafter it is disclosed in patents or other publications, imparted to it by
other parties having lawful possession of the same, or is well known to the
trade to which it relates.
4. TRADE SECRETS. The Employee agrees that he will not at any time,
either during or subsequent to the Employment Term, unless given express consent
in writing by the Employer, either directly or indirectly use or communicate to
any person or entity any confidential information of any kind concerning matters
affecting or relating to the names, addresses, buying habits or practices of any
of Employer's clients to customers; Employer's marketing methods, programs,
formulas, patterns, compilations, devices, methods, techniques or processes and
related data; the amount of compensation paid by Employer to employees and
independent contractors and other terms of their employment or contractual
relationships; other information concerning Employer's manner of operations.
(The foregoing shall not be deemed to prohibit the disclosure of information
which (a) is, at the time of disclosure, in the public domain other than as a
result of Employee's breach of this Agreement, or (b) can be demonstrated by
Employee to be known by Employee on the date hereof, with the burden of proof to
be on Employee.) The Employee agrees that the above information and items are
important, material and confidential trade secrets and that they affect the
successful conduct of the Employer's business and its good will. The Employee
agrees that all business procured by the Employee while employed by the Employer
is and shall remain the permanent and exclusive property of the Employer.
Employee further agrees that Employer's relationship with each of its employees
and independent contractors is a significant and valuable asset of the Employer.
Any interference with the Employer's business, property, confidential
information, trade secrets, clients, customers, employees or independent
contractors by the Employee or any of Employee's agents during or after the term
of this Agreement shall be deemed a material breach of this Agreement.
5. NONSOLICITATION. The Employee hereby acknowledges and agrees that he
is likely to be exposed to a significant amount of confidential information
concerning the Employer's business methods, operations, employment relationships
and customers while employed under this Agreement, that such information might
be retained by Employee in tangible form or simply retained in the Employee's
memory, and that the protection of the Employer's exclusive rights to such
confidential information and the benefits flowing from it can best be ensured by
means of a
<PAGE>
restriction on the Employee's activities after termination of employment.
Therefore, the Employee agrees that for the one-year period following
termination of employment (whether with or without cause) he shall not solicit,
divert or initiate (or attempt to solicit, divert or initiate) any contact with
any customer, client or vendor of the Employer if such action is on behalf of
any person (including Employee) who shall then be in a business competitive with
that of Employer, for any commercial or business reason whatsoever. The
Employee also agrees that for such period he will not directly or indirectly
solicit the employment of any employee of the Employer and will not attempt to
persuade any employee to leave the employment of the Employer.
6. EQUITABLE RELIEF.
(a) Employee acknowledges that the restrictions contained in Sections
4 and 5 hereof are reasonable and necessary to protect the legitimate interests
of Employer and that any violation of such restrictions would result in
irreparable injury to Employer. If the period of time or other restrictions
specified in Sections 4 and 5 should be adjudged unreasonable at any proceeding,
then the period of time or such other restrictions shall be reduced by the
elimination or reduction of such portion thereof so that such restrictions may
be enforced in a manner adjudged to be reasonable. Employee acknowledges that
Employer shall be entitled to preliminary and permanent injunctive relief for a
violation of any such restrictions without having to prove actual damages or to
post a bond; Employer shall also be entitled to an equitable accounting of all
earnings, profits and other benefits arising from such violation, which rights
shall be cumulative and in addition to any other rights or remedies to which
Employer may be entitled in law or equity. In the event of a violation, the
period referred to in Section 5 hereof shall be extended by a period of time
equal to that period beginning with the commencement of any such violation and
ending when such violation shall have been finally terminated in good faith.
(b) Employee agrees that until the expiration of the covenants
contained in Sections 4 and 5 of this Agreement, he will provide, and that
Employer may similarly provide, a copy of the covenants contained in such
Sections to any business or enterprise (i) which he may directly or indirectly
own, manage, operate, finance, join, control or participate in the ownership,
management, operation, financing, control or control of, or (ii) with which he
may be connected with as an officer, director, employee, partner, principal,
agent, representative, consultant
<PAGE>
or otherwise, or in connection with which he may use or permit his name to be
used.
