<PAGE>
SECURITIES AND EXCHANGE COMMISSION
FORM 10-K
Washington, DC 20549
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[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the Fiscal Year Ended June 30, 1998
or
[ ]Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 [No Fee Required]
For the transition period from _____ to _____
Commission File Number 0-10723
BOLT TECHNOLOGY CORPORATION
(Exact name of registrant as specified in its charter)
Connecticut 06-0773922
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Four Duke Place, Norwalk, Connecticut 06854
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203) 853-0700
Securities registered pursuant to Section 12(b) of the Act:
Title of Class Name of Each Exchange
-------------- on Which Registered
-------------------
Common Stock, without par value American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES [ X ] NO [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]
The aggregate market value of Common Stock, without par value, held by
non-affiliates on August 20, 1998: $33,112,404
As of August 20, 1998, there were 5,232,478 shares of Common Stock, without par
value, outstanding.
Documents Incorporated By Reference
Definitive Proxy Statement for 1998 Annual Meeting, which will be filed no later
than 120 days after June 30, 1998, is incorporated by reference in Part III to
the extent stated in this report.
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Note Regarding Forward-Looking Statements
Forward-looking statements in this Form 10-K, future filings by the Company with
the Securities and Exchange Commission, the Company's press releases and oral
statements by authorized officers of the Company are intended to be subject to
the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Investors are cautioned that all forward-looking statements involve risks
and uncertainty, including without limitation (i) the risk of technological
change relating to the Company's products and the risk of the Company's
inability to develop new competitive products in a timely manner, (ii) the risk
of decreased demand for the Company's products due to fluctuations in energy
industry activity, (iii) the Company's reliance on certain significant
customers, (iv) risks associated with a significant amount of foreign sales, and
(v) risk of fluctuations in future operating results. The Company believes that
forward-looking statements made by it are based on reasonable expectations.
However, no assurances can be given that actual results will not differ
materially from those contained in such forward-looking statements. The words
"estimate," "project," "anticipate," "expect," "predict," "believe" and similar
expressions are intended to identify forward looking statements.
PART I
ITEM 1. Business
Bolt Technology Corporation operates in two business segments; geophysical
equipment and industrial clutches. Geophysical equipment comprises the
development, manufacture, lease and sale of the Company's marine seismic energy
sources. The industrial clutch segment includes the manufacture and sale of
precision mechanical and pneumatic clutches by the Company's subsidiary, Custom
Products Corporation ("Custom Products"), which was acquired on January 6, 1998.
See Note 2 to the consolidated financial statements for information related to
this acquisition. Also see Note 10 for information by industry segment.
Products
Geophysical Equipment
An energy source, such as the Company's air gun, used in seismic
exploration creates elastic waves at frequencies that readily travel to great
depths in the earth. As elastic waves travel through the earth,
portions are reflected by variations in the underlying rock layers and the
reflected energy is received as signals by devices known as hydrophones. A
shipboard unit containing electronic recording equipment converts the signals to
digital form. By using computer programs with complex calculations to manipulate
the processed seismic data, geoscientists can model and visualize the subsurface
through the creation and analysis of spatial representations. The analysis of
seismic and other geological data forms the basis of decisions to drill
exploratory and development wells. Because of the significant expense associated
with drilling oil and gas wells, decisions on whether or where to drill are
critical to the overall process.
Recent improvements in drilling success rates through the use of
three-dimensional ("3-D") seismic surveys have substantially increased the
demand for seismic data and, consequently, the demand for the Company's air guns
and replacement parts. Also, 3-D surveys are increasingly used in field
development and reservoir management activities.
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ITEM I. Business (cont'd.)
The precise shot to shot repeatability of the Company's marine air guns and
their reliability of operation make them especially beneficial for use in 3-D
surveys.
A seismic exploration vessel may tow as many as 60 air guns along with multiple
hydrophone streamers of up to 12,000 meters in length. The air guns are fired
simultaneously every 75-150 feet along the survey line.
The Company's latest generation of marine air guns extends the period between
routine air gun maintenance cycles. These new "long-life" guns also provide
improved high peak sound pressure levels and improved frequency spectrum as
compared with older models. These improved characteristics are advantageous to
geoscientists in designing 3-D surveys. A retro-fit kit, which incorporates the
improvements of the new long-life guns, allows users to easily upgrade existing
air gun models to the new long-life standard.
The Company sells a modified version of the marine air gun, in which the
portholes are closed at all times except when the gun is firing, for use in
mud-holes, sand, or other penetrable materials. Unlike the Company's marine air
guns which are used primarily in the exploration for new accumulations of oil
and gas, the Company's down-hole air guns are used for seismic surveys at
established oil and gas wells ("well-shooting") both on and offshore.
The Company sells various models of air guns that range in price from $3,000 to
$76,000. A majority of the air guns sold by the Company are priced in the
$10,000 range. A significant source of the Company's revenue is from the sale of
replacement parts.
Industrial Clutches
Slip clutches manufactured by the Company are used to control torque for
intermittent, continuous or overload slip. The clutch will slip when the torque
setting is reached and resume driving as the load is reduced. Other types of
clutches manufactured by the Company include one-way clutches, jaw clutches and
friction hinges.
The slip clutch is basically two components, a cartridge and a housing. The
cartridge contains inner and outer plates, friction pads, coil springs and a
torque adjusting collar or a nut, all mounted in a central hub. The pins in the
housing engage the outer clutch plates, carrying the controlled torque to a
second shaft, gear or pulley mounted to the housing.
The Company manufactures many variations of its standard clutch design depending
on the specific application required by the customer. The Company's clutches are
used in a wide variety of applications such as business machines, computer
peripherals and medical equipment.
The sales price of a clutch ranges from $5 for a standard design to $300
depending on size and complexity. The quantity ordered also effects the ultimate
sales price.
3
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ITEM 1. Business (cont'd.)
Foreign Sales
During fiscal 1998, 1997 and 1996, approximately 60%, 55% and 46%, respectively,
of the Company's revenue was derived from sales to customers outside the United
States. See Note 10 of Notes to the Consolidated Financial Statements for the
geographic distribution of sales. In addition, sales are made to domestic
customers who frequently use the Company's equipment internationally.
Backlog
Geophysical Equipment
Because of the short period between order and shipment dates for the principal
portion of geophysical equipment sales, the dollar amount of current backlog is
not considered to be a reliable indication of future sales.
Industrial Clutches
As of June 30, 1998, the Company had an order backlog of $1,022,000. It is
estimated that substantially all of the backlog as of June 30, 1998 will be
shipped during the fiscal year ended June 30, 1999.
Competition
Geophysical Equipment
The Company's marine air guns compete primarily with marine air guns
manufactured by Input/Output, Inc. and Seismic Systems, Inc. The Company
believes that technology is the primary basis of competition as oil and gas
exploration companies require higher quality seismic data and improved
productivity. The Company believes that its long-life marine air guns are the
most technically advanced energy sources currently available. The Company
believes that the remaining competitive factors in the industry are field
product support and price. The Company believes that it competes effectively
with respect to each of these factors, although there can be no assurance that
the sales of the Company's marine air gun will not be adversely affected if its
current competitors introduce a marine energy source with better performance or
lower price.
Industrial Clutches
It is not possible to determine with accuracy the relative competitive position
of the Company in the market for industrial clutches. The industry in which the
Company operates is characterized by active and substantial competition. No
single company dominates the market for the types of clutches manufactured by
the Company. The Company's competitors include both larger and smaller
manufacturers and divisions of larger diversified companies with substantial
financial resources. Principal competitive factors in the market for the
Company's products are quality, service, reliability and price. The Company's
clutches compete with other torque control devices to solve design problems such
as electric clutches and wrap spring clutches. Electric clutches are
significantly more expensive than the pneumatic and mechanical clutches
manufactured by the Company. Wrap spring clutches are comparable in price to the
clutches manufactured by the company but do not offer smooth and consistent
operation.
4
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ITEM 1. Business (cont'd.)
Marketing
Geophysical Equipment
The Company's principal customers for its seismic energy sources are seismic
contractors which operate seismic vessels to collect seismic data in accordance
with their customers specifications or for their own seismic data libraries and
foreign national oil and gas companies.
Marketing of the Company's geophysical equipment is principally performed by
salaried sales personnel, all of whom are based in the United States. The
Company also uses sales agents for individual sales in certain foreign
countries. In general, the Company markets its products and services through its
sales force, together with its technical services and engineering staffs,
primarily to representatives of major geophysical contractors. The principal
marketing techniques used by the Company are direct sales visits to current and
potential customers, product demonstrations, and participation at industry trade
shows and meetings.
In general, products are sold on standard 30-day credit terms. In certain
instances, the Company requires its customers to furnish letters of credit,
payable upon shipment.
Industrial Clutches
The Company's clutches are primarily sold to original equipment manufacturers
("OEMs"). OEMs use the clutches manufactured by the Company to seek engineering
solutions to torque related problems which will provide lower installed cost and
high reliability, thereby lowering production and service costs. The Company's
engineering staff and its independent sales representatives continually work in
close collaboration with OEMs to determine the appropriate clutch for the
specific application. Sales are made on standard 30-day credit terms. The
Company sells its clutches in the United States, Canada and Europe.
Research and Development
The Company's ability to compete successfully depends upon, among other things,
its ability to develop new products as well as to improve the technical
capabilities of its existing products and services. The Company, during the
fiscal years 1998, 1997 and 1996, has spent $216,000 , $204,000 and $161,000,
respectively, to develop new products and to upgrade its existing products and
services.
Employees
As of June 30, 1998, the Company employed 57 persons. The Company is not a party
to any collective bargaining agreement and has had no work stoppages. The
Company believes that its employee relations are good.
5
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ITEM 1. Business (cont'd.)
Manufacturing and Raw Materials
The Company manufactures and assembles its geophysical equipment in Norwalk,
Connecticut and its industrial clutches in North Haven, Connecticut. The
Company's manufacturing and assembly operations consist of machining the
necessary components and assembling and testing the final product. The Company
maintains adequate levels of inventory to enable the Company to satisfy customer
requirements within the shortest amount of time. The raw materials used by the
Company are generally in adequate supply. With large marine air gun orders, the
Company occasionally supplies auxiliary equipment such as compressors, air gun
controllers or towing equipment. The Company has not experienced any supply
problems with respect to these auxiliary items.
Regulatory Matters
The Company believes that compliance with federal, state and local laws and
regulations that have been enacted or adopted regarding the discharge of
materials into the environment, or otherwise, relating to the protection of the
environment, will not have a material adverse effect upon the earnings or
competitive position of the Company.
Intellectual Property
The Company currently owns more than 20 United States patents and 30 patents in
foreign countries relating to the manufacture of its products. These patents
have been of value in the growth of the Company's business and may continue to
be of value in the future. However, the Company's business is generally not
dependent upon the protection of any patent and would not be materially affected
by the expiration thereof.
Major Customers
Geophysical Equipment
Historically a significant portion of the Company's revenues have been
attributable to a few large customers. In 1998, sales to Schlumberger, Ltd.,
Petroleum Geo-Services (PGS) and Veritas DGC, Inc. accounted for 22%, 10% and
10%, respectively, of total consolidated revenue. In 1997, sales to
Schlumberger, PGS and Veritas DGC, Inc. accounted for 38%, 20% and 19%,
respectively, of total consolidated revenue and in 1996, sales to Schlumberger,
PGS and Geoscience Corporation accounted for 33%, 16%, and 11%, respectively, of
total consolidated revenue.
