<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------------------
FORM 10-KSB
---------------------------------------
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996 Comm. File No. 0-8115
- ----------------------------------------------- --------
Resource General Corporation
----------------------------------------------
(Name of small business issuer in its Charter)
Ohio 31-0737351
- -----------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
2365 Scioto Harper Drive, Columbus, Ohio 43204
- -----------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (614) 279-8877
--------------------
Securities registered pursuant to Section 12(b) of the Exchange Act: None
- -------------------------------------------------------------------
Securities registered pursuant to Section 12(g) of the Exchange Act:
- -------------------------------------------------------------------
Common shares, without par value. 1,108,020 common shares outstanding as of
February 22, 1997.
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. YES X NO
--- ---
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will 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-KSB or any
amendment to this Form 10-KSB [ ]
The issuer's revenues for the most recent fiscal year is $9,101,850.
The aggregate market value of the voting stock held by non-affiliates as of
February 22, 1997, is estimated to be $1,866,800.
Documents incorporated by reference. Portions of the registrants' Definitive
Proxy Statement for the 1997 Annual Meeting of Shareholders filed pursuant to
Regulation 14A not later than March 21, 1997 (Part III).
<PAGE> 2
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
a. Business Development.
---------------------
Resource General Corporation is an Ohio corporation (the "Company") that
resulted from the merger of a number of small companies over the past twenty
years, the oldest of which was incorporated as the Millersport Bank Company in
1906. The Company sold its banking operations in 1981.
The PH Hydraulics(TM) division of the Company arose out of an acquisition in
1987 by PH Hydraulics & Automation, Inc., a former subsidiary of the Company, of
the right to manufacture and market a line of industrial hydraulic presses which
the Company markets under the PH Hydraulics(TM) label.
The Trueblood(TM) division of the Company arose out of an acquisition in 1990 of
the right to manufacture and market a line of plastic injection molding machines
which the Company markets under the Trueblood(TM) label. The Trueblood(TM)
operations were conducted by subsidiaries of PH Hydraulics & Automation, Inc.
until 1994, when the subsidiaries were merged into PH Hydraulics & Automation,
Inc.
As of October 31, 1996, PH Hydraulics & Automation, Inc., the sole subsidiary of
the Company, was merged into the Company.
b. Business of Issuer.
-------------------
Business and Principal Products
-------------------------------
The Company's operations consist of the manufacture of standard and custom
designed hydraulic presses and vertical injection molding machines. Hydraulic
presses are used in metalforming applications primarily in the automotive and
aircraft industries. Typical uses of hydraulic presses are for assembly,
forming, staking, and straightening applications. The Company estimates that the
market for its hydraulic presses range between $30-40 million. The Company's
hydraulic presses range in tonnage from 1-5,000 tons and are marketed under the
name of PH Hydraulics(TM). Injection molding machines are used by the
automotive, electrical cord set, medical and consumer products industries. The
process involves placing a non-plastic part (inserted) into a mold then molding
plastic around the inserted part. The Company estimates that the market for
injection molding machines is $100-125 million. The injection molding machines
have a tonnage range from 30 to 450 tons and are marketed under the name of
Trueblood(TM).
<PAGE> 3
The following table shows our sales by class of products within the machine tool
industry, for the years 1996, 1995, and 1994.
<TABLE>
<CAPTION>
1996 1995 1994
Dollars Percent Dollars Percent Dollars Percent
<S> <C> <C> <C> <C> <C> <C>
Presses 5,007,010 55 6,373,834 75 5,630,700 72
Machines 3,875,888 42 1,727,463 20 1,700,142 22
Repair Parts 153,605 1 248,876 3 242,418 3
Repair Service 33,047 1 60,260 1 89,584 1
Press Automation 0 --- 0 --- 0 ---
Molded Products 32,300 1 56,978 1 110,660 2
Total 9,101,850 100% 8,467,411 100% 7,773,504 100%
</TABLE>
Sources and Availability of Raw Materials
-----------------------------------------
As a matter of policy, the Company uses standard industrial components in the
manufacture of its products. This policy is perceived as a strong marketing
advantage. Since raw steel is the largest material component of the Company's
product, its availability impacts the Company's ability to meet promised
delivery dates. The Company does not, however, depend heavily on certified or
specialty steels. Hydraulic cylinders and manifolds are key purchase components
which vary in availability and lead times.
Backlog
-------
Backlog at December 31, 1996 was approximately $2,887,000, all of which is
expected to be completed in 1997. Backlog at December 31, 1995 was approximately
$2,619,000 and all 1995 backlog was shipped in 1996.
Competition
-----------
The PH Hydraulics(TM) division is able to design and manufacture presses ranging
in capacity from 1 to 5,000 tons. It faces a different array of competitors with
respect to presses less than or exceeding 50 tons. In either category, however,
most of the market is shared by fewer than a dozen companies, no one of which is
dominant. The Company believes its strong engineering staff, flexibility, and
the reputation for reliability of its PH Hydraulics(TM) product line provide
strong competitive advantages.
In previous years the Company had only two serious competitors in the
manufacture of insert molding machines. However, in recent years a number of
larger companies who had previously sold horizontal clamp machines have
introduced vertical clamp machines to enter vertical (insert) molding. The new
competitors to insert molding are larger and better financed than the Company's
Trueblood(TM) division. Company management, while recognizing the competitive
advantage that the larger companies have, is confident that its Trueblood(TM)
line of products are technically better and that the Trueblood(TM) division will
continue to grow in market share.
Employees
---------
As of December 31, 1996, the Company had 60 employees.
<PAGE> 4
Significant Customers
---------------------
In 1996, one of the Company's customers accounted for 14% of sales and 4% of the
accounts receivable balance. No one customer comprised 10% or more of 1995
sales. One customer accounted for 11% of the sales and 25% of the accounts
receivable balance at December 31, 1994.
