<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1995
COMMISSION FILE NUMBER 0-13251
MEDICAL ACTION INDUSTRIES INC.
(Exact name of registrant as specified in its charter)
DELAWARE 11-2421849
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
150 Motor Parkway, Hauppauge, New York 11788
(Address of Principal executive offices)
Registrant's telephone number, including area code:
(516)231-4600
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months and (2) has been subject to
such filing requirements for the past 90 days.
Yes / / No /X/
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date. 8,119,789
shares of common stock as of October 31, 1995.
<PAGE>
Form 10-Q
CONTENTS
PART I - FINANCIAL INFORMATION
Consolidated Balance Sheets at September 30, 1995 (Unaudited) and
March 31, 1995
Consolidated Statements of Operations for the Three and Six Months
ended September 30, 1995 and September 30, 1994 (Unaudited)
Consolidated Statements of Cash Flows for the Six Months ended
September 30, 1995 and September 30, 1994 (Unaudited)
Notes to Consolidated Financial Statements (Unaudited)
Management's Discussion and Analysis of Results of Operations and
Financial Condition
PART II - OTHER INFORMATION
2
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MEDICAL ACTION INDUSTRIES INC.
Consolidated Balance Sheets
(dollars in thousands)
ASSETS
September 30 March 31
1995 1995
------------ --------
(Unaudited)
CURRENT ASSETS:
Cash $ 68 $ 545
Accounts Receivable, less allowance for
doubtful accounts of $111 at
September 30, 1995 and March 31, 1995 5,929 6,041
Inventories (Note 2) 11,078 9,204
Prepaid expenses 308 332
Recoverable Income Taxes 37 --
Other current assets 262 260
------- -------
TOTAL CURRENT ASSETS $17,682 $16,382
Property and equipment at cost, less
accumulated depreciation of $3,851
at September 30, 1995 and $3,631 at
March 31, 1995 3,982 4,344
OTHER ASSETS:
Investment in Joint Venture 623 666
Other Receivables, less current portion 185 321
Goodwill, net of accumulated
amortization of $151 at September 30,
1995 and $85 at March 31, 1995 2,443 2,482
Other assets 77 134
------- -------
TOTAL ASSETS $24,992 $24,329
======= =======
The accompanying notes are an integral part of these financial statements.
3
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MEDICAL ACTION INDUSTRIES INC.
Consolidated Balance Sheets
(dollars in thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY
September 30, March 31,
1995 1995
------------- ---------
(Unaudited)
CURRENT LIABILITIES:
Accounts payable $ 465 $ 1,434
Accrued expenses, payroll and payroll taxes 781 363
Current portion of capital lease obligations 9 10
Notes payable to bank 2,915 2,997
Current portion of long-term debt 1,681 573
------- --------
TOTAL CURRENT LIABILITIES $ 5,851 $ 5,377
Deferred Income Taxes 474 414
Capital lease obligation, less
current portion 22 26
Long-term debt, less current
portion (Note 5) 6,935 $ 7,303
------- --------
TOTAL LIABILITIES $13,282 $ 13,120
SHAREHOLDERS' EQUITY:
Common stock 15,000,000 shares authorized,
$.001 par value; issued and outstanding
8,087,289 shares at September 30, 1995
and 8,002,289 shares at March 31, 1995. 8 8
Additional paid-in capital, net of
deferred compensation of $474 at
September 30, 1995 and $532
at March 31, 1995. 7,817 7,652
Retained earnings 3,885 3,549
------- --------
TOTAL SHAREHOLDERS' EQUITY 11,710 11,209
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $24,992 $ 24,329
======= ========
The accompanying notes are an integral part of these financial statements.
4
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MEDICAL ACTION INDUSTRIES INC.
Consolidated Statements of Operations
(dollars in thousands except per share data)
Three Months Ended
September 30,
1995 1994
----------- -----------
(Unaudited) (Unaudited)
Net Sales $9,865 $8,485
Cost of Sales 7,806 7,063
------ ------
Gross Profit $2,059 $1,422
Selling, general and administrative
expenses (Note 3) 1,459 1,472
Interest expense 245 172
Other expense 6 1
------ ------
Income (loss) before income taxes $ 349 $ (223)
Income tax (benefit) 138 ( 78)
------ ------
Net Income (loss) $ 211 $ (145)
====== ======
Net Income (loss) per share (Note 4) $ .03 $ (.02)
====== ======
The accompanying notes are an integral part of these financial statements.
5
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MEDICAL ACTION INDUSTRIES INC.
Consolidated Statements of Operations
(dollars in thousands except per share data)
Six Months Ended
September 30,
1995 1994
----------- -----------
(Unaudited) (Unaudited)
Net Sales $19,306 $16,445
Cost of Sales 15,274 13,500
------- -------
Gross Profit $ 4,032 $ 2,945
Selling, general and administrative
expenses 2,950 2,876
Interest expense 484 286
Other expense 27 1
------- -------
Income (loss) before income taxes $ 571 $ (218)
Income taxes (benefit) 235 ( 76)
------- -------
Net Income (loss) $ 336 $ (142)
======= =======
Loss per share (Note 3) $ .04 $ (.02)
======= =======
The accompanying notes are an integral part of these financial statements.
6
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MEDICAL ACTION INDUSTRIES INC. AND SUBSIDIARY
Consolidated Statement of Cash Flows
(dollars in thousands)
Six Months Ended
September 30,
1995 1994
----------- -----------
(Unaudited) (Unaudited)
OPERATING ACTIVITIES
Net loss $ 336 $ (142)
Adjustments to reconcile net income
to net cash used in operating activities:
Loss from sale of property and equipment 27 --
Depreciation and amortization 394 291
Deferred income taxes 60 --
Deferred compensation 58 30
Changes in operating assets and liabilities:
Accounts receivable 96 (707)
Inventories (1,874) (1,728)
Prepaid expenses, other current
assets and other receivables 158 (161)
Other assets 57 56
Accounts payable (981) (464)
Recoverable income taxes ( 6) --
Accrued expenses, payroll and payroll taxes 429 (200)
-------- -------
NET CASH USED IN OPERATING ACTIVITIES (1,246) (3,025)
INVESTING ACTIVITIES
Purchase of property and equipment (28) (32)
Proceeds from sale of property and equipment 78 --
-------- -------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 50 (32)
FINANCING ACTIVITIES
Proceeds from revolving line of credit
and long-term borrowings 2,060 3,249
Principal payments on revolving line of
credit, long-term debt, and capital
lease obligations (1,407) ( 290)
Proceeds from exercise of employee
stock options 66 --
Purchase of common stock into treasury
and retired -- (150)
Decrease in due from officer -- 150
-------- -------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 719 2,959
-------- -------
DECREASE IN CASH (477) (98)
Cash at beginning of year 545 496
-------- -------
Cash at end of period $ 68 $ 398
======== =======
The accompanying notes are an integral part of these financial statements.
