<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
F O R M 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended Commission File Number
January 31, 1997 1-4124
JETRONIC INDUSTRIES, INC.
Pennsylvania 23-1364981
- ----------------------- -------------------
(State of Incorporation) (I.R.S. Employer
Identification No.)
4200 Mitchell Street, Philadelphia, Pennsylvania 19128
------------------------------------------------------
(Address of Principal Executive Offices)
215-482-7660
------------
(Telephone Number)
Securities registered pursuant to Section 12(b) of the Act:
Common Stock, $.10 Par Value American Stock Exchange
- ---------------------------- -----------------------
(Title of Class) (Name of Exchange)
Securities registered pursuant to Section 12(g) of the Act:
None
----
(Title of Class)
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 twelve 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 ninety 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)
On April 14, 1997, the aggregate market value of the Registrant's common stock,
$.10 par value (its only voting stock), held by nonaffiliates of the Registrant
was $4,055,000.
On April 14, 1997, there were 3,604,499 shares of the Registrant's common stock,
$.10 par value, outstanding.
Documents incorporated by reference are hereunder listed:
Part of 10-K into which the
Document Document is Incorporated
- ---------------------------------------- ---------------------------
Definitive Proxy Statement in connection Part III, Items 10, 11, 12
with annual meeting of shareholders to and 13
be held in September 1997
<PAGE>
PART I
ITEM 1 - BUSINESS:
- ------------------
The Registrant, Jetronic Industries, Inc., together with its subsidiaries, is
referred to as "the Company" unless the context clearly indicates otherwise.
During 1996, the Company discontinued its marine electronic and communication
business (Ray Jefferson) because of competitive pricing pressures and a general
softness in the marine market and abandoned a portion of its switchgear product
line. Effective July 31, 1992, holders of the Company's 10% and 14 1/2%
Subordinated Convertible Debentures converted a portion of their bonds into
common stock in satisfaction of mandatory principal payments. The Bondholders
also deferred payment of the accrued interest thereon. In addition, effective
July 31, 1992, Redeemable Preferred Stock was converted into common stock. In
January 1992, certain trade creditors of the Company's retail furniture and
appliance operation (Levin's) filed a petition to place Levin's in Chapter 7 of
the United States Bankruptcy Code. Levin's has liquidated all of its assets. On
January 6, 1997, the Company entered into a settlement agreement whereby the
Trustee accepted $100,000 in full and final settlement of all claims, payable
over a thirteen month period. In March 1997, the Company acquired the assets,
subject to certain liabilities, of certain subsidiaries of Woven Electronic
Corporation. There have been no other significant developments related to the
Company's business.
Business segment and geographic information:
--------------------------------------------
Summarized business segment information for 1997-1995 (in thousands) is as
follows:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Net revenues:
Electronic communication equipment $ 688 $ 820 $ 2,641
Energy conversion products group 22,983 21,533 16,183
------- ------- -------
Consolidated $23,671 $22,353 $18,824
======= ======= =======
Operating profit (loss):
Electronic communication equipment $ 146 $ 23 $ 1,008
Energy conversion products group 2,835 2,429 1,368
Energy conversion products group
abandonment of product line ( 1,392)
Net corporate expenses (2,405) ( 2,371) ( 2,408)
------- ------- -------
Consolidated $ 576 ($ 1,311) ($ 32)
======= ======= =======
Identifiable assets:
Electronic communication equipment $ 296 $ 676 $ 2,322
Energy conversion products group 9,803 7,336 8,045
------- ------- -------
Total 10,099 8,012 10,367
Other corporate assets 1,282 1,395 1,017
------- ------- -------
Consolidated $11,381 $ 9,407 $11,384
======= ======= =======
</TABLE>
- 1 -
<PAGE>
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Depreciation expense:
Electronic communication equipment $ 32 $ 127 $ 193
Energy conversion products group 71 92 126
------- ------- -------
Consolidated $ 103 $ 219 $ 319
======= ======= =======
Capital expenditures:
Electronic communication equipment $ 45
Energy conversion products group $ 64 $ 86 239
------- ------- -------
Consolidated $ 64 $ 86 $ 284
======= ======= =======
</TABLE>
Operating profit is total revenue less operating expenses. In computing
operating profit by segment, none of the following items have been added or
deducted: general corporate expenses, corporate interest expense, corporate
interest income and income taxes.
Identifiable assets by segment are those assets that are used in the Company's
operations in each segment. Corporate assets are principally prepaid and other
assets.
During 1997-1995, respectively, contracts with United States Government agencies
accounted for approximately $930,000, $974,000 and $2,903,000 of total sales in
the electronic communication equipment and energy conversion products group
segments.
Description of the business:
----------------------------
Jetronic was incorporated in the Commonwealth of Pennsylvania on January 12,
1951.
Jetronic is engaged in the design, development, manufacture, distribution and
sale of electronic equipment for commercial and government use through its
"Electronics" and "Transchem" divisions and Redco subsidiary.
The Electronics Division designs and manufactures, to customer specification,
digital data control terminals.
The Transchem Division (energy conversion products group) manufactures and
markets precision solid state power supplies, primarily for the aircraft and
aerospace industries.
Redco, Inc. (energy conversion products group) manufactures and markets
paralleling and nonparalleling electrical switchgear and control systems, along
with the metal enclosures in which the equipment is housed. Redco, Inc. supplies
standardized control panels on a regular basis to major domestic engine
manufacturers (principally Caterpillar, Inc.) and designs, builds and installs
complex cogeneration control systems.