ITEM 2. DESCRIPTION OF PROPERTY.
a. The Company leases a manufacturing and office facility at 2365
Scioto Harper Drive, Columbus, Ohio, containing approximately 22,000 square
feet. The lease term is April 1, 1989 through August 31, 1999. The rent payments
escalate from an annual amount of $54,750 to $88,080 at the end of the eighth
year.
b. Real Estate Owned for Investment
--------------------------------
The Company owns land in Franklin County, Ohio recorded on the books at $20,570
and undeveloped land in Perry County, Ohio recorded on the books at $153,154
which includes $4,004 in oil and gas royalty reserves.
ITEM 3. PENDING LEGAL PROCEEDINGS.
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
a. Market Information
------------------
The Company's stock is traded over the counter. The Company's stock price is
found on the Electronic Bulletin Board. There are three active market makers.
The share price of the last trade was at $3.25 as of February 22, 1997. At
December 31, 1995 the share price was $.63. The share price as of December 31,
1996 was $1.75.
b. Holders
-------
As of December 31, 1996, there were 888 record holders of the Company's common
stock.
c. Dividends
---------
The Company did not pay dividends in 1996 or 1995. Bank lending agreements
contain restrictions against dividend payment.
<PAGE> 5
d. Options
-------
During 1996, the Company granted 5,000 options each to a newly elected director
and a newly elected officer with an exercise price of $1.50 per share. These
options vest and first become exercisable as to one-fourth of the shares on each
anniversary of the date of grant. The Company also granted 20,000 options each
to two newly elected directors in August 1996 with an exercise price of $1.25
per share, exercisable immediately. All options were granted in consideration of
services provided to the Company and expire ten years subsequent to their issue
date. The options were issued in reliance upon an exemption from registration
under the Securities Act pursuant to Section 4(2) thereof.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
Results of Operation
- --------------------
The Company enjoyed its second consecutive year of increased sales and
profitability. Revenues increased by 7.5% to $9.1 million in 1996 from $8.4
million in 1995. The previous year's sales increased 9% over 1994's $7.7
million. Shipments of the company's line PH hydraulic presses decreased to $5.0
million or 55.6% of total sales from $6.6 million or 79% of sales in 1995. The
decrease in shipments in hydraulic presses was more than offset by gains in the
shipments of injection molding machines. Revenues for injection molding machines
increased to $3.9 million or 43.3% of sales from $1.6 million or 19.3% of sales
in 1995. The Company has continued to implement its strategy of increasing sales
of its Trueblood line of injection molding machines. The Company believes that
revenues from injection molding machines will continue to grow at a double digit
rate for the foreseeable future. In January 1997 the Company received an order
of $3.0 million for 10 injection molding machines. This order will insure a
significant increase in revenue from injection molding machine sales in 1997.
Repair parts, service revenues and molded products provided the remainder of
Company revenues.
The Company recorded record net income in 1996. Net income increased to $367,712
or $.33 per share, from $176,485, or $.16 per share in 1995, an increase of
106%. The increase in net income is a significant accomplishment with only a
7.5% increase in sales. Net Income, as a percent of sales, was 4.0% versus 2.1%
in 1995.
The increase in net income was due not only to revenue increases but also a
reduction in all expense categories. In mid 1995, the Company installed an
integrated business system which allows the Company to track costs and provide
management information faster than anytime in its history. As a result of the
software system and the implementation of a Material Requirement Planning
system, the Company was able to reduce material costs as a percent of sales from
50.9% in 1995 to 49.1% in 1996. In addition, the Company entered into contracts
with specified vendors which guaranteed vendors certain levels of business in
exchange for reduced pricing. These measures plus increased sales volume which
accelerated purchasing discounts reduced prices to further assist in the
reduction of material costs.
Labor expense as a percent of sales increased from 9.1% in 1995 to 9.8% in 1996.
The increased labor was due to the change in product mix from hydraulic presses
to more injection molding machines. The molding machines are a more complex
equipment than hydraulic presses, thus, require additional labor hours to build
the equipment. The Company expects to reduce the labor hours in each machine as
it gains labor efficiencies by improving and standardizing assembly priorities.
As the Company builds more units the labor hours will be reduced.
<PAGE> 6
The Company is in a geographic area that does not have a large industrial base.
Consequently, to meet the growing labor requirements as the sales volume
increases it has started its own apprenticeship program. Labor hours for the
program participants are not charged against specific shop orders, thus,
increasing the amount of indirect labor hours. Indirect labor hours do not
generate revenue, thus, increasing the labor cost of the Company.
As management expected, Salary, General & Administrative costs ("SG&A") as a
percent of sales, decreased to 18.5% in 1996. This is the second straight year
of decrease. SG&A was 21.3% in 1995, down from 26.0% in 1994. The main cause for
the decrease was a significant reduction of corporate expenses. A change in
management occurred in May 1996 which eliminated duplicate positions for
President of the operating subsidiary and the Company. The President of the
subsidiary, PH Hydraulics & Automation, Inc., was elected President of the
Company. Further, the sole subsidiary of the Company, PH Hydraulics &
Automation, Inc., was merged into the Company effective October 31, 1996,
resulting in a reduction of administrative and accounting costs.
The Company allocates 10% of its pre-tax profit to its employees. In previous
years the contribution to the 401K plan was partially allocated to the next
year. In 1996 the Company completely allocated the 1996 profit sharing to the
year and absorbed $27,000 in performance bonuses from the previous year. Total
profit sharing for the 401K plan for 1996 was $44,500.
Strong cash management, increased customer deposits and record profitability all
served to decrease interest expense as a percent of sales from 2.2% in 1995 to
1.7% in 1996. Management has placed a strong emphasis on reducing the amount of
time that it takes to ship a press or injection molding machine order. An
improved delivery time reduces the need for borrowing to support inventory. The
company believes that as it continues to improve its manufacturing techniques it
will lessen the need to borrow funds for working capital.