The loss of Schlumberger, PGS or Veritas DGC or a significant decrease in the
amount of their purchases could have a material adverse effect on the Company.
Industrial Clutches
No customer accounted for 10% of total consolidated revenue.
6
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ITEM 2. Properties
The following table sets forth certain information with respect to the Company's
principal properties:
<TABLE>
<CAPTION>
Approximate
Area Expiration
Location Nature of Property (Sq. Feet) Date of Lease
- -------- ------------------ ------------ -------------
<S> <C> <C> <C>
Norwalk, Connecticut Manufacturing 22,300 1999
Norwalk, Connecticut Administration/Engineering 6,600 1999
Houston, Texas Office/Warehouse 3,000 1999
North Haven, Connecticut Manufacturing 6,500 2004
</TABLE>
In the opinion of the Company's management, the properties described above are
in good condition and repair and are suitable and adequate for the Company's
purposes. The properties are currently fully utilized on a one shift basis which
provides sufficient productive capacity.
ITEM 3. Legal Proceedings
From time to time, the Company is a party to what it believes is routine
litigation and proceedings that may be considered as part of the ordinary course
of its business. The Company is not aware of any current or pending litigation
or proceedings that could have a material adverse effect on the Company's
financial position, results of operations, or cash flow.
ITEM 4. Submission of Matters to a Vote of Security Holders
During the fourth quarter of fiscal 1998, no matter was submitted to a vote of
the Company's security holders.
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PART II
ITEM 5. Market for Registrant's Common Equity and Related Stockholder Matters
Since September 10, 1996, the Company's Common Stock has been trading on the
American Stock Exchange under the symbol BTJ. Prices set forth below prior to
September 10, 1996 reflect the high and low bid prices reported by the National
Quotation Bureau, Inc. and represent inter-dealer quotations that do not include
retail markups, markdowns or commissions and do not necessarily represent actual
transactions. Prices since September 10, 1996 reflect the high and low daily
sales price, which represent actual transactions, as reported by the American
Stock Exchange.
Fiscal 1998 High Low
----------- ---- ---
First Quarter 7 1/4 5
Second Quarter 10 5 5/8
Third Quarter 6 7/8 5
Fourth Quarter 10 3/4 6 1/4
Fiscal 1997 High Low
----------- ---- ---
First Quarter 5 15/16 2 1/8
Second Quarter 6 5/8 3 7/8
Third Quarter 6 3 3/4
Fourth Quarter 5 3/16 4 1/4
The number of stockholders of record at July 31, 1998 was 367 and does not
include those stockholders who had shares in broker nominee accounts.
The Company has not paid a dividend since 1985. Under the Company's loan
agreement, approximately $3,100,000 is available for the payment of dividends.
The Company does not expect to pay dividends for the foreseeable future. Any
decision concerning the payment of dividends will depend upon the results of
operations, financial condition, capital required for possible acquisitions as
well as other factors as the board of directors may consider relevant.
8
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ITEM 6. Selected Financial Data
The following table sets forth selected consolidated financial data with respect
to the Company and should be read in conjunction with the consolidated financial
statements provided elsewhere herein.
<TABLE>
<CAPTION>
Year Ended June 30,
-----------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
(In thousands, except per share amounts)
Income Statement Data:
Total revenue ...................................... $18,053 $10,531 $8,631 $7,707 $6,743
------- ------- ------ ------ ------
Costs and expenses:
Cost of sales and service .................. 9,745 5,788 5,220 4,658 3,857
Research and development................... 216 204 161 200 202
Selling, general and administrative.......... 3,300 2,485 2,034 1,830 1,768
Amortization of intangibles.................... 114 - - - -
Interest (income) expense, net................. (98) (67) 6 66 87
------- ------- ------ ------ ------
13,277 8,410 7,421 6,754 5,914
------- ------- ------ ------ ------
Income before income taxes
and extraordinary item .................. 4,776 2,121 1,210 953 829
Benefit for income taxes (1)....................... 358 - - 1,000 -
------- ------- ------ ------ ------
Income before extraordinary item.................. 5,134 2,121 1,210 1,953 829
Extraordinary item ................................. - - - 234
------- ------- ------ ------ ------
Net income..................................... $5,134 $2,121 $1,210 $1,953 $1,063
======= ======= ====== ====== ======
Per Share Data: (2)
Earnings per common share:
Income before extraordinary item:
Basic..................................... $1.00 $0.43 $0.24 $0.39 $0.17
Diluted.................................... $0.97 $0.41 $0.24 $0.38 $0.13
Extraordinary item:
Basic....................................... - - - - $0.05
Diluted..................................... - - - - $0.04
Net income:
Basic...................................... $1.00 $0.43 $0.24 $0.39 $0.22
Diluted.................................... $0.97 $0.41 $0.24 $0.38 $0.17
Average number of common shares outstanding:
Basic.................................. 5,146 4,989 4,971 4,967 4,912
Diluted.................................. 5,287 5,178 5,010 5,151 6,325
Financial Position Data:
Working capital............................... $6,500 $6,182 $4,122 $2,890 $1,873
Total assets.................................. 16,462 8,321 6,462 4,922 3,049
Long-term debt ................................ - - - - -
Stockholders' equity........................... 13,043 7,011 4,872 3,662 2,006
Cash dividends paid............................ None None None None None
==== ==== ==== ==== ====
</TABLE>
(1) Reflects recognition of previously reserved tax benefits in 1998 and 1995.
(2) In the second quarter of 1998, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 128 "Earnings per Share"
(FAS 128). As required, the previously reported earnings per share and
share outstanding information have been restated.
9
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ITEM 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Liquidity and Capital Resources
Current cash and cash equivalent balances, existing borrowing capacity and
projected cash flow from operations are currently in excess of foreseeable
operating cash flow requirements. Net cash provided by operating activities
increased to $3,946,000 in 1998 from $1,333,000 in 1997 primarily due to the
142% increase in net income in 1998 from 1997. The significant changes in
working capital items in 1998 were increases in accounts receivable, accounts
payable and accrued liabilities. These higher amounts resulted from the
acquisition of Custom Products in January 1998 and the increased level of sales
in 1998.
Because of the cash used for the acquistion of Custom Products Corporation, net
cash used in investing activities increased from $87,000 in 1997 to $4,998,000
in 1998. Net cash used in financing activities amounted to $259,000 in 1998 as
the Company repaid the debt assumed in the Custom Products acquisition.
In connection with the Custom Products acquisition, (See Note 2), the Company
established a $3,500,000 unsecured credit facility through January 2003. The
purpose of the credit facility was to assist funding of the acquisition and to
support working capital requirements. Maximum borrowings under the agreement
decrease by $500,000 on each anniversary of the agreement and bear interest at
the prime rate. The credit facility contains certain covenants which include:
(i) prohibition of additional indebtedness; (ii) minimum tangible net worth of
$5,567,000 at June 30, 1998 which increases by 50% of the Company's net income
each year; (iii) a ratio of total liabilities to tangible net worth of no more
than 1.25 to 1; (iv) a ratio of maximum debt service of no less than 2 to 1 and
(v) no two consecutive quarterly losses.
Additions to property and equipment totaled $24,000 in 1998, $87,000 in 1997 and
$22,000 in 1996. Additions in 1998 included normal replacement of manufacturing
equipment. The Company does not anticipate that capital expenditures for 1999
will exceed $200,000 and will be funded from operating cash flow.
The Company believes that inflation and changing prices have not had a material
effect on the Company's revenues and profitability during the past three years.
Under the terms of the asset purchase agreement for Custom Products, the Company
is required to make additional payments to the former owners of Custom Products
in the amount of $800,000 each year through January 2003 if net sales of Custom
Products increase to specified levels. The Company expects to be able to make
these payments, if required, from operating cash flow.
The Company is the owner of a one-half interest in its administrative and
engineering building located in Norwalk, Connecticut through a joint venture
agreement. The agreement expires in July 1999. Under the terms of the agreement,
the Company can purchase the one-half interest owned by its joint venture
partner, estimated at approximately $300,000. The Company is currently exploring
various alternatives with its joint venture partner. If the Company does
purchase the building, it will use existing cash on hand.
10
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ITEM 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations (cont'd.)
Year 2000
Historically, most computer systems utilized software that processes
transactions using two digits to represent the year of the transaction (i.e., 97
represents the year 1997). Software has to be modified to properly process dates
beyond December 1999.
The products manufactured by the Company and its subsidiary, Custom Products, do
not contain any components that are year 2000 sensitive. In 1997 Custom Products
installed manufacturing and accounting software that is year 2000 compliant. The
developer of the manufacturing and accounting system used at Bolt Technology
Corporation has released a version of its year 2000 compliant software. The
Company will be testing and installing this software during 1999 and expects to
be operational by the middle of 1999. The cost of this system upgrade will not
be material to the financial condition or result of operations.
The Company has not contacted its major vendors to determine if there are any
year 2000 issues that would cause an interruption in the delivery of raw
material or key components. The Company believes that since its most critical
purchases are stainless steel with standard dimensions available from several
sources, any year 2000 issues encountered by current vendors would not prevent
the company from securing raw materials from other sources. The Company does not
expect any material disruptions in its operations as a result of any year 2000
issues.
Results of Operations
The results of operations for 1998 include the operations of Custom Products
from January 6, 1998, the date it was acquired by the Company.
The Company's revenues increased 71% to $18,053,000 for 1998 from $10,531,000
for 1997. Net income for 1998 increased 142% to $5,134,000. The acquisition of
Custom Products accounted for 22% of the revenue increase and 13% of the
increase in net income for 1998. The remainder of the increase in revenue and
net income was caused by the continued strong demand for the Company's marine
seismic energy sources and replacement parts. The worldwide fleet of seismic
vessels continues to grow to meet increasing demand for seismic data needed for
oilfield exploration, development and reservoir production monitoring.
Total revenue increased 22% in 1997 from 1996. Net income increased 75% for the
same period. The same factors that contributed to the 1998 increase in marine
seismic energy sources and replacement parts also contributed to the 1997
increase.
Service revenue from the Company's Wellseis(R) crew decreased $456,000 from 1997
to 1998 and $58,000 from 1996 to 1997. Because of the poor outlook for this type
of service provided by the Company, the decision was made to close its service
operations at the end of the second quarter of fiscal 1998. Since the fair value
of the assets comprising the Company's service division are in excess of
carrying value, no impairment loss was required nor was any other provision
necessary because of the closing of the service operations.
Cost of sales as a percentage of sales increased from 52% in 1997 to 54% in
1998. The major factor contributing to the increase in the cost of sales
percentage in 1998 was the higher proportion of auxillary equipment purchased by
the Company which were required for certain marine air gun systems sold. This
Auxiliary equipment historically has lower margins than the Company's
proprietary air guns and replacement parts. The cost of sales percentage was
positively affected by manufacturing efficiencies and the inclusion of Custom
Products which has slightly higher margins than the air guns sold by the
Company.
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ITEM 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations (cont'd.)
Results of Operations (cont'd.)
Cost of sales as a percentage of sales decreased from 55% in 1996 to 52% in
1997. The improved operating margin in 1997 was attributable to (i) the effect
of $70,000 of royalty income included in sales in 1997 for which there was no
associated cost; (ii) improved margins on air gun system sales because of
reduced auxillary equipment purchased from third parties, which historically
carry lower margins and (iii) sales price increases. Cost of sales in 1997 was
negatively impacted by a $32,000 increase in the provision for obsolete and slow
moving inventory.
Research and development costs increased 6% in 1998 and 27% in 1997. Over the
last two years, the Company has continued to concentrate its research and
development efforts in developing a new marine seismic energy source.
