UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the period ended: April 28, 1996
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ............... to ...............
Commission File Number 0-5411
HERLEY INDUSTRIES, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE #23-2413500
- -------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
10 Industry Drive, Lancaster, Pennsylvania 17603
- ------------------------------------------ ----------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (717) 397-2777
--------------
---------------------------------------------------------------
(Former name, former address and former fiscal year, if
changed since last report.)
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.
[X] Yes [ ] No
APPLICABLE ONLY TO ISSUERS INVOLVED
IN BANKRUPTCY PROCEEDINGS DURING
THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
[ ] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
As of June 3, 1996 - 2,798,106 shares of Common Stock.
<PAGE>
HERLEY INDUSTRIES, INC.
AND SUBSIDIARIES
INDEX TO FORM 10-Q
PART I - FINANCIAL INFORMATION PAGE
Item 1 - Financial Statements:
Consolidated Balance Sheets -
April 28, 1996 and July 30, 1995 2
Consolidated Statements of Operations -
For the thirteen and thirty-nine weeks ended
April 28, 1996 and April 30, 1995 3
Consolidated Statements of Cash Flows -
For the thirty-nine weeks ended
April 28, 1996 and April 30, 1995 4
Notes to Consolidated Financial Statements 5
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
PART II - OTHER INFORMATION 8
Signatures 10
Computation of per share earnings 11
<PAGE>
HERLEY INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
April 28, July 30,
1996 1995
--------- ---------
Unaudited Audited
--------- ---------
ASSETS
Current Assets:
Cash and cash equivalents $ 577,906 $ 272,755
Accounts receivable 4,353,720 4,679,917
Notes receivable-officers 2,052,284 -
Other receivables 172,575 163,402
Inventories 8,284,569 9,330,053
Prepaid expenses and other 1,321,285 1,006,503
---------- ----------
Total Current Assets 16,762,339 15,452,630
Property, Plant and Equipment, net 12,889,055 13,775,710
Intangibles, net of amortization 4,648,261 4,852,336
Available-for-sale Securities 4,892,730 4,114,614
Other Investments 3,000,000 3,727,506
Other Assets 336,411 306,486
---------- ----------
$ 42,528,796 $ 42,229,282
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 321,814 $ 357,078
Accounts payable and accrued expenses 7,103,189 7,644,148
Income taxes payable 268,127 -
Reserve for contract losses 500,210 496,000
Advance payments on contracts 2,247,884 1,476,640
---------- ----------
Total Current Liabilities 10,441,224 9,973,866
---------- ----------
Long-term Debt 9,175,000 10,525,000
Deferred Income Taxes 1,487,073 1,282,179
Excess of fair value of net assets of business
acquired over cost, net of amortization 1,095,375 1,460,500
---------- ----------
22,198,672 23,241,545
---------- ----------
Commitments and Contingencies
Shareholders' Equity:
Common stock, $.10 par value; authorized
10,000,000 shares; issued
2,806,541 at April 28, 1996
and 3,015,988 at July 30, 1995 280,654 301,599
Additional paid-in capital 11,828,364 13,040,622
Retained earnings 8,450,973 5,620,516
---------- ----------
20,559,991 18,962,737
Less:
Unrealized loss (gain) on available-for-sale
securities 49,279 (25,000)
Treasury stock, at cost, 19,700 shares 180,588 -
---------- ----------
Total Shareholders' Equity 20,330,124 18,987,737
---------- ----------
$ 42,528,796 $ 42,229,282
========== ==========
The accompanying notes are an integral part of these financial
statements.