7. TERMINATION. This Agreement shall terminate prior to the expiration
of the term set forth in Section 1.1 above upon the occurrence of any of the
following events:
7.1 DISABILITY. In the event that Employee is unable fully to
perform his duties and responsibilities hereunder to the full extent required by
the Board of Directors of the Employer by reason of illness, injury or
incapacity for four consecutive months, during which time he shall continue to
be compensated as provided in Section 1.5 hereof (less any payments due Employee
under disability benefit programs, including Social Security disability,
workers' compensation and disability retirement benefits), this Agreement may be
terminated by Employer, and Employer shall have no further liability or
obligation to Employee for compensation hereunder; provided, however, that
Employee will be entitled to receive the payments prescribed under any
disability benefit plan which may be in effect for employees of Employer and in
which he participated. Employee agrees, in the event of any dispute under this
Section 7.1, to submit to a physical examination by a licensed physician
selected by the Board of Directors of Employer.
7.2 DEATH. In the event that Employee dies during the Employment
Term, Employer shall pay to his executors, legal representatives or
administrators an amount equal to the installment of his salary set forth in
Section 1.5 hereof for the month in which he dies, and thereafter Employer shall
have no further liability or obligation hereunder to his executors, legal
representatives, administrators, heirs or assigns or any other person claiming
under or through him; provided, however, that Employee's estate or designated
beneficiaries shall be entitled to receive the payments prescribed for such
recipients under any death benefit plan which may be in effect for employees of
the Employer and in which Employee participated.
7.3 CAUSE. Notwithstanding any other provision hereof, Employer may
terminate this Agreement at any time for "cause". For purposes of this
Agreement, "cause" shall include, but not be limited to, the failure of Employee
to perform or observe any of the terms or provisions of this Agreement,
dishonesty, misconduct, conviction of a crime involving moral turpitude,
habitual insobriety, misappropriation of funds, disparagement of the Employer,
its management or its employees or financial inability of the Employer to
continue to do business. The Employer's liability, if any, for payment to
Employee as a
<PAGE>
consequence of termination of Employee's employment pursuant to this Agreement
shall be reduced by and to the extent of any earnings received by or accrued for
the benefit of Employee during any unexpired part of the Employment Term.
8. SURVIVAL. Notwithstanding the termination of this Agreement by reason
of Employee's disability under Section 7.1 or for cause under Section 7.3, his
obligations under Section 4 and 5 hereof shall survive and remain in full force
and effect for the periods therein provided, and the provisions for equitable
relief against Employee in Section 6 hereof shall continue in force.
9. GOVERNING LAW. This Agreement shall be governed by and interpreted
under the laws of the State of California.
10. DISPUTES AND ARBITRATION. Any disputes arising hereunder, including
disputes arising from or relating to termination, shall be resolved by binding
arbitration. Notice of the demand for arbitration by either party shall be
given in writing to the other party to this Agreement. Upon such demand, the
dispute shall be settled by arbitration before a single arbitrator pursuant to
the rules of the American Arbitration Association (the "AAA"). Discovery shall
be permitted prior to arbitration and California law shall be applied. The
arbitrator shall be selected by the joint agreement of the parties, but if the
parties do not so agree within twenty days after the date of the notice referred
to above, the selection shall be made pursuant to the rules of, and from the
panels of arbitrators maintained by the AAA. Any award rendered by the
arbitrator shall be conclusive and binding upon the parties hereto; provided,
however, that any such award shall be accompanied by written opinion of the
arbitrator giving the reasons for the award. Each party shall pay its own
expenses of arbitration and the expenses of the arbitrator shall be equally
shared by the parties. Nothing herein shall prevent the parties from settling
any dispute by mutual agreement at any time.
11. NOTICES. All notices and other communications required or permitted
hereunder or necessary or convenient in connection herewith shall be in writing
and shall be deemed to have been given when hand delivered or mailed by
registered or certified mail, as follows (provided that notice of change of
address shall be deemed given only when received):
<PAGE>
If to Employer, to: Pico Macom, Inc.
