[LIVE]
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM lO-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934 (Fee Required)
For the fiscal year ended October 26, 1996
[ ] TRANSITION REPORT UNDERSECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (No Fee Required)
For the fiscal year ended October 26, 1996
Commission File No. 0-1455
OPT-SCIENCES CORPORATION
(Name of small business issuer as specified in its charter)
NEW JERSEY 21-0681502
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Post Office Box 221, 1912 Bannard Street, Riverton, New Jersey 08077
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including Area Code: (609)829-2800
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.25 par value per share
(Title of Class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15 (d) of the Exchange Act during the past 12 months (or for such
shorter period that the issuer was required to file such reports), and (2) has
been subject to such filing requirements for the past 9O days.
YES X NO
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B 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 X
State issuer's revenues for its most recent fiscal year: $2,500,000.
The aggregate market value of the 243,239 common shares held by non-affiliates
of the issuer, based on the average of the bid and asked prices as of
December 30, 1996, was approximately $1,277,000.
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
State the number of shares outstanding of each of the issuer's classes at
common equity, as of the latest practical date: 776,115 shares of Common Stock
as of December 31, 1996.
Documents Incorporated by Reference
Notice of the 1997 Annual Meeting of Shareholders to be held on March 19, 1997
and related Information Statement which are to be filed are incorporated by
reference into Items 9 through 12 of Part
III. Exhibits 3 and 21 of Form 10-K for the fiscal year ended October 31, 1982,
are incorporated by reference into Exhibits 3 and 21 respectively of Item 13,
Part IV.
Transitional Small Business Disclosure Format
Yes ; No X
<PAGE>
TABLE OF CONTENTS
FORM lOKSB ANNUAL REPORT -- FISCAL YEAR 1996
OPT-SCIENCES CORPORATION AND SUBSIDIARY
PART I
PAGE
Item 1.Description of Business . . . . . . . . . . . . . 3
Item 2.Description of Property. . . . . . . . . . . . . . 5
Item 3.Legal Proceedings . . . . . . . . . . . . . . . . 5
Item 4.Submission of Matters to a Vote of Security
Holders . . . . . . . . . . . . . . . . . . . . . 5
PART II
Item 5.Market for Common Equity and
Related Stockholder Matters . . . . . . . . . . . 5
Item 6.Management's Discussion and Analysis or Plan of
Operation. . . . . . . . . . . . . . . . . . . . . 6
Item 7.Financial Statements . . . . . . . . . . . . . . . 7
Item 8.Changes In and Disagreements with Accountants
on Accounting and Financial Disclosure . . . . . . 7
PART III
Item 9.Directors, Executive Officers,Promotors and
Control Persons; Compliance with Section 16(a)
of the Exchange Act . . . . . . . . . . . . . . 8
Item lO.Executive Compensation . . . . . . . . . . . . 8
Item 11.Security Ownership of Certain Beneficial Owners
and Management . . . . . . . . . . . . . . . . . 8
Item 12.Certain Relationships and Related Transactions . 8
PART IV
Item 13.Exhibits and Reports on Form 8-K . . . . . . . . 9
Signatures . . . . . . . . . . . . . . . . . . . . . . . 23 <PAGE>
PART I
Item 1. Description of Business
OPT-Sciences Corporation (the "Company"), through its wholly-owned operating
subsidiary, O&S Research, Inc., is engaged principally in the cutting, grinding,
polishing, coating and painting of glass lenses and glass for flat panel
displays utilized in the custom fabrication of components for aircraft
instrument panels. Principal revenues and income are derived from this business
with no other line of business accounting for 15% or more of revenues and
income under applicable criteria. The Company sells i
g operations at facilities in the Riverton, New Jersey area.