Government business is obtained both through competitive bidding and by
negotiated contract. Commercial products are marketed by Jetronic's officers,
sales managers and a network of manufacturers' representatives. All phases of
Jetronic's business are highly competitive. Each of Jetronic's operating
entities competes with other concerns, some of which have substantially greater
- 2 -
<PAGE>
sales and resources than Jetronic. Each of the operating entities accounts for
only a small portion of sales in its area of competition. The five largest
commercial customers of the energy conversion products group accounted for 70%
of that group's sales, one of which accounted for 57%. Prime contract sales to
the U.S. Government accounted for 1% of the sales of the energy conversion
products group and 100% of the electronic communication equipment business, or
4% of Jetronic sales. At January 31, 1997, the total backlog of orders amounted
to $4,237,000 of which $722,000 consisted of direct U.S. Government business. At
January 31, 1996, the total backlog was $5,997,000 of which $672,000 consisted
of direct U.S. Government business. Of the backlog at January 31, 1997, 17%
represents orders of the Electronics Division and 83% represents orders of the
energy conversion products group. All of the backlog is expected to be filled
within the current year.
Jetronic purchases components, raw materials and finished products from numerous
sources and has generally experienced no significant difficulty in obtaining its
requirements. The business is not materially dependent on patents, licenses or
concessions; Jetronic's position is more dependent on experience and its
marketing and production techniques. During 1997, 1996 and 1995, Jetronic
expended $33,000, $48,000 and $26,000, respectively, on research activities for
the development of new products or the significant improvement of existing
products, all of which were Company sponsored. Future expenditures are expected
to be near 1997 levels. Environmental controls have not had a material effect on
operations. At January 31, 1997, Jetronic employed 162 people.
ITEM 2 - PROPERTIES:
- --------------------
The Company presently has the following leaseholds:
<TABLE>
<CAPTION>
Square Lease
Operating entity Location Use feet expires
- ---------------- -------- --- ---- -------
<S> <C> <C> <C> <C>
Jetronic Philadelphia, PA Manufacturing 7,700 6/98
and Offices
Transchem Division Corona, CA Manufacturing 21,000 11/98
and Offices
Redco Peoria, IL Manufacturing 36,000 1/06
and Offices
Redco Peoria, IL Manufacturing 10,000 3/98
</TABLE>
Leased properties are considered suitable for the purposes intended and adequate
for present levels of utilization. The Company has no significant idle
facilities.
ITEM 3 - LEGAL PROCEEDINGS:
- ---------------------------
On January 29, 1992, certain trade creditors of Harry Levin, Inc., the Company's
wholly-owned subsidiary, engaged in the retail furniture and appliance business
("Levin's"), filed a petition to have Levin's placed in Chapter 7 of the United
States Bankruptcy Code. On January 6, 1997, the Company entered into a
settlement agreement whereby the Trustee accepted $100,000 in full and final
settlement of all claims, payable over a thirteen month period. The Company has
also been named in a suit by a former vendor's sales representative alleging
breach of contract. Management of the Company believes that such claim, if
asserted, will be without merit and will be resolved without any material
adverse impact on either the financial condition or operations of the Company.
- 3 -
<PAGE>
ITEM 4 - SUBMISSION OF MATTERS TO
A VOTE OF SECURITY HOLDERS:
- ----------------------------------
None.
PART II
ITEM 5 - MARKET FOR THE REGISTRANT'S COMMON
STOCK AND RELATED SECURITY HOLDER MATTERS:
- -------------------------------------------
The Company's common stock is traded on the American Stock Exchange. The high
and low sales prices for each quarterly period in the past two years ended
January 31 are:
1997 1996
------------------- ---------------------
Quarter High Low High Low
- ------- ---- --- ---- ---
First $ 11/16 $ 3/8 $ 11/16 $ 1/2
Second 15/16 9/16 1 1/2
Third 1 3/16 5/8 3/4 1/2
Fourth 1 3/8 1/2 5/8 7/16
As of April 14, 1997, there were approximately 1,709 holders of the Company's
common stock. The Company has paid no cash dividends for a number of years. See
Note 6 to Consolidated Financial Statements for a discussion of dividend
restrictions.
ITEM 6 - SELECTED FINANCIAL DATA:
- ---------------------------------
<TABLE>
<CAPTION>
For the year ended January 31,
---------------------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Revenues $23,671 $22,353 $18,824 $18,783 $22,051
Income (loss) from
continuing operations $ 585 ($ 1,285) $ 115 $ 64 $ 4
Income (loss) from continuing
operations per share $ .16 ($ .36) $ .03 $ .02 $ .00
Total assets $11,381 $ 9,407 $11,384 $10,247 $10,938
Long-term debt $ 4,102 $ 3,996 $ 4,393 $ 4,516 $ 4,331
</TABLE>
No cash dividends have been declared in the past five years.
See Note 2 to Consolidated Financial Statements for information concerning
discontinued operations.
- 4 -
<PAGE>
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS:
- ------------------------------------------------
Results of operations:
----------------------
In the following commentary, "Operating Profit" is total revenue less operating
expenses. In computing operating profit or loss, none of the following items
have been added or deducted: general corporate expenses, corporate interest
expense, corporate interest income and income taxes. The following should be
read in conjunction with business segment and geographic information on pages 1
and 2.
1997 compared with 1996:
------------------------
The Company reported revenues of $23,671,000 and an operating profit of $576,000
for the year ended January 31, 1997 (1997) compared to revenues of $22,353,000
and an operating profit of $81,000 for the year ended January 31, 1996 (1996)
before a write-off of $1,392,000 related to the consolidation of the energy
conversion product line. Results of operations for 1996 after the consolidation
charge amounted to a loss of $1,311,000.
The electronic communication equipment operations reported revenues of $688,000
and an operating profit of $146,000 for 1997 compared to revenues of $820,000
and an operating profit of $23,000 for 1996. The reduction in revenues is a
direct result of the U.S. Government's de-emphasis of military programs. The
increase in profitability is a result of the Company's downsizing in reaction to
the reduction in Government business opportunities. The Company did receive an
add-on to its existing contract for delivery during the fiscal year ended
January 31, 1998.
