Page 16
<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 1, 1996
Commission file number 0-12611
AULT INCORPORATED
MINNESOTA 41-0842932
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification
No.)
7300 Boone Avenue North
Minneapolis, Minnesota 55428-1028
(Address of principal executive offices)
Registrant's telephone number: (612) 493-1900
Indicate by check mark whether 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, and (2) has been subject to such filing requirements
for the past 90 days.
YES __X___ NO _______
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest
practicable date.
Outstanding at
Class of Common Stock December 1, 1996
No par value 2,145,776 shares
Total pages - - - -14
Exhibits Index on Page - - - -13
<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
AULT INCORPORATES & SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Thousands, Except Amounts Per Share)
<TABLE>
<CAPTION>
(UNAUDITED)
SECOND QUARTER SIX MONTHS ENDED
ENDED
Dec. 1 NOV. 26 Dec. 1 NOV. 26
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Net Sales $9,248 $7,711 $17.926 $14,592
Cost of Goods Sold 6,861 5,872 13,407 11,023
Gross Profits 2,387 1,839 4,519 3,569
Operating Expenses
Marketing 789 649 1,495 1,275
Design Engineering 390 334 759 672
General & 635 525 1,222 1,048
Administrative
1,814 1,508 3,476 2,995
Operating Income 573 331 1,043 574
Non-Operating Income
(Expense)
Interest & Other Income 3 55 20 85
Interest & Other (191) (186) (377) (397)
Expense
Income Before Income
Taxes 385 200 686 262
Income Taxes (Note 2) 95 -- 169 --
Net Income 290 $200 $517 $262
Net Income Per Share $0.12 $0.09 $0.22 $0.12
Weighted Number of Shares
& Common Equivalent Shares
Outstanding 2,414,178 2,193,281 2,401,219 2,176,589
</TABLE>
See NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
AULT INCORPORATED & SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
<TABLE>
<CAPTION> (Unaudited)
Dec. 1, June 2,
<S> <C> <C>
1996 1996
Assets
Current Assets
Cash & Cash Equivalents $431 $412
(Note 3)
Trade Receivables Less 7,210 7,336
Allowance for
Doubtful Accounts of
$81,000 at December
1, 1996 and $51,000 at June
2, 1996
Inventories:
Finished Goods 2826 2691
Work In Process 341 319
Raw Material 4,365 4,263
Total Inventories 7,532 7,273
Other Current Assets (Note 753 460
4)
Total Current Assets 15,926 15,481
Other Assets 197 197
Other Receivables, Less 182 182
Allowance Of $65,000 (Note 5)
Patent (Note 6)
Other 2 21
Equipment and Leasehold
Improvements, at Cost:
Land 826 826
Building 735 735
Machinery and Equipment 5,237 5,113
Office Furniture 630 593
E.D.P. Equipment 1005 1005
Leasehold Improvements 686 687
9,119 8,959
Less Accumulated Depreciation 6,336 6,110
Net Equipment and Leasehold 2,783 2,849
Improvements
Total Assets $19,090 $18,730
</TABLE>
See NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
AULT INCORPORATED & SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
<TABLE>
<CAPTION>
(Unaudited)
Dec 1, June 2,
1996 1996
<S> <C> <C>
Liabilities and Stockholders'
Equity:
Current Liabilities:
Note Payable to Bank $6,345 $5,618
Current Maturities of Long-
Term Debt (Note 7) 399 388
Accounts Payable 3,408 4,513
Accrued Expenses:
Compensation (Note 8) 466 556
Other (Note 9) 841 627
Income Taxes Payable (Note 2) 162 25
Total Current Liabilities 11,621 11,727
Long-Term Debt, Less Current
Maturities Included Above
<Note 7> 786 935
Deferred Rent Expense (Note 10) 145 164
Deferred Compensation (Note 11) 330 333
Stockholders' Equity:
Preferred Shares, No Par
Value; Authorized,
1,000,000 Shares; None
Issued.