Selling, general and administrative expenses increased by $815,000 in 1998 as
compared to 1997. The inclusion of Custom Products for the last half of 1998
caused selling, general and administrative expenses to increase by $333,000.
Higher incentive compensation expense due to increased profits caused a $306,000
increase and travel expenses related to the company's foreign sales increased
$105,000. In 1997 selling, general and administrative expenses increased
$451,000. Factors that caused the increase were a $243,000 increase in salary,
incentive compensation and other employee benefits due to increased profits; a
$66,000 increase in shareholder related expenses from the Company's listing of
its common stock on the American Stock Exchange and a $56,000 increase in
foreign travel expenses.
Amortization of intangible assets (principally goodwill) associated with the
acquisition of Custom Products amounted to $114,000 in fiscal 1998. The Company
is amortizing the goodwill related to the acquisition over 20 years.
Net interest income increased $31,000 in 1998 and $73,000 in 1997. The higher
level of interest income in 1998 reflects an increase in the level of short-term
investments during the first half of fiscal 1998. These investments provided the
majority of the funding for the Custom Products acquisition in January 1998. The
1997 increase in net interest income also resulted from the higher level of
short-term investments.
Statement of Financial Accounting Standards No. 109 (FAS 109), "Accounting for
Income Taxes", requires that the tax benefit of net operating loss ("nol")
carry-forwards be recorded as an asset to the extent that management assesses
the utilization of such nol carry-forwards to be "more likely than not". During
fiscal 1998, the Company continued its quarterly assessment of the expected
realization of its deferred tax assets based upon the following factors: (a)
past earnings history; (b) current sales backlog; (c) dependence on few
customers for significant percentage of revenues; (d) the cyclical nature of the
seismic exploration industry; and (e) the effect of the Custom Products
acquisition on future taxable income. Based on this review, management concluded
that future taxable income would be higher than amounts previously estimated at
the end of 1997 and, therefore, it was more likely than not that previously
reserved tax assets would be realized in future years. As required by FAS 109,
$1,000,000 of the reduction in the valuation allowance was reflected in the
allocation of the purchase price of the Custom Products acquisition and $642,000
was reflected as an income tax benefit in the consolidated statement of income.
The remaining $1,531,000 decrease in the valuation allowance offset reductions
in gross deferred tax assets, principally from the utilization of the operating
loss carry-forward.
Recent Accounting Pronouncements
For the period ended December 31, 1997, the Company adopted Statement of
Financial Accounting Standards No. 128 (FAS 128), "Earnings per Share". This
standard specifies, among other things, the presentation of basic and diluted
earnings per share data on the face of the income statement. As required by the
statement, prior period earnings per share data has been restated to conform
with the provisions of the statement.
12
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ITEM 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations (cont'd.)
Recent Accounting Pronouncements (cont'd.)
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 131 ("FAS 131"), "Disclosures about Segments of an
Enterprise and Related Information" in June 1997. FAS 131 requires a business
enterprise to determine segments based on the "management approach." The
management approach means reporting segment information similar to the way
management reviews operating results and makes management decisions regarding
its various operating divisions. The requirements of this statement are
effective for fiscal years beginning after December 15, 1997. With the
acquisition of Custom Products, the Company adopted the provisions of FAS 131
for the year ended June 30, 1998. See Note 10 to the consolidated financial
statements for the related segment disclosure.
In 1997, the Financial Accounting Standards Board Issued Statement of Financial
Accounting Standards No. 130 (FAS 130), "Reporting Comprehensive Income". FAS
130 requires the adoption of its provisions for fiscal years beginning after
December 15, 1997. FAS 130 calls for disclosure of comprehensive income in a
financial statement that is displayed with the same prominence as other
financial statements that constitute a full set of financial statements.
Comprehensive income includes all changes in the equity of a business enterprise
during a period except those resulting from investments by shareholders and
distributions to shareholders. Such changes would include net income and the
cumulative translation adjustment. The company will adopt this standard by the
required date.
In 1997, the Company adopted Statement of Financial Accounting Standards No. 123
(FAS 123), "Accounting for Stock Issued to Employees", and has provided in Note
6 to the consolidated financial statements proforma disclosures of the effect on
net income and earnings per share as if the fair value-based method prescribed
by FAS 123 had been applied in measuring compensation expense.
In 1997, the Company adopted Financial Accounting Standards No. 121 (FAS 121),
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of". In accordance with FAS 121, the Company reviews for the
impairment of long-lived assets whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. Under FAS
121, an impairment loss would be recognized when estimated future cash flows
expected to result from the use of the asset and its eventual disposition is
less than its carrying amount. No such impairment losses have been identified by
the Company.
ITEM 7. a. Quantitative and Qualitative Disclosures about Market Risk
None
ITEM 8. Financial Statements and Supplementary Data
See Item 14 for an Index to Financial Statements and Financial Statement
Schedule. Such Financial Statements and Schedule are incorporated herein by
reference.
ITEM 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
13
<PAGE>
PART III
ITEM 10. Directors and Executive Officers of the Registrant
The information as to Directors required by Item 401 and 405 of Regulation S-K
is incorporated by reference to the Company's definitive proxy statement (the
"Definitive Proxy Statement") which will be filed with the Securities and
Exchange Commission pursuant to Regulation 14A within 120 days after the end of
the fiscal year covered by this Form 10-K.
ITEM 11. Executive Compensation
The information required by Item 402 of Regulation S-K is incorporated by
reference to the Definitive Proxy
Statement.
ITEM 12. Security Ownership of Certain Beneficial Owners and Management
The information required by Item 403 of Regulation S-K is incorporated by
reference to the Definitive Proxy Statement.
ITEM 13. Certain Relationships and Related Transactions
The information required by Item 404 of Regulation S-K is incorporated by
reference to the Definitive Proxy Statement.
PART IV
ITEM 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
Consolidated Financial Statements Page Number
-----------
Independent Auditors' Report 16
Consolidated Balance Sheets as of June 30, 1998 and 1997 17
Consolidated Statements of Income for the
Years Ended June 30, 1998, 1997 and 1996 18
Consolidated Statements of Cash Flows for the
Years Ended June 30, 1998, 1997 and 1996 19
Notes to Consolidated Financial Statements 20-32
Financial Statement Schedule for the Years Ended Page Number
-----------
June 30, 1998, 1997 and 1996
II - Valuation and Qualifying Accounts and Reserves 33
Schedules other than that listed above are omitted because they are not
applicable, or the required information is shown in the financial statements or
the notes thereto.
14
<PAGE>
Exhibit Index
Exhibit
No.
- -------
3.1
Restated Certificate of Incorporation of the Registrant (incorporated by
reference to Exhibit 3.1 to Registration Statement No. 2-73456 on Form S-1).
3.2
Amendment of Restated Certificate of Incorporation (incorporated by
reference to Exhibit 3.2 to Registration Statement No. 2-85529 on Form S-1).
3.3
Amendment of Restated Certificate of Incorporation of the Registrant
(incorporated by reference to Exhibit 3.3 to the August 15, 1996 Form 8-A).
3.4
Amendment of Restated Certificate of Incorporation of the Registrant
(incorporated by reference to Exhibit 3.4 to the August 15, 1996 Form 8-A).
3.5
By-laws of the Registrant, as amended (incorporated by reference to Exhibit
3 to the September 30, 1983 Form l0-Q).
10.1
Bolt Technology Corporation Amended and Restated 1993 Stock Option Plan. *
10.2
Asset Purchase Agreement dated as of November 14, 1997, by and among Bolt
Technology Corporation and Gerald Shaff and Carole Shaff (incorporated by
reference to Exhibit 2.1 to Form 8-K dated January 14, 1998).
10.3
Commercial Revolving Loan and Security Agreement dated January 5, 1998 by
and between Bolt Technology Corporation and Fleet National Bank (incorporated by
reference to Exhibit 4.1 to Form 8-K dated January 14, 1998.
21.
Subsidiaries of the Registrant.*
27.
Financial Data Schedule.
Reports on Form 8-K
There were no Form 8-K Reports filed during the quarter ended June 30, 1998.
_____________
* Filed herewith
15
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
Bolt Technology Corporation
Norwalk, Connecticut
We have audited the accompanying consolidated balance sheets of Bolt Technology
Corporation and subsidiaries as of June 30, 1998 and 1997, and the related
consolidated statements of income and cash flows for each of the three years in
the period ended June 30, 1998. Our audits also included the financial statement
schedule listed in the Index at Item 14. These consolidated financial statements
and financial statement schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on the consolidated
financial statements and financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the consolidated financial position of Bolt Technology
Corporation and subsidiaries as of June 30, 1998 and 1997, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended June 30, 1998 in conformity with generally accepted accounting
principles. Also, in our opinion, such financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly, in all material respects, the information set forth
therein.
/ s / Deloitte & Touche LLP
Stamford, Connecticut
August 5, 1998
16
<PAGE>
Bolt Technology Corporation and Subsidiaries
Consolidated Balance Sheets
<TABLE>
<CAPTION>
June 30,
---------------------
Assets 1998 1997
---- ----
<S> <C> <C>
Current Assets:
Cash and cash equivalents..................................... $1,317,000 $2,628,000
Accounts receivable, less allowance for
uncollectible accounts of $136,000 in
1998 and $96,000 in 1997.................................... 5,002,000 2,266,000
Inventories................................................... 2,451,000 1,886,000
Deferred income taxes......................................... 1,060,000 610,000
Other current assets.......................................... 89,000 102,000
--------- ---------
9,919,000 7,492,000
--------- ---------
Plant and Equipment:
Building and leasehold improvements........................... 534,000 534,000
Geophysical equipment......................................... 1,523,000 2,566,000
Machinery and equipment....................................... 4,233,000 4,113,000
Equipment held for rental..................................... 822,000 822,000
--------- ---------
7,112,000 8,035,000
Less accumulated depreciation............................ (6,911,000) (7,908,000)
---------- ---------
201,000 127,000
Goodwill, net...................................................... 4,339,000 -
Deferred Income Taxes.............................................. 1,945,000 680,000
Other Assets....................................................... 58,000 22,000
--------- ---------
$16,462,000 $8,321,000
=========== ==========
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable............................................ $1,717,000 $449,000
Accrued liabilities......................................... 1,702,000 861,000
---------- ---------
3,419,000 1,310,000
---------- ---------
Stockholders' Equity:
Common stock, no par value, authorized
9,000,000 shares; issued and outstanding
5,232,478 shares in 1998 and 5,074,978
in 1997 ............................................. 25,576,000 24,678,000
Accumulated deficit......................................... (12,533,000) (17,667,000)
----------- -----------
Total Stockholders' equity............................. 13,043,000 7,011,000
----------- -----------
$16,462,000 $8,321,000
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
17
<PAGE>
Bolt Technology Corporation and Subsidiaries
Consolidated Statements of Income
<TABLE>
<CAPTION>
For the Year Ended June 30,
---------------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Revenues:
Sales............................................... $18,038,000 $10,060,000 $8,102,000
Service............................................. 15,000 471,000 529,000
---------- ---------- ---------
18,053,00 10,531,000 8,631,000
---------- ---------- ---------
Costs and Expenses:
Cost of sales....................................... 9,665,000 5,219,000 4,420,000
Cost of service..................................... 80,000 569,000 800,000
Research and development............................ 216,000 204,000 161,000
Selling, general and administrative................. 3,300,000 2,485,000 2,034,000
Amortization of intangibles......................... 114,000 - -
Interest (income) expense, net...................... (98,000) (67,000) 6,000
---------- --------- ---------
13,277,000 8,410,000 7,421,000
---------- --------- ---------
Income before income taxes ............................. 4,776,000 2,121,000 1,210,000
Benefit for income taxes.................................. 358,000 - -
---------- --------- ---------
Net income..................................... $5,134,000 $2,121,000 $1,210,000
========== ========== ==========
Earnings per share:
Basic............................................... $1.00 $0.43 $0.24
Diluted............................................. $0.97 $0.41 $0.24
Average number of common shares outstanding:
Basic............................................... 5,146,185 4,989,383 4,971,431
Diluted............................................. 5,287,355 5,177,943 5,010,311
</TABLE>
See Notes to Consolidated Financial Statements.
