U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
Annual Report Under Section 13 or 15(d) of
The Securities Exchange Act of 1934
December 31, 1996 0-11353
(For the year ended) (Commission File No.)
CIRCUIT RESEARCH LABS, INC.
Arizona 86-0344671
State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization
Address of principal executive offices:
2522 West Geneva Drive Tempe, Arizona 85282
Registrant's Telephone No. (602) 438-0888
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.10 Par Value
This registrant has filed all reports required to be filed by
Section 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months and has been subject to such filing
requirements for the past 90 days.
Disclosure of delinquent filers in response to Item 405 of
Regulation SB is not contained in this form, and no disclosure will
be contained, to the best of Registrant's knowledge in definitive
proxy or information statements, incorporated by reference in Part
III of this Form 10-KSB or any amendment to this Form 10-KSB.
The registrant's revenues for fiscal 1996 were $ 2,541,730.
The aggregate market value of the voting stock of the registrant
held by non-affiliates of the registrant on February 28, 1997,
based on the closing sales price for such stock in the
Over-the-Counter market as reported by NASDAQ on such date was
$611,855.
At February 28, 1997, 597,682 shares of the registrant's common
stock were issued and outstanding.
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The registrant's December 31, 1996 Annual Report to Stockholders is
incorporated by reference in Parts I, II and III.
Exhibit Index located on page Seventeen.
CIRCUIT RESEARCH LABS, INC.
INDEX TO ANNUAL REPORT ON FORM 10-KSB
PART I Page
Item 1 Description of Business 3
Item 2 Description of Property 9
Item 3 Legal Proceedings 10
Item 4 Submission of Matters to a Vote of
Security Holders 10
PART II
Item 5 Market for Common Equity and Related
Stockholder Matters 11
Item 6 Management's Discussion and Analysis
or Plan of Operations 11
Item 7 Financial Statements 11
Item 8 Changes in and Disagreements with
Accountants on Accounting
and Financial Disclosure 11
PART III
Item 9 Directors, Executive Officers,
Promoters and Control Persons:
Compliance with Section 16(a) of
the Exchange Act 12
Item 10 Executive Compensation 14
Item 11 Security Ownership of Certain
Beneficial Owners and Management 16
Item 12 Certain Relationships and Related
Transactions 17
Item 13 Exhibits and Reports on Form 8-K 17
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PART I
ITEM 1 - DESCRIPTION OF BUSINESS
General
This information is incorporated by reference to "Corporate
Profile" and "Selected Financial Information" on page 1 of the
Company's 1996 Annual Report to Stockholders (the "1996 Report");
"Corporate Overview" on page 3 of the 1996 Report; and Notes 1, 2
and 8 to the Company's Consolidated Financial Statements on pages
17-22 of the 1996 Report. In addition, reference is made to
"Patents and Trademarks" on page 7, "Competition" on page 7, and
"Dependence on Major Customers" on page 8 of this Form 10-KSB.
Audio Processing
Audio processing equipment produced by the Company is used by radio
and television stations, entertainers and recording studios. The
Company's equipment "repackages" audio signals produced by
microphones, recordings and other audio sources. The equipment
alters such signals to control audio loudness (amplitude) and tonal
balance (equalization) prior to transmission. Audio processing
shapes the audio sound wave when it is in electrical impulse form
before it is transmitted by a carrier wave.
Radio stations utilize audio processing equipment to control the
electrical amplitude limit of audio signals (modulation limit) as
required by government regulations and to control the quality of
radio station signals received by listeners. All radio stations
utilize some type of audio processing to comply with governmental
and environmental regulations and to improve the apparent quality
of their signals. Approximately 10,800 AM and FM stations in the
United States use audio processing, as well as more than 19,000
radio stations in other countries. Of the approximately 1,600
television stations in the United States, about two-thirds of them
now broadcast in stereo, which requires audio processing. Based on
replacement equipment orders, the Company estimates that the
average useful life of audio processing equipment is less than five
years. Other recently developed products are appropriate for the
audio processing needs of the recording and performing industry.
The Principal Products
AUDIO PROCESSING PRODUCTS
CRL's audio processing equipment for radio broadcast can be
separated into four different series or product families, Digital
Series, Modular Series, Amigo Series and the Signature Series.
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Digital Series
The newest addition to CRL's radio processors is the Digital
Series. CRL digital products are on the leading edge of technology
with 100% digital architecture. The principal products are:
DP-100 Digital Processor The CRL DP-100 digital
processor is the newest addition to our FM processing
line. It is currently the only digital audio processor to
use 32 bit floating-point technology. Its advance design
allows the unit to serve a long life in it customer's
hands. The modular construction makes it possible for CRL
to offer specific PCB upgrades without changing the main
chassis. This design approach allows CRL to sell
additional upgrade products to current users of the
DP-100. The DP-100 FM digital processor gives a strong,
high quality sound that attracts and holds the listening
audience. The radio audience will enjoy a clear, bright
and appealing sound that is easy to listen to for long
periods of time. The DP-100 uses the latest digital
technology to its fullest potential to produce the most
advanced digital processor on the market. The DP-100
includes a true digital stereo multiplex generator, gated
AGC (Audio Gain Controller), 5 band compressor,
multi-band limiter and graphic equalizer. Also included
is CRL's exclusive stereo sound enhancement and unique
dynamic gating system.
SC-100 RDS/RBDS (Radio Data Systems/Radio Broadcast Data
Systems) allows a FM radio station to transmit additional
streams of digital information giving the station new
promotional methods, new public service opportunities and
exciting new revenue possibilities. CRL's SC-100 is a
RDS/RBDS generator using the latest in DSP (Digital
Signal Processing) digital technology. The visual text
message that the SC-100 sends to the new "smart radios"
can be used for call letter and slogan recognition,
traffic and weather reports, emergency alert messages and
display advertising. The SC-100 can also be used for
paging, billboard sign control, global positioning plus
other exciting applications. In addition, CRL has become
a value added reseller of equipment to build RDS/RBDS
paging systems. CRL configures the system to the
customer's requirements and, for an additional fee can
oversees the installation of the system.
Modular Series
In its Modular Series CRL designed the entire AM or FM processing
chain as building blocks. As a result, the station can start
simply, with just a limiter and stereo generator, for instance, and
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then add a compressor later as its processing needs change and its
budget allows. The modular approach allows the radio station to buy
just what it needs. The principal Modular systems are:
FM1g A basic FM audio processing system consisting of
CRL's automatic gain controller (AGC) /limiter and
digitally synthesized stereo generator.
FM2g A complete system with an AGC, a limiting system
and digitally synthesized stereo generator.
FM2g+ A comprehensive FM system with an AGC, a limiter, a
digitally synthesized stereo generator and four band
compressor.
AM2m An AGC and a peak limiter are the two components of
this basic mono AM system.
AM4m CRL's most popular AM system is a three unit system
consisting of an AGC, a modulation limiter and four band
compressor.
AM2s CRL's basic stereo AM system includes a stereo AGC
and a limiter.
AM4s Three components form CRL's enhanced stereo AM
system. The system includes a stereo AGC, four band
compressor/equalizer and matrix limiter.
Amigo Series
The next family of radio processing is the Amigo Series. The Amigo
family of processors is an integrated "one box" processing system
designed for the small to mid-size station in both international
and domestic markets. The Amigo family of processors is one of the
best performing processors in its class. The principal Amigo
systems are:
Amigo The Amigo is a combination of a dual band AGC, a
variable pre-emphasis multi-band limiter and digitally
synthesized stereo generator. The single unit contains a
complete FM audio processing system. The Amigo is
flexible and powerful, yet designed for easy set up and
use. The Amigo FM is one of CRL's most popular selling
systems.
Amigo AM The Amigo AM is a complete stereo audio
processing system. It includes CRL's patented AM stereo
processing circuitry as found in the modular AM systems.
The system includes a dual band AGC, triband limiter, and
NRSC (National Radio Systems Committee) output filtering.
The Amigo AM can be used on mono for customers waiting to
convert to stereo.
BAP-2000 A complete stand alone audio processor for any
mono FM. The system consists of an advanced dual band
audio AGC and limiter. Internal options selected by the
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radio station allow the BAP-2000 to be tailored to handle
most any mono audio control job.
Signature Series
The Signature Series is a high performance audio processing system.
The principal products are:
Audio Signature The Audio Signature gives the power of
digital control with multi-band compression and limiting
for high performance power. The FM Audio Signature
includes a stereo AGC and four band compressor with a
sophisticated set of processing controls to produce the
radio station's own unique and distinctive sound.
Modulation Signature The Modulation Signature features a
digitally modulated stereo generator and a fully
adjustable limiting system.
Real Time Event Sequencer The Real Time Event Sequencer
is a programmable event timer that can control any
combination of eight outputs and store up to 255 events.
Events can be programmed to the second for each day of
the week, for each different month of the year.
Television Products
CRL has a complete line of quality audio processing, plus Stereo,
SAP (secondary audio program, primarily designed for public second
language usage) and PRO channel (non-public use with integrated
input limiter, data and telemetry inputs) generators. The audio
processing was designed with surround sound compatibility in mind.
Many first generation stereo users are converting over to the
TVS-3000 series of products because of it surrond sound
capabilities.
TVS-3001 The TVS-3001 is a state-of-the-art stereo
television processing system that offers maximum control
of the audio program material. It includes a precision
tri-band AGC with horizontal sync rejection filter,
exclusive CRL/CBS loudness control circuitry, reversed
phase audio corrector and audio asymmetry removal
circuits.