7
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MEDICAL ACTION INDUSTRIES INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q for
quarterly reports under section 13 or 15(d) of the Securities Exchange Act of
1934. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the six month period ended September
30, 1995 are not necessarily indicative of the results that may be expected
for the year ended March 31, 1996. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's annual report for the year ended March 31, 1995.
Note 2. INVENTORIES
Inventories, which are stated at the lower of cost (first-in, first-out) or
market, consist of the following:
September 30, March 31,
1995 1995
------------- ---------
(Unaudited)
(in thousands of dollars)
Finished Goods $ 3,536 $ 3,548
Work In Process 253 0
Raw Materials 7,289 5,656
------- -------
Total $11,078 $ 9,204
Note 3. SIGNIFICANT EVENTS
On August 12, 1994, the Company acquired substantially all of the assets and
certain liabilities of QuanTech, Inc. ("QuanTech"). QuanTech's business
consisted of manufacturing and distribution of disposable surgical supplies
and a patented light handle cover used primarily in operating rooms of
hospitals and out-patient surgical centers in the United States. The
purchase price consisted of the issuance of 453,408 shares of the Company's
common stock to the principal stockholders of QuanTech in addition to the
assumption of $1,941,000 of the fair value of net liabilities in excess of
assets acquired. Further, if QuanTech's operations achieve certain gross
profit levels, as defined in the agreement, during any consecutive 12 month
period through July, 1996, the purchase price would be adjusted by the
issuance of up to another 250,000 shares of the Company's common stock. The
8
<PAGE>
acquisition has been accounted for as a purchase and the operations of
QuanTech have been included in the Company's Statement of Operations since
the acquisition date. The aggregate of the purchase price and the net
liabilities assumed totalling $2,594,000 is being amortized over twenty (20)
years ($151,000 as of September 30, 1995). The adjustment to goodwill during
the six months ended September 30, 1995 resulted from changes to the
preliminary estimates of the fair value of net liabilities assumed in the
acquisition of QuanTech in August, 1994.
Note 4. NET INCOME PER SHARE
The weighted average number of shares used in computing net income (loss) per
share was 8,243,278 and 8,167,283 for the three and six months ended
September 30, 1995 and 7,673,695 for the three and six months ended September
30, 1994, after considering the dilutive effect of the Company's outstanding
options which are considered common stock equivalents.
Note 5. LONG TERM DEBT
On October 24, 1995, the Company signed an Amended and Restated Revolving
Credit Agreement with its existing bank. The Agreement expires on September
30, 1998 and bears interest at prime plus 1/4%. The Agreement provides for
total borrowings of up to $10,000,000 with a $4,000,000 sublimit for bankers
acceptances, which bear interest at 1-1/2% over the prevailing bankers
acceptance rate, and a $2,000,000 sublimit for letters of credit. The loan
agreement is collateralized by all the assets of the Company and advances to
the Company are made in accordance with the borrowing base formula.
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Results of Operations
Six months ended September 30, 1995 compared to six months ended September
30, 1994
Net sales for the six months ended September 30, 1995 increased 17% to
$19,306,000 from $16,445,000 for the six months ended September 30, 1994.
The increase in net sales was attributable to sales generated from the
Company's QuanTech product line for the full six month period, which
increased approximately $1,272,000, as well as sales growth from the domestic
sale of laparotomy sponges. Net sales of laparotomy sponges increased
approximately $1,867,000, or 25%, from the comparable period in fiscal 1995.
This increase was partially offset by a decrease in the sale of gauze sponges
of approximately $231,000, or 16%, and operating room towels of approximately
$180,000, or 3%.
The Company presently obtains substantially all of its raw materials for
operating room towels from China. These operating room towels are designated
as a textile, for which an export visa is required. These export visas have
continued to adversely impact the availability and pricing of operating room
towels. In anticipation that these conditions will continue during the
current fiscal year, the Company has accelerated its procurement of operating
room towels from China and, to a lesser extent, secured operating room towels
from sources outside of China. Management believes that it has been able to
meet the Company's requirements of operating room towels for fiscal 1996.
Gross profit for the six months ended September 30, 1995 increased 37% to
$4,032,000 from $2,945,000 for the six months ended September 30, 1994.
Gross profit as a percentage of net sales for the six months ended September
30, 1995 increased to 21% of net sales from 18% of net sales for the period
ended September 30, 1994. The increase in gross profit dollars and
percentage was primarily attributable to the increase in net sales, improved
efficiencies at the Company's manufacturing facilities in North Carolina and
increased selling prices of operating room towels, which have been partially
off-set by increases in the cost of raw materials from China.
Selling, general and administrative expenses for the six months ended
September 30, 1995 increased 3% to $2,950,000 from $2,876,000 for the six
months ended September 30, 1994. The increase in selling, general and
administrative expenses is directly attributable to the increase in net
sales. As a percentage of net sales, selling, general and administrative
expenses decreased to 15.3% for the six months ended September 30, 1995 from
17.5% for the six months ended September 30, 1994 due to management's efforts
to control expenses and reduce administrative expenses.