18
<PAGE>
Bolt Technology Corporation and Subsidiaries
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
For the Year Ended June 30,
-------------------------------
1998 1997 1996
---- ---- ----
<S> <C>
Cash Flows From Operating Activities:
Net income.................................................... $5,134,000 $2,121,000 $1,210,000
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization............................. 163,000 56,000 57,000
Deferred income taxes..................................... (642,000) (155,000) (37,000)
---------- ---------- ----------
4,655,000 2,022,000 1,230,000
Change in operating assets and liabilities:
Accounts receivable....................................... (2,515,000) (85,000) (220,000)
Inventories............................................... (26,000) (262,000) 29,000
Other assets.............................................. (60,000) (62,000) (42,000)
Accounts payable and accrued liabilities.................. 1,892,000 (280,000) 433,000
---------- ---------- ----------
Net cash provided by operating activities................. 3,946,000 1,333,000 1,430,000
---------- ---------- ----------
Cash Flows From Investing Activities:
Acquisition of net assets of business acquired................ (4,974,000) - -
Purchase of property and equipment............................ (24,000) (87,000) (22,000)
---------- ---------- ----------
Net cash used in investing activities ................. (4,998,000) (87,000) (22,000)
---------- ---------- ----------
Cash Flows From Financing Activities:
Exercise of stock options...................................... 17,000 18,000 -
Borrowings from bank........................................... 800,000 - -
Net decrease in borrowings under revolving credit
agreement............................................... - - (103,000)
Repayment of long-term debt ................................... (1,076,000) - -
---------- ---------- ----------
Net cash (used in) provided by financing activities...... (259,000) 18,000 (103,000)
---------- ---------- ----------
Net (decrease) increase in cash..................................... (1,311,000) 1,264,000 1,305,000
Cash and cash equivalents at beginning of year...................... 2,628,000 1,364,000 59,000
---------- ---------- ----------
Cash and cash equivalents at end of year............................ $1,317,000 $2,628,000 $1,364,000
========== ========== ==========
Supplemental disclosure of cash flow information:
Cash transactions:
Interest paid ...................................................... $ 6,000 $ 16,000 $25,000
Income taxes paid .................................................. $ 278,000 $186,000 $70,000
Non-cash transaction:
Common stock issued in connection with business
acquisition..................................................... $ 881,000 - -
</TABLE>
See Notes to Consolidated Financial Statements.
19
<PAGE>
Bolt Technology Corporation
Notes To Consolidated Financial Statements
Note 1 - Description of Business and Significant Accounting Policies
Bolt Technology Corporation develops, manufactures and sells marine seismic
energy sources and auxillary equipment for use in the exploration and production
of oil and gas. Its principal subsidiary, Custom Products Corporation, acquired
in January 1998, manufactures precision mechanical and pneumatic slip clutches
sold under the "Polyclutch" tradename.
Principals of Consolidation:
The consolidated financial statements include the accounts of the Company and
its subsidiary companies. All significant intercompany balances and transactions
have been eliminated. Cash and Cash Equivalents:
The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.
Inventories:
Inventories are valued at the lower of cost or market, with cost principally
determined on an average cost method which approximates the first-in, first-out
method. The Company reserves for all slow moving inventory. Amounts are charged
to the reserve when the Company scraps or disposes of inventory.
Plant and Equipment:
Plant and equipment are carried at cost. Depreciation for financial accounting
purposes is computed using the straight-line method over the estimated useful
lives of 5 to l0 years for machinery and equipment and rental assets, 1 to l0
years for geophysical equipment, 15 to 30 years for buildings, and over the
terms of the lease for leasehold improvements. Equipment held for rental
consists of land air gun units, which are generally leased under short-term
rental agreements.
Goodwill:
Goodwill results from the acquisition of Custom Products Corporation and
represents the excess of acquisition costs over the fair value of the net assets
acquired. Goodwill is being amortized over a 20 year period on a straight-line
basis. Accumulated amortization at June 30, 1998 was $111,000.
Revenue Recognition and Warranty Costs:
The Company recognizes revenue from equipment sales upon shipment. Rental income
from short-term leases, which has not been significant, and service income are
recorded monthly as earned. Warranty costs and product returns incurred by the
Company have been insignificant.
20
<PAGE>
Bolt Technology Corporation
Notes To Consolidated Financial Statements
Note 1 - Description of Business and Significant Accounting Policies ( cont'd.)
Income Taxes:
Income taxes are provided using the liability method in accordance with
Statement of Financial Accounting Standards No. 109 (FAS 109), "Accounting for
Income Taxes". Deferred tax assets and liabilities are recognized based upon
differences between book and tax basis of assets and liabilities, using
presently enacted tax rates. The provision for income taxes is the sum of the
amount of income taxes paid or payable for the year as determined by applying
the provisions of enacted tax laws to taxable income for that year and the net
changes during the year in the Company's deferred tax assets and liabilities.
Stock-Based Compensation:
In 1997, the Company adopted Statement of Financial Accounting Standard No. 123
(FAS 123), "Accounting for Stock-Based Compensation". Upon adoption of FAS 123,
the Company continued to measure compensation expense for its stock-based
employee compensation plan using the intrinsic value method prescribed by APB
No. 25, "Accounting for Stock Issued to Employees", and has provided in Note 6
proforma disclosures of the effect on net income and earnings per share as if
the fair value-based method prescribed by FAS 123 had been applied in measuring
compensation expense.
Long-Lived Assets:
The Company reviews for the impairment of long-lived assets and certain
identifiable intangibles whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. The carrying amount
of a long-lived asset is considered impaired when anticipated undiscounted cash
flows expected to result from the use of the asset and its eventual disposition
is less than its carrying amount. The Company believes that no material
impairment existed at June 30, 1998.
Use of Estimates:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of financial statements, and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
21
<PAGE>
Bolt Technology Corporation
Notes To Consolidated Financial Statements
Note 1 - Description of Business and Significant Accounting Policies (cont'd.)
Earnings Per Share:
As required by Statement of Financial Accounting Standards No. 128 (FAS 128),
"Earnings Per Share", the Company must report both basic and diluted earnings
per share. Basic earnings per share is computed by dividing net income by the
average number of common shares outstanding during the year. Diluted earnings
per share is computed by dividing net income by the average number of common
shares outstanding assuming dilution, the calculation of which assumes that all
stock options are exercised at the beginning of the period and the proceeds
used, by the Company, to purchase shares at the average market price for the
period. Previously reported earnings per share have been restated to conform to
FAS 128. The following is a reconciliation from basic earnings per share to
diluted earnings per share for each of the last three years:
<TABLE>
<CAPTION>
Average Shares Earnings
1998 Net Income Outstanding Per Share
---- ---------- ----------- ---------
<S> <C> <C> <C>
Basic earnings per share $5,134,000 5,146,185 $1.00
Effect of dilution:
Stock options 141,170
---------- --------- -----
Diluted earnings per share $5,134,000 5,287,355 $0.97
========== ========= =====
1997
Basic earnings per share $2,121,000 4,989,383 $0.43
Effect of dilution:
Stock options 188,560
---------- --------- -----
Diluted earnings per share $2,121,000 5,177,943 $0.41
========== ========= =====
1996
Basic earnings per share $1,210,000 4,971,431 $0.24
Effect of dilution:
Stock options 38,880
---------- --------- -----
Diluted earnings per share $1,210,000 5,010,311 $0.24
========== ========= =====
</TABLE>
22
<PAGE>
Bolt Technology Corporation
Notes to Consolidated Financial Statements
Note 1 - Description of Business and Significant Accounting Policies (cont'd.)
Recent Accounting Pronouncements:
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 131 ("FAS 131"), "Disclosures about Segments of an
Enterprise and Related Information", in June 1997. FAS 131 requires a business
enterprise to determine segments based on the "management approach". The
management approach means reporting segment information similar to the way
management reviews operating results and makes management decisions regarding
its various operating divisions. The requirements of this statement are
effective for fiscal years beginning after December 15, 1997. With the
acquisition of Custom Products, the Company adopted the provisions of FAS 131
for the year ended June 30, 1998. See Note 10 to the consolidated financial
statements for the related segment disclosure.
In 1997, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 130 ("FAS 130"), "Reporting Comprehensive Income". FAS
130 requires the adoption of its provisions for fiscal years beginning after
December 15, 1997. FAS 130 calls for disclosure of comprehensive income in a
financial statement that is displayed with the same prominence as other
financial statements that constitute a full set of financial statements.
Comprehensive income includes all changes in the equity of a business enterprise
during a period except those resulting from investments by shareholders and
distributions to shareholders. Such changes would include net income and the
cumulative translation adjustment. The company will adopt this standard by the
required date.
Reclassifications:
Certain prior year amounts have been reclassified to conform to current year
presentation.
Note 2 - Custom Products Corporation Acquisition
On January 6, 1998 the Company completed the acquisition of Custom Products
Corporation ("Custom Products") pursuant to the terms of an asset purchase
agreement. Custom Products is a manufacturer of precision mechanical and
pneumatic slip clutches sold under the "Polyclutch" tradename.
The purchase price of the Custom Products' assets acquired included (i)
$4,971,000 in cash; (ii) 135,000 shares of common stock valued at $881,000;
(iii) estimated acquisition costs of $208,000; and (iv) contingent cash
payments. Such contingent cash payments could total $4,000,000 and are dependent
on the annual increases in the net sales of Custom Products for the period
January 1, 1998 to December 31, 2003. The results of operations of Custom
Products have been included in the consolidated statement of income from the
acquisition date.
23
<PAGE>
Bolt Technology Corporation
Notes To Consolidated Financial Statements
Note 2 - Custom Products Corporation Acquisition (cont'd.)
The transaction was accounted for by the purchase method of accounting.
Accordingly, acquired assets and assumed liabilities were recorded at their
estimated fair value, which resulted in goodwill of $4,450,000 that is being
amortized on a straight line basis over 20 years. A summary of the purchase
price allocation is as follows:
Cash $ 206,000
Accounts receivable 221,000
Inventories 538,000
Property and equipment 97,000
Goodwill 4,450,000
Deferred income taxes 1,000,000
Other assets 40,000
Accounts payable (51,000)
Accrued liabilities (165,000)
Long-term debt (276,000)
-----------
Purchase price $6,060,000
===========
The following table reflects the unaudited pro forma combined results of the
Company and Custom Products on the basis that the acquisition had taken place on
July 1, 1996 and includes the impact of certain adjustments such as amortization
of intangible assets, officers salary and interest expense.
June 30,
1998 1997
---- ----
Revenue $19,690,000 $13,652,000
Net income $5,595,000 $3,035,000
Earnings per share:
Basic $1.07 $0.59
Diluted $1.04 $0.57
The pro forma results are not necessarily indicative of the results that might
have occurred had the acquisition of Custom Products actually taken place on
July 1, 1996, or of future results of operations.