TVS-3003 The TVS-3003 is a digitally synthesized MTS
generator with dbx encoding, advanced transfer function
pre-emphasis limiter and a proprietary stereo sound field
enhancer.
TVS-3004 The TVS-3004 Professional Channel (PRO)
generator is a digitally synthesized subcarrier generator
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for non-public use with integrated input limiter, data
and telemetry inputs.
TVS-3005 The TVS-3005 is a digitally synthesized
subcarrier generator for a secondary audio program (SAP)
channel, primarily designed for public second language
usage.
BAP-2000 The BAP-2000 is a complete audio processor with
horizontal sync
rejection filter for mono television applications.
Noise Reduction Systems
DX1 & DX2 For the professional audio and music industry, CRL
manufactures noise reduction systems incorporating an
integrated circuit patented under the dynafexR name. The
dynafexR noise reduction system effectively reduces tap hiss
and other background noises from virtually any audio source.
The dynafex system is available in mono (DX1) and stereo
(DX2). The dynafex chip is also utilized in all CRL products
where possible.
Test and Measurement
DAA-50 With the conversion of audio technology to digital,
CRL recognized the need for an inexpensive test and analysis
tool and developed the DAA-50. The DAA-50 receives and
decodes audio data. A variety of information about the signal
can be determined through easily defined LED status indicator
lights. Because of its compact size, light weight and
partability, the DAA-50 can be used when and wherever it's
needed.
Technology Research and Development
Tektronix AM70 CRL licensed certain digital audio testing
technology to Tektronix. Tektronix's Pathfinder AM70 Audio
Analyzer/Generator is the product of this combined effort.
The AM70 is a handheld programmable audio product that
operates in three modes: generator (serves as source of
analog and digital signals), monitor (provides visual and
audible output), and modify (allows real-time editing).
New Products
CRL introduced its DP-100 Digital Processor for the international
and domestic FM market. Also new features and improvements were
added to CRL's SC-100 RDS/RBDS generator for paging and billboard
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sign control. In addition, CRL is continuing to research and
develop new products for release in the coming years.
Research and Development
This information is incorporated by reference to "Corporate
Strategy" on page 3 of the 1996 Report and to that part of
"Management's Discussion and Analysis" on page 8 of the 1996
Report.
Patents and Trademarks
The Company holds eight United States patents including three
acquired by purchase in July 1985 and a British patent. These
patents cover circuitry components that appear basic to the design
of the Company's current audio processing equipment, AM Stereo and
its dynafexR chip. During 1993, the Company entered into a
licensing agreement with Tektronics. This information is
incorporated by reference on page 7 of the 1996 Report.
"CRL Systems", "CRL Audio" and "dynafexR" are registered trade
names utilized by the Company.
Backlog and Backlog Comparisons
The backlog at December 31, 1996 was approximately $228,350
compared to $566,720 at December 31, 1995. The current backlog is
expected to be filled within the current fiscal year. Additional
information is incorporated by reference to "Selected Financial
Information" on page 1 of the 1996 Report.
Effect of Existing or Probable Government Regulations
The Company's current and forthcoming products are not regulated by
any government. The Company's domestic customers are highly
regulated by the Federal Communications Commission ("FCC") and the
Company's products perform certain audio processing to control a
radio station's signals within FCC limits. The Company's stereo
generators assist its domestic customers in maintaining certain
specifications set by the FCC. The Company's AM limiters and FM TV
stereo generators assist its domestic customers in maintaining
certain specifications set by the FCC.
Competition
Audio processing equipment for broadcast application is produced by
several small companies with less than 100 employees. Based on
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limited information available from Dun & Bradstreet, the largest of
the companies providing audio processing equipment is Orban
Associates, now a wholly-owned subsidiary of a US corporation. The
Company competes with Orban on the basis of uniqueness of design,
quality and price. Custom audio processing equipment is provided
by several very small competitors.
Marketing and Distribution
This information is incorporated by reference to "Management's
Discussion and Analysis" relative to results of operations on page
8 of the 1996 Report and to Note 10 to the Company's Consolidated
Financial Statements on page 22 of the 1996 Report. In addition,
reference is made to "Foreign Operations and Export Sales" on page
9 of this Form 10-KSB.
Warranties and Service
The Company provides a one-year limited warranty against defects in
product, materials and workmanship on it radio line equipment. The
standard warranty for the DP-100, SC-100 and TV series products is
three years. Company employees perform all warranty and repair
service at the Company's facilities. Warranty claims have been
minimal throughout the history of the Company.
Delivery and Installation
The Company delivers FOB its audio processing equipment for
installation by the user. For a fee, the Company will provide
installation service or assistance.
Seasonality
Historically, sales of the Company's equipment have been seasonal
in that demand tends to increase before and after market rating
periods for radio stations. The market rating periods for various
areas are now staggered, making such seasonality less important.
However, sales do increase after major trade shows, such as the
National Association of Broadcasters.
Sales Terms
Company products are currently sold and shipped domestically with
payment due 30 days from the invoice date. Products returned in
1996 were approximately 3.2% of sales. International shipments are
made against letters of credit or are prepaid by wire transfers.
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Dependence on Major Customers
The current industry market is primarily comprised of individual
and small group ownership's of the broadcast properties. The
Company, however, markets its products through wholesale
distributors and agents. Its largest wholesale distributor, Harris
Allied Broadcast Equipment, Richmond, Indiana, accounted for 9% of
net sales for the year ended December 31, 1996 and 17% of net sales
for the year ended December 31, 1995 . Additional information is
incorporated by reference to Note 10 of the Company's Consolidated
Financial Statements on page 22 of the 1996 Report.
Production and Assembly
The Company produces products at facilities in Tempe, Arizona. The
Company assembles certain components, particularly those utilizing
proprietary information, and subcontracts certain other
subassemblies. Other components are purchased from manufacturers
and included in the Company's final assembly.
In a move to diversify, CRL purchased late in 1995, the assets,
name and backlog of a small subcontractor, Desert Assemblies.
Desert Assemblies has been CRL's contract printed circuit board
assembler for several years with proven high quality and ontime
delivery. With the downsizing of many electronic manufacturers in
the Phoenix area, the potential market for subcontract work
expanded beyond the capacity of Desert Assemblies. CRL had excess
manufacturing capacity, including inventory handling. This
purchase allows a consolidation of the subcontract operation into
the CRL facility making for a more efficient operation for both CRL
and Desert Assemblies. Desert Assemblies operates as a division of
CRL.
Sources and Availability of Raw Materials
The Company has experienced no problems in obtaining needed
components and materials. However, because it purchases components
and raw material from outside suppliers, the Company is dependent
on those manufacturers and suppliers. The Company has made
informal arrangements with suppliers for materials and components,
and has second and third sources of supply for most items. The
Company has attempted to exclude materials, parts, and supplies
from its product designs for which availability is not reasonably
assured.
Compliance with Environmental Laws
The Company believes that it is in compliance with all
environmental laws and regulations applicable to its operations.
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Employees
The Company employs 35 persons, 31 of whom are full-time, including
clerical, sales, technical and manufacturing personnel, all in
Tempe, Arizona. The Company has not had, and does not expect to
have difficulty in recruiting and training its labor force.
Governmental Approval of Principal Products
No governmental approval is required for the production and sale of
any of the Company's products. Certain international shipments
require export licenses.
Foreign Operations and Export Sales
The Company has no foreign operations. For the year ended December
31, 1996, the Company's export sales totaled approximately
$1,549,400 which was 61% of total sales. All foreign sales were
made through CRL International, Inc., the Company's wholly-owned
Foreign Sales Corporation, which was incorporated in Guam in
January 1991. The Company's 1996 export sales by region are as
follows:
Region Export Sales Percentage
Europe $ 378,800 24%
Pacific Rim 716,100 46
Latin and South America 139,000 9
Canada and Mexico 151,300 10
Other 164,200 11
Total $1,549,400 100%
ITEM 2 - DESCRIPTION OF PROPERTY
In June 1983, the Company contracted for the purchase of land and
construction of a building at 2522 West Geneva Drive, Tempe,
Arizona. In February 1984, the Company moved its operations into
this 5,300 square foot building on a 37,500 square foot parcel of
land that currently houses the Company's executive, administrative,
sales and research facilities. This property is subject to a
mortgage collateralizing the property and is referred to in Note 7
to the Company's Consolidated Financial Statements on page 20 of
the 1996 Report.
In August 1990, the Company entered into a contract for the
construction of an addition to the existing building at 2522 West
Geneva Drive. The project was completed in January 1991 and was
financed through cash reserves. The 5,000 square foot addition is
being utilized by corporate manufacturing. The Company believes its
plant, equipment and offices are in good condition and are adequate
for the Company's foreseeable future.
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It is the Company's policy to not invest in real estate other than
that real estate necessary for the operations of the business.
ITEM 3 - LEGAL PROCEEDINGS
The Company is not involved in any material legal proceedings.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders during the
fourth quarter of the fiscal year covered by this report.
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PART II
ITEM 5 - MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
This information is incorporated by reference to "Stock Market
Information" on page 23 of the 1996 Report.
Over-the-counter market quotations reflect inter-dealer prices,
without retail mark-up, mark-down or commission and may not
necessarily represent actual transactions.