2
<PAGE>
HERLEY INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Thirteen weeks ended Thirty-nine weeks ended
-------------------- -----------------------
April 28, April 30, April 28, April 30,
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net sales $ 7,236,163 $ 6,439,622 $ 21,496,209 $ 18,243,592
---------- ---------- ---------- ----------
Cost and expenses:
Cost of products sold 4,929,063 4,817,881 14,845,965 13,785,211
Selling and administrative expenses 1,356,834 1,331,650 4,312,740 3,540,740
Unusual items - 4,870,800 - 5,447,005
---------- ---------- ---------- ----------
6,285,897 11,020,331 19,158,705 22,772,956
---------- ---------- ---------- ----------
Operating income (loss) 950,266 (4,580,709) 2,337,504 (4,529,364)
---------- ---------- ---------- ----------
Other income (expense):
Net gain (loss) on sale of marketable
securities and other investments (131,211) 62,430 1,033,786 (467,296)
Dividend and interest income 126,322 56,767 288,716 525,101
Interest expense (167,900) (220,226) (613,449) (743,652)
---------- ---------- ---------- ----------
(172,789) (101,029) 709,053 (685,847)
---------- ---------- ---------- ----------
Income (loss) before income taxes 777,477 (4,681,738) 3,046,557 (5,215,211)
Income tax provision (benefit) - 77,000 216,100 (159,000)
---------- ---------- ---------- ----------
Net income (loss) $ 777,477 $ (4,758,738) $ 2,830,457 $ (5,056,211)
========== ========== ========== ==========
Earnings (loss) per common and common
equivalent share $.26 $(1.33) $.86 $(1.29)
=== ==== === ====
Earnings (loss) per common share -
assuming full dilution $.25 $(1.33) $.83 $(1.29)
=== ===== === ====
Weighted average number of common and
common equivalent shares outstanding 3,019,108 3,565,234 3,367,704 3,905,161
========= ========= ========= =========
Weighted average number of common shares
outstanding - assuming full dilution 3,156,902 3,565,234 3,421,271 3,905,161
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
HERLEY INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Thirty-nine weeks ended
-----------------------
April 28, April 30,
1996 1995
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 2,830,457 $ (5,056,211)
----------- -----------
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Depreciation and amortization 1,165,013 1,576,583
(Gain) loss on sale of marketable securities (1,033,786) 467,296
Decrease (increase) in deferred tax assets 123,555 (323,811)
Increase in deferred tax liabilities 130,855 186,218
Litigation settlement - 5,447,005
Changes in operating assets and liabilities:
Decrease in accounts receivable 326,197 1,252,902
(Increase) in notes receivable (2,052,284) -
Decrease (increase) in other receivables (9,173) 134,348
Decrease in inventories 1,045,484 1,888,684
(Increase) in prepaid expenses and other (314,782) (37,134)
(Decrease) in accounts payable and accrued expenses (540,959) (2,494,639)
Increase (decrease) in income taxes payable 268,127 (124,865)
Increase (decrease) in reserve for contract losses 4,210 (236,000)
Increase (decrease) in advance payments on contracts 771,244 (1,368,150)
Other, net (53,999) (585)
----------- -----------
Total adjustments (170,298) 6,367,852
----------- -----------
Net cash provided by operating activities 2,660,159 1,311,641
----------- -----------
Cash flows from investing activities:
Purchase of available-for-sale securities (8,500,471) (20,880,071)
Purchase of other investment (2,000,000) -
Proceeds from sale of available-for-sale securities 7,536,619 27,365,202
Proceeds from sale of other investments 3,823,233 -
Capital expenditures (415,334) (114,751)
----------- -----------
Net cash provided by investing activities 444,047 6,370,380
----------- -----------
Cash flows from financing activities:
Borrowings under bank line of credit 7,875,000 1,818,102
Proceeds from exercise of stock options 77,070 -
Payments under lines of credit (9,225,000) (7,385,000)
Payments of long-term debt (35,264) (253,149)
Purchase of treasury stock (1,490,861) (2,039,683)
----------- -----------
Net cash used in financing activities (2,799,055) (7,859,730)
----------- -----------
Net increase (decrease) in cash and cash equivalents 305,151 (177,709)
Cash and cash equivalents at beginning of period 272,755 539,729
----------- -----------
Cash and cash equivalents at end of period $ 577,906 $ 362,020
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
Herley Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements - (Unaudited)
1. The consolidated financial statements include the accounts of Herley
Industries, Inc. and its subsidiaries, all of which are wholly-owned. All
significant intercompany accounts and transactions have been eliminated in
consolidation.
In the opinion of the Company, the accompanying consolidated financial
statements reflect all adjustments (which include only normal recurring
adjustments) necessary to present fairly the results of operations and cash
flows for the periods presented. These financial statements (except for the
balance sheet presented at July 30, 1995) are unaudited and have not been
reported on by independent public accountants.