The energy conversion products group reported revenues of $22,983,000 and an
operating profit of $2,835,000 for 1997 compared to revenues of $21,533,000 and
an operating profit of $2,429,000 for 1996 before the inventory write-off due to
a consolidation of product line, which reduced profitability to $1,037,000. The
increase in revenues is attributable to the switchgear business, whereas the
increase in profitability is primarily associated with the solid state power
supply business which is beginning to realize the effect of its prior investment
in the aerospace industry.
Net corporate expenses, comprised of interest expense and general corporate
items, were $2,405,000 in 1997 compared to $2,371,000 in 1996.
1996 compared with 1995:
------------------------
During 1996, the Company discontinued its marine electronic and communications
business (Ray Jefferson) because of competitive pricing pressures and a general
softness in the marine market. As a result of this discontinuance the Company
incurred $998,000 of losses, which included a $500,000 reserve in the fourth
quarter in anticipation of final phase-down costs and write-down of remaining
assets. Additionally, in the course of consolidating the energy conversion
product group's manufacturing facilities, inventory not presently used in a
major customer's current product line was abandoned resulting in a one-time
charge of $1,392,000 in the fourth quarter. The Company reported revenues of
$22,353,000 and an operating profit of $81,000 for the year ended January 31,
1996 (1996) before the write-off related to the consolidation of the energy
conversion product line. Results of operations after the consolidation charge
amounted to a loss of $1,311,000. The Company reported revenues of $18,824,000
and an operating loss of $32,000 for the year ended January 31, 1995 (1995).
- 5 -
<PAGE>
The electronic communication equipment operations reported revenues of $820,000
and an operating profit of $23,000 for 1996 compared to revenues of $2,641,000
and an operating profit of $1,008,000 for 1995. The reduction in revenues and
operating profit is a direct result of the U.S. Government's de-emphasis of
military programs. Additionally, although the Company received a new contract
from the U.S. Government to produce equipment similar to that delivered under
previous contracts, the necessity to retain the cadre of experienced personnel
and the associated costs negatively impacted operations until award of the
contract. The Company expects that this de-emphasis will be continuing.
The energy conversion products group reported revenues of $21,533,000 and an
operating profit of $2,429,000 for 1996 before the inventory write-off due to a
consolidation of a product line compared to revenues of $16,183,000 and an
operating profit of $1,368,000 for 1995. Both revenues and profitability
increased primarily due to an increase in the custom switchgear business. There
still exists softness in the solid state power supply business, but recent
quotation activity indicates a potential return to previous business levels.
Net corporate expenses, comprised of interest expense and general corporate
items, were $2,371,000 in 1996 compared to $2,408,000 in 1995. 1995 reflects a
one-time charge of $259,000 for the cancellation of accrued interest related to
stock subscriptions.
Liquidity and capital resources:
--------------------------------
During 1997 and 1996, the operations of the Company and its subsidiaries were
financed by a lending institution under various formulae which provide operating
funds as required. Such borrowings are primarily in the form of short-term
loans, secured by assignment of accounts receivable and inventories. Under the
various formulae, borrowings are limited to varying percentages and maximum
dollar amounts of accounts receivable and inventories with a maximum limitation
of $5,000,000. As of January 31, 1997, such borrowings amounted to $2,836,000
with an additional availability based on the various formulae of $609,000. The
Company's line of credit agreement with its current lender expires on June 30,
1999.
At this time, there are no material commitments for capital expenditures. Cash
requirements for the next fiscal year should remain level with the current year.
Based upon the availability of funds under the various existing financing
arrangements, the Company deems its liquidity to be adequate.
- 6 -
<PAGE>
ITEM 8 - FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA:
- ----------------------------------
INDEX
Page(s)
-------
Independent auditors' report 8
Financial statements:
Consolidated balance sheets 9
Consolidated statements of operations 10
Consolidated statements of changes in
shareholders' equity (deficit) 11
Consolidated statements of cash flows 12
Notes to consolidated financial statements 13 - 20
Financial statement schedule:
Valuation and qualifying accounts (Schedule II) 21
- 7 -
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Shareholders and
Board of Directors
Jetronic Industries, Inc.
Philadelphia, Pennsylvania
We have audited the accompanying consolidated balance sheets of Jetronic
Industries, Inc. and Subsidiaries as of January 31, 1997 and 1996 and the
related consolidated statements of operations, changes in Shareholders' equity
(deficit) and cash flows for each of the three years in the period ended January
31, 1997. Our audits also include the financial statement schedule listed in the
Index at Item 8. These consolidated financial statements and financial statement
schedule are the responsibility of the Company's management. Our responsibility
is to express an opinion on these 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 financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Jetronic Industries, Inc. and Subsidiaries as of January 31, 1997 and 1996 and
the consolidated results of their operations and their cash flows for each of
the three years in the period ended January 31, 1997 in conformity with
generally accepted accounting principles. Also, in our opinion, the financial
statement schedule referred to above, when considered in relation to the basic
consolidated financial statements taken as a whole, present fairly in all
material respects the information set forth therein for each of the three years
in the period ended January 31, 1997.
ASHER & COMPANY, LTD.