Common Shares, No Par Value,
Authorized 7,025 6,967
5,000,000 Shares; Shares
Outstanding: December 1, 1996;
2,145,776 Shares; June 2,
1996;
2,119,776 Shares
Foreign Currency Translation
Adjustment (Note 12) (22) (84)
Retained Earnings (Deficit) (795) (1,312)
Total 6,208 5,571
Total Liabilities and $19,090 $18,730
Stockholders' Equity
</TABLE>
See NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
AULT INCORPORATED & SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTH ENDED
Dec. 1, Nov. 26,
1996 1996
<S> <C> <C>
Cash Flows From Operating
Activities:
Net Income $517 $262
Adjustments to Reconcile Net
Income to Net Cash
Used In Operating Activities:
Depreciation 226 256
Provision for Doubtful 30 (3)
Accounts
Provision for Inventory 58 32
Allowance
Deferred Rent (19) (13)
Changes in Assets and
Liabilities:
(Increase) Decrease In:
Trade Receivables 96 (162)
Inventories (317) (363)
Other Current Assets (293) (61)
Increase (Decrease) In:
Accounts Payable (1,105) (979)
Accrued Expenses 121 51
Income Tax Payable 137
Net Cash Used in
Operating (549) (980)
Activities
Cash Flows From Investing
Activities:
Purchase of Equipment (160) (91)
Decrease in Other Assets 19 47
Net Cash Used In Investing (141) (44)
Activities
Cash Flows From Financing
Activities:
Net Borrowings on Revolving
Credit Agreement 727 945
Proceeds From Issuance of 58 9
Common Stock
Principal Payments on Long-
Term Borrowings, (138) (200)
Including Capital Lease
Obligations
Net Cash Provided By
(Used In) Financing 647 754
Activities
Effect of Foreign Currency
Exchange Rate 62 (5)
Changes on Cash
Increase (Decrease)in Cash 19 (275)
Cash: Beginning 412 319
End $431 $44
</TABLE>
See NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
AULT INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR SECOND QUARTER ENDING DECEMBER 1, 1996
NOTE 1:
In the opinion of management, the accompanying
unaudited financial statements contain all adjustments
(which only include normal recurring adjustments)
necessary to present fairly Ault Incorporated's
consolidated financial position as of December 1, 1996,
and changes in financial position for the six months
then ended. The consolidated financial statements
include the operations of the parent company, Ault
Incorporated (US operation), and its wholly owned
subsidiary, Ault Korea Corporation.
NOTE 2:
The Company made income tax provisions of $95,000 and
$169,000 for the second quarter and six months,
respectively, of fiscal 1996 applying the Alternative
Minimum Tax. At June 2, 1996 the Company had tax
credits and net operating loss carryforwards amounting
to $633,000 and $190,000, respectively, available for
use in US and net operating loss carryforwards
amounting to $426,000 for use in South Korea. No income
taxes were accrued for the six months of fiscal 1995.
NOTE 3:
For the purpose of reporting cash and cash flows, the
Company considers all highly liquid debt instruments
purchased with a maturity of three months or less to be
cash equivalents.
NOTE 4:
Prepaid and other expenses for both periods are
principally customs duty and value added taxes, and
certain deferred expenses that are related to, and will
be absorbed against revenue in future periods of fiscal
1997. The customs duty and value added taxes are paid
by Ault Korea Corporation to the Korea authority on
products that are manufactured for exportation. These
payments are refundable when the subsidiary submits to
the Korean Government the appropriate claim and proof
of exportation.
NOTE 5:
Other receivable of $197,000, net of allowance of
$65,000 and other amounts written off represents
portions of amounts due the Company for trade
receivable that was invoiced in fiscal 1991. The
customer had terminated his contract with the company
for reasons that were external and unrelated to the
Company, and refused to make compensation for cost that
the Company had incurred. The matter is in litigation
brought by the Company. Court hearings to date on
positions taken by the debtor were all determined
favorable to the Company's claim. Management believes
that the matter is nearing a conclusion that will be in
favor of the Company.
NOTE 6:
The Patent cost, which currently has no amortization
charged against it, represents the contract price of US
Patent #5,303,137,1 acquired by the Company from a
source external to and independent of the Company. The
Company believes that products using the power
conversion technology it represents will generate
significant revenues into fiscal 2002. For
amortization purposes, the patent has been assigned a
life of four years beginning in fiscal 1997.