Results of operations for interim periods are not necessarily indicative of
the results of operations for a full year due to external factors which are
beyond the control of the Company.
2. In November 1995, and March 1996 the Company lent $1,700,000 and $300,000
respectively, to certain officers, as authorized by the Board of Directors,
pursuant to the terms of nonnegotiable promissory notes. The loans are
secured by 445,774 shares of common stock of the Company. The notes are due
November 1996 and March 1997, respectively, and may be renewed by the
Company for up to four additional one-year periods. Interest is payable at
maturity at the average rate of interest paid by the Company on borrowed
funds during the fiscal year. The pledge agreement also provides for the
Company to have the right of first refusal to purchase the pledged
securities, based on a formula as defined, in the event of the death or
disability of the officer.
3. Inventories at April 28, 1996 and July 30, 1995 are summarized as follows:
April 28, 1996 July 30, 1995
-------------- -------------
Purchased parts and raw materials $ 3,588,779 $ 5,749,455
Work in process 4,568,442 3,478,268
Finished products 127,348 102,330
--------- ---------
$ 8,284,569 $ 9,330,053
========= =========
4. The following is a summary of available-for-sale securities:
Gross Gross Estimated
Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ------- ------- ----------
April 28, 1996
Government bonds $ 4,439,631 $ 15,848 $ 97,977 $ 4,357,502
Other 531,368 - - 531,368
--------- ------ ------ ---------
Total debt
securities 4,970,999 15,848 97,977 4,888,870
Equity securities 3,860 - - 3,860
--------- ------ ------ ---------
$ 4,974,859 $ 15,848 $ 97,977 $ 4,892,730
========= ====== ====== =========
July 30, 1995
Government bonds $ 3,878,937 $ 72,968 $ 31,302 $ 3,920,603
Other 189,919 - - 189,919
--------- ------ ------ ---------
Total debt
securities 4,068,856 72,968 31,302 4,110,522
Equity securities 4,092 - - 4,092
--------- ------ ------ ---------
$ 4,072,948 $ 72,968 $ 31,302 $ 4,114,614
========= ====== ====== =========
5
<PAGE>
In April 1996 the Company invested $2,000,000 in M.D. Sass
RE/ENTERPRISE-II, L.P., a Delaware limited partnership. The objective of
the partnership is to achieve superior long-term capital appreciation
through investments consisting primarily of securities of companies that
are experiencing significant financial or business difficulties. This
investment is carried at cost, which approximates market, in the
consolidated financial statements at April 28, 1996 since the percentage of
ownership is less than 3%. The Company liquidated $2,000,000 of its
available-for-sale securities to fund this investment.
As of December 31, 1995, the Company sold its investment and terminated its
partnership interest in M.D. SASS RE/ENTERPRISE PARTNERS, L.P., a Delaware
limited partnership for $3,823,233 realizing a gain of $1,095,727. The
proceeds from the sale were temporarily invested in marketable securities.
During the quarter ended October 29, 1995, the Company liquidated
$1,100,000 of its available-for-sale securities and used the proceeds to
purchase shares of its common stock in the open market. The Company
purchased a total of 213,714 shares of its common stock during the quarter,
all of which have been retired.
5. In January 1996, the Company entered into a revolving credit agreement with
a new bank that provides for the extension of credit in the aggregate
principal amount of $11,000,000 and may be used for general corporate
purposes, including business acquisitions. The facility requires the
payment of interest only on a monthly basis and payment of the outstanding
principal balance on January 31, 1998. Interest is set biweekly at 1% over
the bank's Federal Funds Rate (5.26% at April 28, 1996) applied to
outstanding balances up to 80% of the net equity value of certain
investments, and at the bank's Base Rate (9.25% at April 28, 1996) for
outstanding balances in excess of this limit. The premium rate portion of
the facility is secured by the marketable securities. The credit facility
also provides for the issuance of stand-by letters of credit with a fee of
1.0% per annum of the amounts outstanding under the facility. At April 28,
1996, stand-by letters of credit aggregating $3,325,273 were outstanding.