12500 Foothill Boulevard
Lakeview Terrace, CA 91342
With a required copy to: Spencer W. Franck, Jr., Esquire
Saul, Ewing, Remick & Saul
3800 Centre Square West
Philadelphia, PA 19102
If to Employee, to: Mr. Norman Reinhardt
___________________
___________________
or to such other names or addresses as Employer or Employee, as the case may be,
shall designate by notice to each other person entitled to receive notices in
the manner specified in this Section.
12. CONTENTS OF AGREEMENT; AMENDMENT AND ASSIGNMENT.
(a) This Agreement supersedes all prior agreements and sets forth the
entire understanding among the parties hereto with respect to the subject matter
hereof and cannot be changed, modified, extended or terminated except upon
written amendment approved by the Board Directors of Employer and executed on
its behalf by a duly authorized officer. Without limitation, nothing in this
Agreement shall be construed as giving Employee any right to be retained in the
employ of Employer beyond the expiration of the Employment Term, and Employee
specifically acknowledges that, unless this Agreement is renewed in accordance
with Section 1.2 hereof, he shall be an employee-at-will of Employer thereafter,
and thus subject to discharge by Employer with or without cause and without
compensation of any nature.
(b) Employee acknowledges that from time to time, Employer may
establish, maintain and distribute employee manuals or handbooks or personnel
policy manuals, and officers or other representatives of Employer may make
written or oral statements relating to personnel policies and procedures. Such
manuals, handbooks and statements are intended only for general guidance. No
policies, procedures or statements of any nature by or on behalf of Employer
(whether written or oral, and whether or not contained in any employee manual or
handbook or personnel policy manual), and no acts or practices of any nature,
shall be construed to modify this Agreement or to create express or implied
obligations of any nature to Employee.
<PAGE>
(c) All of the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
heirs, executors, administrators, legal representatives, successors and assigns
of the parties hereto, except that the duties and responsibilities of Employee
hereunder are of a personal nature and shall not be assignable or delegatable
in whole or in part by Employee.
13. SEVERABILITY. If any provision of this Agreement or application
thereof to anyone or under any circumstances is adjudicated to be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect any other provision or application of this Agreement which can be given
effect without the invalid or unenforceable provision or application and shall
not invalidate or render unenforceable such provision or application in any
other jurisdiction.
14. REMEDIES CUMULATIVE; NO WAIVER. No remedy conferred upon Employer by
this Agreement is intended to be exclusive of any other remedy, and each and
every such remedy shall be cumulative and shall be in addition to any other
remedy given hereunder or now or hereafter existing at law or in equity. No
delay or omission by Employer in exercising any right, remedy or power hereunder
or existing at law or in equity shall be construed as a waiver thereof, and any
such right, remedy or power may be exercised by Employer from time to time and
as often as may be deemed expedient or necessary by Employer in its sole
discretion.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
Attest: PICO MACOM, INC.
Joseph T. Kingsley By: Everett T. Keech
- ------------------------- ---------------------
Secretary
Norman F. Reinhardt
-------------------------
NORMAN REINHARDT
<PAGE>
EMPLOYMENT AGREEMENT
EXHIBIT "A"
EMPLOYMENT AGREEMENTS, NON-COMPETITION AGREEMENTS AND NON-DISCLOSURE AGREEMENTS
1. General Instrument, Video Cipher Division, SAR Agreement.
2. News Datacom, Inc. Employment Letter.
3. General Instrument, Video Cipher Division, Non-Disclosure Agreements with
many and various commercial entities.
4. News Datacom, Inc. & News Corporation Non-Disclosure Agreement, with many
and various commercial entities.
5. News Datacom, Inc. Release from Employment Agreement.
<PAGE>
EXHIBIT 10(O)
Amendment to the Exclusive Manufacturing/Marketing Agreement between Good Mind
Industries and Pico Macom, Inc., dated April 26, 1989:
A. The Exclusive Manufacturing/Marketing Agreement is extended for the three
year period ending May 1, 1998. Pico Macom Inc. agrees to purchase exclusive
products with minimum quantities to be specified for each year of the Agreement.
To enable Good Mind to plan its monthly manufacturing requirements, Pico Macom
will periodically update a twelve month forecast for key items.
B. Either party shall have the right to terminate this Agreement with one year
notice. In the event of a termination notice, neither party will violate the
exclusivity agreement in this contract.