ITEM 6 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
This information is incorporated by reference to "Management's
Discussion and Analysis" on pages 8 through 11 of the 1996 Report.
ITEM 7 - FINANCIAL STATEMENTS
This information is incorporated by reference to the Consolidated
Financial Statements on pages 12 through 22 of the 1996 Report.
ITEM 8 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
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PART III
ITEM 9 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS: COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE
ACT
Name Age Position
Ronald R. Jones 49 Chief Executive Officer,
President and a Director
Gary D. Clarkson 44 Secretary/Treasurer and a
Director
Erle M. Constable 78 Assistant Treasurer and a
Director
Carl E. Matthusen 53 Director
Gary M. Hamker 60 Director
Dennis L. Drew 51 Vice President Operations,
Assistant
Secretary/Treasurer
DIRECTORS
Ronald R. Jones has been Chief Executive Officer and a director of
the Company since its incorporation in 1978. Mr. Jones founded
Circuit Research Labs in 1974. Since 1976, he has devoted his sole
business efforts to the Company and its affiliates. Prior to that
time, Mr. Jones served as a consultant chief engineer for numerous
radio stations. He also taught courses in broadcast engineering at
Phoenix College and the Institute of Broadcast Arts from 1974 to
1976. Mr. Jones holds an associate degree in electronics
engineering technology from DeVry Institute of Technology, Phoenix,
Arizona. He is a member of the Institute of Electrical and
Electronics Engineers and the Audio Engineering Society. Mr. Jones
is President and a director of CRL International, Inc., the
Company's wholly owned foreign sales corporation.
Gary D. Clarkson has been Secretary and a director of the Company
since its incorporation and in July 1992 was elected Treasurer.
Mr. Clarkson founded Circuit Research Labs with Mr. Jones in 1974,
and has devoted substantially all of his business efforts to the
Company's business since that time. He has been a design engineer
for Circuit Research Labs from 1974 to present. He holds an
associate degree in electronics engineering technology from DeVry
Institute of Technology, Phoenix, Arizona. Mr. Clarkson served as
assistant and chief engineer at many radio stations from 1971 until
1978. Mr. Clarkson is Treasurer and a director of CRL
International, Inc., the Company's wholly owned foreign sales
corporation.
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Erle M. Constable has served as a director of the Company since
1983 and Treasurer from January 1987 to November 1988 when he
reduced his activity to Assistant Treasurer. In 1983, Mr.
Constable retired from Dynalectron Corporation (now DYNCORP), then
a publicly-held diversified technical services company where he
served as Vice President of Finance and Corporate Development. He
was employed by Dynalectron in 1973, and was in charge of an
acquisition program which merged 15 companies into Dynalectron.
Prior to joining Dynalectron, Mr. Constable worked for Fairchild
Industries, Lockheed Aircraft Corporation, Glenn L. Martin Company
and Trans World Airlines. He holds undergraduate and masters
degrees in business administration received in 1939 and 1940 from
the University of Nebraska. Periodically, Mr. Constable acts as a
consultant to the Company and receives an hourly consulting fee for
his services. Mr. Constable is a director of CRL International,
Inc., the Company's wholly owned foreign sales corporation.
Carl E. Matthusen has served as a director of the Company since
February 1988. Mr. Matthusen began his career in the broadcast
industry in 1963 serving in various capacities at seven radio
broadcast stations in Arizona, Wisconsin, Minnesota and Virginia.
Since 1978, he has been General Manager of KJZZ/Sun Sounds operated
by the Mesa Community College in Mesa, Arizona. In addition, he is
a guest lecturer at Mesa Community College, Phoenix College and
Arizona State University as well as a consultant to Arizona Western
Community College and the Arizona Commission on Post-secondary
Education. Mr. Matthusen also served as Chairman of the Board of
Directors of the National Public Radio Network from 1992 to 1996,
where he has been a director from 1990 to 1996.
Gary M. Hamker has been a member of the Board of Directors and a
Special Projects Consultant since July 1993. Mr. Hamker is retired
from NCR/AT&T after 30 years in Marketing and Corporate Product
Management. While with NCR/AT&T he had many diversified
assignments, including developing new domestic and international
computer product strategies and product/marketing plans for the
worldwide market. He was instrumental in development and sales
strategies of mini-computers and personal computer/network systems
during their infancy. Approval of research and development, new
product specifications, monitoring R&D budgets, developing and
approving new product plans and planning profitable products
phase-out, were a few of his responsibilities. His expertise
includes working on system problems, on proposals to increase
market penetration with large multi-national accounts and on
developing internal communications to improve departmental
cooperation and effectiveness. Periodically, Mr. Hamker acts as a
consultant to the Company and receives an hourly consulting fee for
his services.
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OTHER EXECUTIVE OFFICERS
Dennis L. Drew joined the Company in 1993 as controller. In 1994,
he was appointed to the positions of Vice President of Operations,
and Assistant Sectretary/Treasurer. Before joining the Company,
Mr. Drew spent three years as a Project Manager for Computer Cable
Specialists. Prior to Computer Cable Specialists, Mr. Drew held
several senior financial management positions with companies in the
computer leasing industry. These positions covered a wide range of
responsibilities including implementing computerized internal
controls to negotiating contracts and loan agreements. Mr. Drew
has an MBA from Arizona State University.
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ITEM 10 - EXECUTIVE COMPENSATION
The Company did not pay any individual cash compensation in excess
of $100,000 for services provided during the fiscal year. The
following table sets forth compensation paid or accrued to the
chief executive officer during each of the three years ended
December 31, 1996.
Summary Compensation Table
Name and Other
Principal Position Year Salary Bonus Compensation
Ronald R. Jones
President and
Chairman of
the Board 1996 $ 72,696 -0- $ 2,022(1)
1995 72,696 -0- 2,152(1)
1994 72,696 -0- 2,270(1)
(1) Fee paid by Company for the personal guarantee of the SBA
loan.
The Company has no employment contracts currently in force. The
Company has agreements with all employees calling for nondisclosure
of trade secrets.
The Company has group life, disability, and medical insurance
plans, a 401(k) pension plan, and an Employee Stock Purchase Plan.
The 1994 Stock Option Plan was approved by the Company's
shareholders at the Company's annual meeting on May 6, 1994.
Compensation of Directors
During the year ended December 31, 1996, directors received no
compensation for attending meetings.
Employee Pension Plan
The Company sponsors the CRL, INC. 401(k) PROFIT SHARING PLAN (the
"Plan") for the benefit of all employees meeting certain
eligibility requirements. Under the Plan, participants are
permitted to make pre-tax contributions to their plan accounts.
The Company will match 50% of a participant's contributions up to a
maximum Company matching contribution of 3% of a participant's
annual compensation. Total annual contributions to a participant's
account may not exceed 25% of annual compensation. In addition,
the Company, at its sole discretion, may make an annual profit
sharing contribution to the Plan out of its current or accumulated
profits. The annual contribution, if any, is allocated to
participants based upon each participant's annual compensation.
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The Company has not made an annual contribution and currently has
no plans to do so. The Company did not make a contribution to the
account of the individual listed in the preceding cash compensation
table for the year ended December 31, 1996.
Stock Purchase Plan
The Company has an employee stock purchase plan which is offered to
substantially all employees, including officers. Employees may
purchase the Company's common stock through payroll deductions not
exceeding $50 per week and shares are purchased at the market
price, by a nonaffiliated dealer on the open market. During 1996,
two employees participated in this plan.
Stock Options
The following is a brief summary of the Company's 1994 Stock Option
Plan. The closing bid price of the Company's common stock on the
NASDAQ National Market System on February 28, 1997 was $2.125 per
share.
In May 1994, the Company's stockholders approved the Company's 1994
Stock Option Plan, which set aside an aggregate of 60,000 shares
of common stock for which options may be granted to employees,
officers, directors, and consultants. Options granted and not
exercised under the Company's previous plan were canceled and new
options were granted. The Company's Board of Directors appoints
the Stock Option Committee which is authorized to grant incentive
stock options and non qualified stock options under the Plan,
select optionees, determine the number of shares to be granted to
each nominee, select the term of the option (up to ten years), and
determine the price to be paid on the exercise of the option,
provided that such price must not be less than 100% of the market
value of the shares subject to the option at the time it is
granted. Each option is exercisable from time to time subject to
such restrictions on exercisability as the Stock Option Committee
may impose at the grant date. This plan expires in April 2004.
As of February 28, 1997, options to purchase a total of 10,312
shares were outstanding to 5 employees and directors.
The following table sets forth information as to all options to
purchase Common Stock under the Plan which were granted to certain
officers and directors and to all officers and directors as a group
and which were outstanding as of February 28, 1997:
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Average
Name Capacities Shares Price
Erle M. Constable Director and
Assistant Treasurer 1,562(1) $1.25
Carl E. Matthusen Director 1,250(2) $1.25
All officers and directors
as a group (2 individuals) 2,812(3) $1.25
(1) 1,562 shares granted May 6, 1994. All shares became
exercisable on May 6, 1995 and expire May 6, 1997.
(2) 1,250 shares granted May 6, 1994. All shares became
exercisable on May 6, 1995 and expire May 6, 1997.
(3) An additional 7,500 shares may be acquired by employees
exercising options which expire May 6, 1997.