10
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Interest expense for the six months ended September 30, 1995 increased 69% to
$484,000 from $286,000 for the six months ended September 30, 1994. The
increase in interest expense was attributable to an increase in the prime
lending rate in addition to an increase in the average principal loan
balances outstanding during the six months ended September 30, 1995 as
compared to the six months ended September 30, 1994. This increase in
principal loan balances was primarily attributable to the aforementioned
acquisition of QuanTech, Inc. and higher inventory levels of operating room
towels.
Net income for the six months ended September 30, 1995 increased to $336,000
from a net loss of $(142,000) for the six months ended September 30, 1994.
The increase in net income is attributable to the aforementioned increase in
net sales and gross profits which were partially offset by an increase in
selling, general and administrative expenses, interest expense and a $27,000
loss of sale of property and equipment.
Three Months ended September 30, 1995 compared to three months ended
September 30, 1994.
Net sales for the three months ended September 30, 1995 increased 16% to
$9,865,000 from $8,485,000 for the three months ended September 30, 1994.
The increase in net sales was attributable to a full quarter of sales
generated from the Company's QuanTech product line, which increased
approximately $481,000, as well as sales growth coming from the domestic sale
of laparotomy sponges. Net sales of laparotomy sponges increased
approximately $1,187,000, or 32%, from the comparable period in fiscal 1995.
This increase was partially offset by a decrease in the sale of operating
room towels of approximately $211,000, or 6%, and gauze sponges of
approximately $97,000, or 15%.
Gross profit for the three months ended September 30, 1995 increased 45% to
$2,059,000 from $1,422,000 for the three months ended September 30, 1994.
Gross profit as a percentage of net sales for the period ended September 30,
1995 increased to 21% of net sales from 17% of net sales for the period ended
September 30, 1994. The increase in gross profit dollars and percentage was
primarily attributable to the increase in net sales, improved efficiencies at
the Company's manufacturing facilities in North Carolina and increased
selling prices of operating room towels, which have been partially off-set by
increases in the cost of raw materials from China.
Selling, general and administrative expenses for the three months ended
September 30, 1995 decreased 1% to $1,459,000 from $1,472,000 for the three
months ended September 30, 1994. As a percentage of net sales, selling,
general and administrative expenses decreased to 14.8% for the three months
ended September 30, 1995 from 17.3% for the three months ended September 30,
1994 due to management's efforts to control expenses and reduce
administrative expenses, offset by increased selling expenses of $65,000
attributable to increased net sales.
11
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Interest expense for the three months ended September 30, 1995 increased 42%
to $245,000 from $172,000 for the three months ended September 30, 1994. The
increase in interest expense was attributable to an increase in the prime
lending rate in addition to an increase in the average principal loan
balances outstanding during the three months ended September 30, 1995 as
compared to the three months ended September 30, 1994. This increase in
principal loan balances was primarily attributable to the aforementioned
acquisition of QuanTech, Inc. and higher inventory levels of operating room
towels.
Net income for the three months ended September 30, 1995 increased to
$211,000 from a net loss of $(145,000) for the three months ended September
30, 1994. The increase in net income is attributable to the aforementioned
increase in net sales and gross profits which were partially off-set by an
increase in interest expense.
Liquidity and Capital Resources
Current assets have increased $1,300,000 to $17,682,000 at September 30, 1995
from $16,382,000 at March 31, 1995. The increase was primarily attributable
to a $1,874,000 increase in inventory. The Company had working capital of
$11,831,000 with a current ratio of 3.02 at September 30, 1995 compared to
working capital of $11,005,000 with a current ratio of 3.05 on March 31,
1995. Total bank borrowings outstanding were $11,531,000 with a debt to
equity ratio of .98 at September 30, 1995 as compared to $10,872,000 with a
debt to equity ratio of .97 at March 31, 1995. The increase in total
borrowings outstanding and the decline in the Company's cash balance at
September 30, 1995 are primarily attributable to borrowings required to
support the increased levels of inventory necessary to meet the Company's
requirements of operating room towels for fiscal 1996. On October 24, 1995
the Company signed an Amended and Restated Revolving Credit Agreement with
its existing bank. The Agreement extended the credit period through
September 30, 1998 from September 30, 1996 and maintained the borrowing limit
of $10,000,000. The new agreement bears interest at prime plus 1/4%, a
reduction of 1/4% from the previous agreement.
12
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MEDICAL ACTION INDUSTRIES INC. AND SUBSIDIARY
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
There are no material legal proceedings against the Company or
in which any of this property is subject.
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
A. The Registrant held its Annual Meeting of Stockholders
on August 9, 1995.
B. Two Directors were elected at the Annual Meeting to
serve until the Annual Meeting of Stockholders in 1998.
The names of these Directors and votes cast in favor of
their election and shares withheld are as follows:
Name Votes For Votes Withheld
---- --------- --------------
Bernard Wengrover 7,033,707 123,430
Paul D. Meringola 7,033,707 123,430
In addition to the election of Directors, the stockholders
approved a proposal to ratify the selection of Ernst & Young
as independent public auditors of the Company for the fiscal
year ending March 31, 1996; 7,101,872 shares voted in favor
of this proposal, 18,000 shares voted against and 37,265
shares abstained from voting.
Item 5. Other Information
None
Item 6. (a) Exhibits - Notice of Annual Meeting of Stockholders -
Proxy Statement
(b) Reports on Form 8-K
None
13
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MEDICAL ACTION INDUSTRIES INC.
Date: November 2, 1995 By: /s/ Richard G. Satin
------------------ --------------------------------
Richard G. Satin, Vice President
Principal Accounting Officer
14
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MEDICAL ACTION INDUSTRIES INC.
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
AUGUST 9, 1995
------------------------
To the Stockholders of
MEDICAL ACTION INDUSTRIES INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of MEDICAL
ACTION INDUSTRIES INC. will be held on August 9, 1995 at Ernst & Young LLP, 395
N. Service Road, Melville, New York at 3:00 p.m. (the 'Annual Meeting'), for the
following purposes:
1. To elect two directors to serve in Class II until the 1998 Annual
Meeting of Stockholders;
2. To consider and act upon the ratification of Ernst & Young LLP as
independent public auditors of the Company for the fiscal year ending March 31,
1996; and
3. To consider and act upon such other business as may properly come
before the meeting or any adjournment thereof.