Liquidity and Capital Resources
- -------------------------------
The Company's balance sheet continued to improve. Net worth of the Company
increased from $745,000 to $1,126,000, an increase of 51%. Working capital
increased to $336,000 or 7.7% of assets, up from $145,000 or 4.1% of assets in
1995. Increased profitability is reflected in the decrease of long term debt as
a percent of assets at 9.4%, down from 15.3% in 1995.
Profit of $367,000 plus non-cash expenses of $206,000 generated $573,000 in
cash flow. Capital expenditures for the year were $242,000.
The Company has a $1.75 million line of credit with its bank. The borrowing
arrangement allows the company to borrow a percentage of accounts receivable and
inventory. The Company has a term loan with a balance of $383,333.38 at year end
secured by fixed assets. At the end of the year the Company had an excess
availability in the line of credit of $592,000. The Company's immediate
borrowing capacity plus cash generated from operations should be more than
sufficient to fund normal operating costs, debt payments and capital
expenditures for current levels of business. However, the Company is considering
alternatives to debt financing to increase the capital structure to fund
significant increases in sales capacity or potential acquisitions.
<PAGE> 7
ITEM 7. FINANCIAL STATEMENTS.
[LOGO GREEN & WALLACE, INC.]
1241 Dublin Road
Columbus, Ohio 43215
(614) 486-3126
FAX (614) 486-0095
INDEPENDENT AUDITORS' REPORT
To the Shareholders
Resource General Corporation
We have audited the accompanying balance sheets of Resource General Corporation
(See Note 1) as of December 31, 1996 and 1995 and the related statements of
operations, shareholders' equity and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements 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 financial position of Resource General Corporation
as of December 31, 1996 and 1995, and the results of its operations and cash
flows for the years then ended in conformity with generally accepted accounting
principles.
/s/ GREEN & WALLACE, INC.
Columbus, Ohio
February 7, 1997
<PAGE> 8
RESOURCE GENERAL CORPORATION
Balance Sheets
December 31, 1996 and 1995
<TABLE>
<CAPTION>
Assets
------
1996 1995
---- ----
<S> <C> <C>
Current assets:
Cash $ 116,449 122,746
Accounts receivable (Notes 3 and 9) 2,135,276 1,277,415
Inventories, less estimated long-term
portion (Note 3) 764,989 871,022
Deferred income taxes (Note 4) 50,200 22,400
Other current assets (Note 8) 88,885 57,696
--------- ---------
Total current assets 3,155,799 2,351,279
--------- ---------
Property and equipment, at cost (Notes 3 and 5):
Office equipment 407,656 389,312
Manufacturing equipment 956,140 872,250
Leasehold improvements 255,518 232,809
Vehicles 132,934 81,600
--------- ---------
Total property and equipment 1,752,248 1,575,971
Less accumulated depreciation
and amortization 927,879 804,185
--------- ---------
Property and equipment, net 824,369 771,786
--------- ---------
Other noncurrent assets:
Inventory, estimated long-term portion
(Note 3) 39,000 50,000
Oil and gas royalty interests, net 4,004 13,004
Land held for investment (Note 3) 169,720 169,720
Goodwill, net 83,178 110,904
Other noncurrent assets (Note 8) 102,276 47,754
--------- ---------
Total other noncurrent
assets 398,178 391,382
--------- ---------
Total assets $ 4,378,346 3,514,447
========= =========
</TABLE>
The accompanying notes are an integral part
of these financial statements.
<PAGE> 9
RESOURCE GENERAL CORPORATION
Balance Sheets
(contd)
December 31, 1996 and 1995
<TABLE>
<CAPTION>
Liabilities and Shareholders' Equity
------------------------------------
1996 1995
---- ----
<S> <C> <C>
Current liabilities:
Accounts payable $ 735,530 792,694
Bank line of credit (Note 3) 1,157,849 532,849
Notes payable to directors (Note 8) - 87,500
Current portion of long-term debt
(Note 3) 141,877 130,444
Current portion of capital lease
obligations (Note 5) 16,854 14,814
Income taxes payable 23,500 5,000
Accrued expenses and taxes 494,823 414,323
Customer deposits 249,049 229,080
--------- ---------
Total current liabilities 2,819,482 2,206,704
--------- ---------
Noncurrent liabilities, less any current portions:
Notes payable to bank (Note 3) 296,247 383,333
Other long-term installment notes
(Note 3) 77,434 95,751
Capital lease obligations (Note 5) 42,940 59,794
Deferred compensation (Note 10) 6,366 -
Deferred income taxes (Note 4) 10,200 23,400
--------- ---------
Total noncurrent liabilities 433,187 562,278
--------- ---------
Total liabilities 3,252,669 2,768,982
--------- ---------
Shareholders' equity: (Note 7)
Common stock, with no par value,
authorized 3,412,000 shares;
issued and outstanding 1,087,820 in
1996 and 1,085,820 in 1995 at
$.01 stated value 10,878 10,858
Additional paid-in capital 1,239,023 1,236,543
Retained earnings (deficit) (124,224) (491,936)
--------- ---------
1,125,677 755,465
Less subscription receivable (Note 8) - 10,000
--------- ---------
Total shareholders' equity 1,125,677 745,465
--------- ---------
Total liabilities and
shareholders' equity $ 4,378,346 3,514,447
========= =========
</TABLE>
The accompanying notes are an integral part
of these financial statements.