<PAGE>
NOTE 7:
Long-term debt, including current maturities consists
of capitalized lease obligations and a mortgage on
South Korea facility. Capitalized leases amounting
approximately $169,000 are due in various monthly
installments maturing through fiscal year 1998. The
mortgage, which has a current balance of approximately
$1,016,000 at 9.0% rate of interest requires
installment payments of about $160,000, in March and
September through the year 2000.
NOTE 8:
Compensation consists principally of amounts accrued
for payment of employees' salaries, vacation and sick
leave.
NOTE 9:
Accrued expenses, other, are mainly undue amounts for
sales representatives' commission and agency fees, and
provisions for future payment of current warranty
commitments.
NOTE 10:
The lease on the Company's Minneapolis plant and office
facilities includes schedules base rent increases over
the term of the lease, which has a duration of ten
years. The total amount of the base rent payments is
being charged to expense on the straight-line method
over the term of the lease. The difference between the
payments and the expense is recorded as deferred rent.
NOTE 11:
Deferred compensation is provision by Ault Korea
Corporation, in accordance with requirement by the
Korea Authority, for the compensation of each current
employee when his/her employment with the subsidiary
terminates.
NOTE 12:
The Korean Won is considered the functional currency of
the Korean subsidiary. Accordingly, the effect of
translating the subsidiary's statements into US dollars
is recorded as s separate component of shareholder's
equity.
NOTE 13: Subsequent Events
Public Offering: On December 12, 1996, the Company
signed an underwriting agreement with an investment
banker to undertake a public offering of 1,600,000
shares of common stock at a price to the public of
$6.50 per share. The agreement includes an
overallotment option to sell an additional 240,000
shares and entitles the underwriters to purchase from
the Company for $100 warrants for the purchase of
112,000 shares of the Company's common stock. These
warrants will expire five years from the effective date
of the Registration Statement and are exercisable at
120 percent of the public offering price. The Company
plans to use the proceeds from this offering to repay
funds advanced under its credit facilities, repayment
of long term debt, upgrade manufacturing and management
information capabilities and for general corporate
purposes, including working capital. See-Liquidity and
Capital Resources.
<PAGE>
ITEM 2
MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Net sales increased 19.9% in the second quarter of
fiscal 1997 to $9,248,000 from $7,711,000 in the second
quarter of fiscal 1996. For the six months of fiscal
1997, net sales totaled $17,926,000 representing an
increase of 22.8% from net sales of $14,592,000 for
the six months of fiscal 1996. The increase represents
continued strength in the telecommunications and data
communications market segments as well as effectiveness
of the Company's strategy in partnering with OEM
customers to provide power conversion
products/engineering and other services required in the
development of their new products. Orders booked
(bookings) during the six months amounted to
$15,946,000 and orders pending manufacturing and
shipment (order backlog) totaled $14,991,000 at
December 1, 1996, compared to $14,257,000 at November
26, 1995 and $16,971,000 at June 2, 1996. Several
major OEMs, for whom the Company is exclusive provider
of products have delayed introduction of new products
until the first half of 1997. New orders expected from
these customers are anticipated to result in
significant improvements in bookings for the Company
during the remaining six months of fiscal 1997. In
December following close of the quarter, The Company
announced to its OEM customers and the power
conversion market the availability of products from its
patented high density power supply technology. Their
competitive features and price are expected to generate
additional orders beginning in the third quarter. The
Company also announced availability of a line of new
low power regulated power supplies. Like the high
density product that will enable the Company to service
OEM equipment that require greater power, these
products provide telecommunications, computer and
industrial OEMs whose products require power conversion
features in the lower end of the power range. At the
close of the quarter, the Company also signed an
agreement with Shinko Shoji, a large Japanese
international distributor of electronic products.
Under the agreement, Shinko Shoji will act as an
independent representative and distributor of the
Company's products through out the Asian power supply
market. With the reputation and experience of Shinko
Shoji, this alliance represents an excellent
opportunity for sale of the Company's products in the
Japanese market. Because of these factors, including
the Company's continuing emphasis on design engineering
services and anticipation that the market for power
conversion products will remain strong, the Company
believes that its third quarter and second half will
result in improvement in customer orders and revenue
over the quarters just ended.