Page 19
ITEM 11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
A. Security Ownership of Certain Beneficial Owners
As of February 28, 1997, the following persons were known by the
Company to be the beneficial owners of more than 5% of the
Company's Common Stock:
Amount and
Name and Address of Nature of Percent of
Title of Class Beneficial Owner Beneficial Owner Class(1)
$.10 par value
common Ronald R. Jones 187,500 31.4%
$.10 par value
common Gary D. Clarkson 121,312 20.3%
All of
Circuit Research Labs, Inc.
2522 West Geneva Drive
Tempe, Arizona 85282
(1) On the basis of 597,682 shares outstanding on February 28,
1997.
B. Security Ownership of Management
The stock ownership by directors and officers of the Company as of
February 28, 1997 is set forth below. Each person named exercises
sole voting power over all shares beneficially owned.
Amount and
Name and Nature of Percent
Address of Beneficial of Class
Title of Class Beneficial Owner Owner (4)
$.10 par value
common Ronald R. Jones 187,500 31.2%
$.10 par value
common Gary D. Clarkson 121,312 20.2%
$.10 par value
common Erle M. Constable 2,500(1) .4%
$.10 par value
common Carl E. Matthusen 1,250(2) .2%
All of
Circuit Research Labs, Inc.
2522 West Geneva Drive
Tempe, Arizona 85282
Officer and directors as
a group (4 persons) 312,562(3) 52%
Page 20
(1) 938 shares owned; 1,562 shares under exercisable options.
Held as community property with Eugenia Constable.
(2) No shares owned; 1,250 shares under exercisable options.
(3) Includes 2,812 shares which may be acquired by exercising
stock options.
(4) Percentage is calculated on the basis that all director and
officer shares under stock options presently exercisable are
deemed outstanding, a total of 600,494 shares.
ITEM 12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
This information is incorporated by reference to Notes 7 and 8 of
the Consolidated Financial Statements on pages 20-21 of the 1996
Report.
ITEM 13 - EXHIBITS AND REPORTS ON FORM 8-K
The following consolidated financial statements of Circuit Research
Labs, Inc. and subsidiaries are included in the annual report of
the registrant to its stockholders for the year ended December 31,
1996 and are incorporated by reference in Item 7:
Consolidated balance sheets - December 31, 1996 and
1995.
Consolidated statements of operations - Years ended
December 31, 1996 and 1995.
Consolidated statements of stockholders' equity -
Years ended December 31, 1996 and 1995.
Consolidated statements of cash flows - Years ended
December 31, 1996 and 1995.
Notes to consolidated financial statements - Years
ended December 31, 1996 and 1995.
Exhibit Index
(a) Exhibit No.
11 Schedule of computation of per share earnings - see page
19.
23 Consent of Deloitte & Touche LLP - see page 18
In addition to the exhibits previously described, the Company
hereby incorporates the following exhibits by reference
pursuant to Rule 12B-32, each of which was filed as an
exhibit to the Company's Registration Statement on Form S-18
which was effective October 14, 1983, and subsequent filings
in a timely manner.
Page 21
3 Articles of Incorporation as Amended and Bylaws
previously filed and incorporated herein by reference
10 Stock Option Plan previously filed and incorporated
herein by reference 1994 Stock Option Plan previously
filed and incorporated herein by reference
13 1996 Annual Report to Security Holders incorporated by
reference Previous Annual Reports to Security Holders and
Forms 10-Q were previously filed in a timely manner and
are incorporated herein by reference.
21 Subsidiaries of the Registrant - CRL International, Inc.
the Company's wholly-owned Foreign Sales Corporation was
incorporated in Guam in January 1991.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the last quarter of
1996.
Page 22
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration
Statement No. 33-82176 of Circuit Research Labs, Inc. on Form S-8
of our report dated March 1, 1997 incorporated by reference in this
Annual Report on Form 10-KSB of Circuit Research Labs, Inc. for the
year ended December 31, 1996.
DELOITTE & TOUCHE LLP
Phoenix, Arizona
March 26, 1997
Page 23
CIRCUIT RESEARCH LABS, INC.
SCHEDULE OF COMPUTATION OF PER SHARE EARNINGS
YEARS ENDED DECEMBER 31, 1996 AND 1995
1996 1995
PRIMARY(1)
Average shares outstanding 597,682 597,682
Net effect of stock options which
are dilutive 2,222
TOTAL 599,904 597,682
NET INCOME (LOSS) $ 123,160 $306,720
INCOME (LOSS PER COMMON SHARE) $.21 $(.51)
(1) Fully diluted approximates primary.
Page 24
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.
CIRCUIT RESEARCH LABS, INC.
Registrant
Date: March 29, 1997 By /s/ Ronald R. Jones
Ronald R. Jones, Chief Executive
Officer and Chairman of the
Board
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.
Date: March 29, 1997 By /s/ Ronald R. Jones
Ronald R. Jones, Chief Executive
Officer and Director (Principal
Executive Officer)
Date: March 29, 1997 By /s/ Gary D. Clarkson
Gary D. Clarkson,
Secretary/Treasurer and
Director
Date: March 29, 1997 By /s/ Dennis L. Drew
Dennis L. Drew, Controller, Vice
President Operations
Date: March 29, 1997 By /s/ Erle M. Constable
Erle M. Constable, Director
Date: March 29, 1996 By /s/ Carl E. Matthusen
Carl E. Matthusen, Director
Date: March 29, 1997 By /s/ Gary M. Hamker
Gary M. Hamker, Director
Page 25
CIRCUIT RESEARCH LABS, INC.
CORPORATE PROFILE
Circuit Research Labs, Inc. (the "Company") is an electronics
company developing, manufacturing and marketing high quality audio
processing and transmission encoding equipment for the radio,
television and professional audio markets world wide.
The Company's main product lines control the audio quality and
range of radio and television audio reception including generators
allowing radio and television stations to broadcast in stereo.
Professional sound reinforcement and digital audio test equipment
is also produced having a wide range of applications.
SELECTED FINANCIAL INFFORMATION
YEARS ENDED DECEMBER 31
1996 1995 19 94 1993 1992
Operating Highlights
Net sales $2,524,870 $1,884,402 $2,074,716 $2,089,390 $2,098,422
Other income 16,860 26,524 29,596 29,119 47,386
Total revenues 2,541,730 1,910,926 2,104,312 2,118,509 2,145,808
Net income (loss) 123,160 (306,720) (92,427) (126,062) (92,340)
Net income (loss)
per common share(1) .21 (.51) (.15) (.21) (.15)
Weighted average
number of common
shares outstanding(1) 599,904 597,682 597,682 597,682 597,685
Balance Sheet Highlights
Current assets $1,431,175 $1,389,754 $1,466,831 $1,533,432 $1,666,304
Current liabilities 239,811 321,974 133,355 154,272 145,007
Total assets 2,169,590 2,149,670 2,236,761 2,357,265 2,514,126
Long-term
obligations 122,287 138,458 112,354 119,514 159,578
Total liabilities 362,098 460,432 245,709 273,786 304,585
Stockholders'
equity 1,807,492 1,689,238 1,991,052 2,083,479 2,209,541
No cash dividends have been declared.
Key Statistics
Current ratio 5.97 4.32 11.00 9.94 11.5
Book value per
share(1) $3.02 $2.83 $3.33 $3.49 $3.70
Working capital $1,191,364 $1,067,780 $1,333,476 $1,379,160 $1,521,297
Order backlog $228,350 $566,720 $103,000 $227,000 $312,000
Employees 35 25 20 26 24
Page 1
CIRCUIT RESEARCH LABS, INC.
Dear Shareholders:
Your company was able to make delivery on a large number of the
new DP-100 audio processors during 1996 utilizing our many hours
of research and design. This is a major step forward in
technology enabling us to design and produce equipment in the
digital mode so important to our customers and our competitive
position.
As an indication of the acceptance of the newly designed product
by the marketplace, CRL's net sales increased from $1.9 million in
1995 to over $2.5 million in 1996, an increase of about 31
percent. The net profit of $123,160 compares with a 1995 loss of
$306,720.
Our shipments continue to be primarily in the international
marketplace with over 61% of sales being made outside the U.S.
I personally have spent a great portion of my sales effort abroad
as the number of radio and TV stations overseas far outnumber the
ones in the U.S. Many of these stations are improving their
equipment, opening up opportunities for sales of many of our
products.
The Company has other digital design based products in process for
introduction in the near future which should assist in maintaining
the momentum gained in 1996.
CRL's work force is due a big "thank you" from all of us since the
positive gains in 1996 are the result of everyone putting in a
full effort to make this all happen.
We again thank our shareholders who have maintained their
investment during this period.
Very truly yours,
Ronald R. Jones
Chairman and President
Page 2
CIRCUIT RESEARCH LABS, INC.
Corporate Overview
Founded in 1974 as broadcast industry consultants, Circuit
Research Labs built upon its understanding of the broadcast
industry's needs by expanding into product development and
manufacturing. In 1978, Circuit Research Labs, Inc., herein after
referred to as the Company or CRL, was incorporated , and in late
1983 became registered as a public company on the NASDAQ stock
exchange.
Since the first product, which was designed to improve the
"coverage and quality" of low powered AM radio stations, CRL has
been committed to improving broadcast quality. CRL's product lines
have grown to include digital and analog audio processing and
encoding devices for mono or stereo AM or FM radio, international
short-wave and mono or stereo television, RDS/RBDS generators and
receivers and digital audio analyzers. These products are labeled
"CRL Systems".