<PAGE> 10
RESOURCE GENERAL CORPORATION
Statements of Operations
For the years ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Net sales $ 9,101,850 8,467,411
Cost of sales 6,901,102 6,287,521
--------- ---------
Gross margin 2,200,748 2,179,890
Selling, general and administrative expenses 1,680,616 1,802,597
--------- ---------
Income from operations 520,132 377,293
--------- ---------
Other income (expenses):
Oil and gas royalty, net 7,595 (5,258)
Interest income 1,755 310
Interest expense (154,079) (186,776)
Other, net 35,509 (4,084)
--------- ---------
Total other income
(expenses), net (109,220) (195,808)
--------- ---------
Income before income taxes 410,912 181,485
Provision for income taxes (Note 4) (43,200) (5,000)
--------- ---------
Net income $ 367,712 176,485
--------- ---------
Per share data:
Net income per common share $ .33 .16
========= =========
</TABLE>
The accompanying notes are an integral
part of these financial statements.
<PAGE> 11
RESOURCE GENERAL CORPORATION
Statements of Shareholders' Equity
For the years ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
Retained
Additional Earnings Total
Common Stock Paid-In (Accumulated Subscription Shareholders'
Shares Amount Capital Deficit) Receivable Equity
------ ------ ------- -------- ---------- ------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1994 1,085,820 $ 10,858 1,236,543 (668,421) (10,000) 568,980
Net income - - - 176,485 - 176,485
--------- ------- --------- -------- ------- ---------
Balance, December 31, 1995 1,085,820 $ 10,858 1,236,543 (491,936) (10,000) 745,465
Collection of subscription - - - - 10,000 10,000
receivable (Note 8)
Issuance of common stock (Note 7) 2,000 20 2,480 - - 2,500
Net income - - - 367,712 - 367,712
--------- ------- --------- -------- ------- ---------
Balance, December 31, 1996 1,087,820 $ 10,878 1,239,023 (124,224) - 1,125,677
========= ======= ========= ======== ======= =========
</TABLE>
The accompanying notes are an integral
part of these financial statements.
<PAGE> 12
RESOURCE GENERAL CORPORATION
Statements of Cash Flows
For the years ended December 31, 1996 and 1995
Increase (Decrease) in Cash
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 367,712 176,485
Adjustments to reconcile
net income to net
cash (used in) provided by
operating activities:
Depreciation and
amortization 215,282 213,596
(Gain) loss on sale of
property and equipment (16,562) 7,896
Changes in assets and
liabilities affecting cash
flows from operating
activities:
Accounts receivable (857,861) 1,037,804
Inventories 117,033 74,363
Other current assets (25,289) 38,852
Other noncurrent assets (16,748) (7,713)
Accounts payable (57,164) (71,965)
Accrued income taxes payable 18,500 5,000
Accrued expenses and taxes 80,500 (46,512)
Customer deposits 19,969 (91,199)
Deferred income taxes (41,000) -
Deferred compensation 6,366 -
-------- ---------
Net cash (used in) provided by
operating activities (189,262) 1,336,607
-------- ---------
Cash flows from investing activities:
Proceeds from sale of equipment 14,400 83,228
Capital expenditures for
property and equipment (227,651) (106,062)
Issuance of note receivable (45,000) -
-------- ---------
Net cash used in
investing activities $ (258,251) (22,834)
======== =========
</TABLE>
The accompanying notes are an integral
part of these financial statements.
<PAGE> 13
RESOURCE GENERAL CORPORATION
Statements of Cash Flows
(contd)
For the years ended December 31, 1996 and 1995
Increase (Decrease) in Cash
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Cash flows from financing activities:
Principal payments on
debt obligations $ (136,106) (410,216)
Proceeds from debt obligations 42,136 585,000
Net borrowings (payment)-line
of credit 625,000 (1,350,161)
Principal payments on notes
payable to directors (87,500) (62,876)
Payment of capital lease obligations (14,814) (17,998)
Proceeds from issuance of
common stock 12,500 -
--------- ----------
Net cash provided by (used
in) financing activities 441,216 (1,256,251)
--------- ----------
Net (decrease) increase in cash (6,297) 57,522
Cash, beginning of year 122,746 65,224
--------- ----------
Cash, end of year
$ 116,449 122,746
========= ==========
</TABLE>
The accompanying notes are an integral
part of these financial statements.
<PAGE> 14
RESOURCE GENERAL CORPORATION
Notes to Financial Statements
Note 1 - Business Description:
Resource General Corporation ("Resource"), an Ohio corporation, is the
product of the merger of several companies, the oldest of which was
incorporated in 1906. The primary operations of Resource are the
manufacture and marketing of a line of hydraulic presses and
automation equipment under the name of PH Hydraulics ("PH"). Resource
also manufactures and markets a line of insert injection molding
machines under the name of Trueblood. The principal market area of
these two product lines is North America. Resource also owns several
real estate parcels held for investment in Ohio, and royalty interests
in a number of oil and gas wells in southeastern Ohio.
Prior to an October 1996 merger, the operations of PH and Trueblood
were performed in a wholly-owned subsidiary named PH Hydraulics and
Automation, Inc. See (Note 2) regarding principles of consolidation.
Note 2 - Summary of Significant Accounting Policies:
The following is a summary of certain significant accounting policies
followed in the preparation of the financial statements.
Principles of consolidation
The accompanying financial statements for 1995 were consolidated to
include the accounts of the Company and its wholly-owned subsidiary,
hereafter referred to as the "Company". All intercompany accounts and
transactions have been eliminated from these statements.
Inventories
Inventories are stated at the lower of cost (on a first-in, first-out
basis) or market. Inventories at December 31, 1996 and 1995 consisted
of the following:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Raw materials $ 346,365 351,844
Work-in-process 457,624 569,178
------- -------
$ 803,989 921,022
======= =======
</TABLE>
<PAGE> 15
RESOURCE GENERAL CORPORATION
Notes to Financial Statements
(contd)
Note 2 - Summary of Significant Accounting Policies: (contd)
Inventories (contd)
The Company has in stock certain items which are not expected to be
utilized or sold currently. Inventory of $39,000 in 1996 and $50,000
in 1995 is shown on the balance sheet as a long-term asset which
represents an estimate of this portion of total raw materials
inventory at each year end.