C. Both parties agree that Good Mind Industries has the primary responsibility
for engineering, design and manufacturing for products on the exclusive list.
D. During the past few years, technology changes have begun to impact the
worldwide cable TV and SMATV markets. In order to respond to customer requests,
Pico Macom employees and contractors may design products to meet the needs of
different markets. For products totally developed by Pico Macom Inc. employees
and contractors, both parties agree that Good Mind may be an Original Equipment
Manufacturer (OEM) which will manufacture products in accordance with PMI's
specifications. Good Mind agrees that when it is functioning as an OEM, it will
receive information which is proprietary to Pico Macom Inc. Good Mind agrees to
not disclose or use this information in any manner except as directed by Pico
Macom Inc. OEM products will be included on a separate schedule.
E. Both parties agree that maintaining a continuous flow of product is
essential. Therefore, both parties agree to establish procedures to ensure
product flow in the event that a catastrophe interrupts shipments from Good Mind
to Pico Macom for more than 30 days. Catastrophes include such items as natural
disasters, acts of war, or labor disruptions. In the event of a catastrophe,
Good Mind, if able, will work with Pico Macom personnel to arrange for
alternative manufacturing
<PAGE>
facilities or alternative sources of supply. If needed, Good Mind will make
available all manufacturing parts lists, drawings and assembly instructions
to allow manufacturing operating to begin at an alternate site or facility
until Good Mind can resume their manufacturing operations.
PICO MACOM INC. GOOD MIND INDUSTRIES
Date: April 10, 1995 Date: March 28, 1995
-------------- --------------
Everett T. Keech Y. T. Ho
- -------------------- --------------------
Chairman and CEO General Manager
- -------------------- --------------------
<PAGE>
EXHIBIT 11.1
PICO PRODUCTS, INC.
COMPUTATION OF PER SHARE EARNINGS
(IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended April 30, Ended April 30,
--------------------- ---------------------
1995 1994 1995 1994
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
NET INCOME ATTRIBUTABLE
TO COMMON STOCK $ 56 $ 219 $ 390 $ 684
--------- --------- --------- ---------
--------- --------- --------- ---------
PRIMARY EARNINGS PER SHARE:
Weighted average number
of common shares
outstanding 3,637 3,617 3,635 3,599
Dilutive effect of stock
options and warrants
after application of
treasury stock method 592 729 628 698
--------- --------- --------- ---------
Number of shares used to
compute primary
earnings per share 4,229 4,346 4,263 4,297
Primary earnings per share $ 0.01 $ 0.05 $ 0.09 $ 0.16
--------- --------- --------- ---------
--------- --------- --------- ---------
FULLY DILUTED EARNINGS PER SHARE:
Weighted average number
of common shares
outstanding 3,637 3,617 3,635 3,599
Dilutive effect of stock
options and warrants
after application of
treasury stock method 592 729 628 720
--------- --------- --------- ---------
Number of shares used to
compute fully diluted
earnings per share 4,229 4,346 4,263 4,319
Fully diluted earnings per share $ 0.01 $ 0.05 $ 0.09 $ 0.16
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-START> AUG-01-1994
<PERIOD-END> APR-30-1995
<CASH> 560
<SECURITIES> 0
<RECEIVABLES> 5,300
<ALLOWANCES> 350
<INVENTORY> 8,609
<CURRENT-ASSETS> 14,222
<PP&E> 3,726
<DEPRECIATION> 2,933
<TOTAL-ASSETS> 15,539
<CURRENT-LIABILITIES> 10,860
<BONDS> 305
<COMMON> 36
0
0
<OTHER-SE> 4,338
<TOTAL-LIABILITY-AND-EQUITY> 15,539
<SALES> 23,889
<TOTAL-REVENUES> 24,165
<CGS> 18,163
<TOTAL-COSTS> 23,186
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 73
<INTEREST-EXPENSE> 490
<INCOME-PRETAX> 416
<INCOME-TAX> 26
<INCOME-CONTINUING> 390
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 390
<EPS-PRIMARY> 0.09
<EPS-DILUTED> 0.09
</TABLE>