24
<PAGE>
Bolt Technology Corporation
Notes to Consolidated Financial Statements
Note 3 - Long-Term Debt
In connection with the Custom Products acquisition, the Company established a
$3,500,000 unsecured credit facility through 2003. The purpose of the credit
facility was to assist funding of the acquisition and to support working capital
requirements. Maximum borrowings under the agreement decrease by $500,000 on
each anniversary of the agreement and bear interest at the prime rate.
The credit facility contains certain covenants which include: (i) prohibition of
additional indebtedness; (ii) minimum tangible net worth of $5,567,000 at June
30, 1998 which increases by 50% of the Company's net income each year; (iii) a
ratio of total liabilities to tangible net worth of no more than 1.25 to 1; (iv)
a ratio of minimum debt service of no less than 2 to 1 and (v) no two
consecutive quarterly losses. The Company is in compliance with the covenants
contained in the agreement.
The Company borrowed $800,000 under the above agreement in connection with the
acquisition of Custom Products. This amount has been repaid.
Note 4 - Inventories
Inventories, net of reserves, at June 30 consist of the following:
1998 1997
---- ----
Raw materials and sub-assemblies $2,182,000 $1,665,000
Work-in-process 269,000 221,000
---------- ----------
$2,451,000 $1,886,000
========== ==========
Note 5 - Income Taxes
Income tax (benefit) expense consists of the following for the three years ended
June 30,:
1998 1997 1996
---- ---- ----
Current:
Federal $ -- $ -- $ --
State 284,000 155,000 37,000
------- ------- ------
284,000 155,000 37,000
------- ------- ------
Deferred:
Federal (642,000) (155,000) (37,000)
State -- -- --
-------- ------- -------
642,000 (155,000) (37,000)
-------- ------- -------
Income tax benefit $(358,000) $ -- $ --
======== ======= =======
25
<PAGE>
Bolt Technology Corporation
Notes to Consolidated Financial Statements
Note 5 - Income Taxes (cont'd.)
The benefit for income taxes differs from the amounts computed, based upon the
Federal statutory rate for the reasons shown below:
<TABLE>
<CAPTION>
Year Ended June 30,
-------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Federal income taxes at the statutory rate 34% 34% 34%
State income taxes, net of federal tax benefit 4 5 2
Nondeductible expenses 1 2 3
Utilization of net operating loss carry-forwards (33) (39) (36)
Reduction in deferred tax valuation allowance (13) (2) (3)
------ ------ ------
(7%) -- --
====== ====== ======
</TABLE>
Deferred tax assets (liabilities) at June 30, 1998 and 1997 are comprised of the
following:
1998 1997
---- ----
Deferred tax assets:
Tax loss carry-forward $ 3,462,000 $ 5,013,000
Investment tax credit carry-forward 200,000 200,000
Inventory reserve 328,000 311,000
Bad debt reserve 53,000 37,000
Alternative minimum tax
credit carry-forward 171,000 98,000
Other 2,000 1,000
----------- -----------
Gross deferred tax asset 4,216,000 5,660,000
Deferred tax liability:
Amortization of intangibles (14,000 -
Deferred tax asset valuation allowance (1,197,000) (4,370,000)
----------- -----------
Net deferred tax asset $ 3,005,000 $ 1,290,000
=========== ===========
The company has net operating loss carry-forwards totaling $10,181,000 which
expire as follows: 2003 - $4,055,000; 2004 - $2,403,000; 2005 - $3,415,000; 2006
- - $63,000 and 2007 - $245,000. In addition, the company has $200,000 of
investment tax credits which expire in 2001 and 2002.
26
<PAGE>
Bolt Technology Corporation
Notes to Consolidated Financial Statements
Note 5 - Income Taxes (cont'd.)
Statement of Financial Accounting Standards No. 109 (FAS 109), "Accounting for
Income Taxes", requires that the tax benefit of net operating loss ("nol")
carry-forwards be recorded as an asset to the extent that management assesses
the utilization of such nol carry-forwards to be "more likely than not". During
fiscal 1998, the Company continued its quarterly assessment of the expected
realization of its deferred tax assets based upon the following factors: (a)
past earnings history; (b) current sales backlog; (c) dependence on few
customers for significant percentage of revenue; (d) cyclical nature of seismic
exploration industry; and (e) the effect of the Custom Products acquisition on
future taxable income. Based on this review, management concluded that future
taxable income would be higher than amounts previously estimated at the end of
1997 and, therefore, it was more likely than not that previously reserved tax
assets would be realized in future years. As required by FAS 109, $1,000,000 of
the reduction in the valuation allowance was reflected in the allocation of the
purchase price of the Custom Products acquisition and $642,000 was reflected as
an income tax benefit in the consolidated statement of income. The remaining
$1,531,000 decrease in the valuation allowance offset reductions in gross
deferred tax assets, principally from the utilization of the net operating loss
carry-forwards.
The amount of the net deferred tax asset recorded could be reduced if estimates
of future taxable income during the carry-forward period are reduced.
Note 6 - Stock Options
In November 1997, by a vote of the Company's stockholders, the 1993 Stock Option
Plan was amended to provide the granting of options to purchase up to 550,000
shares of common stock of the Company at a price not less than fair market value
at date of grant. Options granted to employees are exercisable for a period not
to exceed ten years. The plan also provides for the granting to non-employee
directors options to purchase 3,000 shares of common stock each time they are
elected directors.
A summary of the status of the Company's Stock Option Plan as of June 30, 1998,
1997 and 1996, and the changes during the years ending on those dates is
presented below.
<TABLE>
<CAPTION>
1998 1997 1996
------------------------- ------------------------- -------------------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
------ -------- ------ -------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year 191,250 $ 1.80 260,000 $ 0.87 254,000 $ 0.84
Granted 117,500 $ 6.65 51,000 $ 4.22 6,000 $ 1.81
Exercised (22,500) $ 0.78 (119,000) $ 0.80 -- --
Canceled (750) $ 1.00 (750) $ 0.75 -- --
-------- -------- -------- -------- -------- --------
Outstanding at end of year 285,500 $ 3.88 191,250 $ 1.80 260,000 $ 0.87
======== ======== ======== ======== ======== ========
</TABLE>
There were 181,453 options available for future grants under the plan at June
30, 1998.
27
<PAGE>
Bolt Technology Corporation
Notes to Consolidated Financial Statements
Note 6 - Stock Options (cont'd.)
The following table summarizes information concerning currently outstanding and
exercisable options by three ranges of exercise prices at June 30, 1998:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
---------------------------------------------------------------------- --------------------------------------
Range of Number Outstanding Weighted Average Weighted Number Weighted
Exercise as of Remaining Average Exercisable Average
Prices June 30, 1998 Contractual Life Exercise Price As of June 30, 1998 Exercise Price
- ---------- ---------------------- ----------------- -------------- -------------------- --------------
<S> <C> <C> <C> <C> <C>
$0.75 - $1.00 91,000 0.8 years $0.84 91,000 $0.84
$1.19 - $1.81 26,000 2.1 years $1.33 24,500 $1.30
$4.12 - $6.94 168,500 4.2 years $5.92 48,000 $4.18
------- --------- ----- ------- -----
285,500 2.9 years $3.88 163,500 $1.89
======= ========= ===== ======= =====
</TABLE>
The estimated fair value of options granted during 1998, 1997 and 1996 were
$3.97, $2.45 and $1.05 per share, respectively. The Company applies Accounting
Principles Board Opinion No. 25 and related interpretations in accounting for
its stock option plan. Accordingly, no compensation cost has been recognized for
its stock option plan. Had compensation cost for the Company's stock option plan
been determined based on the fair value at option grant dates for awards in
accordance with accounting provisions of FAS 123, the Company's net income and
earnings per share for the years ended June 30, 1998, 1997 and 1996 would have
been reduced to the pro forma amounts indicated below:
Net Income: 1998 1997 1996
- ----------- ---- ---- ----
As reported $5,134,000 $2,121,000 $1,210,000
Pro forma $4,839,000 $2,062,000 $1,209,000
Basic earnings per share:
- -------------------------
As reported $ 1.00 $0.43 $0.24
Pro forma $ 0.94 $0.41 $0.24
Diluted earnings per share:
- ---------------------------
As reported $ 0.97 $0.41 $0.24
Pro forma $ 0.92 $0.40 $0.24
As required by FAS 123, the fair value of each grant is estimated on the date of
grant using the Black-Scholes option pricing model with the following weighted
average assumptions used for 1998, 1997 and 1996: dividend yield 0%; expected
volatility of 65% for 1998 grants and 62% for 1997 and 1996 grants; risk-free
interest rates of 5.75% for 1998 grants and 6.00% for 1997 and 1996 grants and
expected option lives of 5 years for all option grants.
28
<PAGE>
Bolt Technology Corporation
Notes to Consolidated Financial Statements
Note 7 - Benefit Plans
The Company maintains defined contribution retirement plans covering all
employees who satisfy the age and service requirements of the plans. The
Company's contributions to the plans for the years ended June 30, 1998, 1997 and
1996 amounted to $102,000, $42,000 and $28,000, respectively.
Note 8 - Stockholders' Equity
Changes in issued common stock and stockholders' equity for the three years
ended June 30, 1998 were as follows:
<TABLE>
<CAPTION>
Common Stock
------------ Accumulated
Shares Amount Deficit Total
------ ------ ------- -----
<S> <C> <C> <C> <C>
Balance June 30, 1995.............................. 4,971,431 $24,660,000 $(20,998,000) $3,662,000
Net income.................................... - - 1,210,000 1,210,000
--------- ---------- ---------- ----------
Balance June 30, 1996.............................. 4,971,431 24,660,000 (19,788,000) 4,872,000
Exercise of stock options..................... 103,547 18,000 - 18,000
Net income.................................... - - 2,121,000 2,121,000
--------- ---------- ---------- ----------
Balance June 30, 1997.............................. 5,074,978 24,678,000 (17,667,000) 7,011,000
Exercise of stock options.................... 22,500 17,000 - 17,000
Common stock issued for acquisition.......... 135,000 881,000 - 881,000
Net income................................... - - 5,134,000 5,134,000
--------- ---------- ---------- ----------
Balance June 30,1998............................... 5,232,478 $25,576,000 $(12,533,000) $13,043,000
========= =========== ============ ===========
</TABLE>
Note 9 - Commitments and Contingencies
Concentration of Credit Risk
Financial instruments which potentially subject the Company to concentrations of
credit risk are primarily cash and cash equivalents, and trade accounts
receivable. The Company believes that the concentration of credit risk in its
trade receivables is substantially mitigated by the Company's ongoing credit
evaluation and its short collection terms. The Company does not generally
require collateral from its customers but, in certain cases, the Company does
require the customer to provide a letter of credit or an advance payment. In
limited cases the Company will grant customers extended payment terms of up to
12 months. The Company establishes an allowance for uncollectible accounts based
upon factors surrounding the credit risk of specific customers. Historically,
the Company has not incurred significant credit related losses. The Company
invests its excess cash in certificates of deposit with maturities of usually
less than one month in an effort to maintain safety and liquidity.
Financial Instruments:
The Company does not hold or issue financial instruments for trading purposes,
nor does it hold interest rate, leveraged, or other types of derivative
financial instruments.
Fair values of cash and cash equivalents, receivables, accounts payable and
accrued liabilities reflected in the June 30, 1998 and 1997 balance sheets
approximate carrying value at that date.
29
<PAGE>
Bolt Technology Corporation
Notes to Consolidated Financial Statements
Note 9 - Commitments and Contingencies (cont'd.)