Property and equipment
Property and equipment are stated at cost. Upon sale or retirement,
the cost and related accumulated depreciation are eliminated from the
respective accounts and the resulting gain or loss is included in
income. Depreciation and amortization are computed using the
straight-line method for financial reporting purposes and accelerated
methods for income tax purposes over the estimated useful lives of the
related assets.
Depreciation expense was $178,556 and $158,349 in 1996 and 1995,
respectively.
Oil and gas royalty interests
Oil and gas royalty interests were valued at $180,000 when originally
acquired. The original value was reduced by $66,655 in 1986 due to a
decline in oil and gas prices. Oil and gas royalty interests are
amortized based on actual oil and gas production compared to reserves
estimated by a geological study. The annual amortization was $9,000 in
1996 and 1995.
The accumulated amortization at December 31, 1996 and 1995 was
$109,341 and $100,341, respectively.
Land held for investment
Land held for investment is valued at the lower of cost or market.
Expenditures that add to the recoverable value of the property are
capitalized as land development costs.
Goodwill
Goodwill is being amortized over a six year period for financial
statement purposes beginning in 1994. The amortization expense for
both 1996 and 1995 was $27,726. Goodwill on the financial statements
is shown net of accumulated amortization at December 31, 1996 and 1995
of $74,884 and $47,158, respectively.
<PAGE> 16
RESOURCE GENERAL CORPORATION
Notes to Financial Statements
(contd)
Note 2 - Summary of Significant Accounting Policies: (contd)
Research and development costs incurred
It is the Company's policy to expense research and development costs
when incurred. Research and development costs during 1996 and 1995
total $16,492 and $11,252, respectively.
Revenue recognition
Revenue from equipment sales and related costs are generally
recognized when products are completed and accepted for shipment by
the customer and all costs are incurred or subject to reasonable
estimate. Advance payments from customers prior to shipment are
reported as customer deposits.
Product warranty
The Company generally provides a warranty against defects in its
products for periods up to one year. A liability for estimated
warranty costs is recognized on current sales. The Company has
determined the estimate based on the historical relationship of actual
warranty costs to sales revenue.
Earnings per share
Earnings per share amounts are computed based on the weighted average
number of shares actually outstanding plus the shares that would be
outstanding assuming exercise of dilutive stock options, all of which
are considered to be common stock equivalents. The number of shares
that would be issued from the exercise of stock options has been
reduced by the number of shares that could have been purchased from
the proceeds at the average market price of the company's stock. The
number of shares used in the computation of earnings per share in 1996
was 1,130,714.
Earnings per share for 1995 does not include stock options because
there was no dilutive effect on earnings per share. The weighted
average number of shares outstanding in 1995 was 1,085,820.
<PAGE> 17
RESOURCE GENERAL CORPORATION
Notes to Financial Statements
(contd)
Note 2 - Summary of Significant Accounting Policies: (contd)
Use of estimates in the preparation of financial statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
Note 3 - Bank Debt and Other Installment Obligations:
Short-term debt
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Bank line of credit, due February 28, 1997 and collateralized by all
property and equipment, accounts receivable, inventory and assignment
of $500,000 life insurance policy on one director. Interest at prime
plus 1% is payable monthly (9.25% at December 31, 1996). Unused balance
of $592,151 at December 31, 1996, subject to borrowing base restrictions. $ 1,157,849 532,849
========= =======
Long-term debt
Bank:
Note payable to bank, collateralized by all accounts receivable,
property and equipment, inventory and assignment of $500,000 life
insurance policy on one director. Due in monthly installments of $8,333
plus interest at prime plus 1% through November 6, 2000. $ 383,333 483,333
</TABLE>
<PAGE> 18
RESOURCE GENERAL CORPORATION
Notes to Financial Statements
(contd)
Note 3 - Bank Debt and Other Installment Obligations: (contd)
Long-term debt (contd)
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Bank: (contd)
Note payable to bank, collateralized by an auto. Monthly payment of
$542 includes interest at 8% per annum through January 2000. 18,161 -
Other:
Note payable to City of Columbus, secured by an injection mold press.
Monthly payment of $1,414 includes interest at 5%, with final payment
in July 1999. 41,023 55,537
Note payable to City of Columbus, secured by an injection mold press.
Monthly payment of $1,414 includes interest at 5% with final
payment in February 2000. 49,577 63,675
Installment note payable, collateralized by an automobile. Monthly
payment of $198 includes interest at 8.75% with final payment
in May 1999. 5,150 6,983
Installment note payable: collaterized by a truck. Monthly payment of
$510 includes interest at 10.25% with final payment in August 2000. 18,314 -
------- -------
Total 515,558 609,528
Long-term portion - notes payable to bank 296,247 383,333
Long-term portion - other installment notes 77,434 95,751
------- -------
Current portion $ 141,877 130,444
======= =======
</TABLE>
<PAGE> 19
RESOURCE GENERAL CORPORATION
Notes to Financial Statements
(contd)
Note 3 - Bank Debt and Other Installment Obligations: (contd)
Long-term debt (contd)
Maturities of long-term debt obligations for each year through
expiration at December 31, 1996 are as follows:
<TABLE>
<S> <C>
1997 $ 141,877
1998 144,422
1999 138,698
2000 90,561
</TABLE>
The Company had combined interest payments on loans payable and
capital leases (Note 5) during 1996 and 1995 of $154,078 and $186,467,
respectively.
The bank line-of-credit agreement and term debt agreement with
balances of $1,157,849 and $383,333 respectively, at December 31,
1996, contain several restrictive covenants. Among the restrictions
are covenants regarding the following: tangible net worth, debt to
tangible net worth ratio, cash flow coverage ratio, current ratio,
payment of dividends, and repurchase of common stock. The Company was
in violation of one loan covenant at December 31, 1996, however, the
violation has been temporarily waived by the bank. The debt is
classified into expected current and long-term portion according to
original terms.