Philadelphia, Pennsylvania
May 8, 1997
- 8 -
<PAGE>
JETRONIC INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
January 31,
-----------------------------
1997 1996
---- ----
ASSETS
<S> <C> <C>
Current assets:
Cash $ 498,000 $ 652,000
Accounts receivable, net 3,599,000 2,858,000
Inventories 5,156,000 4,140,000
Prepaid expenses and other current assets 853,000 601,000
----------- -----------
Total current assets 10,106,000 8,251,000
Property, plant and equipment at cost, less
accumulated depreciation 438,000 481,000
Goodwill 301,000 311,000
Other assets 536,000 364,000
----------- -----------
$11,381,000 $ 9,407,000
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Notes payable, bank $ 2,836,000 $ 2,331,000
Current portion of long-term debt 84,000 89,000
Accounts payable 2,295,000 1,584,000
Other accrued liabilities 969,000 911,000
Net liabilities of discontinued operations 139,000 232,000
Deferred interest 1,273,000 1,166,000
----------- -----------
Total current liabilities 7,596,000 6,313,000
Long-term debt 4,102,000 3,996,000
----------- -----------
11,698,000 10,309,000
----------- -----------
Commitments and contingencies
Redeemable preferred stock, $1.85 stated
value - shares authorized, 577,400; issued
and outstanding, none
Shareholders' equity (deficit):
Common stock, $.10 par value - shares
authorized, 10,000,000; issued and
outstanding, 3,604,499 in 1997 and 1996 361,000 361,000
Capital in excess of par value 12,569,000 12,569,000
Retained earnings (deficit) (13,247,000) (13,832,000)
----------- -----------
Total shareholders' equity (deficit) (317,000) (902,000)
----------- -----------
$11,381,000 $ 9,407,000
=========== ===========
</TABLE>
See notes to consolidated financial statements.
- 9 -
<PAGE>
JETRONIC INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year ended January 31,
----------------------------------------------------
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Net sales $23,671,000 $22,353,000 $18,824,000
Costs and expenses:
Cost of goods sold 19,747,000 19,065,000 15,227,000
Selling, general and administrative
expenses 2,371,000 2,158,000 2,662,000
Interest and debt expense 977,000 1,049,000 967,000
Abandonment of product line 1,392,000
----------- ----------- -----------
23,095,000 23,664,000 18,856,000
----------- ----------- -----------
Income (loss) from continuing
operations before income taxes 576,000 (1,311,000) (32,000)
Provision for (benefit from) income
taxes (9,000) (26,000) (147,000)
----------- ----------- -----------
Income (loss) from continuing
operations 585,000 (1,285,000) 115,000
Discontinued operations - net
of income tax provision (benefit)
of ($60,000) in 1996 and
$70,000 in 1995 (938,000) (61,000)
----------- ----------- -----------
Net income (loss) $ 585,000 ($ 2,223,000) $ 54,000
=========== =========== ===========
Net income (loss) per share:
Income (loss) from continuing
operations $ .16 ($ .36) $ .03
Discontinued operations ( .26) (.02)
----- ------ -----
Net income (loss) $ .16 ($ .62) $ .01
===== ====== =====
</TABLE>
See notes to consolidated financial statements.
- 10 -
<PAGE>
JETRONIC INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
Common Stock Capital in Retained Stock
------------------ excess of earnings option
Shares Amount par value (deficit) receivables Total
------ ------ --------- --------- ----------- -----
<S> <C> <C> <C> <C> <C> <C>
Balance, January 31, 1994 3,722,199 $373,000 $12,815,000 ($11,663,000) ($258,000) $1,267,000
Recision of stock option
subscriptions (117,700) (12,000) (246,000) 258,000
Net income, year ended
January 31, 1995 54,000 54,000
--------- -------- ----------- ------------ --------- ----------
Balance, January 31, 1995 3,604,499 361,000 12,569,000 ( 11,609,000) -0- 1,321,000
Net loss, year ended
January 31, 1996 ( 2,223,000) (2,223,000)
--------- -------- ----------- ------------ --------- ----------
Balance, January 31, 1996 3,604,499 361,000 12,569,000 ( 13,832,000) -0- (902,000)
Net income, year ended
January 31, 1997 585,000 585,000
--------- -------- ----------- ------------ --------- ----------
Balance, January 31, 1997 3,604,499 $361,000 $12,569,000 ($13,247,000) -0- ($ 317,000)
========= ======== =========== ============ ========= ==========
</TABLE>
See notes to consolidated financial statements.
- 11 -
<PAGE>
JETRONIC INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year ended January 31,
-------------------------------------------------
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 585,000 ($2,223,000) $ 54,000
Adjustments to reconcile net income
(loss) to net cash from (used by)
operating activities:
Gain on sale of building (212,000)
Depreciation and amortization 103,000 216,000 263,000
Change in goodwill 10,000 10,000 10,000
Interest cancellation 259,000
Deferred taxes (86,000) (88,000)
Changes in assets and liabilities:
Accounts receivable (741,000) (495,000) (644,000)
Inventories (1,016,000) 1,176,000 (1,059,000)
Prepaid expenses and other (252,000) (28,000) 18,000
Other assets (172,000) (178,000) 54,000
Accounts payable 711,000 (42,000) 535,000
Other accrued liabilities 165,000 12,000 32,000
Reserve for discontinued
operations (93,000) 500,000
Net assets of discontinued
operations 1,213,000 217,000
---------- ---------- ----------
Total adjustments (1,285,000) 2,086,000 (403,000)
---------- ---------- ----------
Net cash from (used by)
operating activities (700,000) (137,000) (349,000)
---------- ---------- ----------
Cash flows from (used by) investing
activities:
Capital, expenditures, net of
disposals (60,000) (95,000) (240,000)
Proceeds from sale of building 696,000
---------- ---------- ----------
Net cash from (used by)
investing activities (60,000) 601,000 (240,000)
---------- ---------- ----------
Cash flows from (used by) financing activities:
Net borrowings from lenders 505,000 487,000 634,000
Principal payments on
long-term debt (81,000) (443,000) (118,000)
Proceeds from long-term debt 182,000
---------- ---------- ----------
Net cash from (used by)
financing activities 606,000 44,000 516,000
---------- ---------- ----------
Net increase (decrease) in cash (154,000) 508,000 (73,000)
Cash, beginning of year 652,000 144,000 217,000
---------- ---------- ----------
Cash, end of year $ 498,000 $ 652,000 $ 144,000
=========== =========== ===========
Supplemental disclosures of cash flow information:
Interest paid during the year $ 325,000 $ 524,000 $ 230,000
=========== =========== ===========
Income taxes paid during the year $ 1,000 $ 1,000 $ 6,000
=========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
- 12 -
<PAGE>
JETRONIC INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Principles of consolidation:
----------------------------
The consolidated financial statements include the accounts of Jetronic
Industries, Inc. ("Jetronic") and its wholly-owned subsidiaries. Significant
intercompany transactions and balances have been eliminated in consolidation.