Gross profit increased 29.8% in the second quarter of
fiscal 1997 to $2,387,000 as compared to $1,839,000 for
the comparable period in fiscal 1996. For the six
months, gross profit increased by 26.6% to $4,519,000
in fiscal 1997 from $3,569,000 for fiscal 1996. As a
percentage of net sales, gross profit totaled 25.8% and
23.8% for the second quarter of fiscal 1997 and fiscal
1996, respectively. For the six months, gross profit
amounted to 25.2% in fiscal 1997, compared to 24.5% in
fiscal 1996. The improvement in fiscal 1997 is due to
increased sales of higher margin switching power
supplies and a more favorable application of fixed
costs resulting from the larger net sales.
Operating expenses increased 20.3% in the second
quarter of fiscal 1997 to $1,814,000 from $1,508,000 in
fiscal 1996, and increased by 16.0% to $3,476,000 for
the six months of fiscal 1997 from $2,995,000 for the
six months of fiscal 1996. The increase is due
principally to commissions paid to sales
representatives on the additional sales and expenses
associated with improving the Company's management
information system, and its foreign manufacturing
administration and sales promotion. As a percentage of
net sales, operating expenses were 19.6% for each
quarter and 19.4% for the six months of fiscal 1997,
compared to 20.5% for the six months of fiscal 1996.
Operating income increased by 73.1% to $573,000 for
the second quarter of fiscal 1997 from $331,000 for
fiscal 1996 and by 81.7% to $1,043,000 for the six
months of fiscal 1997 from $574,000 for the six months
of fiscal 1996.
Non-operating income of $20,000 for fiscal 1997 and
$85,000 for fiscal 1996 are earnings by the South
Korean subsidiary principally from interest received on
short-term investments and currency exchange rate gains
on the importation of raw material. Interest expense
of $377,000 for fiscal 1997 and $397,000 for fiscal
1996 are interest paid mainly on short-term bank
borrowings made to support working capital and mortgage
interest paid on the manufacturing facility owned by
the South Korean subsidiary.
Although the Company has substantial amounts of net
operating loss carryforwards and business credits, it
established provisions for income taxes of $95,000 for
the second quarter and $169,000 for the six months due
to anticipated tax liabilities from application of the
Alternative Minimum Income Tax. There was no tax
provision for the six months of fiscal 1996 due to the
utilization of net operating loss carryforwards.
Net income increased 45.0% to $290,000 for the second
quarter of fiscal 1997 from $200,000 for the second
quarter of fiscal 1996. For the six months, net income
increased by 97.3% to $517,000 in fiscal 1997 from
$262,000 in fiscal 1996.
Per share earnings for the second quarter totaled $0.12
in fiscal 1997 and $0.09 in fiscal 1996; and for the
six months totaled $0.22 in fiscal 1997 and $0.12 in
fiscal 1996.
Liquidity and Capital Resources
The Company's principal sources of working capital
relied on for normal growth in revenue and attainment
of profit goals have been its credit facilities and
cash flows from operations. Since fiscal 1995, market
conditions for sale of power conversion products have
significantly improved as strategies of the Company to
grow by offering to customers competitive conversion
product engineering and services were gaining success.
The Company recognizes these factors as presenting
opportunities to enhance revenue and profits above that
which its existing sources of working capital would
support. Also growth in trade receivable and
inventories that resulted from increased sales and
customer service were using greater amounts of cash
flows and placing greater reliance by the Company on
its credit facilities to provide the needed working
capital.
Credit Facilities
The Company maintains two credit facilities; its
primary credit facility with First Bank Minneapolis and
a smaller facility with Korea Exchange Bank supporting
the South Korean subsidiary.
The US credit facility totaled $6.0 million
collateralized by a security interest in all of the
Company's US assets. Indexed to certain percentages of
trade receivable and other assets, borrowing at
December 1, 1996 amounted to $5.2 million at an
interest spread of .75% above the prime rate, down from
a previous average spread of 2.33% above the prime
rate. The new rate became effective on September 1,
1996. In addition to the utilization, $400,000 of the
credit facility was allocated to a standby letter of
credit provided to Korea Exchange Bank as collateral
for the credit facility it provides to the South Korean
subsidiary.
The South Korean credit facility amounted to $1.5
million of which borrowings at December 1, 1996
amounted to $1.1 million at 9.0% rate of interest.