Note 4 - Income Taxes:
The Company filed a consolidated Federal income tax return prior to
the October 1996 merger described in Note 1. The provision for income
taxes on income before income taxes is comprised of the following:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Current tax (expense):
Federal $ (68,500) -
State and local (15,700) (5,000)
------- ------
Current tax (expense) (84,200) (5,000)
Deferred tax benefit:
Federal 41,000 -
------- ------
Provision for income tax
(expense) $ (43,200) (5,000)
======= ======
</TABLE>
<PAGE> 20
RESOURCE GENERAL CORPORATION
Notes to Financial Statements
(contd)
Note 4 - Income Taxes: (contd)
The Company paid income taxes of $64,159 in 1996. No cash was used to
pay income taxes during 1995.
The following is a reconciliation between the amount of reported
income tax provision and the amount computed by multiplying income
before income taxes and extraordinary items by the applicable
statutory federal income tax rate:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Expected Federal income
tax expense at
statutory rate of 34% $ (139,700) (61,767)
(Increase) decrease in
income taxes resulting
from:
State and local taxes (15,700) (5,000)
Effect of graduated rates 6,800 7,667
Change in valuation
allowances on deferred
tax assets 96,900 59,500
Other items, net 8,500 (5,400)
------- ------
Provision for income tax
expense $ (43,200) (5,000)
======= ======
</TABLE>
Deferred taxes are recorded based upon temporary differences between
the financial statement and tax basis of assets and liabilities and
available tax credit carryforwards. Temporary differences and
carryforwards which give rise to a significant portion of deferred tax
assets and liabilities at December 31, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Deferred tax liabilities:
Taxable temporary differences
Depreciation $ 69,800 82,900
-------- -------
Gross deferred tax liability 69,800 82,900
-------- -------
</TABLE>
<PAGE> 21
RESOURCE GENERAL CORPORATION
Notes to Financial Statements
(contd)
Note 4 - Income Taxes: (contd)
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Deferred tax assets:
Deductible temporary differences
Inventory 42,700 42,300
Oil and gas mineral rights 26,300 26,000
Operating loss carryforward - 119,700
Deferred landfill development costs 45,500 45,500
Accrued warranty 23,100 29,000
Accrued vacation 10,700 7,100
Alternative minimum tax credit 45,900 -
Goodwill 15,700 9,800
Other items, net 2,100 1,600
Investment tax credits 5,600 5,600
-------- --------
Gross deferred tax asset 217,600 286,600
Less: Valuation allowance (107,800) (204,700)
-------- --------
Net deferred tax asset 109,800 81,900
--------- --------
Net deferred tax asset (liability) $ 40,000 (1,000)
========= ========
</TABLE>
The components giving rise to the net deferred tax asset and liability
described above have been included in the accompanying balance sheets
as of December 31, 1996 and 1995 as follows:
<TABLE>
<CAPTION>
1996
----
Assets (Liabilities) Net
------ ------------- ---
<S> <C> <C> <C>
Current $ 50,200 - 50,200
Long-term 59,600 (69,800) (10,200)
------- -------- --------
Totals $ 109,800 (69,800) 40,000
======= ======== ========
</TABLE>
<TABLE>
<CAPTION>
1995
----
Assets (Liabilities) Net
------ ------------- ---
<S> <C> <C> <C>
Current $ 22,400 - 22,400
Long-term 59,500 (82,900) (23,400)
------ -------- -------
Totals $ 81,900 (82,900) (1,000)
====== ======== =======
</TABLE>
<PAGE> 22
RESOURCE GENERAL CORPORATION
Notes to Financial Statements
(contd)
Note 4 - Income Taxes: (contd)
The Company has available at December 31, 1996 unused investment
credits of $5,600 which expire in the year 2000.
Note 5 - Leases:
Capital lease agreement
The Company is the lessee of computer hardware and software equipment
under a capital lease agreement which expires in the year 2000. The
lease contains a bargain purchase option at its conclusion. The
company records assets and liabilities under capital lease agreements
at the lower of the present value of the minimum lease payments or the
fair value of the asset. The assets are depreciated over the lower of
their related lease term or their estimated productive lives.
Minimum future lease payments under the capital lease agreement as of
December 31, 1996 for each year through expiration and in the
aggregate are as follows:
<TABLE>
<CAPTION>
Year ending December 31:
-----------------------
<S> <C>
1997 $ 23,633
1998 23,633
1999 23,633
2000 1,968
-------
Total minimum lease payments $ 72,867
Less amount representing
interest (13,073)
Present value of minimum lease
payments 59,794
Long-term portion 42,940
Current portion $ 16,854
=======
</TABLE>
<PAGE> 23
RESOURCE GENERAL CORPORATION
Notes to Financial Statements
(contd)
Note 5 - Leases: (contd)
Capital lease agreement (contd)
Following is a summary of property held under capital lease agreement:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Office Equipment $ 92,607 92,607
Less: Accumulated
depreciation 37,043 18,521
------ ------
$ 55,564 74,086
====== ======
</TABLE>
The interest rate on the capital lease agreement is 13%. The Company
imputes interest based on the lower of the Company's incremental
borrowing rate at the inception of the lease or the lessor's implicit
rate of return.
Depreciation on assets held under capital leases for 1996 and 1995 was
$18,522 and $18,521, respectively.
Operating lease agreement
During 1989, the Company entered into an agreement to lease office and
manufacturing space. The lease period is 125 months with renewal
options for an additional three years and an option to buy the
facility at the conclusion of the lease for its fair market value. The
lease was structured with a rent abatement for the first five months
of the lease and monthly payments starting thereafter at $4,548,
escalating to $7,340. In accordance with Statement of Financial
Accounting Standards No. 13, "Accounting for Leases", the Company has
recorded the lease expense on a straight-line basis.