Estimates:
----------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosure of contingent assets and
liabilities. Actual results could differ from those estimates.
Concentration of credit risk:
-----------------------------
The Company maintains cash accounts which, at times, may exceed federally
insured limits. The Company has not experienced any losses from maintaining cash
accounts in excess of federally insured limits. Management believes it is not
exposed to any significant credit risks on its cash accounts.
Inventories:
------------
Inventories are stated at the lower of cost or market. Cost is determined on the
last-in, first-out (LIFO) method for a portion of energy conversion products
(15% of consolidated inventory) and on the first-in, first-out (FIFO) method for
the remaining portion of energy conversion products and electronics. Progress
billings in advance of delivery reduce inventory.
Property, plant and equipment:
------------------------------
Property, plant and equipment includes the cost of additions and those
improvements which increase the capacity or lengthen the useful lives of assets.
Expenditures for repairs and maintenance are expensed as incurred. Depreciation
is computed principally on the straight-line method over the anticipated useful
lives of the respective assets.
Goodwill:
---------
Goodwill which arose from the acquisition of Redco, Inc. is being amortized over
forty years on the straight-line method. Such balance is net of accumulated
amortization of $105,000 in 1997 and $95,000 in 1996.
Revenue recognition:
--------------------
Sales of products under long-term contracts involving definable end items are
recognized as shipments are made.
Research and development costs:
-------------------------------
Research and development costs are charged to expense as incurred. Such costs
amounted to $33,000, $48,000 and $26,000 in 1997 - 1995, respectively.
- 13 -
<PAGE>
JETRONIC INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Selling, general and administrative expenses:
---------------------------------------------
Selling, general and administrative costs were reduced in 1996 by $335,000 as a
result of a gain on the sale of a building and refund of prior years' state
taxes.
Income taxes:
-------------
The Company accounts for income taxes in accordance with Statement of Financial
Accounting Standards No. 109 (SFAS No. 109). Under SFAS No. 109 the deferred tax
provision is determined under the liability method. Under this method, deferred
tax assets and liabilities are recognized based on differences between financial
statement and tax bases of assets and liabilities using presently enacted rates.
Per share data:
---------------
Common share and common share equivalent per share data are based on the
weighted average number of common shares outstanding and of common share
equivalents deemed to be outstanding during the year, except when dilutive.
Common share equivalents are represented by stock options and warrants reduced
by the number of common shares assumed to have been purchased with the proceeds
from the exercise of the options and warrants.
When dilutive, the computation of fully diluted per share data is based on the
weighted average number of common and common equivalent shares as if convertible
debentures had been converted into common stock at the beginning of the
respective periods after giving effect to the elimination of interest expense,
net of income taxes, applicable to the debentures. There was no dilution in
1997, 1996 or 1995.
The weighted average number of common and common equivalent shares used to
compute primary per share data was 3,604,000 in 1997, 3,604,000 in 1996 and
3,722,000 in 1995.
NOTE 2 - DISCONTINUED OPERATIONS:
During 1996, the Company discontinued its marine electronic and communications
business (Ray Jefferson) located in Philadelphia, Pennsylvania. Revenues and
results of the discontinued marine electronic and communication operations are
summarized below.
Year ended January 31,
----------------------
1996 1995
---- ----
Revenues $1,671,000 $3,123,000
========== ==========
Income (loss) from operations ($ 498,000) $ 9,000
Provision to reduce to net
realizable value (500,000)
---------- ----------
($ 998,000) $ 9,000
========== ==========
- 14 -
<PAGE>
JETRONIC INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Assets and liabilities of discontinued operations as of January 31, 1997 and
1996 are as follows:
1997 1996
---- ----
Current assets:
Accounts receivable $ 15,000 $ 66,000
Inventories 165,000 261,000
----------- -----------
Total current assets 180,000 327,000
Property, plant and equipment, net 119,000 119,000
----------- -----------
Total assets $ 299,000 $ 446,000
=========== ===========
Current liabilities:
Accounts payable $ 48,000 $ 132,000
Accrued liabilities 46,000 46,000
Reserve for discontinued operations 344,000 500,000
----------- -----------
Total current liabilities $ 438,000 $ 678,000
=========== ===========
NOTE 3 - ACCOUNTS RECEIVABLE:
January 31,
------------------------------
1997 1996
---- ----
Trade $ 3,623,000 $ 2,864,000
Allowance for doubtful accounts (24,000) (6,000)
----------- -----------
$ 3,599,000 $ 2,858,000
=========== ===========
NOTE 4 - INVENTORIES:
January 31,
------------------------------
1997 1996
---- ----
Raw materials $ 3,524,000 $ 2,626,000
Work-in-process 1,632,000 1,514,000
----------- -----------
$ 5,156,000 $ 4,140,000
=========== ===========
- 15 -
<PAGE>
JETRONIC INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Current replacement cost on a first-in, first-out basis for all inventories
approximated $5,199,000 and $4,220,000 at January 31, 1997 and 1996,
respectively. Inventory values are stated net of valuation reserves of $45,000
and $20,000 at January 31, 1997 and 1996, respectively.