The agreement contains various financial covenants, including, among other
matters, the maintenance of working capital, tangible net worth, and
restrictions on cash dividends.
6. On March 6, 1996, the Board of directors approved the purchase of an
industrial parcel of land from the Chairman and principal shareholder of
the Company for $940,000. The purchase price was based on two independent
appraisals. A deposit of $94,000 was paid on April 11, 1996, and the
balance will be paid at settlement on or before April 30, 1998. The land
will be used for future expansion.
7. Supplemental cash flow information is as follows:
April 28, 1996 April 30, 1995
-------------- --------------
Cash paid during the period for:
Interest $ 562,048 $ 696,114
Income Taxes 16,931 121,809
6
<PAGE>
Item 2: Management's Discussion and Analysis of Financial Condition and Results
of Operations
Liquidity and Capital Resources
- -------------------------------
As of April 28, 1996 and July 30, 1995, working capital was approximately
$6,321,000 and $5,479,000, respectively, and the ratio of current assets to
current liabilities was 1.61 to 1 and 1.55 to 1, respectively.
In January 1996, the Company entered into a revolving credit agreement with
a new bank that provides for the extension of credit in the aggregate principal
amount of $11,000,000 and may be used for general corporate purposes, including
business acquisitions. The facility expires January 31, 1998. As of April 28,
1996 and July 30, 1995, the Company had borrowings outstanding of $5,650,000 and
$7,000,000 (under a prior agreement), respectively.
At April 28, 1996, the Company owned high grade investment securities
having a market value of approximately $4,893,000, and cash and cash equivalents
of approximately $578,000.
The Company believes that presently anticipated future cash requirements
will be provided by internally generated funds, and existing credit facilities.
Results of Operations
- ---------------------
Thirteen weeks ended April 28, 1996 and April 30, 1995
- ------------------------------------------------------
Net sales for the thirteen weeks ended April 28, 1996 increased by
approximately $797,000 or 12% over the comparable period of the prior year due
to an increase in flight instrumentation products net sales of approximately
$1,190,000 of which the acquisition of Stewart Warner Electronics Co.
contributed approximately $1,224,000; offset by a decrease in net sales of
microwave components of approximately $393,000.
Cost of products sold for the thirteen weeks ended April 28, 1996 decreased
as a percentage of net sales from 75% in 1995 to 68% in 1996. This decrease is
attributable to higher margins on foreign sales, which were approximately
$1,734,000 in the quarter as compared to $1,184,000 in 1995, and increased
absorption of fixed costs due to the increase in sales volume.
There is no significant change in total selling and administrative expenses
for the thirteen weeks ended April 28, 1996. Among the components of selling and
administrative expenses, however, representative fees increased $29,000 in line
with higher foreign sales, and in the third quarter 1995 there was a provision
for customer disputed charges of $100,000. The acquisition of Stewart Warner
added $71,000 in selling and administrative expenses.
Included in unusual items in 1995 are settlement costs in connection with
certain legal actions of $4,310,000, legal fees of $253,000, and related
expenses of $308,000.
Other net expense for the thirteen weeks ended April 28, 1996 increased
$72,000 from the comparable prior year period due to net losses on the sale of
marketable securities of approximately $131,000 as compared to a gain in 1995 of
$62,000; offset by an increase in investment income of $69,000 and a decrease in
interest expense of $52,000.
No income tax provision has been recorded in the thirteen weeks ended April
28, 1996 due to the anticipated utilization of net operating losses.
Thirty-nine weeks ended April 28, 1996 and April 30, 1995
- ---------------------------------------------------------
Net sales for the thirty-nine weeks ended April 28, 1996 increased by
approximately $3,253,000 or 18% over the comparable period of the prior year due
to an increase in flight instrumentation products net sales of approximately
$4,508,000 of which the acquisition of Stewart Warner Electronics Co.
contributed approximately $3,324,000; offset by a decrease in net sales of
microwave components of approximately $1,255,000.
7
<PAGE>
Cost of products sold for the thirty-nine weeks ended April 28, 1996
decreased as a percentage of net sales from 76% in 1995 to 69% in 1996. This
decrease is attributable to higher margins on foreign sales, which were
approximately $5,130,000 in the period as compared to $2,359,000 in 1995, and
increased absorption of fixed costs due to the higher sales volume.