The business is labor intensive. As of October 26, 1996, the Company and its
operating subsidiary employed 41 persons, an increase of 10 from the preceding
year. This number is expected to increase in Fiscal 1997. The aircraft
industry is retrofitting older airplanes and replacing glass lenses in
instrument panels with flat panel displays which the Company manufactures, thus
resulting in a build up in demand for the Company's products. Overall labor
relations with the employees are satisfactory. None
tine employee benefits, such as life and health insurance. The Company does not
maintain any qualified pension or profit sharing plan for its employees.
There are many companies in the United States and overseas which compete
against the Company in its manufacture and coating of glass lenses and glass for
flat panel displays for aircraft. There are presently a number of competitors
of the Company, which are as large as or larger than the Company and have
greater financial resources than the Company. The principal methods of
competition in this industry are price, product quality, delivery date controls,
and other customer services. The Company's quality
rtant to the Company's business is its ability to manufacture optical thin film
coatings for glass lenses and glass instruments used on cathode ray tubes
(CRTs) and liquid crystal displays (LCDs). In addition, the Company has gained
considerable visibility as an approved vendor to supply avionic display glass
for many aerospace instrument manufacturers. It's glass lenses are used on all
types of applications from handheld scanners to the avionic displays used on
the space shuttle.
The Company's products are sold domestically and abroad primarily by the
Company's President and other management personnel. Four aerospace instrument
manufacturers constituted approximately 75% of total sales in Fiscal 1996. No
other customer makes up more than 5%. New technology has reduced dependence on
the Company's glass for electro-mechanical instruments, which is declining in
significance as a Company product. The Company now coats more glass for CRTs
and LCDs which its customers are using in l
Based on current projections, sales and earnings are expected to increase
moderately in Fiscal 1997. The Company's development of new specialty coatings
used on high performance CRTs and LCDs and its penetration into commercial flat
panel display markets will pave the way for increased sales in 1997.
Foreign sales for Fiscal l996 constituted approximately 6% of sales. This is
the same as the prior year. The Company does not expect significant changes in
Fiscal 1997.
The Company had a backlog of orders totalling $900,000 at the end of Fiscal
l996. This represented a 50% increase from $605,000 at the end of Fiscal l995.
Since the manufacturing cycle for the Company is generally less than one year,
most of the backlog registered at the end of the fiscal year is expected to be
completed during Fiscal 1997.
The Company believes it is in substantial compliance with all federal, state
and local regulations controling the discharge of materials into the environment
or otherwise protecting the environment. There has been no material effect on
the Company's capital expenditures, earnings or competitive position due to
compliance with such regulations. The Company is subject to the Occupational
Safety and Health Act and believes it is in substantial compliance with such Act
and the regulations thereunder.
Certain of the matters discussed above contain forward-looking statements that
involve risks and uncertainties. Although the Company believes that the
assumptions accompanying such forward-looking statements are reasonable, the
Company cannot give any assurance that expected results will occur. A
significant variation between actual results and any of such assumptions may
cause actual results to differ materially from expectations.
Item 2. Description of Property
Operations are conducted at the principal office and manufacturing facility
located in the East Riverton Section of Cinnaminson, New Jersey. This property
is owned by the Company's operating subsidiary in fee simple, and the property
is not encumbered by any lien or mortgage. The facility is constructed of
cinderblock and masonry construction appropriate to its size and use and
contains approximately ll,OOO square feet of manufacturing space. The Company's
operating subsidiary also owns and utilizes
a building containing 8,000 square feet of warehouse and manufacturing space on
premises adjacent to the manufacturing facility.
Item 3. Legal Proceedings
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
PART II
Item 5. Market for Common Equity and Related Security Holder Matters
There is no established public trading market for the Company's shares. Only
limited and sporadic quotations are available. Subject to the foregoing
qualification, the following table sets forth the range of bid and asked
quotations, for the calendar quarter indicated, as recorded by the National
Quotation Bureau, Inc. and reflects inter-dealer prices, without retail mark up,
mark down or commission and may not necessarily represent actual transactions.