During 1996 and 1995, certain inventory quantities were reduced. These
reductions resulted in liquidations of LIFO inventory quantities carried at
lower costs prevailing in prior years as compared with the cost of current
purchases, the effect of which decreased net loss by $39,000 in 1996 ($.01 per
share) and increased net income by $7,000 in 1995.
During 1996, in the course of consolidating the energy conversion product
group's manufacturing facilities, inventory not presently used in a major
customer's current product line was abandoned resulting in a one-time charge of
$1,392,000 in the fourth quarter.
NOTE 5 - PROPERTY, PLANT AND EQUIPMENT:
January 31,
------------------------ Estimated
1997 1996 useful lives
---- ---- ------------
Land, buildings and improvements $ 574,000 $ 564,000 6-16 years
Machinery, equipment and tooling 1,997,000 1,965,000 4-10 years
Furniture and fixtures 1,196,000 1,178,000 4-10 years
---------- ----------
3,767,000 3,707,000
Accumulated depreciation (3,329,000) (3,226,000)
---------- ----------
$ 438,000 $ 481,000
========== ==========
Depreciation and amortization expense amounted to $103,000, $219,000 and
$319,000 in 1997, 1996 and 1995, respectively.
NOTE 6 - INDEBTEDNESS:
The Company's lender has made available lines of credit aggregating up to
$5,000,000 to the Company and its subsidiaries at interest rates 2.25% above
prime with a similar commitment fee on amounts up to a $3,000,000 minimum. Such
borrowings are primarily in the form of short-term loans, secured by assignment
of accounts receivable and inventories. At January 31, 1997, $2,836,000 of
demand loans were outstanding under these credit arrangements. Total unused
lines of credit available at January 31, 1997 approximated $609,000. The
weighted average interest rate applicable to all short-term borrowings
outstanding at the end of the year approximated 10.64% in 1997 and 11.44% in
1996.
Notes payable and term loans are variously secured by substantially all of the
Company's accounts receivable, inventories, property, plant and equipment and
capital stock of subsidiaries. Provisions of these agreements contain certain
restrictive covenants which restrict investments in other companies, forego
dividend payments and payments to subordinated debenture holders other than
normal interest.
- 16 -
<PAGE>
JETRONIC INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Long-term debt consists of:
<TABLE>
<CAPTION>
January 31,
-----------------------
1997 1996
---- ----
<S> <C> <C>
10% Debentures due December 1999 $2,400,000 $2,400,000
10% Debentures due December 1999 (formerly 14 1/2%) 1,456,000 1,456,000
Term loans at 2.25% above prime payable in
monthly installments of $5,700 through
July 2001 286,000 169,000
Philadelphia Industrial Development Corporation
(PIDC) term loan at 4.5% payable in monthly
installments of $1,500 through September 1999 44,000 60,000
---------- -----------
4,186,000 4,085,000
Less - Amount due within one year (84,000) (89,000)
---------- -----------
$4,102,000 $3,996,000
========== ==========
</TABLE>
The Debentures are subordinated to the prior payment of all senior indebtedness.
In May 1995, the Bondholders agreed to extend the maturity of both issues to
December 1999, reduce the rate of the 14 1/2% debentures to 10% and waive the
existing mandatory redemption obligations.
The term loans are secured by various machinery and equipment. The Philadelphia
Industrial Development Company (PIDC) loan is secured by a first lien against
the Company's computer system at its Headquarters location.
Principal repayment obligations on all long-term debt amount to $84,000 in 1998,
$85,000 in 1999, $3,934,000 in 2000, $68,000 in 2001 and $15,000 in 2002.
NOTE 7 - COMMON STOCK AND OTHER SHAREHOLDERS' EQUITY:
During 1991, shareholders approved the granting of up to 565,774 options on
shares of common stock under the 1990 Incentive Stock Option Plan. Options are
exercisable immediately upon grant and expire five years after the date of
grant. The option price must be at least equal to the fair market value of the
common stock at the time of grant. There were 286,000 Options issued under the
1990 Plan, none of which have been exercised and all of which have lapsed.
In 1985, certain officers executed promissory notes in the amount of $258,000 on
exercise of options to acquire 117,700 shares of Jetronic Industries, Inc.
common stock. As of January 31, 1995, there was due $259,000 of accrued interest
on account of the unpaid principal balance of said notes. Under provisions of
the Pennsylvania Business Corporation Law in effect in 1984, the Company had no
power to accept a promissory note in consideration of the issuance or sale of
common stock, whether secured by pledge or otherwise. Accordingly, counsel for
the Company has determined that the stock was invalidly issued and that the
transactions were ultra vires and void. The officers have delivered the shares
of common stock to the Company. The accrued interest has been cancelled and is
reflected as a charge to general and administrative expenses for the year ended
January 31, 1995.
- 17 -
<PAGE>
JETRONIC INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
In conjunction with various financing arrangements, warrants to purchase common
stock were issued for 75,000 shares at $1.5625 per share and 111,435 shares at
$1.00 per share.
At January 31, 1997, 565,774 shares were reserved for future grants under the
1990 Stock Option Plan. In addition, there were 10,086 and 186,435 shares,
respectively, reserved for employee stock bonuses and exercise of warrants.