Lease Commitments:
Rent expense amounted to $349,000, $344,000 and $301,000 for the years ended
June 30, 1998, 1997 and 1996, respectively.
Minimum annual rental commitments under operating leases with terms in excess of
one year are as follows: 1999 - $320,000; 2000 - $51,000; 2001 - $31,000; 2002 -
$31,000; 2003 - $31,000 and thereafter $26,000.
Employment Agreements:
The Company has a severance compensation plan for certain executive officers and
key employees of the Company which becomes operative upon their termination if
such termination occurs within 24 months subsequent to a change in ownership of
the Company, as defined in the plan. The Company also has an employment
agreement with its president and chief executive officer which provides for
severance in the case of voluntary or involuntary termination and change in
control. The employment agreement has a term through June 30, 1999, subject to
extension as set forth in the agreement. The aggregate commitment for these
employment agreements approximates $2,810,000 as of June 30, 1998. The Company
also has an employment agreement with the president and chief executive officer
of its subsidiary. The agreement has a term of five years, expiring in December
2002. Minimum annual salary under the agreement is $150,000.
Litigation:
In the ordinary course of business, the Company is involved in various pending
or threatened legal actions. While management is unable to predict the ultimate
outcome of these actions, it believes that any ultimate liability arising from
these actions will not have a material adverse effect on the Company's financial
position, results of operations, or cash flows.
30
<PAGE>
Bolt Technology Corporation
Notes to Consolidated Financial Statements
Note 10 - Segment and Customer Information:
Bolt Technology Corporation's reportable segments are its two specific business
units: (1) seismic energy sources and auxillary equipment manufactured by Bolt
Technology Corporation and (2) industrial clutches manufactured by Custom
Products Corporation. Custom Products was acquired in January 1998. The
following table provides selected financial information for each of the
Company's segments for 1998. Prior to 1998, the Company operated in only one
segment, seismic energy sources.
<TABLE>
<CAPTION>
Seismic Energy Industrial
Sources Clutches Total
------ -------- -----
<S> <C> <C> <C>
Revenue $16,417,000 $1,636,000 $18,053,000
Interest income 104,000 - 104,000
Interest expense 5,000 1,000 6,000
Depreciation and amortization 39,000 124,000 163,000
Income before income taxes 4,394,000 382,000 4,776,000
Segment assets 9,987,000 6,475,000 16,462,000
Fixed asset additions 24,000 - 24,000
</TABLE>
The Company does not allocate income taxes to segments.
The following table reports sales by country for the years ended June 30, 1998,
1997 and 1996. Sales are attributed to each country based on the location of the
customer.
1998 1997 1996
---- ---- ----
United States.................... $7,215,000 $4,788,000 $4,620,000
Norway........................... 3,458,000 3,670,000 2,096,000
Peoples Republic of China........ 2,014,000 308,000 25,000
United Kingdom................... 1,930,000 95,000 530,000
Former Soviet Union.............. 1,269,000 92,000 -
Singapore........................ 671,000 1,014,000 601,000
Other............................ 1,496,000 564,000 759,000
----------- ----------- ----------
$18,053,000 $10,531,000 $8,631,000
=========== =========== ==========
A relatively small number of customers has accounted for the Company's seismic
energy source segment sales. The segment's three largest customers in 1998, 1997
and 1996 accounted for 42%, 77%, and 60% of total consolidated revenue,
respectively. Customers accounting for 10% or more of consolidated revenue for
1998, 1997 and 1996 are as follows: 1998 1997 1996
1998 1997 1996
---- ---- ----
Customer A....................... 22% 38% 33%
Customer B....................... 10 20 16
Customer C....................... 10 19 -
Customer D....................... - - 11
31
<PAGE>
Bolt Technology Corporation
Notes to Consolidated Financial Statements
Note 11 - Supplementary Information
Accrued liabilities at June 30 consist of the following:
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Compensation and related taxes.............................. $1,043,000 $527,000
Compensated absences........................................ 195,000 155,000
Commissions payable......................................... 192,000 74,000
Professional fees........................................... 84,000 41,000
Taxes payable............................................... 106,000 11,000
Other....................................................... 82,000 53,000
---------- --------
$1,702,000 $861,000
========== ========
</TABLE>
Interest income (expense), net consists of the following:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Interest income............................................. $104,000 $87,000 $19,000
Interest expense............................................ (6,000) (20,000) (25,000)
------- -------- --------
Interest income (expense), net.............................. $98,000 $67,000 $(6,000)
======= ======== ========
</TABLE>
Note 12 - Quarterly Results (unaudited)
The following table summarizes results for each of the four quarters for the
years ended June 30, 1998 and 1997.
<TABLE>
<CAPTION>
Earnings per Share
Costs and ------------------
Revenue Expenses Net Income Basic Diluted
------- -------- ---------- ----- -------
Quarters Fiscal 1998:
<S> <C> <C> <C> <C> <C>
First $2,657,000 $2,047,000 $868,000 $0.17 $0.17
Second 3,750,000 2,866,000 984,000 0.19 0.19
Third 5,117,000 3,894,000 1,223,000 0.23 0.23
Fourth 6,529,000 4,470,000 2,059,000 0.39 0.38
Quarters Fiscal 1997:
First $2,318,000 $1,925,000 $393,000 $0.08 $0.08
Second 2,353,000 1,881,000 472,000 0.09 0.09
Third 2,886,000 2,316,000 570,000 0.11 0.11
Fourth 2,974,000 2,288,000 686,000 0.14 0.13
</TABLE>
32
<PAGE>
Bolt Technology Corporation
Schedule II - Valuation and Qualifying Accounts and Reserves
For the Three Years Ended June 30, 1998
<TABLE>
<CAPTION>
Additions Charged
Balance At (Credited) To
Beginning Of Costs And Balance At
Description Year Expenses Deductions End of Year
----------- ------------ ---------- ---------- -----------
<S> <C> <C> <C> <C>
Allowance for uncollectible
accounts:
1996 $ 68,000 $78,000 $(62,000) $84,000
1997 84,000 85,000 (73,000) 96,000
1998 96,000 79,000 (39,000) 136,000
Reserve for inventory
valuation:
1996 $ 916,000 $34,000 - $950,000
1997 950,000 66,000 $(217,000) (1) 799,000
1998 799,000 82,000 (40,000) (1) 841,000
Valuation allowance
for deferred
tax asset:
1996 $5,995,000 $(482,000) $(255,000) $5,258,000
1997 5,258,000 (214,000) (674,000) 4,370,000
1998 4,370,000 (642,000) (2,531,000) (2) 1,197,000
</TABLE>
(1) Inventory scrapped.
(2) Includes $1,000,000 allocated to the purchase price of Custom Products
Corporation.
33
<PAGE>
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized on the 23rd day of
September 1998.
BOLT TECHNOLOGY CORPORATION
By / s / Raymond M. Soto
----------------------------------
Raymond M. Soto
(President and Chief Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/ s / Raymond M. Soto President, September 23, 1998
- ----------------------------------- and Director
(Raymond M. Soto) (Principal Executive
Officer and Principal
Financial Officer)
/ s / Alan Levy Vice President - Finance, September 23, 1998
- ----------------------------------- Secretary and Treasurer
(Alan Levy) (Principal Accounting
Officer)
/ s / Kevin M. Conlisk Director September 23, 1998
- -----------------------------------
(Kevin M. Conlisk)
/ s / Stephen Chelminski Director September 23, 1998
- -----------------------------------
(Stephen Chelminski)
/ s / John H. Larson Director September 23, 1998
- -----------------------------------
(John H. Larson)
/ s / Bernard Luskin Director September 23, 1998
- -----------------------------------
(Bernard Luskin)
/ s / Joseph Mayerick, Jr. Director September 23, 1998
- -----------------------------------
(Joseph Mayerick, Jr.)
/ s / Gerald H. Shaff Director September 23, 1998
- -----------------------------------
(Gerald H. Shaff)
/ s / Gerald A. Smith Director September 23, 1998
- -----------------------------------
(Gerald A. Smith)
</TABLE>
34
<PAGE>
EXHIBIT 10.1
BOLT TECHNOLOGY CORPORATION
THE AMENDED AND RESTATED 1993 STOCK OPTION PLAN
ARTICLE I -- GENERAL
1.01 PURPOSE
The purpose of the Amended and Restated 1993 Stock Option Plan (the
"Plan") is to aid Bolt Technology Corporation, (the "Company") and its
subsidiaries in securing and retaining key employees and directors of
outstanding ability and to motivate such employees and directors to exert their
best efforts on behalf of the Company and its subsidiaries. In addition, the
Company expects that it will benefit from the added interest which the
respective optionees will have in the welfare of the Company as a result of
their ownership or increased ownership of the Company's Common Stock.
1.02 ADMINISTRATION
(a) The Plan shall be administered by a Committee of disinterested
persons appointed by the Board of Directors of the Company (the "Committee"), as
constituted from time to time. The Committee shall consist of at least two
members of the Board, all of whom shall be disinterested persons (hereinafter
referred to as "disinterested persons") within the meaning of Rule 16b-3 of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended (hereinafter referred to as the "Exchange Act").
(b) The Committee shall have the authority, in its sole discretion and
from time to time to:
(i) designate the employees or classes of employees eligible to
participate in the Plan:
(ii) grant options provided in the Plan in such form, amount and
with such exercise periods as the Committee shall determine;
(iii) impose such limitations, restrictions and conditions upon
any such option as the Committee shall deem appropriate; and
(iv) interpret the Plan and any agreement with a participant
under the Plan, adopt, amend and rescind rules and regulations relating
to the Plan, and make all other determinations and take all other action
necessary or advisable for the implementation and administration of the
Plan.
(c) Decisions and determinations of the Committee on all matters
relating to the Plan and any agreement with a participant under the Plan shall
be in its sole discretion and shall be final and conclusive. No member of the
Committee shall be liable for any action taken or decision made in good faith
relating to the Plan or any option granted hereunder.
1.03 ELIGIBILITY FOR PARTICIPATION
All officers and key employees of the Company and its subsidiaries are
eligible to receive incentive stock options or options other than incentive
stock options under the Plan. Non-employee directors are hereby granted options
other than incentive stock options as hereinafter provided in Article III.
<PAGE>
1.04 TYPES OF OPTIONS AVAILABLE UNDER PLAN
All options granted under the Plan shall be either options other than
incentive stock options or incentive stock options as defined in section 422 of
the Internal Revenue Code of 1986, as amended (the "Code"). Each option shall
state whether or not it will be treated as an incentive stock option.
1.05 AGGREGATE LIMITATION ON STOCK SUBJECT TO PLAN
(a) Shares of stock which may be issued under the Plan shall be
authorized and unissued or treasury shares of Common Stock of the Company
("Common Stock"). Subject to Section 4.06 hereof, the maximum number of shares
of Common Stock which may be issued under the Plan increased to 550,000:
(b) For purposes of calculating the maximum number of shares of Common
Stock which may be issued under the Plan:
(i) all the shares issued (including the shares, if any,
withheld for tax withholding requirements) shall be counted when cash is
used as full payment for shares issued upon exercise of a stock option;
and
(ii) only the net shares issued (including the shares, if any,
withheld for tax withholding requirements) shall be counted when shares
of Common Stock are used as full or partial payment for shares issued
upon exercise of a stock option.
(c) Any shares of Common Stock subject to a stock option which for any
reason is terminated unexercised or expires shall again be available for options
under the Plan.