Selling and administrative expenses for the thirty-nine weeks ended April
28, 1996 increased approximately $772,000 over the comparable period of the
prior year, of which $278,000 is attributable to increased representative fees
on foreign sales, and increases of $205,000 in personnel and related expenses,
and outside services of $84,000; offset by a reduction in other expenses of
$21,000. The third quarter of 1995 included a provision for customer disputed
charges of $100,000. The acquisition of Stewart Warner added $326,000 in selling
and administrative expenses in 1996. Legal fees were reclassified in the third
quarter 1995 and included in the unusual item.
Included in unusual items in 1995 are settlement costs in connection with
certain legal actions of $4,310,000, legal fees of $829,000, and related
expenses of $308,000.
Other income, net of interest expense, for the thirty-nine weeks ended
April 28, 1996 increased $1,395,000 from the comparable prior year period due to
net gains on the sale of a partnership interest in M. D. SASS RE/ENTERPRISE
PARTNERS, L.P. and other marketable securities of approximately $1,034,000 as
compared to a loss in 1995 of $467,000, and a decrease in interest expense of
$130,000; offset by a reduction in investment income of $236,000.
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS:
In April 1992, Litton Systems, Inc. Electron Devices Division ("Litton")
commenced an action in the Essex Superior Court of Massachusetts against the
Company (the "Litton Action") alleging, among other claims for relief, theft of
trade secrets, unfair trade practices and related common law claims in
connection with the defendants' alleged misappropriation of Litton's beacon
magnetron drawings. In a jury trial which ended April 3, 1995, a verdict on
liability was rendered against the Company and the other defendants. Prior to a
separate, subsequent trial to determine damages, the Company settled the action
on April 12, 1995 for the sum of $4,000,000, and agreed to the entry of an
injunction precluding the use by the Company of the alleged misappropriated
drawings in connection with the manufacture of beacon magnetrons. The settlement
provides for two equal payments of $2,000,000 each without interest, the first
of which was paid, and the second is due in July 1996.
In May and June 1994, the Company was served with two class action
complaints against the Company and certain of its officers and directors in the
United States District Court for the Eastern District of Pennsylvania. The
claims were made under Section 10(b) and 20(a) of the Securities Exchange Act of
1934 and Rule 10b-5 thereunder. One of the claims is also based upon alleged
negligence. The claims relate to the Company's acquisition of Carlton
Industries, Inc. and its subsidiary, Vega Precision Laboratories, Inc. The
claims were combined into one matter and a consolidated Complaint. In April
1995, the Court certified that the claims based on the Securities Exchange Act
may proceed as a Class Action pursuant to Rule 23(b) (3), but without prejudice
to the rights of the parties thereafter to seek modification of the Class or
revocation of leave to proceed. The Court refused to certify the negligence
claim as a Class Action. In May 1995, the parties negotiated a tentative
settlement of all claims in consideration for a payment of $450,000 subject to
the negotiation and execution of a satisfactory Settlement Agreement and Court
approval after notice to Class Members. A Stipulation of Settlement has been
executed by the parties and is being submitted to the Court for approval after
appropriate notice to Class Members.
In May 1995, the Company was served with a Class Action Complaint against
the Company and its Chief Executive Officer in the United States District Court
for the Eastern District of Pennsylvania. The claim was made under Section 10(b)
and 20(a) of the Securities Exchange Act of 1934 and Rule 10(b)-5 thereunder.
The claim relates to the Company's settlement of the Litton Action in the Essex
Superior Court of Massachusetts and alleges, inter alia, that there was
insufficient disclosure by the Company of its true potential exposure in that
claim. The Company believes it has a meritorious defense and intends to
vigorously defend against the action.