NOTE 8 - INCOME TAXES:
The provision for (benefit from) taxes on income include:
1997 1996 1995
---- ---- ----
Current:
State ($ 9,000) $ 11,000
Deferred:
Federal ($ 86,000) ( 87,000)
State ( 1,000)
----------- ------------ ------------
($ 9,000) ($ 86,000) ($ 77,000)
=========== ============ ============
The tax effects of temporary differences that gave rise to the significant
portions of the deferred tax liability and the deferred tax assets as of January
31, 1997 and 1996 were as follows:
1997 1996
---- ----
Deferred tax liability:
Prepaid expenses ($ 16,000)
Deferred tax assets:
Accounts receivable $ 8,000 4,000
Inventories 29,000 14,000
Prepaid expenses 21,000
Liquidation valuations 117,000 170,000
Net operating loss carryforwards 2,969,000 3,123,000
Investment tax credit carryforwards 82,000 82,000
---------- ----------
Deferred tax assets 3,226,000 3,393,000
Less-valuation allowance (3,052,000) (3,203,000)
---------- ----------
Net deferred tax assets 174,000 190,000
---------- ----------
Net deferred tax benefit $ 174,000 $ 174,000
========== ==========
In accordance with SFAS No. 109, the Company has provided a valuation allowance
relative to net operating loss carryforwards because realization is not
reasonably assured at this time. The Company will periodically review the
likelihood of realizing these assets and adjust the valuation allowance as
needed. The valuation allowance decreased by $150,000 in 1997 as a result of the
utilization of net operating loss carryforwards against current federal income
taxes and increased by $653,000 in 1996 due to the operating losses incurred.
- 18 -
<PAGE>
JETRONIC INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Differences between the statutory federal income tax rate and the effective tax
rate for 1997 - 1995 are accounted for as follows:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Federal income tax rate 34.0% (34.0%) (34.0%)
State income taxes, net of
federal tax benefit 29.4
Tax effect of non-deductible expenses 2.1 0.5 61.4
NOL utilization under SFAS No. 109 (36.1) 29.8 (391.6)
Other ( 1.5)
----- ----- ------
Effective income tax rate ( 1.5%) ( 3.7%) (334.8%)
===== ===== ======
</TABLE>
For federal income tax purposes, at January 31, 1997 the Company has net
operating loss carryforwards of $8,732,000 which will expire from 2003 to 2011.
The Company also has investment tax credit carryforwards of $82,000 at January
31, 1997 which will expire through 2000.
NOTE 9 - EMPLOYEE BENEFIT PLANS:
Jetronic has a qualified profit sharing plan covering certain employees.
Contributions to the plan are made at the discretion of the Board of Directors.
No contributions were made in 1997 or 1996; $25,000 was contributed in 1995. The
Company also has a 401(k) plan for eligible employees to which contributions of
$8,000, $11,000 and $12,000 were made in 1997 - 1995, respectively.
Certain subsidiaries maintain qualified profit sharing or defined contribution
plans for their employees under a collective bargaining agreement. The Company's
obligation is based on a rate per hour worked. Contributions to such plans were
$155,000, $130,000 and $135,000 in 1997 - 1995, respectively.
NOTE 10 - COMMITMENTS AND CONTINGENCIES:
The Company rents certain of its facilities under noncancelable operating
leases. At January 31, 1997, total rental commitments under these leases, which
expire periodically through 2006, aggregated $1,293,000. Under the terms of
these lease agreements, expenses such as taxes, insurance, maintenance and
repairs are paid by the Company. Total rental commitments approximate $249,000,
$207,000, $121,000, $113,000, $113,000 for the years 1998 through 2002,
respectively and $490,000 thereafter. Total rental expense under all operating
leases was $344,000, $295,000 and $348,000 for 1997, 1996 and 1995,
respectively.
The Company has entered into employment agreements requiring minimum annual
payments of $250,000 until 2001. At January 31, 1997, the Company had a total of
162 employees, of which approximately 49% are represented by a union whose
existing labor agreement expires in May 1998.
Management is of the opinion that no excess profits have been realized on sales
to government agencies or contractors and, accordingly, has made no provision
for renegotiation of profits or profit limitations, if any, to which the Company
may be subject.
-19-
<PAGE>
JETRONIC INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
On January 29, 1992, certain trade creditors of Harry Levin, Inc., the Company's
wholly-owned subsidiary engaged in the retail furniture and appliance business
("Levin"), filed a petition to have Levin's placed in Chapter 7 of the United
States Bankruptcy Code. On January 6, 1997, the Company entered into a
settlement agreement whereby the Trustee accepted $100,000 in full and final
settlement of all claims, payable over a thirteen month period. The Company has
also been named in a suit by a former vendor's sales representative alleging
breach of contract. Management of the Company believes that such claim, if
asserted, will be without merit and will be resolved without any material
adverse impact on either the financial condition or operations of the Company.
NOTE 11 - FAIR VALUE OF FINANCIAL INSTRUMENTS:
The carrying amounts of all assets and liabilities (other than long-term debt)
considered financial instruments approximate fair value because of the short
term maturity of these items.
The carrying amount of long-term debt approximates fair value because of the
short term maturity of a portion of the liability and because the interest rates
approximate market interest rates.
NOTE 12 - SUBSEQUENT EVENT:
In March 1997, the Company acquired the assets, subject to certain liabilities,
of certain subsidiaries of Woven Electronic Corporation for a total purchase
price of $715,000, of which $200,000 was paid in cash and the balance evidenced
by a three year 8% note with quarterly payments beginning April 1998.
NOTE 13 - BUSINESS SEGMENT AND GEOGRAPHIC INFORMATION:
Business segment and geographic information for the years ended January 31,
1997, 1996 and 1995 included on pages 1 and 2 of this Annual Report on Form 10-K
is an integral part of these financial statements. In 1997, 1996 and 1995,
respectively, Caterpillar, Inc. accounted for 55%, 51% and 56% of consolidated
revenues.
-20-
<PAGE>
JETRONIC INDUSTRIES, INC.