Only stockholders of record at the close of business on June 23, 1995 shall
be entitled to vote at the Annual Meeting.
IF YOU DO NOT EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE SIGN AND RETURN
THE ENCLOSED PROXY IN ORDER THAT YOUR SHARES MAY BE VOTED FOR YOU AS SPECIFIED.
By Order of the Board of Directors,
Richard G. Satin
Vice President -- Operations
and General Counsel
Dated: Hauppauge, New York
July 1, 1995
<PAGE>
MEDICAL ACTION INDUSTRIES INC.
150 MOTOR PARKWAY
HAUPPAUGE, NEW YORK 11788
------------------------
ANNUAL MEETING OF STOCKHOLDERS
WEDNESDAY, AUGUST 9, 1995
------------------------
PROXY STATEMENT
The Annual Meeting of Stockholders of MEDICAL ACTION INDUSTRIES INC. (the
'Company') will be held on Wednesday, August 9, 1995 at Ernst & Young LLP, 395
N. Service Road, Melville, New York at 3:00 p.m. for the purposes set forth in
the accompanying Notice of Annual Meeting of Stockholders. This statement is
furnished in connection with the solicitation by the Board of Directors of
proxies to be used at the Annual Meeting and at any and all adjournments of such
meeting.
If a proxy in the accompanying form is duly executed and returned, the
shares represented by such proxy will be voted as specified. Any person
executing the proxy may revoke it prior to its exercise either by letter
directed to the attention of the Corporate Secretary of the Company or in person
at the Annual Meeting.
VOTING RIGHTS
On June 23, 1995 (the 'Record Date'), the Company had outstanding one class
of voting securities, namely 8,038,030 shares of Common Stock, $.001 par value.
Stockholders are entitled to one vote for each share registered in their names
at the close of business on the Record Date. A majority of the outstanding
shares will constitute a quorum at the meeting. Abstentions and broker non-votes
are counted for purposes of determining the presence or absence of a quorum for
the transaction of business. Abstentions are counted in tabulations of the votes
cast on proposals presented to stockholders, whereas broker non-votes are not
counted for purposes of determining whether a proposal has been approved. The
following table sets forth as of the Record Date certain information with regard
to ownership of the Company's Common Stock by (i) each beneficial owner of 5% or
more of the Company's Common Stock; (ii) each director; and (iii) all executive
officers and directors of the Company as a group:
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT OF
TITLE OF CLASS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) CLASS
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stock Joseph R. Meringola 1,919,684(2) 23.9%
$.001 par value 150 Motor Parkway
Hauppauge, New York
Common Stock Paul D. Meringola 364,000(2) 4.4%
$.001 par value 150 Motor Parkway
Hauppauge, New York
Common Stock Richard G. Satin 162,150(2) 2.0%
$.001 par value 150 Motor Parkway
Hauppauge, New York
</TABLE>
1
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<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT OF
TITLE OF CLASS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) CLASS
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stock Dr. Philip F. Corso 18,000 --
$.001 par value 1200 Post Road East
Westport, Connecticut
Common Stock Dr. Thomas A. Nicosia 1,000 --
$.001 par value 1615 Northern Blvd.
Manhasset, New York
Common Stock Bernard Wengrover 50,000 --
$.001 par value 111 Great Neck Road
Great Neck, New York
Common Stock Grover A. Cox 100,000(2) 1.2%
$.001 par value 5156 N. Placita Barra
Tucson, Arizona
Common Stock Directors and Officers 2,769,334(2) 32.4%
$.001 par value as a Group (8 Persons)
</TABLE>
- ------------------
(1) Unless otherwise indicated, no director beneficially owns more than 1% of
the Company's Common Stock.
(2) Includes shares (i) awarded under the Company's Restricted Management Stock
Bonus Plan, and (ii) exercisable under the Company's Non-Qualified Stock
Option Plan and Incentive Stock Option Plan.
This Proxy Statement has been mailed on or about July 1, 1995 to all
stockholders as of the Record Date.
ELECTION OF DIRECTORS
The Company's Board of Directors presently consists of seven directors,
classified into three classes as nearly equal in number as possible, whose terms
of office expire in successive years. The two directors named below in Class II,
all of whom are presently directors of the Company, have been nominated for
election as directors of the Company until the Annual Meeting of Stockholders in
1998 or until their respective successors are chosen and qualified. Shares
represented by executed proxies in the form enclosed will be voted, unless
otherwise indicated, for the election as directors of the aforesaid nominees,
unless they shall be unavailable, in which event such shares may be voted for
substitute nominee(s) designated by the Board of Directors. The Board of
Directors has no reason to believe that the nominees will be unavailable or, if
elected, will decline to serve. The following table sets forth the directors of
the Company.
<TABLE>
<CAPTION>
CLASS I CLASS II CLASS III
(TO SERVE UNTIL THE (TO SERVE UNTIL THE (TO SERVE UNTIL THE
ANNUAL MEETING OF ANNUAL MEETING OF ANNUAL MEETING OF
STOCKHOLDERS IN 1997) STOCKHOLDERS IN 1995) STOCKHOLDERS IN 1996)
- --------------------------------------------------------------------------------
<S> <C> <C>
Dr. Thomas A. Nicosia Bernard Wengrover Joseph R. Meringola
Grover A. Cox Paul D. Meringola Dr. Philip F. Corso
Richard G. Satin
</TABLE>
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The Board of Directors held five meetings during the fiscal year ended
March 31, 1995. Except for Dr. Nicosia, all directors attended 75% or more of
the aggregate number of meetings of the Board and its committees, on which they
serve. Non-employee directors receive $500 for each board meeting they attend.
In addition, Mr. Wengrover is compensated pursuant to a separate consulting
agreement.
BOARD COMMITTEES
The Board of Directors has established the following committees, all of
which consist of three non-employee directors, Mr. Wengrover, Dr. Corso and Dr.
Nicosia, to perform certain specific functions. Included among the committees
are an Audit Committee, a Compensation Committee and a Stock Option Committee.