Corporate Strategy
CRL is dedicated to serving the audio processing needs of the
broadcast and professional audio markets with the highest quality
products utilizing state-of-the-art technology. To achieve this
goal requires a high level of research and development and CRL
commits a large portion of its revenues to developing new products
and constantly improving existing product performances. CRL also
monitors new technology frontiers in our existing markets and
others for possible product improvements. CRL has confidence in
its engineers' expertise to develop new products on the leading
edge of technology for the broadcast industry.
In order to prevent dependency on one market, when appropriate,
consultants, licensing of technology and acquisition of product
lines are also used to diversify operations. CRL also encourages
product engineering and development for other complementary
broadcast manufacturers. Examples include the development of
digital audio analyzers and the acquisition of Desert Assemblies.
CRL's production capabilities are constantly being improved and
new marketing concepts are being developed to provide increased
market share. Trusting in our dealers internationally and
domestically for final product distribution, the CRL marketing and
sales staff works directly in sales efforts with potential
customers along with and for its dealers. Supported by an
efficient customer service department, CRL maintains a reputation
for excellent business ethics and selling standards.
The Broadcast Industry and CRL
CRL was a major participant in the National Radio Systems
Committee (NRSC) which developed standards for AM stations adopted
by the FCC. During 1987, CRL developed and produced equipment
enabling AM stations to meet certain NRSC standards and, as a
result, enjoyed an increase in sales and continued to be a market
leader in AM processing.
CRL is a member of the National Association of Broadcasters (NAB).
The NAB is the world's largest, most extensive broadcaster's
association, offering a wide variety of services to radio and
television stations, as well as organizations that provide
products and/or services to the broadcast industry. CRL's staff
contribute articles and technical papers to various NAB
publications and participate in technical conferences.
Page 3
CRL is a member of the (Radio Data Systems) RDS Forum. The Forum
promotes the exchange of experience between broadcasters and
manufacturers on RDS system implementation and provides guidance
to manufacturers on broadcasters' operational needs. RDS is a
system which enables a FM radio station to transmit digital data
without interfering with the current audio signal.
In 1985, CRL purchased all rights to the patented dynafexR chip.
The dynafexR noise reduction system effectively reduces tap hiss
and other background noises from virtually any audio source. Two
products are being produced under the dynafexR label and most CRL
processors utilize the dynafexR chip.
In the last quarter of 1995, CRL acquired Desert Assemblies, a
contract electronic assemblies company. The acquisition of Desert
Assemblies expands and enhances CRL's production capabilities. CRL
now possesses the ability to design, build and test products for
other companies (turnkey production).
CRL holds several patents on component designs for CRL products
within the broadcast industry.
The Principal Products
AUDIO PROCESSING PRODUCTS
CRL's audio processing equipment for radio broadcast can be
separated into four different series or product families, Digital
Series, Modular Series, Amigo Series and the Signature Series.
Page 5
Digital Series
The newest addition to CRL's radio processors is the Digital
Series. CRL digital products are on the leading edge of technology
with 100% digital architecture. The principal products are:
DP-100 Digital Processor The CRL DP-100 digital
processor is the newest addition to our FM processing
line. It is currently the only digital audio processor
to use 32 bit floating-point technology. Its advance
design allows the unit to serve a long life in it
customer's hands. The modular construction makes it
possible for CRL to offer specific PCB upgrades without
changing the main chassis. This design approach allows
CRL to sell additional upgrade products to current users
of the DP-100. The DP-100 FM digital processor gives a
strong, high quality sound that attracts and holds the
listening audience. The radio audience will enjoy a
clear, bright and appealing sound that is easy to listen
to for long periods of time. The DP-100 uses the latest
digital technology to its fullest potential to produce
the most advanced digital processor on the market. The
DP-100 includes a true digital stereo multiplex
generator, gated AGC (Audio Gain Controller), 5 band
compressor, multi-band limiter and graphic equalizer.
Also included is CRL's exclusive stereo sound
enhancement and unique dynamic gating system.
Page 4
SC-100 RDS/RBDS (Radio Data Systems/Radio Broadcast Data
Systems) allows a FM radio station to transmit
additional streams of digital information giving the
station new promotional methods, new public service
opportunities and exciting new revenue possibilities.
CRL's SC-100 is a RDS/RBDS generator using the latest in
DSP (Digital Signal Processing) digital technology. The
visual text message that the SC-100 sends to the new
"smart radios" can be used for call letter and slogan
recognition, traffic and weather reports, emergency
alert messages and display advertising. The SC-100 can
also be used for paging, billboard sign control, global
positioning plus other exciting applications. In
addition, CRL has become a value added reseller of
equipment to build RDS/RBDS paging systems. CRL
configures the system to the customer's requirements
and, for an additional fee, oversees the installation of
the system.
Modular Series
In its Modular Series, CRL designed the entire AM or FM processing
chain as building blocks. As a result, the station can start
simply, with just a limiter and stereo generator, for instance,
and then add a compressor later as its processing needs change and
its budget allows. The modular approach allows the radio station
to buy just what it needs. The principal Modular systems are:
FM1g A basic FM audio processing system consisting of
CRL's automatic gain controller (AGC) /limiter and
digitally synthesized stereo generator.
FM2g A complete system with an AGC, a limiting system
and digitally synthesized stereo generator.
FM2g+ A comprehensive FM system with an AGC, a limiter,
a digitally synthesized stereo generator and four band
compressor.
AM2m An AGC and a peak limiter are the two components of
this basic mono AM system.
AM4m CRL's most popular AM system is a three unit system
consisting of an AGC, a modulation limiter and four band
compressor.
AM2s CRL's basic stereo AM system includes a stereo AGC
and a limiter.
AM4s Three components form CRL's enhanced stereo AM
system. The system includes a stereo AGC, four band
compressor/equalizer and matrix limiter.
Amigo Series
The next family of radio processing is the Amigo Series. The Amigo
family of processors is an integrated "one box" processing system
designed for the small to mid-size station in both international
and domestic markets. The Amigo family of processors is the best
performing processor in its class. The principal Amigo systems
are:
Amigo The Amigo is a combination of a dual band AGC, a
variable pre-emphasis multi-band limiter and digitally
synthesized stereo generator. The single unit contains a
complete FM audio processing system. The Amigo is
flexible and powerful, yet designed for easy set up and
use. The Amigo FM is one of CRL's most popular selling
systems.
Amigo AM The Amigo AM is a complete stereo audio
processing system. It includes CRL's patented AM stereo
processing circuitry as found in the modular AM systems.
The system includes a dual band AGC, triband limiter,
and NRSC (National Radio Systems Committee) output
filtering. The Amigo AM can be used on mono for
customers waiting to convert to stereo.
Page 5
BAP-2000 A complete stand alone audio processor for any
mono FM. The system consists of an advanced dual band
audio AGC and limiter. Internal options selected by the
radio station allow the BAP-2000 to be tailored to
handle most any mono audio control job.
Signature Series
The Signature Series is a high performance audio processing
system. The principal products are:
Audio Signature The Audio Signature gives the power of
RESULTS OF OPERATIONS
digital control with multi-band compression and limiting
for high performance power. The FM Audio Signature
includes a stereo AGC and four band compressor with a
sophisticated set of processing controls to produce the
radio station's own unique and distinctive sound.
Modulation Signature The Modulation Signature features a
digitally modulated stereo generator and a fully
adjustable limiting system.
Real Time Event Sequencer The Real Time Event Sequencer
is a programmable event timer that can control any
combination of eight outputs and store up to 255 events.
Events can be programmed to the second for each day of
the week, for each different month of the year.
Television Products
CRL has a complete line of quality audio processing, plus Stereo,
SAP (secondary audio program, primarily designed for public second
language usage) and PRO channel (non-public use with integrated
input limiter, data and telemetry inputs) generators. The audio
processing was designed with surround sound compatibility in mind.
Many first generation stereo users are converting over to the
TVS-3000 series of products because of it surround sound
capabilities.
TVS-3001 The TVS-3001 is a state-of-the-art stereo
television processing system that offers maximum control
of the audio program material. It includes a precision
tri-band AGC with horizontal sync rejection filter,
exclusive CRL/CBS loudness control circuitry, reversed
phase audio corrector and audio asymmetry removal
circuits.
TVS-3003 The TVS-3003 is a digitally synthesized MTS
generator with dbx encoding, advanced transfer function
pre-emphasis limiter and a proprietary stereo sound
field enhancer.
TVS-3004 The TVS-3004 Professional Channel (PRO)
generator is a digitally synthesized subcarrier
generator for non-public use with integrated input
limiter, data and telemetry inputs.
TVS-3005 The TVS-3005 is a digitally synthesized
subcarrier generator for a secondary audio program (SAP)
channel, primarily designed for public second language
usage.
BAP-2000 The BAP-2000 is a complete audio processor with
horizontal sync
rejection filter for mono television applications.
Page 6
Noise Reduction Systems
DX1 & DX2 For the professional audio and music industry, CRL
manufactures noise reduction systems incorporating an
integrated circuit patented under the dynafexR name. The
dynafexR noise reduction system effectively reduces tap hiss
and other background noises from virtually any audio source.
The dynafex system is available in mono (DX1) and stereo
(DX2). The dynafex chip is also utilized in all CRL products
where possible.