Minimum future rental payments for the above noncancelable operating
lease for each of the years through expiration are as follows at
December 31, 1996:
<TABLE>
<S> <C>
1997 $ 86,704
1998 88,080
1999 58,720
</TABLE>
Rental expense under all operating leases was approximately $73,000 in
1996 and 1995.
<PAGE> 24
RESOURCE GENERAL CORPORATION
Notes to Financial Statements
(contd)
Note 6 - Fair Value of Financial Instruments:
Estimated fair values of the Company's significant financial
instruments, all of which are held for non-trading purposes
approximate their carrying amounts at December 31, 1996 and 1995. The
fair values of bank line of credit and long-term debt including
current portions, are based on current rates at which the Company
could borrow funds with similar remaining maturities.
Note 7 - Stock Options:
The Company has a fixed director's stock option plan. Under this plan
the Company may grant up to 5,000 options per director after May 1996.
The maximum term of the options is ten years and they become fully
vested at the end of two years. Director's who held their position
before May 1996 could receive up to 20,000 options which are fully
vested upon receipt, and expire in the year 2005. The exercise price
of each option is equal to the market price of the Company's stock on
the date of the grant.
The fair value of each option granted is estimated on the grant date
using the Black-Scholes Formula. The following assumptions were made
in estimating fair value for grants in 1996:
<TABLE>
<CAPTION>
Assumption
----------
<S> <C>
Dividend yield 0%
Risk-free interest rate 6.84%
Expected life 4 years
Expected volatility Less than 1%
</TABLE>
<PAGE> 25
RESOURCE GENERAL CORPORATION
Notes to Financial Statements
(contd)
Note 7 - Stock Options: (contd)
The Company applies APB Opinion No. 25 in accounting for its fixed
stock option plan, accordingly, no compensation cost has been
recognized in 1996 and 1995. Had compensation cost been determined on
the basis of fair value pursuant to FASB Statement No. 123, net income
and earnings per share would have been reduced as follows:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Net income
----------
As reported $ 367,712 176,485
Pro forma $ 354,712 176,485
Earnings per share
------------------
As reported $ .33 .16
Pro forma $ .31 .16
</TABLE>
The following table summarizes stock option activity:
<TABLE>
<CAPTION>
Number of Weighted Average
Shares Exercise Price
------ --------------
<S> <C> <C>
Outstanding as of
December 31, 1994 174,000 $ 1.00
-------
Outstanding as of
December 31, 1995 174,000 $ 1.00
Granted 50,000 $ 1.30
Exercised (2,000) $ 1.25
Cancelled (20,000) $ 1.00
-------
Outstanding as of
December 31, 1996 202,000 $ 1.07
=======
Options exercisable at
December 31, 1996 194,000
=======
Weighted average fair
value of each option
granted during 1996 $ .30
===
</TABLE>
<PAGE> 26
RESOURCE GENERAL CORPORATION
Notes to Financial Statements
(contd)
Note 7 - Stock Options: (contd)
Following is a status of the fixed options outstanding at December 31,
1996:
<TABLE>
<CAPTION>
Outstanding Options Exercisable Options
------------------- -------------------
Weighted
Average Weighted Weighted
Exercise Remaining Average Average
Price Contractual Exercise Exercise
Range Number Life Price Number Price
----- ------ ---- ----- ------ -----
<S> <C> <C> <C> <C> <C>
$1.00 153,000 8 years $1.00 153,000 $1.00
$1.25 40,000 8 years $1.25 40,000 $1.25
$1.50 9,000 9 years $1.50 1,000 $1.50
</TABLE>
In November 1988, the shareholders approved an Employees' Incentive
Stock Option plan providing options for 50,000 shares. Options granted
to employees under the plan are to be at the market price on the day
of the grant, except that if options are granted to employees with
existing shareholdings of 10% or more, the option price must be 110%
of the then market price. To date, no options have been granted.
Note 8 - Transactions with Related Parties:
At December 31, 1995 a former officer was indebted to Resource for
$10,000 on a stock subscription receivable for 10,000 shares. These
shares were included in the calculation of earnings per share. This
amount was offset against a note payable due to this former officer
during 1996.
In 1996 and 1995 fees of $19,600 and $16,684 respectively, were paid
to a director for services provided to the Company.
Notes receivable and accrued interest totalling $3,350 and $4,896 were
due from a shareholder/director at December 31, 1996 and 1995,
respectively.
<PAGE> 27
RESOURCE GENERAL CORPORATION
Notes to Financial Statements
(contd)
Note 8 - Transactions with Related Parties: (contd)
In December 1996 the Company agreed to lend up to $59,000 to an entity
owned by certain shareholders. At December 31, 1996 the outstanding
balance was $45,000 with $5,900 in other current assets and $39,100 in
other non-current assets. Interest is computed on the outstanding
principal amount at a rate of bank prime plus 1.25%. Principal
repayment is $5,900 per year for 1997, 1998 and 1999. The remaining
balance is due in 2000.
Notes payable totalling $87,500 were due to two shareholders/directors
at December 31, 1995. The amounts were repaid during 1996. Interest on
these unsecured demand notes ranged from 8.25% to 12%. Interest of
$4,750 and $13,497 was paid in 1996 and 1995, respectively.
A director of the Company served as legal counsel for the Company
through July 31, 1995, for which an expense of $61,000 was incurred
during 1995. At December 31, 1996 and 1995, other current assets
contains $6,383 and $12,929 for legal fees advanced to this director.
Note 9 - Significant Customers and Industry Concentration:
A significant portion of the Company's business activity is with
customers directly or indirectly related to the automotive industry.