There is no Nominating Committee of the Board of Directors.
AUDIT COMMITTEE. This Committee reviews the plan for and the results of
the independent audit, reviews the Company's financial information and internal
accounting and management controls, and performs other related duties. The Audit
Committee held one meeting during the last fiscal year.
COMPENSATION COMMITTEE. This Committee makes recommendations to the Board
of Directors with respect to compensation for the officers of the Company and
the Chief Executive Officer. This Committee met one time during fiscal year
1995.
STOCK OPTION COMMITTEE. This Committee has reviewed and approved the grant
of options pursuant to the Company's stock option plans for the Company's
directors and officers. The Committee held one meeting during the last fiscal
year.
PRESENT OCCUPATION OF DIRECTORS
Mr. Joseph R. Meringola has been Chairman of the Board and Chief Executive
Officer of the Company since its inception in 1977. Mr. Meringola has served in
various executive management and operating positions for the Company, including
President and Chief Operating Officer. Mr. Meringola received a Bachelor of
Science degree in business administration from C.W. Post College of Long Island
University.
Mr. Paul D. Meringola, a director and President of the Company since
November, 1992, has been employed by the Company for more than the past fifteen
years in various executive positions. He previously served the Company as Vice
President -- Operations from March, 1989 to October, 1991 and Senior Vice
President (Chief Operating Officer) from October, 1991 to November, 1992.
Mr. Richard G. Satin, previously a director of the Company from October,
1987 to February, 1992, was reappointed to the Board of Directors in February,
1993. Mr. Satin has been employed by the Company as Vice President and General
Counsel since January, 1993 and has been Corporate Secretary of the Company
since October, 1991. In February, 1994, Mr. Satin was appointed Vice
President -- Operations. Mr. Satin, a practicing attorney in the State of New
York for more than the past ten years, was associated with the law firm of Blau,
Kramer, Wactlar, Lieberman & Satin, P.C. from May, 1983 to January, 1993.
Mr. Grover A. Cox, a director of the Company since February, 1993, was Vice
President -- Corporate from February, 1992 until December, 1993. Since April,
1994, Mr. Cox has been employed by Manzi Medical as Vice President -- Sales.
Prior to joining the Company, Mr. Cox was employed by the Kendall Corporation
for thirty years in various sales and marketing positions including Vice
President--Corporate Accounts (Healthcare Products). Mr. Cox received a Bachelor
of Arts degree in economics from Colgate University.
3
<PAGE>
Dr. Philip F. Corso, a director of the Company since March, 1984, has been
associated with the Yale University School of Medicine for more than the past
ten years and is presently Assistant Clinical Professor. In addition, Dr. Corso
is Senior Attending and Chief of Plastic Surgery at Bridgeport and Norwalk
Hospitals in Connecticut. Dr. Corso has also published numerous articles in
professional journals on plastic and reconstructive surgery.
Dr. Thomas A. Nicosia, a director of the Company since November, 1985, has
been a practicing cardiologist for more than the past five years. Dr. Nicosia is
a fellow of the American College of Cardiology and is affiliated with St.
Francis Hospital in Roslyn, New York and North Shore University Hospital in
Manhasset, New York.
Mr. Bernard Wengrover, a director of the Company since October, 1990, has
been a certified public accountant in the State of New York for more than twenty
years and is a partner in the accounting firm of Schneider, Ehrlich & Wengrover.
Mr. Wengrover was the Company's independent auditor from 1977 until March 31,
1989.
MANAGEMENT
OFFICERS OF THE COMPANY
The Company's executive officers are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION HELD WITH THE COMPANY
- --------------------------------------------------------------------------------
<S> <C> <C>
Joseph R. Meringola... 52 Chairman of the Board (Chief Executive Officer)
Paul D. Meringola..... 37 President (Chief Operating Officer)
Richard G. Satin...... 40 Vice President -- Operations, General Counsel
and Corporate Secretary
Daniel Marsh.......... 37 Vice President -- Sales and Marketing
</TABLE>
All of the executive officers of the Company hold office at the pleasure of
the Board of Directors. Joseph R. and Paul D. Meringola are brothers.
Mr. Daniel Marsh has been employed by the Company for more than the past
five years in various sales and marketing positions. Mr. Marsh was appointed
Vice President of Sales and Marketing in February, 1994 and since April 1, 1993
served as Vice President -- International.
4
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information concerning the annual and
long-term compensation of the Company's Chief Executive Officer and each of the
Company's four most highly compensated executive officers (referred to
collectively with the Chief Executive Officer as the 'named executives') during
the years ended March 31, 1993, 1994 and 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
------------------------------
ANNUAL COMPENSATION AWARDS
------------------------------- ------------------------------ ALL OTHER
FISCAL RESTRICTED STOCK COMPENSATION
NAME AND PRINCIPAL POSITION(1) YEAR SALARY($) BONUS($) AWARDS($)(2) OPTIONS(#) ($)(4)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Joseph R. Meringola............ 1995 208,000 -- -- -- 5,969
Chairman of the Board 1994 209,695 -- -- -- 4,497
and CEO 1993 210,050 -- -- -- 5,804
Paul D. Meringola(3)........... 1995 172,593 -- 13,281 -- 7,105
President and Chief Operating 1994 158,046 10,000 112,500 50,000 17,865
Officer 1993 140,008 -- -- 25,000 4,772
Richard G. Satin(3)(5)......... 1995 127,692 -- 12,750 -- 5,036
Vice President -- Operations 1994 119,772 7,500 45,000 25,000 1,477
and General Counsel
Daniel Marsh(3)(5)............. 1995 139,666 -- 12,750 -- 1,811
Vice President -- Sales 1994 131,244 7,500 33,750 15,000 3,931
and Marketing
</TABLE>
- ------------------
(1) Includes Chairman of the Board and Chief Executive Officer and the other
most highly compensated executive officers as measured by salary and bonus.
(2) Represents the dollar value of restricted shares granted during the year in
question, calculated by multiplying the closing market price of the
Company's Common Stock on the date of grant by the number of shares
awarded. The aggregate number of shares of restricted stock held by each
named executive as of March 31, 1995, together with the value of those
shares is as follows: Mr. Joseph R. Meringola -- 50,000 shares/$53,125; Mr.