Test and Measurement
DAA-50 With the conversion of audio technology to digital,
CRL recognized the need for an inexpensive test and analysis
tool and developed the DAA-50. The DAA-50 receives and
decodes audio data. A variety of information about the signal
can be determined through easily defined LED status indicator
lights. Compact and light weight, the DAA-50 can be used when
and wherever it's needed.
Technology Research And Development
Tektronix AM70 CRL licensed certain digital audio testing
technology to Tektronix. Tektronix's Pathfinder AM70 Audio
Analyzer/Generator is the product of this combined effort.
The AM70 is a handheld programmable audio product that
operates in three modes: generator (serves as source of
analog and digital signals), monitor (provides visual and
audible output), and modify (allows real-time editing).
New Products
New features and improvements were added to CRL's DP100 Digital
Processor and SC-100 RDS/RBDS generator for paging. In addition,
CRL is continuing to research and develop new products for release
in the coming years.
Page 7
CIRCUIT RESEARCH LABS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
YEARS ENDED DECEMBER 31, 1996 AND 1995
RESULTS OF OPERATIONS
The following tables set forth financial information for each of
the four quarters of the year ended December 31, 1996 and for the
years ended December 31, 1996 and 1995.
1996 Quarters Ended
March 31 June 30 September 30 December 31
Net sales $607,264 $599,761 $631,295 $686,550
Other income 5,005 3,461 4,215 4,179
Total revenues $612,269 $603,222 $635,510 $690,729
Gross margin on net sales $390,921 $354,460 $360,987 $291,296
Gross margin percent 64% 59% 57% 42%
Net income $21,232 $ 30,970 $64,984 $5,974
Net income percent 3% 5% 10% .01%
Income per share $.04 $.05 $.10 $.01
Years Ended December 31
1996 1995
Net sales $2,524,870 $1,884,402
Other income 16,860 26,524
Total revenues $2,541,730 $1,910,926
Gross margin on net sales $1,397,664 $1,188,266
Gross margin percent 55% 63%
Net income (loss) $123,160 $(306,720)
Net income (loss) percent 5% (16)%
Income (loss) per share $.21 $.(.51)
Net sales in 1996 increased 34% to $2,525,000 compared to
$1,884,000 for 1995. The increase is the result of increased sales
of CRL's audio processing equipment, the sales of package paging
Page 8
systems that compliment the sales of CRL's SC100, and revenues
from CRL's circuit board assembly division.
Cost of goods sold in 1996 was 45% of net sales compared to 37% in
1995. The increase is the result of the expected lower profit
margins in the sales of package paging systems and CRL's circuit
board assembly division. The cost of goods sold on CRL's main
product lines for the year ended December 31, 1996 was 38% which
was consistent with 37% for the same period of 1995.
Selling, general and administrative expense in 1996 of $996,000
was comparable to the selling, general and administrative expense
in 1995 of $1,056,000. The $60,000 decrease was due primarily to
a decrease in domestic and international marketing costs including
travel and trade show costs.
Research and development expense for the period ended December 31,
1996 was $272,000 a decrease of $158,000 compared to the same
period of 1995 of $430,000. The decrease was the result of lower
developmental cost on the new product lines and lower labor cost
resulting from not having contract engineers on staff.
Interest and other income of $17,000 for the period ended December
31, 1996 was $10,000 lower than for the same period of 1995 of
$27,000. The decrease was due to lower income from investments as
a result of the decrease in funds invested.
FINANCIAL CONDITION
At December 31, 1996, the Company had net working capital of
$1,191,000 and a current ratio of 5.97 to 1. CRL believes that
its financial resources are adequate to fund its operations in
1997 and will continue to finance operations from its existing
sources of cash.
The Company's credit line expired on July 1, 1996, and since it
had not been used, the Company did not pursue its renewal. The
Company believes future liquidity needs will be met by a
combination of cash generated from operating activities, the
reduction of investments, and existing cash balances.
Receivables at December 31, 1996 of $190,000 were consistent with
the December 31, 1995 balance of $162,000. Our credit policy
remains the same as in previous years, with letters-of-credit for
international shipments and short-term extension of payment terms
to domestic dealers.
Inventories of $956,000 at December 31, 1996 increased $119,000
compared to $837,000 of inventories at December 31, 1995. The
increase is the result of raw material purchases for the
production of the new product, the DP-100.
There were no major capital expenditures in 1996 and none are
contemplated for 1997.
The document includes "forward-looking" statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
Management's anticipation of future events is based upon
assumptions regarding levels of competition, research and
development results, raw material markets, the markets in which
the Company operates, and stability of the regulatory environment.
Any of these assumptions could prove inaccurate, and therefore
there can be no assurance that the forward-looking information
will prove to be accurate.
Page 9
CIRCUIT RESEARCH LABS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
YEARS ENDED DECEMBER 31, 1995 AND 1994
RESULTS OF OPERATIONS
The following tables set forth financial information for each of
the four quarters of the year ended December 31, 1995 and for the
years ended December 31, 1995 and 1994.
1995 Quarters Ended
March 31 June 30 September 30 December 31
Net sales $537,185 $422,865 $488,577 $435,775
Other income 6,006 7,167 4,887 8,464
Total revenues $543,191 $430,032 $493,464 $444,239
Gross margin on net sales $358,627 $283,925 $306,042 $239,672
Gross margin percent 67% 67% 63% 55%
Net income (loss) $2,483 $(47,261) $(85,713) $(176,229)
Net income (loss) percent 0% (11)% (17)% (40)%
Income (Loss) per share $.00 $(.08) $(.14) $(.29)
Years Ended December 31
1995 1994
Net sales $1,884,402 $2,074,716
Other income 26,524 29,596
Total revenues $1,910,926 $2,104,312
Gross margin on net sales $1,188,266 $1,308,855
Gross margin percent 63% 63%
Net loss $(306,720) $( 92,427)
Net loss percent (16)% (4)%
Loss per share $(.51) $.(.15)
Net sales in 1995 at $1,884,402 were lower compared to $2,074,716
for 1994. The decrease was the result of lower international
Page 10
demand for the Company's radio products. The percentage of
international sales also decreased to 55% or $1,028,842 compared
to 66%, or $1,364,200 for 1994.
Cost of goods sold in 1995 was 37% which was comparable to 1994 at
37%.
Selling, general and administrative expense in 1995 of $1,056,000
was comparable to the selling, general and administrative expense
in 1994 of $1,074,700.
Research and development expense for the period ended December 31,
1995 was $429,600, an increase of $70,900 compared to the same
period of 1994 of $358,700. The increase was the result of
contract engineering work on the new products, the DP-100 and the
RDS/RBDS units.
Interest and other income of $26,500 for the period ended December
31, 1995 was comparable to the same period of 1994 of $29,600.
FINANCIAL CONDITION
At December 31, 1995, the Company had net working capital of
$1,067,800 and a current ratio of 4.32 to 1. The increase in
liabilities was due to the purchase of Desert Assemblies.
Receivables at December 31, 1995 of $162,200 decreased $47,400
from December 31, 1994 balance of $209,600 as a result of
decreased sales in 1995 and a receivable for royalties due on the
licensing agreement with Tektronics in 1994.
Inventory of $836,600 at December 31, 1995 increased $125,600
compared to $711,000 of inventory at December 31, 1994. The
increase is the result of raw material purchases for the
production of the new product, the DP-100.
CRL purchased late in 1995 the assets, name and backlog of a small
subcontractor, Desert Assemblies. Desert Assemblies has been
CRL's contract printed circuit board assembler for several years
with proven high quality and ontime delivery. With the downsizing
of many electronic manufacturers in the Phoenix area, the
potential market for subcontract work expanded beyond the capacity
of Desert Assemblies. CRL had excess manufacturing capacity,
including inventory handling. This purchase allows a
consolidation of the subcontract operation into the CRL facility
making for a more efficient operation for both CRL and Desert
Assemblies. Desert Assemblies will be operated as a division of
CRL
There were no other major capital expenditures in 1995.
Page 11
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
Circuit Research Labs, Inc.
Tempe, Arizona
We have audited the accompanying consolidated balance sheets of
Circuit Research Labs, Inc. and its subsidiaries as of December
31, 1996 and 1995, and the related consolidated statements of
operations, stockholders' equity and cash flows for the years then
ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion
on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present
fairly, in all material respects, the financial position of
Circuit Research Labs, Inc. and its subsidiaries at December 31,
1996 and 1995, and the results of their operations and their cash
flows for the years then ended in conformity with generally
accepted accounting principles.
DELOITTE & TOUCHE LLP
Phoenix, Arizona
March 1, 1997
Page 12
CIRCUIT RESEARCH LABS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
ASSETS 1996 1995
CURRENT ASSETS:
Cash $ 48,048 $ 25,974
Securities available-for-sale (Note 3) 167,961 297,667
Accounts receivable, less allowance
for doubtful accounts of $6,520 in
1996 and $16,500 in 1995 189,616 162,242
Inventories (Note 4) 955,922 836,628
Prepaid expenses and other 69,628 67,243
Total current assets 1,431,175 1,389,754
PROPERTY, PLANT AND EQUIPMENT - Net
(Notes 5 and 7) 578,564 594,152
OTHER ASSETS - Net 159,851 165,764
TOTAL $2,169,590 $2,149,670
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 64,650 $ 91,401
Accrued salaries and benefits 65,699 58,004
Accrued professional fees 21,976 27,405
Customer deposits 40,432 99,818
Other accrued expenses and liabilities 31,826 26,210
Current portion of long-term debt (Note 7) 15,228 19,136
Total current liabilities 239,811 321,974
LONG-TERM DEBT, Net of current portion (Note 7) 122,287 138,458
Total liabilities 362,098 460,432
STOCKHOLDERS' EQUITY (Note 8):
Preferred stock, $100 par value -
authorized, 500,000 shares, none issued
Common stock, $.10 par value -
authorized, 20,000,000 shares, 597,682
shares issued and outstanding 59,768 59,768
Additional paid-in capital 1,247,240 1,247,240
Retained earnings 500,484 377,324
Unrealized appreciation on securities
available-for-sale 4,906
Total stockholders' equity 1,807,492 1,689,238
TOTAL $2,169,590 $2,149,670
See notes to consolidated financial statements.