One of the Company's customers accounted for 14% of sales in 1996 and
4% of the accounts receivable balance at December 31, 1996. No one
customer comprised 10% or more of 1995 sales.
Generally, the Company performs ongoing credit evaluation of its
customers' financial condition and on occasion requires advance
deposits with orders.
Note 10 - Deferred Compensation Plans:
In 1996 the Company entered into individual deferred compensation
contracts with several key employees. The Company has invested in
corporate-owned variable annuity investments to fund these agreements.
The deferred compensation benefits do not vest until the employee has
completed either nine or ten years of service from the contract date.
The deferred compensation expense recognized was $6,366 in 1996.
<PAGE> 28
RESOURCE GENERAL CORPORATION
Notes to Financial Statements
(contd)
Note 11 - Profit-Sharing Plan:
The Company sponsors a profit-sharing plan covering employees
completing at least six months of service, working at least 1,000
annual hours, and having attained the age of 21. Contributions to the
plan are made at the discretion of the Board of Directors. Employees
have an option to make voluntary contributions to the Plan under the
provisions of Internal Revenue Code Section 401(k). Profit-sharing
expense was $44,500 in 1996, and $30,000 in 1995.
<PAGE> 29
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
None
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS,
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
The information required by this Item is incorporated herein by reference to the
Company's definitive Proxy Statement (page 11, "Election of Directors" and page
24, "Section 16(a) Beneficial Ownership Reporting Compliance") relating to the
1997 Annual Meeting of Shareholders filed not later than March 21, 1997.
ITEM 10. EXECUTIVE COMPENSATION.
The information required by this Item is incorporated herein by reference to the
Company's definitive Proxy Statement (page 23, "Compensation of Management")
relating to the 1997 Annual Meeting of Shareholders filed not later than March
21, 1997.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The information required by this Item is incorporated herein by reference to the
Company's definitive Proxy Statement (page 19, "Security Ownership of Principal
Shareholders, Directors, Nominees and Executive Officers") relating to the 1997
Annual Meeting of Shareholders filed not later than March 21, 1997.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required by this Item is incorporated herein by reference to the
Company's definitive Proxy Statement (page 24, "Certain Relationships and
Related Transactions") relating to the 1997 Annual Meeting of Shareholders filed
not later than March 21, 1997.
<PAGE> 30
ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K.
(a) LIST OF EXHIBITS
----------------
(3.1) Articles of Incorporation. See Amended Articles of
Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the
Company's Quarterly Report on Form 10-QSB for the quarterly period ended June
30, 1996; Commission File No. 0-8115 (the "3rd Quarter 10-QSB").
(3.2) By-laws. See Amended and Restated Code of Regulations of
the Company (incorporated by reference to Exhibit 3.2 to the 3rd Quarter
10-QSB).
(4) Instruments Defining the Rights of Security-Holders,
Including Indentures
(4.1) See Articles III, IV, V and VI of the
Amended Articles of Incorporation of the
Company (incorporated by reference to
Exhibit 3.1 to the 3rd Quarter 10-QSB).
(4.2) See Article I, Sections 1(F), 2, and 3 of
Article II, Article IV and Sections 1 and 3
of Article V of the Amended and Restated Code
of Regulations of the Company (incorporated by
reference to Exhibit 3.2 to the 3rd Quarter
10-QSB).
(10) Material Contracts. See Bank Lending Agreement
(Incorporated by reference to Exhibit 10 to the Company's Annual Report on Form
10-KSB for the period ended December 31, 1996).
(27) Financial Data Schedule
(27.1) Financial Data Schedule (submitted
electronically for SEC information only)
(b) REPORTS ON FORM 8-K: There were no reports on Form 8-K filed
during the fourth quarter of 1996.
<PAGE> 31
SIGNATURES
----------
In accordance with Section 13 or 15 (d) of the Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
RESOURCE GENERAL CORPORATION
March 11, 1997 by: \s\ Charles T. Sherman
- -------------- ----------------------
Charles T. Sherman, President and Director
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
DATE SIGNATURE AND CAPACITY
---- ----------------------
March 11, 1997 by: \s\ Charles T. Sherman
- -------------- ----------------------
Charles T. Sherman, President and Director
March 11, 1997 by: \s\ Bob Binsky
- -------------- ----------------------
Bob Binsky, Director
March 11, 1997 by: \s\ Alida Breen
- -------------- ----------------------
Alida Breen, Director
March 11, 1997 by: \s\ David H. Montgomery
- -------------- ----------------------
David H. Montgomery, Director
March 11, 1997 by: \s\ Terry L. Sanborn
- -------------- ----------------------
Terry L. Sanborn, Director
March 11, 1997 by: \s\ Theodore P. Schwartz
- -------------- ----------------------
Theodore P. Schwartz, Director
and Vice Pres. of Sales
March 11, 1997 by: \s\ Michael W. Gardner
- -------------- ----------------------
Michael W. Gardner, Director
and Vice Pres. of Operations
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<CASH> 116,449
<SECURITIES> 0
<RECEIVABLES> 2,135,276
<ALLOWANCES> 0
<INVENTORY> 764,989
<CURRENT-ASSETS> 3,155,799
<PP&E> 1,752,248
<DEPRECIATION> 927,879
<TOTAL-ASSETS> 4,378,346
<CURRENT-LIABILITIES> 2,819,482
<BONDS> 416,621
0
0
<COMMON> 10,878
<OTHER-SE> 1,114,799
<TOTAL-LIABILITY-AND-EQUITY> 4,378,346
<SALES> 9,101,850
<TOTAL-REVENUES> 9,101,850
<CGS> 6,901,102
<TOTAL-COSTS> 6,901,102
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 154,079
<INCOME-PRETAX> 410,912
<INCOME-TAX> 43,200
<INCOME-CONTINUING> 367,712
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 367,712
<EPS-PRIMARY> .33
<EPS-DILUTED> .33
</TABLE>