Paul D. Meringola -- 99,500 shares/$105,719; Richard G. Satin -- 52,000
shares/$55,250 and Daniel Marsh -- 27,000 shares/$28,688. The shares of
restricted stock vest in four equal installments (25% increments) on the
second, third, fourth and fifth anniversaries of the date of issuance.
Dividends are paid in shares of restricted stock if and to the extent paid
on the Company's Common Stock generally.
(3) The Company has entered into an Employment Agreement with Mr. Paul D.
Meringola and Change of Control Agreements with Messrs. Paul D. Meringola,
Satin and Marsh that may result in payments to each of them upon a change
of control of the Company. These arrangements are described under
'Management -- Employment Agreement' and 'Change of Control Arrangements'.
(4) Includes, among other things, matching contributions under the Company's
401(K) Retirement Plan, the cost to the Company of the nonbusiness use of
Company automobiles and amounts payable to Mr. Paul D. Meringola under his
Employment Agreement.
(5) Messrs. Satin and Marsh became executive officers in February, 1993 and
February, 1994, respectively.
5
<PAGE>
STOCK OPTIONS
During the fiscal year ended March 31, 1995, there were no individual
grants of stock options made to the named executives.
The following table sets forth with respect to the named executives,
information concerning the exercise of options during the last fiscal year and
unexercised options held as of March 31, 1995:
OPTION EXERCISES AND FISCAL YEAR-END VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED IN-THE-
SHARES NUMBER OF UNEXERCISED MONEY OPTIONS AT YEAR END
ACQUIRED ON OPTIONS AT YEAR END 1995 1995
EXERCISE VALUE ---------------------------- --------------------------------
NAME (#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Joseph R. Meringola... -- -- -- -- -- --
Paul D. Meringola..... -- -- 192,500 25,000 $18,844 --
Richard G. Satin...... -- -- 95,000 12,500 $ 3,488 --
Daniel Marsh.......... -- -- 127,500 7,500 $11,988 --
</TABLE>
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Pursuant to Section 16(a) of the Exchange Act of 1934, directors, certain
officers, and beneficial owners of 10% or more of the Company's Common Stock
('reporting persons') are required from time to time to file with the Securities
and Exchange Commission (the 'Commission') reports on Forms 3, 4 or 5, relating
principally to transactions in Company securities by such persons. Based solely
upon its review of the copies of such reports furnished to the Company, or
written representations received by the Company that no other reports were
required, the Company believes during fiscal 1995 that the reporting persons
filed on a timely basis the reports required by Section 16(a) of the Securities
Act of 1934.
COMPENSATION COMMITTEE REPORT
The Compensation Committee is responsible for developing and making
recommendations to the Company with respect to executive officer compensation
policies, addressing such matters as salaries, incentive plans, benefits and
over-all compensation. The Compensation Committee determines the compensation to
be paid to the Chief Executive Officer and each of the other executive officers
of the Company.
The objectives of the Compensation Committee in determining the type and
amount of executive officer compensation are to provide a level of base
compensation which allows the Company to attract and retain superior talent and
to align the executive officers' interests with the success of the Company
through the payment of a bonus based upon Company performance and participation
in stock option and other stock ownership plans which provide the executive
officers with the opportunity to build a substantial ownership interest in the
Company.
The compensation of an executive officer of the Company includes cash
compensation consisting of a base salary plus performance bonus, long-term
incentive compensation in the form of stock options and restricted stock awards,
and participation in various benefit plans generally available to employees of
the Company.
Although the compensation paid to each of the Company's executive officers
is well below the $1 million deduction limit under the Internal Revenue Code of
1986 (the 'Code'), the Company intends to take the necessary steps to conform
its compensation to comply with the Code.
6
<PAGE>
Base Salary. Compensation for each of the named officers consists of a
base salary and annual and longer-term incentive compensation. In the setting of
base salaries, consideration is given to national and local salary surveys and
review of salaries paid to senior executives with comparable qualifications,
experience and responsibilities at other companies in the particular geographic
area. Annual and longer-term incentive compensation is tied to the Company's and
the executive's success in achieving significant financial and non-financial
goals.
The Committee weighs the value of achievement of subjective factors such as
demonstrated management ability, initiative and contributions toward the
Company's goal of leadership within the industry in which it competes. The
Committee also weighs, when appropriate, the value of the individual's actions
during times when progress towards predetermined goals was hindered by elements
outside the Company's and the executive's control. The Committee recognizes that
the operational challenges faced during unforeseen times or events are often
valid reasons to modify what may otherwise be a negative result to the base
salary decision.
Finally, the Committee considers the individual executive's impact on those
elements that contribute to increased stockholder value. The Committee's
discretion usually determines the weighing of these various factors in its final
determination of base salary development or adjustment.
Incentive Compensation. In evaluating the performance and setting the
incentive compensation of the executive officers of the Company, the Committee
developed an incentive program predominantly predicated on the attainment of
specific levels of revenue and pre-tax income for the Company. To a lesser
extent, the Committee considers other managerial goals stated as objectively as
possible. For the fiscal year ended March 31, 1995, no incentive compensation
was awarded to the named executives.
Stock Options and Grants. The Committee periodically considers the
desirability of granting senior executives, including the named executives,
awards under the Company's stock plans. The Committee believes that its past
grants of stock options and restricted stock awards have successfully focused
the Company's senior management on building profitability and stockholder value.
In determining the amount and nature of awards under such plans to be
granted to the senior management group, including the named executives, the
Committee reviews with the Chief Executive Officer awards recommended by him,
taking into account the respective scope of accountability, strategies and
operational goals and anticipated performance requirements and contributions of
each member of the senior management group. The award to the Chief Executive
Officer is established separately and is based, among other things, on the
Committee's analysis of his past and expected future contributions to the
Company's achievement of its long-term performance goals.