8
<PAGE>
In or about March 1994, the principal selling shareholders of Carlton
Industries, Inc. ("Carlton") and its subsidiary, Vega Precision Laboratories,
Inc. ("Vega"), as claimants, commenced an arbitration proceeding before the
American Arbitration Association in New York City pursuant to the terms of the
Stock Purchase Agreement ("Agreement") by which the Company acquired the stock
of Carlton and Vega. The claimants principally are seeking to recover damages
for the Company's alleged failure to register timely the claimants' shares of
the Company's common stock in accordance with the provisions of the Agreement
and other breaches of the Agreement. The Company has denied and has contested
vigorously the legitimacy of the claimants' claims and has interposed several
counterclaims seeking indemnification under the Agreement against the principal
selling shareholders, for damages suffered by the Company in an aggregate amount
exceeding $1 million as a result of breaches of contractual representations.
Hearings have been closed and final briefs were submitted. The matter has yet to
be determined by the Arbitrators.
There is no certainty as to the outcome of the above unresolved matters.
However, in the opinion of management, the ultimate liability on these matters,
if any, will not have a material adverse effect on the consolidated financial
position or results of operations of the Company.
ITEM 2 - CHANGES IN SECURITIES:
None
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES:
None
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:
None
ITEM 5 - OTHER INFORMATION:
None
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K:
(a) Exhibit 11: Computation of per share earnings.
Exhibit 27: Financial Data Schedule (for electronic submission only).
(b) During the quarter for which this report is filed, the Registrant filed
the following reports under Form 8-K:
None.
9
<PAGE>
FORM 10-Q
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HERLEY INDUSTRIES, INC.
-----------------------
Registrant
BY: /s/ Myron Levy
-----------------------
Myron Levy, President
BY: /s/ Anello C. Garefino
---------------------------
Anello C. Garefino
Principal Financial Officer
DATE: June 5, 1996
10
HERLEY INDUSTRIES, INC.
AND SUBSIDIARIES
Exhibit 11
COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Thirteen weeks ended
-----------------------------------
April 28, 1996 April 30, 1995
------------------ ------------------
Primary Fully Diluted Primary Fully Diluted
------- ------------- ------- -------------
<S> <C> <C> <C> <C>
Net Income (loss) $ 777,477 $ 777,477 $ (4,758,738) $ (4,758,738)
======= ======= ========= =========
Weighted average shares outstanding:
Shares outstanding from beginning of period 2,802,274 2,802,274 3,615,815 3,615,815
Shares issued for options exercised 11,326 11,326 - -
Treasury shares acquired (16,608) (16,608) (50,581) (50,581)
Common equivalents - options and warrants 222,116 222,116 - -
Common equivalents - using period end price - 137,794 - -
--------- --------- --------- ---------
Weighted average common and common
equivalent shares outstanding 3,019,108 3,156,902 3,565,234 3,565,234
========= ========= ========= =========
Earnings (loss) per common and
common equivalent share: $.26 $.25 $(1.33) $(1.33)
=== === ==== ====
Thirty-nine weeks ended
-----------------------------------
April 28, 1996 April 30, 1995
------------------ ------------------
Primary Fully Diluted Primary Fully Diluted
------- ------------- ------- -------------
Adjustment of net income (loss):
Net Income (loss) $ 2,830,457 $ 2,830,457 $ (5,056,211) $ (5,056,211)
Add elimination of interest, net of tax
benefit, under the modified treasury
stock method 77,222 - - -
--------- --------- --------- ---------
Adjusted net income (loss) $ 2,907,679 $ 2,830,457 $ (5,056,211) $ (5,056,211)
========= ========= ========= =========
Weighted average shares outstanding:
Shares outstanding from beginning of period 3,015,988 3,015,988 4,175,689 4,175,689
Shares issued for options exercised 3,775 3,775 15,556 15,556
Treasury shares acquired (200,122) (200,122) (299,307) (299,307)
Common equivalents - options and warrants 548,063 548,063 13,223 13,223
Common equivalents - using period end price - 53,567 - -
--------- --------- --------- ---------
Weighted average common and common
equivalent shares outstanding 3,367,704 3,421,271 3,905,161 3,905,161
========= ========= ========= =========
Earnings (loss) per common and
common equivalent share: $.86 $.83 $(1.29) $(1.29)
=== === ==== ====
</TABLE>
11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS FOR THE 39 WEEKS ENDED APRIL 28, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUL-28-1996
<PERIOD-START> JUL-31-1995
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0
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