1.06 EFFECTIVE DATE AND TERM OF PLAN
(a) The Plan has been adopted and approved by the Board by action taken
on September 16, 1997; provided, however, that the effectiveness of the Plan is
expressly conditioned upon ratification and approval of the Plan by the
affirmative votes of the holders of a majority of the Company's Common Stock
present, or represented, and entitled to vote at the Annual meeting of the
Company's shareholders in l997. Options granted under the Plan prior to such
meeting shall be subject to, and the exercise thereof shall be expressly
conditioned upon, such shareholder approval of the Plan. If said shareholder
approval shall for any reason not be forthcoming at such meeting, the options
shall be null and void.
(b) No stock options shall be granted under the Plan after June 30,
2003; provided, however, that all options granted under the Plan prior to such
date shall remain in effect until such options have been exercised or terminated
in accordance with the Plan and the terms of such options.
ARTICLE II -- EMPLOYEE STOCK OPTIONS
2.01 GRANT OF STOCK OPTION
The Committee may from time to time, and subject to the provisions of
the Plan and such other terms and conditions as the Committee may prescribe,
grant any participant in the Plan one or more stock options to purchase for cash
or shares the number of shares of Common Stock determined by the Committee. The
date of a stock option shall mean the date on which the Committee selects a
specific number of shares subject to the option granted to a participant
pursuant to the Plan.
2
<PAGE>
2.02 STOCK OPTION AGREEMENTS
The grant of a Stock Option shall be evidenced by a written stock option
Agreement, executed by the Company and the holder of a stock option (the
"optionee"), stating at least the option price, the number of shares of Common
Stock subject to the stock option evidenced thereby and the exercise period, and
shall be in such form as the Committee may, from time to time, determine.
2.03 STOCK OPTION PRICE
The option price per share of Common Stock deliverable upon exercise of
a stock option shall be determined by the Committee, but shall not be less than
100% of the fair market value of a share of Common Stock on the date the stock
option is granted. "Fair market value" as of any date and in respect of any
share of Common Stock means the closing sales price on such date or on the next
business day, if such date is not a business day, of a share of Common Stock as
reported in The Wall Street Journal.
The option price per share payable upon exercise of an incentive stock
option granted to a person owning more than 10 percent of the voting power of
the Company's voting stock shall not be less than 110% of the fair market value
of such shares.
2.04 OPTION PERIOD
Each option shall be exercisable during and over such period ending not
later than ten years from the date it was granted, as may be determined by the
Committee and stated in the option Agreement. No option shall be exercisable
during the year ending on the first anniversary date of the granting of the
option. Exercise of any option granted hereunder shall be conditional upon the
prior approval of the listing on the principle securities exchange on which the
Common Stock is traded.
No incentive stock option granted to a person owning more than 10
percent of the voting power of the Company's voting stock shall be exercisable
after the expiration of five years from the date the option is first granted.
2.05 EXERCISE OF OPTION
Each stock option Agreement shall set forth the procedure governing the
exercise of the stock option granted hereunder, and shall provide that, upon
such exercise in respect of any shares of Common Stock subject thereto, the
optionee shall pay to the Company, in full, the option price for such shares and
applicable takes, if any, with cash (including check, bank draft or money
order), with previously owned Common Stock or with a combination thereof.
In no event shall any participant be granted an incentive stock option
if such grant would permit the participant to exercise for the first time during
any calendar year (under the Plan and all other plans of the Company and
subsidiaries) incentive stock options to purchase shares of any or all such
corporations having an aggregate fair market value (determined at time of grant
of each such incentive stock option) in excess of $100,000.
3
<PAGE>
2.06 EXERCISE UPON DEATH, DISABILITY OR RETIREMENT
(a) Subject to Section 2.06(c) of the Plan, if an optionee's employment
by the Company or a subsidiary terminates by reason of his death, his option may
thereafter be exercised only to the extent to which it was exercisable at the
time of his death and may not be exercised after the expiration of the period of
fifteen months from the date of his death or the expiration of the stated period
of the option, whichever period is the shorter.
(b) Subject to Section 2.06(c) of the Plan, if an optionee's employment
by the Company or a subsidiary terminates by reason of retirement or his total
and permanent disability, his option may thereafter be exercised only to the
extent to which it was exercisable at the time of such termination of employment
and may not be exercised after the expiration of the period of three months from
the date of such termination of employment or the stated period of the option,
whichever period is shorter; provided, however, that if the optionee dies within
such three month period, any unexercised stock option, to the extent to which it
was exercisable at the time of his death, shall thereafter be exercisable for a
period not exceeding fifteen months from the date of his death or for the stated
period of the option, whichever period is the shorter.
(c) If an optionee's employment terminates by death, by total and
permanent disability or by retirement after the first anniversary date of the
granting of the option and prior to an installment of his option (other than the
first installment) becoming exercisable and if there are no conditions to the
next succeeding installment becoming exercisable other than the passage of time,
his option thereupon shall become exercisable with respect to a number of shares
(in addition to shares covered by installments theretofore matured) equal to a
pro rata portion of the shares for which it would become exercisable upon the
maturity of the next succeeding installment, such pro rata portion to be based
upon the proportion which the number of full months in the period beginning with
the maturity date of the next preceding installment and ending with such
termination of his employment bears to the total number of full months in the
period beginning with the maturity date of the next preceding installment and
ending with the maturity date of the next succeeding installment.
2.07 TERMINATION FOR OTHER REASON
If an optionee's employment terminates for any reason other than death,
total and permanent disability or retirement, his option shall thereupon
terminate.
ARTICLE III -- NON-EMPLOYEE DIRECTORS STOCK OPTIONS
3.01 GRANT OF OPTIONS
Notwithstanding any provision of the Plan to the contrary, each director
of the Company who is not a key employee of the Company or any of its
subsidiaries and who is elected a director by the shareholders of the Company at
an Annual Meeting of Shareholders held in 1993 and in years thereafter ending
with the year 2002 shall be, and hereby is granted an option other than an
incentive stock option to purchase 3,000 shares of Common Stock. The option
price shall be the closing sales price per share on the principal securities
exchange on which the Common Stock is traded on the date of the applicable
Annual Meeting of Shareholders as reported in the Wall Street Journal (or if
there is no sale on the relevant date, then on the next business
4
<PAGE>
day on which a sale was reported). The option shall be exercisable for a period
of five years from the date it is granted; provided it shall not be exercisable
during the year ending on the first anniversary date of the grant and then until
its expiration date the option may be exercised at any time and in any amount up
to the total of the shares covered by the option. The option granted hereby is
subject to the terms and conditions of the Plan except that if a director ceases
to be director for any reason other than death, his option may thereafter be
exercised only to the extent to which it was exercisable at the time he ceased
to be a director and may not be exercised after the expiration of the period of
30 days from the date he ceased to be a director or the stated period of the
option, whichever period is shorter.
ARTICLE IV-MISCELLANEOUS
4.01 GENERAL RESTRICTION
(a) The Committee may require each person purchasing shares pursuant to
the option to represent to and agree with the Company in writing that he is
acquiring the shares for investment, without a view to distribution thereof. The
certificates for such shares may include any legend which the Committee deems
appropriate to reflect any restrictions on transfers.
(b) The option shall not be transferable by the optionee otherwise than
by will or by the laws of descent and distribution. During the lifetime of an
optionee the option shall be exercisable only by him.
4.02 WITHHOLDING TAXES
Whenever the Company proposes or is required to issue or transfer shares
of Common Stock under the Plan, the Company shall have the right to require the
optionee to remit to the Company an amount sufficient to satisfy any federal,
state and/or local withholding tax requirements prior to the delivery of any
certificate or certificates for such shares. Alternatively, the Company may
issue or transfer such shares of Common Stock net of the number of shares
sufficient to satisfy the withholding tax requirements. For withholding tax
purposes, the shares of Common Stock shall be valued on the date the withholding
obligation is incurred.
4.03 RIGHT TO TERMINATE EMPLOYMENT
Nothing in the Plan nor in any stock option Agreement entered into
pursuant to the Plan shall confer upon any participant the right to continue in
the employment of the Company or affect any right which the Company or any
subsidiary may have to terminate the employment of such participant.
4.04 NON-UNIFORM DETERMINATIONS
The Committee's determinations under the Plan (including, without
limitation, determinations of the persons to receive options, the form, amount
and timing of such options, the terms and provisions of such options and the
stock option Agreements evidencing same) need not be uniform and may be made by
it selectively among persons who receive, or are eligible to receive, options
under the Plan, whether or not such persons are similarly situated.
4.05 RIGHTS AS A SHAREHOLDER
The recipient of any option granted under the Plan shall have no rights
as a shareholder with respect thereto unless and until certificates for shares
of Common Stock are issued to him.
5
<PAGE>
4.06 CHANGES IN CAPITAL
In the event (a) of any merger or consolidation in which the outstanding
shares of Common Stock are exchanged for securities, cash or property of a third
party (other than any merger or consolidation with any wholly-owned subsidiary
of the Company), (b) that all or substantially all of the assets or more than
50% of the outstanding voting stock of the Company is acquired by any other
person or entity, or (c) of a liquidation of the Company, the Board, or the
board of directors of any corporation assuming the obligations of the Company,
shall provide for such successor corporation to assume the obligations of the
Company with regard to options granted and, as to outstanding options, shall
provide that all outstanding options shall become exercisable in full
immediately prior to such event (except during the year ending on the first
anniversary date of the granting of the option) and shall either (i) provide
that all unexercised options shall be assumed or equivalent options shall be
substituted by the acquiring or successor corporation (or an affiliate thereof),
provided that any such options substituted for incentive stock options shall
meet the requirements of section 424(a) of the Code, or (ii) upon written notice
to the optionees, provide that all unexercised options will terminate
immediately prior to the consummation of such merger, consolidation,
acquisition, reorganization or liquidation unless exercised by the optionee
within a specified number of days (but not less than fifteen days) following the
date of such notice.
The Company may grant options under the Plan in substitution for options
held by employees of another corporation who become employees of the Company, or
a subsidiary of the Company, as the result of a merger or consolidation of the
employing corporation with the Company or a subsidiary of the Company, or as a
result of the acquisition by the Company, or one of its subsidiaries, of
property or stock of the employing corporation. The Company may direct that
substitute options be granted on such terms and conditions as the Board
considers appropriate in the circumstances.
If the outstanding Common Stock of the Company, shares of which are
eligible for the granting of options hereunder or subject to options theretofore
granted, shall at any time be changed or exchanged by declaration of a stock
dividend, splitup, combination of shares, recapitalization, merger,
consolidation or other corporate reorganization in which the Company is the
surviving corporation, the number and kind of shares subject to the Plan or
subject to any options theretofore granted, and the option prices, shall be
appropriately and equitably adjusted so as to maintain the proportionate number
of shares without changing the aggregate option price.
4.07 AMENDMENTS
The Board of Directors may amend, alter or discontinue the Plan, but no
amendment, alteration or discontinuation shall be made which would impair the
rights of any optionee under any option theretofore granted, without his
consent, or which, without the approval of the stockholders, would:
(a) Except as is provided in Section 4.06 of the Plan, increase
the total number of shares reserved for the purposes of the Plan.
(b) Decrease the option price to less than 100% of the fair
market value on the date of the granting of the option.
(c) Change the persons eligible to receive options under this
Plan.
6
<PAGE>
EXHIBIT 21
SUBSIDIARIES
The Registrant, Bolt Technology Corporation, a Connecticut Corporation, has no
parent.