CEO COMPENSATION
Determination of the Company's compensation of its Chief Executive Officer
and founder, Joseph R. Meringola, takes into account the factors described above
as pertinent to the remainder of the Company's executives, while also taking
into consideration the nature of the Company's business and efforts expended in
connection with development of the Company's strategy and product development
activities.
The Committee has concluded that Mr. Meringola's performance warrants the
compensation for 1995 as reflected in the Summary Compensation table on page 5.
The Compensation Committee
Bernard Wengrover
Dr. Philip Corso
Dr. Thomas Nicosia
7
<PAGE>
STOCKHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total return on
the Company's Common Stock against the cumulative total return of the Standard &
Poor 500 Stock Index and a Peer Group Index for the period of five years
commencing April 1, 1990 and ending March 31, 1995.
The Peer Group Index is comprised of the following publicly traded
companies, all of whom are contained within the Standard Industry Code 3841:
Acme UTD Corp. Alliance Imaging Inc.
Allied Healthcare Products, Inc. Electromedics Inc.
Graham Field Health Products Namic USA Corp.
Personal Diagnostics Inc. Protocol Systems Inc.
Quest Medical Inc. Survival Technology Inc.
[PERFORMANCE GRAPH]
None of the companies in the Peer Group offers a fully comparable range of
products and services. The returns of each company have been weighed according
to their respective stock market capitalization for purposes of arriving at a
peer group average.
8
<PAGE>
The line graph assumes that $100 was invested on April 1, 1990 in each of
the companies' common stock, the Standard & Poor 500 Stock Index and the Peer
Group Index and that all dividends were reinvested.
EMPLOYMENT AGREEMENT
In February, 1993, the Company entered into an Employment Agreement with
Paul D. Meringola for the period April 1, 1993 through March 31, 1996. The
Agreement provides for a salary at an annual rate of $150,000, together with
cost of living increments and the reimbursement of medical expenses not
otherwise covered by the Company's medical plans, up to a maximum of $5,000. The
Agreement further provides that in the event there is a change in control of the
Company, as defined therein, or in any person directly or indirectly controlling
the Company, as also defined therein, Mr. Meringola has the option, exercisable
within six months of becoming aware of such event, to terminate his Employment
Agreement. Upon such termination, Mr. Meringola has the right to receive as a
lump sum payment an amount equal to the compensation remaining to be paid for
the balance of the term of the Agreement.
1989 NON-QUALIFIED STOCK OPTION PLAN
The Company's Board of Directors and stockholders approved a Non-Qualified
Stock Option Plan (the 'Plan') which presently covers 1,150,000 shares of the
Company's Common Stock. The Plan, which expires in 1999, permits the granting of
non-qualified options to the Company's officers, directors and other senior
executives and management and supervisory personnel and consultants. The Plan is
administered by the Stock Option Committee, who determine, among other things,
the individuals to whom, and the time or times at which, options shall be
granted, the number of shares to be subject to each option, the purchase price
of the shares and the term of each option, with the exception that no option can
be granted at less than 85% of the market value at the time of grant and options
may only be exercised before the expiration of five years from the date of
grant. Each option granted under the Plan may be exercised only during the
continuance of an Optionee's employment or service with the Company.
1994 STOCK INCENTIVE PLAN
The Company's Board of Directors and stockholders have approved the 1994
Stock Incentive Plan (the 'Incentive Plan'), which presently covers 500,000
shares of the Company's Common Stock. The Incentive Plan, which expires in 2004,
permits the granting of incentive stock options, shares of restricted stock and
non-qualified stock options. All officers and key employees of the Company and
its affiliates are eligible to participate in the Incentive Plan. The Incentive
Plan is administered by the Stock Option Committee, who determine the persons to
whom, and the times at which, awards will be granted, the type of awards to be
granted and all other related terms and conditions of the awards. The per share
exercise price of any options may not be less than the fair market value of a
share of Common Stock at the time of grant. As of March 31, 1995, no issuances
have been made under the Incentive Plan.
INCENTIVE STOCK OPTION PLAN
The Company's Incentive Stock Option Plan (the 'Option Plan'), which
covered 350,000 shares of the Company's Common Stock, $.001 par value per share,
expired in May, 1994. The option price was the fair market value on the date of
grant, unless the employee owns, as defined in the applicable sections of the
Internal Revenue Code of 1954, as amended, 10% of the total combined voting
power or value of the Common Stock of the Company immediately before the grant
of any option, in which case the option price was at least 110% of the fair
market value at the date of grant. Options expire five years from date of grant
unless the employment is
9
<PAGE>
terminated, in which event, subject to certain exceptions, the options terminate
three months subsequent to date of termination.
RESTRICTED MANAGEMENT STOCK BONUS PLAN
The Company's Restricted Management Stock Bonus Plan (the 'Bonus Plan'),
which covered 500,000 shares of the Company's Common Stock, $.001 par value per
share, expired in May, 1994. Shares issued under the Bonus Plan vest in four
equal installments on the second, third, fourth and fifth anniversaries of the
date of issuance. Except for those shares which have vested, shares issued under
the Bonus Plan may not be sold, transferred or otherwise disposed of unless they
are first offered to the Company for the same amount paid by the recipient.
MEDICAL ACTION INDUSTRIES INC. RETIREMENT PLAN
The Company has adopted, effective April 1, 1988, the Medical Action
Industries Inc. Retirement Plan (the 'Retirement Plan') for certain employees
pursuant to Section 401(k) of the Internal Revenue Code. All employees of the
Company and its subsidiaries are eligible to participate in the Retirement Plan.
Subject to the terms and conditions of the Retirement Plan, each eligible
employee may contribute up to 15% of his compensation, as defined therein. Each
participant's contribution vests immediately.
In addition, the Retirement Plan provides for discretionary Company
contributions, up to a maximum of 3% of such participant's compensation. Each
participant's portion of the discretionary contribution vests over a period of
four years.
For the fiscal year ended March 31, 1995, contributions under the
Retirement Plan for Messrs. Joseph R. Meringola, Paul D. Meringola, Richard G.
Satin and Daniel Marsh were approximately $1,920, $1,994, $1,397 and $1,507,
respectively, and $6,818 for all officers as a group.