Cash Flows
Operations used $549,000 of net cash for the six months
ended December 1, 1996, which came from activities that
provided $1,166,000 of cash and activities that used
$1,715,000 of cash. The activities that provided
$1,166,000 of cash were as follows:
(a) Net profit and non cash expenses provided $812,000
of which net profit totaled $517,000. Non cash
expenses provided $295,000 of cash, of which
depreciation expenses contributed $226,000.
(b) Reduction in trade receivable provided $96,000 of
cash during the six months. This reduction followed
use of cash amounting to $2.1 million in fiscal 1996
that resulted from increased net sales. It is believed
that the anticipated growth in net sales for fiscal
1997, if attained will result in increased trade
receivable and, therefore, will make no contribution to
cash for the year.
(c) Accrued income taxes of $162,000 for the six
months reduced by payment of amounts due from fiscal
1996 provided $137,000 of cash.
The activities that used $1,715,000 of cash were as
follows:
(a) Increase in inventories used $317,000 of cash due
mainly to a competitive situation where key customers
require vendors to store certain portions of scheduled
deliveries of finished products close to their
operations to support flexible demands. This service is
provided under conditions that present no risks to the
Company although it will continue to use cash flows
because of the earlier than normal incurring of
manufacturing cost to support it.
(b) Reduction in trade payable used $1,105,000 of
cash. The reduction occurred principally because of
payment in fiscal 1997 of large portions of liabilities
that were associated with fiscal 1996 fourth quarter
greater net sales. It is anticipated that activities
in trade payable from the expected levels of
manufacturing will contribute to cash flows in the
second half.
(c) Increase in other current assets, which are
principally prepaid expenses used $293,000 of cash.
Investing Activities. Investing activities used net
cash of $141,000 mainly for the purchase of capital
equipment and tooling.
Financing Activities. Financing activities provided
$647,000 of cash of which $727,000 was provided through
borrowings under the credit facilities. Issuance of
common stock from exercise of employee stock options
provided $58,000 of cash, while payments on mortgage
and other long-term debt used $138,000.
Impact of Recent Accounting Standard Changes
In October, 1995, the FASB issued SFAS No. 123,
Accounting for Stock-Based Compensation, which
establishes a fair-value-based method for financial
accounting and reporting for stock-based employee
compensation plans. However, the new standard allows
compensation to continue to be measured using the
intrinsic value-based method of accounting prescribed
by Accounting Principles Board Statement No. 25,
Accounting for Stock Issued to Employees, providing
that there were expanded disclosures. SFAS No. 123 is
effective in fiscal year 1997. The Company has elected
to continue to apply the intrinsic value-based method
of accounting for stock options.
Impact of Foreign Operations and Currency changes
Although products that were manufactured by Ault Korea
Corporation contributed a very significant portion of
total sales, conversion of the Won to US dollars had no
significant impact on profits because conversion rates
were relatively stable. Also, the Company is not
exposed to any significant currency exchange risk
related to its foreign manufacturing arrangements since
all transactions are conducted in US dollars. Other
contracts that are in a foreign currency are not
significant in amounts at this time and therefore
exposure to currency exchange risk is minimal.
Current Working Capital and Future Operations:
At December 1, 1996, the Company had working capital of
$4.3 million, compared to $3.8 million at June 2, 1996.
At June 2, 1996, the Company also had current ratios of
1.32:1, compared to 1.38:1 on December 1, 1996.
Public offering of Common Shares:
In view of the opportunities available to the Company
for continued business growth, and the lack of adequate
supporting cash flows, the Company filed with the
Securities and Exchange Commission, during the
quarter, for approval to seek additional capital
through a secondary public offering of its common
shares. Sale of the stock was completed on December 12,
1996, and together with the underwriters' purchase of
over-allotment shares, the Company sold 1,840,000
common shares from which it raised $11,063,000, after
underwriters' discounts and commissions.
The proceeds to the Company will be used for the
following purposes:
(a) Repayment of credits in the US at First Bank
(b) Investment in Ault Korea Corporation so that the
subsidiary may (1) upgrade its manufacturing and
management information systems capabilities, (2)
purchase and equip a wholly owned manufacturing
facility in Northern China for the manufacturing of
products under its supervision, (3) repay its mortgage
loan and (4) reduce its short-term bank debt.
(c) Investment in Thailand through joint venture with
a current, major sub-contractor to expand its
capabilities and capacity to manufacture low cost
products for the Company.