Fiscal 1995 Bid Asked
First Quarter $1.50 - 1.88 $2.50 - 2.75
Second Quarter 1.50 - 1.88 2.25 - 2.75
Third Quarter 1.50 - 2.50 2.25 - 2.75
Fourth Quarter 2.50 - 2.75 3.75 - 4.25
Fiscal 1996 Bid Asked
First Quarter $2.75 - 2.75 $3.75 - 3.75
Second Quarter 2.75 - 3.50 3.50 - 5.00
Third Quarter 3.50 - 3.75 5.00 - 5.75
Fourth Quarter 3.75 - 4.00 -- - --
The Company had 1,043 shareholders of record of its Common Stock as of
December 31, 1996.
Distributions
No distribution was made to shareholders in l995 or 1996 and the Board of
Directors has taken no action to provide for distributions during 1997.
Item 6. Management's Discussion and Analysis or Plan of
Operation.
LIQUIDITY AND CAPITAL RESOURCES.
As a result of the Company's relatively strong cash position, the Company has
sufficient liquidity to fund its contemplated capital and operating activities
through Fiscal 1997. The Company also anticipates earnings in Fiscal 1997 which
will further assure the Company's ability to meet its capital expenditure
requirements.
RESULTS OF OPERATIONS.
Fiscal Year 1996
Fiscal 1996 improved over Fiscal 1995, attributable in large part to a still
growing commercial aircraft market and a military market which is seeing more
retrofit programs as opposed to new aircraft manufacture. The Company's sales
increased by 36% and operating income increased by 120% from Fiscal 1995. Other
sources of income did not change materially from the prior year. Besides funds
needed to convert a portion of the 8,000 square feet of warehouse space in a
building adjacent to the Company's head
id not engage in any significant capital expenditures.
Fiscal Years 1995 and 1994
Fiscal 1995 ended with net sales increasing by 18% from fiscal year 1994 and
profits increased by 44% as a continuation of normal levels of profitability
experienced in the final 2 quarters of Fiscal 1994. Other sources of income
remained comparable to 1994.
Fiscal 1994 ended with net sales increasing significantly from the prior
year, which suffered from a weak market, strong price competition, depressed
prices and reduced profit margins for many of the Company's products.
There were no significant changes in machinery, material and depreciation
accounts during Fiscal 1994 and 1995.
INFLATION
During the three year period that ended on October 26, 1996, inflation did not
have a material effect on the Company's operating results.
Item 7. Financial Statements
The Consolidated Financial Statements, the notes thereto, and the report
thereon by Max S. Mayer & Co., P.C. dated January 6, 1997, are filed as part of
this report below under Item 13.
Item 8. Changes in and Disagreements With Accountants onAccounting and Financial
Disclosure
Not applicable.
PART III
The information required by Part III (Items 9, 10, 11 and 12) are incorporated
by reference from the Company's definitive Information Statement to be filed in
accordance with 240.14c-101, Schedule 14C.
PART IV
Item 13. Exhibits and Reports on Form 8-KSB
(a) Financial Statements, Schedules and Exhibits
1. Financial Statements and Schedules
See Index to Consolidated Financial Statements and Schedules on page 11.
2. Exhibits:
3. Articles of Incorporation and By-Laws - See page 33 et seq. of Form lOK
for the fiscal year ending in 1982.
21. List of Subsidiaries -See page 67 of Form lOK for the fiscal year ending
in 1982.
(b) Reports on Form 8-KSB:
No reports on Form 8-KSB were filed during the period covered by this report.
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.
OPT-SCIENCES CORPORATION
By:
Anderson L. McCabe
President
Date: January , 1997
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 date indicated. The signatures
include a majority of directors of the Registrant.
SIGNATURE TITLE DATE
President and January , 1997
Anderson L. McCabe Director
Secretary, January , 1997
Arthur J. Kania Treasurer and
Director
Director January , 1997
Arthur J. Kania, Jr.