VALUATION AND QUALIFYING ACCOUNTS
SCHEDULE II
<TABLE>
<CAPTION>
Additions Deductions
--------- ----------
Charged
Balance to costs Account Balance
beginning and write- end
Description of year expenses offs of year
----------- --------- -------- ------- -------
Year ended January 31, 1997:
<S> <C> <C> <C> <C>
Allowance for doubtful accounts $ 6,000 $ 30,000 $ 12,000 $ 24,000
======== ======== ======== ========
Inventory valuation $ 20,000 $ 25,000 $ 45,000
======== ======== ========
Reorganization $232,000 $ 93,000 $139,000
======== ======== ========
Year ended January 31, 1996:
Allowance for doubtful accounts $ 23,000 $ 23,000 $ 40,000 $ 6,000
======== ======== ======== ========
Inventory valuation $ 20,000 $ 20,000
======== ========
Reorganization $175,000 $500,000 $443,000 $232,000
======== ======== ======== ========
Year ended January 31, 1995:
Allowance for doubtful accounts $ 16,000 $ 10,000 $ 3,000 $ 23,000
======== ======== ======== ========
Inventory valuation $ 20,000 $ 20,000
======== ========
Reorganization $421,000 $246,000 $175,000
======== ======== ========
</TABLE>
- 21 -
<PAGE>
ITEM 9 - DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE:
- --------------------------------------------------------------
NONE.
PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT:
- -------------------------------------------------------------
Reference is made to the Definitive Proxy Statement to Shareholders which the
Company intends to file not later than 30 days after the filing of its Annual
Report on Form 10-K.
ITEM 11 - EXECUTIVE COMPENSATION:
- ---------------------------------
Reference is made to the Definitive Proxy Statement to Shareholders which the
Company intends to file not later than 30 days after the filing of its Annual
Report on Form 10-K.
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT:
- -------------------------------------------------------------------------
Reference is made to the Definitive Proxy Statement to Shareholders which the
Company intends to file not later than 30 days after the filing of its Annual
Report on Form 10-K.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS:
- ---------------------------------------------------------
Reference is made to the Definitive Proxy Statement to Shareholders which the
Company intends to file not later than 30 days after the filing of its Annual
Report on Form 10-K.
PART IV
ITEM 14 EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES, AND REPORTS ON FORM 8-K:
- ---------------------------------------------------------------------------
(a) Exhibits, financial statements and financial statement schedules:
1. The financial statements included in the Index to Part
II, Item 8, are filed as part of this report.
2. The financial statement schedule included in the Index
to Part II, Item 8, is filed as part of this report.
3. List of Exhibits:
( 3) Articles of incorporation and amendments thereto
and by-laws are incorporated herein by reference
to Exhibit 3 to the Registrant's Annual Report on
Form 10-K for the year ended January 31, 1981.
( 4)(a) Instruments defining the rights of security
holders, including indentures. See Exhibit (3)
above.
-22-
<PAGE>
(b) Agreements with the holders of Registrant's Convertible
Subordinated Debentures and Preferred Stock related to
conversions thereof effective July 31, 1992, are
incorporated herein by reference to Exhibit 4(b) to the
Registrant's Annual Report on Form 10-K for the year ended
January 31, 1992.
(22) Subsidiaries of Registrant
Principal Location of
subsidiaries incorporation Business names
------------ ------------- --------------
Harry Levin, Inc. Pennsylvania Levin's
Redco, Inc. Illinois Republic
Electric &
Development
Company
(b) Reports on Form 8-K:
1. There were no reports on Form 8-K filed during the quarter
ended January 31, 1997.
Any person may request a copy of any Exhibit filed with this report upon payment
of a fee of $.25 per page of the requested Exhibit, plus postage. Requests
should be directed to Leonard W. Pietrzak, Vice President - Finance, Jetronic
Industries, Inc., 4200 Mitchell Street, Philadelphia, Pennsylvania 19128.
-23-
<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.
JETRONIC INDUSTRIES, INC.
-------------------------
Registrant
Date: May 8, 1997 By /s/ Peter J. Kursman
-------------------------
Peter J. Kursman,
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
Signature Capacity Date
--------- -------- ----
/s/ Peter J. Kursman
- -------------------------
Peter J. Kursman Principal Executive May 8, 1997
President Officer and Director
/s/ Daniel R. Kursman
- -------------------------
Daniel R. Kursman, Director May 8, 1997
Chairman of the Board and
Treasurer
/s/ Leonard W. Pietrzak
- -------------------------
Leonard W. Pietrzak Principal Financial May 8, 1997
Vice President-Finance and Accounting Officer
and Director
/s/ William L. Weiss
- -------------------------
William L. Weiss Director May 8, 1997
General Counsel and
Secretary
-24-
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000053500
<NAME> JETRONIC INDUSTRIES, INC.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JAN-31-1997
<PERIOD-START> FEB-01-1996
<PERIOD-END> JAN-31-1997
<CASH> 498
<SECURITIES> 0
<RECEIVABLES> 3,623
<ALLOWANCES> 24
<INVENTORY> 5,156
<CURRENT-ASSETS> 10,106
<PP&E> 3,767
<DEPRECIATION> 3,329
<TOTAL-ASSETS> 11,381
<CURRENT-LIABILITIES> 7,596
<BONDS> 3,856
0
0
<COMMON> 361
<OTHER-SE> (678)
<TOTAL-LIABILITY-AND-EQUITY> 9,407
<SALES> 23,671
<TOTAL-REVENUES> 23,671
<CGS> 19,747
<TOTAL-COSTS> 22,118
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 977
<INCOME-PRETAX> 576
<INCOME-TAX> (9)
<INCOME-CONTINUING> 585
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 585
<EPS-PRIMARY> .16
<EPS-DILUTED> .16
</TABLE>