(d) General corporate purposes, including working
capital.
AULT INCORPORATED
PART II. OTHER INFORMATION
ITEM 1-3 Not Applicable
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
The Company held its annual meeting of shareholders on
October 1, 1996. The Shareholders voted to elect the
directors named below to hold office until the next
Annual Meeting of Shareholders or until their
successors are elected and qualified. The shareholders
present in person or by proxy voted their shares in
connection with the election of directors as follows:
<TABLE>
<CAPTION>
Votes For Votes
Withheld
<S> <C> <C>
James M. Duddleston 1,959,973 100
Frederick M. Green 1,960,073 0
Delbert W. Johnson 1,959,073 1000
John G. Kassakian 1,960,073 0
Edward C. Lund 1,959,973 100
Eric G. Mitchell 1,959,033 1040
Matthew A. Sutton 1,959,073 1000
</TABLE>
ITEM 5 OTHER INFORMATION: Not Applicable
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
Exhibits
<TABLE>
<CAPTION>
Reference Title of Document Location
<S> <C> <C>
10.7 Third and Fourth Registration Statement
Amendment to Agreement (Commission File No.
on Credit Facility 333-14965) Filed Dec.
12, 1996
Part 1 Exhibits
11 Computation of Per Filed herewith at Page
Share Earnings
27 Financial Data Filed Electronically
Scheduling
</TABLE>
(a) None
(b) Reports on Form 8-K
There were no reports on Form 8-K filed for the quarter
ended December 1, 1996.
SIGNATURES
Pursuant to the requirements of the Securities and
Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
AULT INCORPORATED
(REGISTRANT)
<TABLE>
<S> <C> <C>
DATED: 1/10/96 /s/ Frederick M. Green
Frederick M. Green, President
Chief Executive Officer and
Chairman
DATED: 1/10/96 /s/ Carlos S. Montague
Carlos S. Montague, Vice
President
Chief Financial Officer and
Controller
<S> <C> <S>
</TABLE>
AULT INCORPORATED & SUBSIDIARY
CALCULATIONS OF CONSOLIDATED EARNINGS PER SHARE
(In Thousands of Dollars, Except Per Share Data)
<TABLE>
<CAPTION>
Dec. 1, Nov. 26,
1996 1995
<S> <C> <C>
Primary Earnings Per Common Share:
Net Income $517 $262
Average Shares of Common Stock and
Equivalent Outstanding:
Common Shares Beginning of Period 2,119,776 2,083,776
Common Stock From Exercise of
Options, Weighted 17,499 2,749
Additional Outstanding Common
Stock From Fully Dilutive
Options, Weighted* 263,944 90,064
Used to Compute Primary Earnings 2,401,219 2,176,589
Per Share
Primary Earnings Per Share $0.22 $0.12
<FN>
*Common stock equivalent for exercisable options amounting to 34,498
shares in fiscal 1996, had an antidilutive effect on the earnings per
share, because of their higher exercise prices compared to their
market values. The shares were, therefore excluded from the per share
earnings calculations.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATIONS FOUND ON
PAGES 2 THRU 4 OF THE COMPANY'S FORM 10-Q FOR SECOND QUARTER ENDED 12-01-96 AND
IS QUALIFIED IN ITS ENTIRETY BY REFFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-01-1997
<PERIOD-START> SEP-02-1996
<PERIOD-END> DEC-01-1996
<CASH> 431
<SECURITIES> 0
<RECEIVABLES> 7210
<ALLOWANCES> 0
<INVENTORY> 7532
<CURRENT-ASSETS> 15926
<PP&E> 9119
<DEPRECIATION> 6336
<TOTAL-ASSETS> 19090
<CURRENT-LIABILITIES> 11621
<BONDS> 0
0
0
<COMMON> 7025
<OTHER-SE> (817)
<TOTAL-LIABILITY-AND-EQUITY> 19090
<SALES> 17926
<TOTAL-REVENUES> 17926
<CGS> 13407
<TOTAL-COSTS> 13407
<OTHER-EXPENSES> 3456
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 377
<INCOME-PRETAX> 686
<INCOME-TAX> 169
<INCOME-CONTINUING> 517
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 517
<EPS-PRIMARY> .22
<EPS-DILUTED> .22
</TABLE>