Chief January , 1997
Harvey Habeck Accountant
OPT-Sciences Corporation
and Subsidiary
Financial Statements
Years ended October 26, 1996 and
October 28, 1995
TABLE OF CONTENTS
Independent Auditor's Report 12
Consolidated Balance Sheets 13 - 14
Consolidated Statements of Earnings 15
Consolidated Statements of Stockholders'
Equity 16
Consolidated Statements of Cash Flows 17 - 18
Notes to Consolidated Financial Statements 19 - 22
INDEPENDENT AUDITOR'S REPORT
To Stockholders and Board of Directors
OPT-Sciences Corporation
We have audited the accompanying consolidated balance sheets of
OPT-Sciences Corporation and Subsidiary as of October 26, 1996
and October 28, 1995 and the related consolidated statements of
earnings and stockholders' equity and cash flows for each of the
fiscal years in the two year period ended October 26, 1996 (52
weeks). These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opin-
ion 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, the financial statements referred to above
present fairly, in all material respects, the consolidated finan-
cial position of OPT-Sciences Corporation and Subsidiary as of
October 26, 1996 and October 28, 1995, and the consolidated
results of their operations and their cash flows for each of the
fiscal years in the two year period ended October 26, 1996 in
conformity with generally accepted accounting principles.
MAX S. MAYER & CO., P.C.
A Professional Corporation
January 6, 1997
OPT-Sciences Corporation and Subsidiary
CONSOLIDATED BALANCE SHEETS
ASSETS
October 26, October 28,
1996 1995
CURRENT ASSETS
Cash and cash equivalents $2,557,251 $2,628,274
Trade accounts receivable-net 480,178 302,391
Inventories 219,606 167,239
Prepaid expenses 25,938 25,188
Marketable securities 560,962 174,629
Total current assets 3,843,935 3,297,721
PROPERTY AND EQUIPMENT
Land 114,006 114,006
Building and improvements 304,044 223,059
Machinery and equipment 594,783 586,834
Small tools 53,580 53,580
Furniture and fixtures 8,048 8,048
Office equipment 35,615 35,615
Automobiles 30,315 30,315
Total property and
equipment 1,140,391 1,051,457
Less accumulated depreciation 747,340 709,346
Net property and
equipment 393,051 342,111
Total assets $_________ $_________
OPT-Sciences Corporation and Subsidiary
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
October 26, October 28,
1996 1995
CURRENT LIABILITIES
Accounts payable - trade $43,760 $50,561
Accrued income taxes 151,050 49,542
Other current liabilities 203,779 109,942
Total current liabilities 398,589 210,045
STOCKHOLDERS' EQUITY
Common capital stock - par value
$0.25 per share - authorized
and issued 1,000,000 shares 250,000 250,000
Additional paid in capital 272,695 272,695
Retained earnings 3,481,639 3,078,329
Net unrealized gains
on marketable securities 20,451 14,588
Less treasury stock at cost -
223,885 shares ( 186,388) ( 185,825)
Total stockholders' equity 3,838,397 3,429,787
Total liabilities and
stockholders' equity $_________ $_________
OPT-Sciences Corporation and Subsidiary
CONSOLIDATED STATEMENTS OF EARNINGS
Fiscal Year Ended
1996 1995
(52 Weeks) (52 Weeks)
NET SALES $2,593,297 $1,894,139
COST OF SALES 1,638,401 1,353,937
Gross profit on sales 954,896 540,202
OPERATING EXPENSES
Sales and delivery 18,831 19,012
General and administrative 384,775 273,971
Total operating expenses 403,606 292,983
Operating income 551,290 247,219
OTHER INCOME 137,445 109,022
Net income before taxes 688,735 356,241
FEDERAL AND STATE
INCOME TAXES 285,425 134,575
Net income $_________ $_________
EARNINGS PER SHARE OF
COMMON STOCK _________ _________
Weighted average
number of shares _________ _________
OPT-Sciences Corporation and Subsidiary
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