The following are the subsidiaries of the Registrant
(at June 30, 1998)
State of
Incorporation
-------------
Bolt International Corporation Connecticut
Duke Place Investments Delaware
Bolt Export Corporation United States,
Virgin Islands
Criterion Exploration, Inc. Texas
Custom Products Corporation Connecticut
The names of certain subsidiaries are omitted since such subsidiaries considered
in the aggregate would not constitute a significant subsidiary at the end of the
year covered by this report.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FINANCIAL STATEMENTS FOR THE PERIOD ENDED JUNE 30, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> JUN-30-1998
<CASH> 1,317,000
<SECURITIES> 0
<RECEIVABLES> 5,002,000
<ALLOWANCES> 136,000
<INVENTORY> 2,451,000
<CURRENT-ASSETS> 9,919,000
<PP&E> 7,112,000
<DEPRECIATION> (6,911,000)
<TOTAL-ASSETS> 16,462,000
<CURRENT-LIABILITIES> 3,419,000
<BONDS> 0
0
0
<COMMON> 25,576,000
<OTHER-SE> (12,533,000)
<TOTAL-LIABILITY-AND-EQUITY> 16,462,000
<SALES> 18,038,000
<TOTAL-REVENUES> 18,053,000
<CGS> 9,665,000
<TOTAL-COSTS> 9,745,000
<OTHER-EXPENSES> 3,630,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (98,000)
<INCOME-PRETAX> 4,776,000
<INCOME-TAX> 358,000<F1>
<INCOME-CONTINUING> 5,134,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,134,000
<EPS-PRIMARY> 1.00
<EPS-DILUTED> .97
<FN>
<F1> (1) INCOME TAX BENEFIT
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR THE PERIOD ENDED SEPTEMBER 30, 1995 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 203,000
<SECURITIES> 0
<RECEIVABLES> 1,711,000
<ALLOWANCES> 0
<INVENTORY> 1,727,000
<CURRENT-ASSETS> 4,158,000
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,918,000
<CURRENT-LIABILITIES> 1,002,000
<BONDS> 0
0
0
<COMMON> 24,660,000
<OTHER-SE> (20,744,000)
<TOTAL-LIABILITY-AND-EQUITY> 4,918,000
<SALES> 1,959,000
<TOTAL-REVENUES> 2,129,000
<CGS> 1,072,000
<TOTAL-COSTS> 1,325,000
<OTHER-EXPENSES> 542,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,000
<INCOME-PRETAX> 254,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 254,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 254,000
<EPS-PRIMARY> .05<F1>
<EPS-DILUTED> .05<F1>
<FN>
<F1> RESTATED FOR EFFECT OF SFAS 128. ADOPTION OF SFAS 128
HAS NO EFFECT ON EARNINGS PER SHARE.
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FINANCIAL STATEMENTS FOR THE PERIOD ENDED DECEMBER 31, 1995
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 575,000
<SECURITIES> 0
<RECEIVABLES> 1,370,000
<ALLOWANCES> 0
<INVENTORY> 1,768,000
<CURRENT-ASSETS> 4,192,000
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,950,000
<CURRENT-LIABILITIES> 824,000
<BONDS> 0
0
0
<COMMON> 24,660,000
<OTHER-SE> (20,534,000)
<TOTAL-LIABILITY-AND-EQUITY> 4,950,000
<SALES> 3,636,000
<TOTAL-REVENUES> 3,909,000
<CGS> 1,971,000
<TOTAL-COSTS> 2,411,000
<OTHER-EXPENSES> 1,020,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,000
<INCOME-PRETAX> 464,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 464,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 464,000
<EPS-PRIMARY> .09<F1>
<EPS-DILUTED> .09<F1>
<FN>
<F1>RESTATED FOR EFFECT OF SFAS 128. ADOPTION OF SFAS 128 HAD NO EFFECT ON
EARNINGS PER SHARE.
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM FINANCIAL STATEMENTS FOR THE PERIOD ENDING MARCH 31, 1996
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> MAR-31-1996
<CASH> 748,000
<SECURITIES> 0
<RECEIVABLES> 1,646,000
<ALLOWANCES> 0
<INVENTORY> 1,705,000
<CURRENT-ASSETS> 4,584,000
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,340,000
<CURRENT-LIABILITIES> 937,000
<BONDS> 0
0
0
<COMMON> 24,660,000
<OTHER-SE> (20,257,000)
<TOTAL-LIABILITY-AND-EQUITY> 5,340,000
<SALES> 5,418,000
<TOTAL-REVENUES> 5,864,000
<CGS> 2,884,000
<TOTAL-COSTS> 3,511,000
<OTHER-EXPENSES> 1,582,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,000
<INCOME-PRETAX> 751,000
<INCOME-TAX> 10,000
<INCOME-CONTINUING> 741,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 741,000
<EPS-PRIMARY> .15<F1>
<EPS-DILUTED> .15<F1>
<FN>
<F1> RESTATED FOR EFFECT OF SFAS 128. ADOPTION OF SFAS 128 HAS NO
EFFECT ON EARNING PER SHARE.
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 1996 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<CASH> 1,364,000
<SECURITIES> 0
<RECEIVABLES> 2,181,000
<ALLOWANCES> 84,000
<INVENTORY> 1,624,000
<CURRENT-ASSETS> 5,712,000
<PP&E> 8,068,000
<DEPRECIATION> (7,972,000)
<TOTAL-ASSETS> 6,462,000
<CURRENT-LIABILITIES> 1,590,000
<BONDS> 0
0
0
<COMMON> 24,660,000
<OTHER-SE> (19,788,000)
<TOTAL-LIABILITY-AND-EQUITY> 6,462,000
<SALES> 8,102,000
<TOTAL-REVENUES> 8,650,000
<CGS> 4,420,000
<TOTAL-COSTS> 5,220,000
<OTHER-EXPENSES> 2,195,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 25,000
<INCOME-PRETAX> 1,210,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,210,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,210,000
<EPS-PRIMARY> .24<F1>
<EPS-DILUTED> .24<F1>
<FN>
<F1>RESTATED FOR EFFECT OF SFAS 128. ADOPTION OF SFAS 128 HAD NO EFFECT
ON EARNING PER SHARE.
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM FINANCIAL STATEMENTS FOR THE PERIOD ENDED SEPTEMBER 30, 1996
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 1,243,000
<SECURITIES> 0
<RECEIVABLES> 2,382,000
<ALLOWANCES> 0
<INVENTORY> 1,645,000
<CURRENT-ASSETS> 5,866,000
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,647,000
<CURRENT-LIABILITIES> 1,382,000
<BONDS> 0
0
0
<COMMON> 24,660,000
<OTHER-SE> (19,395,000)
<TOTAL-LIABILITY-AND-EQUITY> 6,647,000
<SALES> 2,158,000
<TOTAL-REVENUES> 2,332,000
<CGS> 1,126,000
<TOTAL-COSTS> 1,294,000
<OTHER-EXPENSES> 640,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,000
<INCOME-PRETAX> 393,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 393,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 393,000
<EPS-PRIMARY> .08<F1>
<EPS-DILUTED> .08<F1>
<FN>
<F1> RESTATED FOR EFFECT OF SFAS 128. ADOPTION OF SFAS 128 HAD NO EFFECT
ON EARNINGS PER SHARE.
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM FINANCIAL STATEMENTS FOR THE PERIOD ENDING DECEMBER 31, 1996
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 1,646,000
<SECURITIES> 0
<RECEIVABLES> 2,000,500
<ALLOWANCES> 0
<INVENTORY> 1,936,000
<CURRENT-ASSETS> 6,170,000
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,980,000
<CURRENT-LIABILITIES> 1,240,000
<BONDS> 0
0
0
<COMMON> 24,663,000
<OTHER-SE> (18,923,000)
<TOTAL-LIABILITY-AND-EQUITY> 6,980,000
<SALES> 4,378,000
<TOTAL-REVENUES> 4,671,000
<CGS> 2,251,000
<TOTAL-COSTS> 2,596,000
<OTHER-EXPENSES> 1,232,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (22,000)
<INCOME-PRETAX> 865,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 865,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 865,000
<EPS-PRIMARY> .17<F1>
<EPS-DILUTED> .17<F1>
<FN>
<F1>* RESTATED FOR EFFECT OF SFAS 128. ADOPTION OF SFAS 128 HAD NO EFFECT
ON EARNINGS PER SHARE.
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM FINANCIAL STATEMENTS FOR THE PERIOD ENDED MARCH 31, 1997 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> MAR-31-1997
<CASH> 2,672,000
<SECURITIES> 0
<RECEIVABLES> 1,477,000
<ALLOWANCES> 0
<INVENTORY> 1,928,000
<CURRENT-ASSETS> 6,761,000
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 7,591,000
<CURRENT-LIABILITIES> 1,280,000
<BONDS> 0
0
0
<COMMON> 24,664,000
<OTHER-SE> (18,353,000)
<TOTAL-LIABILITY-AND-EQUITY> 7,591,000
<SALES> 7,173,000
<TOTAL-REVENUES> 7,557,000
<CGS> 3,781,000
<TOTAL-COSTS> 4,255,000
<OTHER-EXPENSES> 1,907,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (40,000)
<INCOME-PRETAX> 1,435,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,435,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,435,000
<EPS-PRIMARY> .29<F1>
<EPS-DILUTED> .28<F1>
<FN>
<F1> RESTATED FOR THE EFFECT OF THE ADOPTION OF SFAS 128.
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> JUN-30-1997
<CASH> 2,628,000
<SECURITIES> 0
<RECEIVABLES> 2,266,000
<ALLOWANCES> 96,000
<INVENTORY> 1,886,000
<CURRENT-ASSETS> 7,492,000
<PP&E> 8,035,000
<DEPRECIATION> (7,908,000)
<TOTAL-ASSETS> 8,321,000
<CURRENT-LIABILITIES> 1,310,000
<BONDS> 0
0
0
<COMMON> 24,678,000
<OTHER-SE> (17,667,000)
<TOTAL-LIABILITY-AND-EQUITY> 8,321,000
<SALES> 10,060,000
<TOTAL-REVENUES> 10,531,000
<CGS> 5,219,000
<TOTAL-COSTS> 5,788,000
<OTHER-EXPENSES> 2,689,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (67,000)
<INCOME-PRETAX> 2,121,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,121,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,121,000
<EPS-PRIMARY> .43<F1>
<EPS-DILUTED> .41<F1>
<FN>
<F1> RESTATED FOR THE EFFECT OF THE ADOPTION OF SFAS 128.
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FINANCIAL STATEMENTS FOR THE PERIOD ENDED SEPTEMBER 30, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL.
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 3,633,000
<SECURITIES> 0
<RECEIVABLES> 1,531,000
<ALLOWANCES> 0
<INVENTORY> 1,662,000
<CURRENT-ASSETS> 7,847,000
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 8,670,000
<CURRENT-LIABILITIES> 790,000
<BONDS> 0
0
0
<COMMON> 24,679,000
<OTHER-SE> (16,799,000)
<TOTAL-LIABILITY-AND-EQUITY> 8,670,000
<SALES> 2,647,000
<TOTAL-REVENUES> 2,657,000
<CGS> 1,304,000
<TOTAL-COSTS> 1,349,000
<OTHER-EXPENSES> 732,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (34,000)
<INCOME-PRETAX> 610,000
<INCOME-TAX> (258,000)
<INCOME-CONTINUING> 868,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 868,000
<EPS-PRIMARY> .17<F1>
<EPS-DILUTED> .17<F1>
<FN>
<F1>* RESTATED FOR EFFECT OF SFAS 128. ADOPTION OF SFAS 128 HAD NO
EFFECT ON EARNING PER SHARE.
</FN>
</TABLE>