Page 13
CIRCUIT RESEARCH LABS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1996 AND 1995
1996 1995
NET SALES (Note 10) $2,524,870 $1,884,402
COST OF GOODS SOLD 1,127,206 696,136
Gross profit 1,397,664 1,188,266
OPERATING EXPENSES (Note 11):
Selling, general and administrative 995,882 1,055,950
Research and development 272,354 429,630
Total operating expenses 1,268,236 1,485,580
INCOME (LOSS) FROM OPERATIONS 129,428 (297,314)
OTHER INCOME (EXPENSE):
Interest and other income 16,860 26,524
Interest expense (23,078) (13,989)
Total other (expense) income (6,218) 12,535
INCOME (LOSS) BEFORE INCOME TAX
PROVISION (BENEFIT) 123,210 (284,779)
INCOME TAX PROVISION (BENEFIT) (Note 9):
Current 50 ( 8,059)
Deferred 30,000
Total income tax provision
(benefit) 50 21,941
NET INCOME (LOSS) $ 123,160 $ (306,720)
INCOME (LOSS) PER COMMON SHARE $ .21 $(.51)
WEIGHTED AVERAGE NUMBER OF COMMON
AND COMMON EQUIVALENT SHARES OUTSTANDING 599,904 597,682
See notes to consolidated financial statements.
Page 14
CIRCUIT RESEARCH LABS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1996 AND 1995
Unrealized
Additional Appreciation
Common Paid-in Retained On Securities
Stock Capital Earnings Available-for-Sale Total
BALANCE,
JANUARY 1, 1995 $59,768 $1,247,240 $ 684,044 $1,991,052
Unrealized
appreciation on
securities
available-for-sale $4,906 4,906
Net los s (306,720) (306,720)
BALANCE,
DECEMBER 31, 1995 59,768 1,247,240 377,324 4,906 1,689,238
Unrealized
depreciation on
securities
available-for-sale (4,906) (4,906)
Net income 123,160 123,160
BALANCE,
DECEMBER 31, 1996 59,768 $1,247,240 $ 500,484 $0 $1,807,492
See notes to consolidated financial statements.
Page 15
CIRCUIT RESEARCH LABS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996 AND 1995
1996 1995
OPERATING ACTIVITIES:
Net income (loss) $123,160 $ (306,720)
Adjustments to reconcile net income (
loss) to net cash used in
operating activities:
Depreciation and amortization 80,958 77,867
Deferred income taxes 30,000
Changes in assets and liabilities:
Accounts receivable (27,374) 47,355
Income taxes receivable 13,000
Inventories (119,294) (125,582)
Prepaid expenses and other (2,385) 7,016
Other assets 4,832 (452)
Accounts payable and accrued
expenses (78,255) 176,652
Net cash used in operating
activities (18,358) (80,864)
INVESTING ACTIVITIES:
Capital expenditures (65,370) (40,552)
Purchase of securities (264,931) (396,049)
Proceeds from sale or maturity
of securities 389,731 425,000
Payments received on stockholder notes 1,081 3,381
Net cash provided by
(used in) investing
activities 60,511 (8,220)
FINANCING ACTIVITIES -
Principal payments on long-term debt (20,079) (7,159)
NET INCREASE (DECREASE) IN CASH 22,074 (96,243)
CASH, BEGINNING OF YEAR 25,974 122,217
CASH, END OF YEAR $ 48,048 $ 25,974
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest $ 23,078 $ 13,989
Debt issued to purchase Desert
Assemblies $ 45,230
See notes to consolidated financial statements.
Page 16
CIRCUIT RESEARCH LABS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996 AND 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation - The consolidated financial
statements include the accounts of Circuit Research Labs, Inc.
and its wholly-owned subsidiaries: CRL Systems, Inc., National
Communications Research Center, Inc. ("NCRC") and CRL
International, Inc. (collectively, the "Company").
Significant intercompany accounts and transactions have been
eliminated in consolidation.
Securities available-for-sale are securities being held for
indefinite periods of time, including securities that
management intends to use for liquidity needs or that may be
sold in response to changes in interest rates, prepayments or
other factors and are carried at estimated fair value, with the
net, after-tax unrealized gain or loss recorded as a separate
component of stockholders' equity with no effect on current
results of operations.. Realized gains and losses are included
in other income and are computed using specific identification.
Inventories are stated at the lower of cost (first-in,
first-out method) or market.
Property, plant and equipment are stated at cost. Depreciation
is computed using the straight-line method over the estimated
useful lives of the related assets ranging from 3 years to 31.5
years.
Other assets consist principally of cash surrender values on
officers' life insurance, patents which are stated at cost less
amortization computed on the straight-line method over the
underlying asset's estimated useful life and certain
intangibles acquired from Desert Assemblies. Accumulated
amortization of patents was $36,979 and $35,831 at December 31,
1996 and 1995, respectively.
Income Taxes - Income tax expense is calculated under the
liability method as required under Statement of Financial
Accounting Standards ("SFAS") No. 109. Under the liability
method, deferred tax assets and liabilities are determined
based upon the differences between financial statement carrying
amounts and the tax bases of existing assets and liabilities
and are measured at the tax rates that will be in effect when
these differences reverse.
Revenue is recognized on sales of products at the time of
shipment.
New accounting pronouncements - In October 1995, the Financial
Accounting Standards Board issued SFAS No. 123 "Accounting for
Stock Based Compensation". The Company has determined that it
will not change to the fair value method and will continue to
use Accounting Principles Board Opinion No. 25 for measurement
and recognition of employee stock based compensation.
Use of estimates - The preparation of financial statements in
conformity with generally accepted accounting principles
necessarily requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period.
Actual results could differ from these estimates.
Page 17
Financial instruments - SFAS No. 107 "Disclosures About Fair
Value of Financial Instruments" was adopted for the year ended
December 31, 1995. SFAS No. 107 requires disclosures of the
estimated fair value of certain financial instruments. The
Company has estimated the fair value of its financial
instruments using available market data. However, considerable
judgment is required in interpreting market data to develop
estimates of fair value. The use of different market
assumptions or methodologies may have a material effect on the
estimates of fair value. The carrying values of cash,
securities available-for-sale, receivables, accounts payable
and long-term debt approximate fair values due to the
short-term maturities or market rates of interest of these
instruments.
Research and development costs are charged to expense as
incurred.
Income (loss) per common share is based on the weighted average
number of shares outstanding during each period, after giving
effect for any dilutive stock options, which are considered to
be common stock equivalents. For the year ended December 31,
1995, options that would otherwise qualify as common stock
equivalents are excluded because their inclusion would be
antidilutive.
Reclassifications - Certain reclassifications were made to the
1995 financial statements to conform with the 1996 presentation.
2. DESCRIPTION OF BUSINESS
The Company develops, manufactures and markets audio
processing and transmission encoding equipment for the
broadcast and professional entertainment industries. In
addition ,the Company has become a value added reseller of
equipment to build RDS/RBDS paging systems. CRL configures
the system to the customer's requirements and for an
additional fee, can oversee the installation of the system.
The Company also acts as a subcontractor for circuit board
assemblies, since December 4, 1995 when it purchased certain
assets of Desert Assemblies, a former contractor and
sub-assembler for the Company.
3. SECURITIES AVAILABLE-FOR-SALE
SFAS No. 115 "Accounting for Certain Investments in Debt and
Equity Securities" requires the classification of securities at
acquisition into one of three categories: held-to-maturity,
available-for-sale or trading -- with different reporting
requirements for each classification. All of the Company's
marketable securities are classified as available-for-sale. The
fair value of the Company's securities are estimated based on
quoted market prices for those or similar instruments.
A summary of the Company's securities is as follows at
December 31:
1996 1995
Amortized cost:
Preferred stocks $ 50,000 $ 50,000
United States Treasury bonds 117,961 242,761
Total $167,961 $292,761
Page 18
Estimated fair value:
Preferred stocks $ 50,000 $ 54,500
United States Treasury bonds 117,961 243,167
Total $167,961 $297,667
Gross unrealized holding gains $4,906
At December 31, 1996, the United States Treasury bonds mature
within one year.
4. INVENTORIES
Inventories consist of the following at December 31:
1996 1995
Raw materials and supplies $335,072 $437,368
Work in process 314,291 169,640
Finished goods 306,559 229,620
Total $955,922 $836,628
5. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following at
December 31:
1996 1995
Land $ 130,869 $ 130,869
Building and improvements 497,004 497,004
Furniture and fixtures 397,546 383,523
Machinery and equipment 616,081 564,734
Total 1,641,500 1,576,130
Less accumulated depreciation 1,062,936 981,978
Property, plant and equipment - net $ 578,564 $ 594,152
6. CREDIT ARRANGEMENTS
The Company's line of credit commitment expired July 1, 1996
and since it had not been used, the Company did not pursue it
renewal. The Company believes its future liquidity needs will
be met by a combination of cash generated from operating
activities, the reduction of investments and existing cash
balances.