October 26, 1996 and October 28, 1995
Reserve for
net unrealized
gains or
losses on
Common Paid -In Retained equity Treasury Stock
Stock Capital Earnings securities Cost Shares
Balance - October
29, 1994 250,000 272,695 2,856,663 ( 5,453) (185,405) 223,236
Net income for
the fiscal year
ended October 28,
1995 221,666 20,041
Acquisition of
common stock ( 420) 280
Balance - October
28, 1995 250,000 272,695 3,078,329 14,588 (185,825) 223,516
Net income for
the fiscal year
ended October 26,
1996 403,310 5,863
Correction of number
of treasury stock
shares (per confirm) ( 6)
Acquisition of
common stock ( 563) 375
Balance - October
26, 1996 $_______ $_______ $_________ $ ______ $(_______) _______
OPT-Sciences Corporation and Subsidiary
CONSOLIDATED STATEMENTS OF CASH FLOWS
Fiscal Year Ended
October 26, October 28,
1996 1995
(52 Weeks) (52 Weeks)
Cash flows from
operating activities
Net earnings $403,310 $221,666
Adjustments to reconcile
net earnings to net cash
provided by operating activities:
Depreciation and
Amortization 37,995 38,212
(Gain) on sale of
securities ( 2,657) ( 1,762)
Decrease (increase) in
Accounts receivable ( 177,787) 83,632
Inventories ( 52,367) ( 12,844)
Prepaid expenses ( 750) 4,883
(Decrease) increase in
Accounts payable ( 6,801) 27,766
Accrued income taxes 101,508 ( 9,814)
Other current liabilities 93,837 31,341
Net cash provided by
operating activities 396,288 383,080
Cash flows from
investment activities:
Additions to property
and equipment ( 88,934) ( 25,168)
Purchases of available for
sale securities ( 387,780) ( 36,853)
Proceeds from sales
of securities 9,966 34,355
Net cash used by
investing activities ( 466,748) ( 27,686)
OPT-Sciences Corporation and Subsidiary
CONSOLIDATED STATEMENTS OF CASH FLOWS
Fiscal Year Ended
October 26, October 28,
1996 1995
(52 Weeks) (52 Weeks)
Cash flows from
financing activities:
Purchases of treasury stock ( 563) ( 420)
Net cash used in
financing activities ( 563) ( 420)
(Decrease) increase in cash ( 71,023) 354,974
Cash and cash equivalents
at beginning of year 2,628,274 2,273,300
Cash and cash equivalents
at end of year $_________ $_________
Supplemental disclosures of
cash flow information
Cash paid (received)
during the year for:
Interest paid $________ $_________
Income taxes paid $________ $_________
OPT-Sciences Corporation and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 26, 1996 and October 28, 1995
NOTE 1 - Summary of Significant Accounting Policies
Principles of consolidation
The consolidated financial statements include the
accounts of OPT-Sciences Corporation and its wholly
owned subsidiary. All significant intercompany ac-
counts and transactions have been eliminated. Certain
prior year amounts have been reclassified to conform to
the current year's classifications.
Cash and Cash Equivalents
The Company considers certificates of deposit and debt
securities purchased with a maturity of three months or
less to be cash equivalents.
Line of Business and Credit Concentration
The Company, through its wholly owned subsidiary, is
engaged in grinding, polishing, coating and painting of
optical glass for the custom fabrication of precision
optical components for aircraft instruments. The
Company grants credit to companies within the aerospace
industry.
Accounts Receivable
Bad debts are charged to operations in the year in
which the account is determined to be uncollectible.
If the allowance method for uncollectible accounts were
used it would not have a material effect on the finan-
cial statements
Inventories
Raw materials are stated at the lower of average cost
or market. Work in process and finished goods are
stated at accumulated cost of raw material, labor and
overhead, or market, whichever is lower. Market is net
realizable value.