CHANGE IN CONTROL ARRANGEMENTS
The Company has entered into agreements with three of its executive
officers, Messrs. Paul D. Meringola, Satin and Marsh, which provide certain
benefits in the event of a change in control of the Company. A 'change in
control' of the Company is defined as, in general, the acquisition by any person
of beneficial ownership of 20% or more of the voting stock of the Company,
certain business combinations involving the Company or a change in a majority of
the incumbent members of the Board of Directors, except for changes in the
majority of such members approved by such members. If, within two years after a
change in control, the Company or, in certain circumstances, the executive,
terminates his employment, the executive is entitled to a severance payment
equal to three times (i) such executive's highest annual salary within the
five-year period preceding termination plus (ii) a bonus increment equal to the
average of the two highest of the last five bonuses paid to such executive. In
addition, the executive is entitled to the continuation of all employment
benefits for a three-year period, the vesting of all stock options and certain
other benefits, including payment of an amount sufficient to offset any 'excess
parachute payment' excise tax payable by the executive pursuant to the
provisions of the Internal Revenue Code or any comparable provision of state
law.
Prior to a change in control, the rights and obligations of the executive
with regard to his employment by the Company shall be determined in accordance
with the policies and procedures adopted from time to time by the Company. The
agreements deal only with certain rights and obligations of the executive
subsequent to a change in control, and the existence of the agreement shall not
be treated as raising any inference with respect to what rights and obligations
exist prior to a change in control.
10
<PAGE>
APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors recommends that the stockholders approve the
appointment of Ernst & Young LLP as the Company's independent auditors to
examine the financial statements of the Company for the fiscal year ending March
31, 1996. A representative of the firm plans to be present at the Annual
Meeting, with the opportunity to make a statement if he desires to do so, and
will be available to respond to appropriate questions.
CERTAIN TRANSACTIONS
During fiscal 1995, the Company's Chairman of the Board, Joseph R.
Meringola, satisfied in full previously outstanding loans made to him in the
aggregate amount of $150,000.
ADDITIONAL INFORMATION
The Board of Directors does not intend to present to the meeting any
matters not referred to in the form of proxy. If any proposal not set forth in
this Proxy Statement should be presented for action at the meeting, and is a
matter which should come before the meeting, it is intended that the shares
represented by proxies will be voted with respect to such matters in accordance
with the judgment of the persons voting them.
The cost of soliciting proxies in the accompanying form has been or will be
paid by the Company. In addition to solicitation by mail, arrangements may be
made with brokerage houses and other custodians, nominees and fiduciaries to
send proxy material to their principals, and the Company may reimburse them for
their expenses in so doing. To the extent necessary in order to assure
sufficient representation, officers and regular employees of the Company may
request the return of proxies personally, by telephone or telegram. The extent
to which this will be necessary depends entirely upon how promptly proxies are
received, and stockholders are urged to send in their proxies without delay.
Stockholder proposals with respect to the Company's next Annual Meeting of
Stockholders must be received by the Company no later than April 1, 1996 to be
considered for inclusion in the Company's next Proxy Statement.
A copy of the Annual Report has been mailed to every stockholder of record.
The Annual Report is not to be considered proxy soliciting material.
By Order of the Board of Directors,
Richard G. Satin
Vice President -- Operations
and General Counsel
Dated: Hauppauge, New York
July 1, 1995
11
<PAGE>
MEDICAL ACTION INDUSTRIES INC.
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS
The undersigned hereby appoints Paul D. Meringola and Richard G. Satin, or
either of them with full power of substitution, proxies to vote at the Annual
Meeting of Stockholders of Medical Action Industries Inc. (the 'Company') to be
held on August 9, 1995 at 3:00 p.m., local time, and at any adjournment or
adjournments thereof, hereby revoking any proxies heretofore given, to vote all
shares of common stock of the Company held or owned by the undersigned as
directed below, and in their discretion upon such other matters as may come
before the meeting.
/x/ Please mark your votes as in this example.
1. Election of Directors:
FOR / / WITHHELD / /
FOR, EXCEPT VOTE WITHHELD FOR THE FOLLOWING NOMINEE(S): ____________________
NOMINEES: Bernard Wengrover, Paul D. Meringola
2. Approval of the ratification of Ernst & Young LLP as independent public
auditors of the Company for the fiscal year ending March 31, 1996.
FOR / / AGAINST / / ABSTAIN / /
(To be Signed on Reverse Side)
<PAGE>
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS GIVEN HEREIN.
IF NO INSTRUCTIONS ARE INDICATED, THE PERSONS NAMED PROXY HEREIN WILL VOTE ALL
SHARES IN THE NAME OF THE UNDERSIGNED FOR THE MATTERS SET FORTH HEREIN AND, IN
THEIR DISCRETION, FOR ANY OTHER BUSINESS WHICH MAY PROPERLY COME BEFORE THE
MEETING OR ANY ADJOURNMENT(S) THEREOF.
Please mark, date, sign and promptly return this proxy in the accompaning
envelope. No postage is required if mailed within the United States.
Date ____________________________________
Signature _______________________________
Signature _______________________________
NOTE: Please sign as name appears hereon.
Joint owners should each sign. When
signing as attorney, executor,
administrator or guardian, please give
full title as such.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
consolidated financial statements and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 68
<SECURITIES> 0
<RECEIVABLES> 6040
<ALLOWANCES> 111
<INVENTORY> 11078
<CURRENT-ASSETS> 17682
<PP&E> 7833
<DEPRECIATION> 3851
<TOTAL-ASSETS> 24992
<CURRENT-LIABILITIES> 5851
<BONDS> 0
<COMMON> 8
0
0
<OTHER-SE> 11702
<TOTAL-LIABILITY-AND-EQUITY> 24992
<SALES> 19306
<TOTAL-REVENUES> 19306
<CGS> 15274
<TOTAL-COSTS> 18224
<OTHER-EXPENSES> 27
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 484
<INCOME-PRETAX> 571
<INCOME-TAX> 335
<INCOME-CONTINUING> 336
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 336
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