Paage 19
7. LONG-TERM DEBT
Long-term debt consists of the following at December 31:
1996 1995
12.7% mortgage note collateralized by
the Company's operating facility requiring
monthly principal and interest payments of
$1,913 through April 2004 $104,385 $112,364
Noninterest-bearing note issued in
connection with acquisition of Desert
Assemblies, requiring annual payments of
$11,000 through January 2000 39,000 55,000
Less unamortized discount based on
imputed interest rate of 10% (5,870) (9,770)
Total 137,515 157,594
Less current portion (15,228) (19,136)
Long-term debt, net of current portion $122,287 $138,458
Principal payments on long-term debt are scheduled as follows:
1997, $15,228; 1998, $18,626; 1999, $20,894; 2000, $23,478,
2001, $15,287 and $44,002, thereafter.
The Board of Directors of the Company has elected to provide
compensation to two principal stockholders for their
continuing guarantee of the long-term note payable for the
Company's operating facility. Such compensation is calculated
at 3% of the outstanding balance of the long-term note payable
at each fiscal year-end .
8. STOCKHOLDERS' EQUITY
In May 1994, the Company's stockholders approved the Company's
1994 Stock Option Plan, which set aside an aggregate of
60,000 shares of common stock for which options may be granted
to employees, officers, directors, and consultants. Options
granted and not exercised under the Company's previous plan
were canceled and new options were granted. The Company's
Board of Directors appointed the Stock Option Committee which
is authorized to grant incentive stock options and non
qualified stock options under the Plan, select optionees,
determine the number of shares to be granted to each nominee,
select the term of the option (up to ten years), and
determine the price to be paid on the exercise of the option,
provided that such price must not be less than 100% of the
market value of the shares subject to the option at the time
it is granted. Each option is exercisable from time to time
subject to such restrictions on exercisability as the Stock
Option Committee may impose at the grant date. This plan
expires in April 2004.
Page 20
Information with respect to stock option activity follows:
Option Price
Shares Per Share
Outstanding at January 1, 1995 14,062 $1.25
Cancelled 0
Issued 0
Outstanding at December 31, 1995 14,062 $1.25
Cancelled 3,750 $1.25
Issued 0
Outstanding at December 31, 1996 10,312 $1.25
All options are currently exercisable, and the expiration date
is May 6, 1997. The aggregate exercise price of options
outstanding at December 31, 1996 was $12,890.
Preferred stock may be issued in amounts with such
designations, preferences, voting rights, privileges and such
other restrictions and qualifications as the Board of
Directors may establish. No preferred stock has been issued.
9. INCOME TAXES
The principal reasons for the difference between the income tax
provision (benefit) and the amounts computed by applying the
statutory income tax rates to income (loss) before income tax
provision (benefit) for the years ended December 31, are as
follows:
1996 1995
Federal tax at statutory rates $31,000 $(88,300)
State tax at statutory rates 11,000 (25,600)
Dividends deduction 1,200 (1,300)
Officers' life insurance 4,300 3,400
Use of net operating loss (47,450)
Other (6,259)
Increase in valuation allowance 140,000
Total $50 21,941
At December 31, the deferred taxes represent the tax effect of
temporary differences related to:
1996 1995
Current deferred taxes:
Inventory capitalization $ 22,300 $ 25,900
Prepaid expenses (24,900) (26,900)
Inventory obsolescence reserve 40,100 30,200
Allowance for doubtful accounts 2,600 6,600
Other 500
Deferred tax valuation allowance (40,600) (35,800)
Total $ 0 $ 0
Page 21
Non-current deferred taxes:
Depreciation $ (28,000) $(22,000)
Operating loss carryforward 70,500 161,500
Federal general business credit
carryforward 85,000 85,000
Other 2,700 3,200
Deferred tax valuation allowance (130,200) (227,700)
Total $ 0 $ 0
At December 31, 1996, a valuation allowance totaling $ 170,800
was recorded which relates to, among other items, federal and
state net operating losses and federal general business credit
carryforwards for which the utilization is not reasonably assured.
Net operating loss carryforwards of approximately $170,000 which
expire through 2010 are available for federal income tax purposes.
10.SALES TO MAJOR CUSTOMERS AND EXPORT SALES
Sales during the two years ended December 31, 1996 were
conducted primarily through wholesale distributors and
dealers. One wholesale distributor accounted for approximately
9% of net sales for the year ended December 31, 1996 and 17% of
net sales for the year ended December 31, 1995.
International sales in 1996 and 1995 totaled approximately
$1,549,400 and $1,029,000, respectively. Foreign sales are made
through the Company's wholly-owned foreign sales corporation.
The Company requires that all sales be paid in U.S. currency.
Accordingly, there are no foreign currency gains or losses for the
years ended December 31, 1996 or 1995. The Company's export
sales by region are as follows:
Export Sales
Region 1996 % 1995 %
Europe $ 378,800 24%$ 233,100 23%
Pacific Rim 716,100 46 363,900 35
Latin and South America 139,000 9 121,800 12
Canada and Mexico 151,300 10 124,600 12
Other 164,200 11 185,600 18
Total $1,549,400 100% $1,029,000 100%
11. EMPLOYEE BENEFIT PLAN
As of January 1, 1991, the Company adopted a 401(k) profit
sharing plan (the "Plan") for the benefit of all employees who
meet certain eligibility requirements. The Company will match
50% of employee contributions up to a maximum contribution by
the Company of 3% of a participant's annual compensation. Total
annual contributions to a participant's account may not exceed 25%
of compensation. Company contributions made to the Plan were $13,189
and $15,498 in 1996 and 1995, respectively.
Page 22
CIRCUIT RESEARCH LABS, INC.
STOCK INFORMATION
The Company's common stock is publicly traded in the
over-the-counter market (NASDAQ symbol: CRLI) and commenced
trading on November 4, 1983. As of February 28, 1997, there were
597,682 shares of common stock issued and outstanding, with an
estimated 324 stockholders of record. The following table sets
forth the high and low closing bid prices as reported by the
National Association of Securities Dealers Automated Quotations
(NASDAQ).
1996 - Quarters Ended
March 31 June 30 September 30 December 31
Bid Quotation Range
High $1.63 $1.75 $1.63 $1.94
Low $1.25 $1.50 $1.50 $1.63
1995 - Quarters Ended
March 31 June 30 September 30 December 31
Bid Quotation Range
High $1.75 $2.00 $1.68 $1.63
Low $1.38 $1.63 $1.13 $1.38
Over-the-counter market quotations reflect inter-dealer prices,
without retail mark-up, mark-down or commission and may not
necessarily represent actual transactions.
DIVIDENDS
The Company has not paid any dividends on its common stock for the
two most recent fiscal years and intends to retain its earnings
for use in the development of its business. Therefore, the
Company does not expect to pay cash dividends at any time in the
foreseeable future. No contractual restrictions or limitations
exist on the Company's present or future ability to pay dividends.
Page 23
CIRCUIT RESEARCH LABS, INC.
CORPORATE DIRECTORY
OFFICERS AND DIRECTORS:
Ronald R. Jones
Chairman of the Board of Directors, President, Chief Executive
Officer and
Chief Operating Officer
Gary D. Clarkson
Secretary/Treasurer and Director
Erle M. Constable
Assistant Treasurer and Director
Carl E. Matthusen
Director
General Manager KJZZ/Sun Sounds
Gary M. Hamker
Director
Dennis L. Drew
Vice President Operations and Assistant Secretary/Treasurer
CORPORATE INFORMATION
Corporate Headquarters:
Circuit Research Labs, Inc.
2522 West Geneva Drive
Tempe, Arizona 85282
Transfer Agent and Registrar: Independent Auditors:
Harris Trust and Savings Bank Deloitte & Touche LLP
111 West Monroe Street 2901 North Central Avenue
Chicago, Illinois 60603 Suite 1200
Phoenix, Arizona 85012
Financial Public Relations Counsel: Corporate Counsel:
The Equity Group Inc. James S. Freedman, Esquire
919 Third Avenue 4455 East Camelback Rd., E160
New York City, New York 10022 Phoenix, Arizona 85018
Additional Information:
A copy of Circuit Research Labs, Inc.'s current Form 10-KSB has
been filed with the Securities and Exchange Commission and is available
on request without charge by writing to the company's corporate
headquarters and marked: Attention: Investor Relations.
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<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 48,048
<SECURITIES> 167,961
<RECEIVABLES> 183,096
<ALLOWANCES> 6,520
<INVENTORY> 955,922
<CURRENT-ASSETS> 1,431,175
<PP&E> 1,641,500
<DEPRECIATION> 1,062,936
<TOTAL-ASSETS> 2,169,590
<CURRENT-LIABILITIES> 239,811
<BONDS> 122,287
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<COMMON> 59,768
<OTHER-SE> 1,807,492
<TOTAL-LIABILITY-AND-EQUITY> 2,169,590
<SALES> 2,524,870
<TOTAL-REVENUES> 2,541,730
<CGS> 1,127,206
<TOTAL-COSTS> 995,882
<OTHER-EXPENSES> 272,354
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<INCOME-PRETAX> 123,210
<INCOME-TAX> 50
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