Marketable Securities
Marketable securities consist of debt and equity secu-
rities and mutual funds. Equity securities include
both common and preferred stock.
OPT-Sciences Corporation and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 26, 1996 and October 28, 1995
The Company's investment securities are classified as
"available-for-sale". Accordingly, unrealized gains
and losses and the related deferred income tax effects
when material, are excluded from earnings and reported
in a separate component of stockholders' equity.
Realized gains or losses are computed based on specific
identification of the securities sold.
Property and Equipment
Property and equipment are comprised of land, building
and improvements, machinery and equipment, small tools,
furniture and fixtures, office equipment and automo-
biles. These assets are recorded at cost.
Depreciation for financial statement purposes is calcu-
lated over estimated useful lives of three to twenty-
five years, using the straight-line method.
Maintenance and repairs are charged to expense as
incurred.
Income Taxes
Deferred income taxes reflect the net tax effects of
temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes
and the amounts used for income tax purposes.
Earnings per Common Share
Earnings per common share were computed by dividing net
income by the weighted average number of common shares
outstanding.
OPT-Sciences Corporation and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 26, 1996 and October 28, 1995
NOTE 2 - Inventories
Inventories consisted of the following:
October 26, October 28,
1996 1995
Finished Goods $ 47,760 $ 34,450
Raw materials and
supplies 32,506 32,058
Work in process 139,340 100,731
$_______ $_______
NOTE 3 - Marketable Securities
Marketable securities consisted of the following at
October 26, 1996 and October 28, 1995.
1996 1995
Common stock $ 4,088 $ 4,013
Preferred stock 218,837 154,976
Corporate bonds 31,232 7,472
Equity mutual funds -0- 8,168
Unit investment trusts 11,586 -0-
U.S. treasury bills 295,219 -0-
$_______ $_______
The following is an analysis of marketable securities
available for sale at October 26, 1996 and October 28,
1995.
1996 1995
Amortized cost basis $540,511 $160,041
Gross unrealized gains 20,451 14,588
Gross unrealized losses -0- -0-
$_______ $_______
Sales of securities available for sale during the years
ended October 26, 1996 and October 28, 1995 were as
follows:
1996 1995
Proceeds from sales $ 9,966 $34,335
Gross realized gains $ 2,657 $ 1,762
OPT-Sciences Corporation and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 26, 1996 and October 28, 1995
NOTE 4 - Income Taxes
The provision for income taxes based on earnings re-
ported in the financial statements is as follows:
Current Tax Expense October 26, October 28,
1996 1995
Federal $220,860 $104,084
State 64,565 30,491
Total $_______ $_______
For the years ended October 26, 1996 and October 28,
1995, there was no provision for deferred taxes. The
company has no deferred tax liabilities and the de-
ferred tax assets of the tax effect of a capital loss
carryforward in the amount of $68,488. A valuation
allowance was established for the capital loss since
the Company does not believe that it is more likely
than not that it will generate sufficient capital gains
within the appropriate time period to offset those
capital losses.
NOTE 5 - Major Customers
Two customers accounted for approximately $800,200 and
$694,200 of net sales during the year ended October 26,
1996 and approximately $681,500 and $468,700 of net
sales during the year ended October 28, 1995. The
amount due from these customers, included in trade
accounts receivable, was approximately $326,500 for the
year ended October 26, 1996 and $141,000 for the year
ended October 28, 1995.
NOTE 6 - Concentration of Credit Risk of Financial instruments
The Company has various demand and time deposits with
three financial institutions where the amount of the
deposits exceed the federal insurance limits of the
institution on such deposits. The maximum amount of
accounting loss that would be incurred if an individual
or group that makes up the concentration of the depos-
its failed completely to perform according to the terms
of the deposit was $2,018,724 at October 26, 1996 and
$2,069,132 at October 28, 1995.
