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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the fiscal year ended JUNE 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the transition period from __________ to __________
Commission file number 0-15198
Osmic, Inc.
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(Exact name of registrant as specified in its charter)
DELAWARE 38-2640630
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(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification No.)
1788 NORTHWOOD, TROY, MICHIGAN 48084
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (810) 362-1290
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
None
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Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.01 par value
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(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [x]
As of August 31, 1996 there were 1,970,894 shares of Common Stock
outstanding.
Portions of the registrant's Proxy Statement for its 1996 Annual Meeting of
Stockholders have been incorporated by reference in Part III of this Annual
Report on Form 10-K.
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
General
Osmic, Inc. ("Osmic"), formerly Ovonic Synthetic Materials Company,
Inc. is engaged in the research, development and production of synthetic
materials products. Osmic was incorporated in 1985 to commercialize four
technologies in the areas of multilayer optical coatings, magnetic materials,
metallurgical coatings and atomic ceramics. This objective was based on
Osmic's unique ability to engineer materials on the atomic scale and knowledge
of the high quench rate processes by which nonequalibrium materials can be
produced. Today, substantially, all of Osmic's product sales originate from
being one of the world's leading commercial suppliers of multilayer optic
products used for reflecting x-rays and neutrons. These products are used in
analytical equipment, research applications and in prototypes for technologies
such as x-ray lithography, microscopy and astronomy. Osmic is also pursuing
strategic alliances to commercialize developed technologies in the areas of
high-performance permanent magnet powders and solid lubricant thin-films.
Stock / Ownership History
In connection with an approximate $21,000,000 financing in December
1985 among Osmic, Energy Conversion Devices, Inc. ("ECD") and Manning & Napier
Advisors, Inc. ("Manning & Napier") on behalf of their accredited investor
clients (the "Investment Agreement"), Osmic transferred approximately
$11,000,000 of the $21,000,000 it received to ECD and, in exchange, ECD was to
transfer to Osmic, ECD's pre-existing synthetic materials technology and
related equipment. In addition, in return for 100% or 1,400,000 of the
outstanding shares of Common Stock of Osmic, $.01 par value ("Osmic Common
Stock"), ECD granted to Osmic a worldwide, irrevocable, exclusive license
(including the right to grant sublicenses) to make, use and sell products using
any or all of ECD's synthetic materials technology (including all relevant
United States and foreign patents and patent applications).
Effective August 18, 1993 ("Closing Date"), in connection with the
termination of a February 1988 Consent Decree between ECD and Manning & Napier
and pursuant to Order of the United States District Court for the Western
District of New York ("Court") and pursuant to Section 3 (a) (10) of the
Securities Act of 1933, ECD the former 100% holder of Osmic Common Stock
conveyed all of the issued and outstanding Osmic Common Stock to the holders of
record as of July 2, 1993 of Osmic's Preferred Stock pro rata according to
their ownership percentage of Osmic Preferred Stock as of such record date. In
exchange for the total settlement of claims against one another and in exchange
for various proprietary interests, ECD conveyed Osmic's Common Stock to the
respective holders of Osmic Preferred Stock and ECD was granted irrevocable,
non-exclusive, worldwide, royalty-free rights, with the right to sublicense
such rights to Osmic's superconductivity and clear coat technologies.
Effective July 18, 1994, the Company adopted a Plan of
Recapitalization wherein each share of preferred stock and resultant rights
were exchanged for an equivalent number of shares of common stock. Therefore,
the Company currently has only common stock issued and outstanding. Osmic
understands that Manning & Napier had dispositive power or voting control over
substantially all the outstanding shares of Osmic Common Stock. Mr. William
Manning, as founder, President and majority shareholder of Manning & Napier,
may be deemed to be the controlling person of Manning & Napier, and, as such,
may be deemed to have control over substantially all of the shares of Osmic
Common Stock owned by Manning & Napier's clients.
Amorphous X-Ray Dispersive Mirrors / Supermirrors
Although a number of materials reflect visible light and consequently
can be used as ordinary mirrors, only a very limited number of materials can be
used to reflect highly penetrative X-rays, especially the longer wavelength
X-rays used for the analysis of light elements. Conventional X-ray reflective
materials are crystalline and thus are
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both difficult to form to curved surfaces and are expensive. In addition,
these materials reflect a very limited range of X-ray energies (wavelengths)
efficiently, degrade rapidly in air, are not durable, and are, in some cases,
toxic.
Osmic has used the thin-film synthetic multilayer (SML)
technology--also referred to as an amorphous superlattice--to develop synthetic
crystals that can be used for X-ray dispersive mirrors which are commonly used
in wavelength dispersive X-ray fluorescent spectrometers for industrial
measurement and research applications. Ovonyx(TM) X-ray dispersive mirrors
enhance reflectivity for light element X-rays for which there were previously
no satisfactory products available. They also have increased durability
(surfaces not easily scratched during routine handling) and increased thermal
stability. Ovonyx(TM) X-ray mirrors increase analytical sensitivity and provide
for superior performance in analysis of light elements. Ovonyx(TM) X-ray
mirrors utilize nontoxic materials. Osmic's technology also permits
fabrication on complex surfaces.
Osmic supplys such major original equipment manufacturers as
Nederlandse Philips Bedrijven B.V. ("Philips"), Rigaku Corporation ("Rigaku")
and Siemens AG X-Ray Analytical Systems ("Siemens"), and sells X-ray mirrors to
upgrade existing instruments. Osmic also has sold X-ray mirrors to researchers
in the fields of X-ray lasers, X-ray astronomy, plasma diagnostics and
synchrotron radiation.
In 1995, the Company began commercializing a laterally-graded
multilayer mirror under the tradename Gutman Optics. These optics have been
introduced into X-ray diffraction applications by the Company's current OEM
customers. Furthermore, during fiscal year 1996 Osmic was granted a Phase II
Small Business Innovative Research ("SBIR") award for $200,000 related to new
applications for this multilayer product. Osmic is evaluating the use of this
product and its other multilayer products in a number of other applications,
including X-ray medical diagnostics.
Based on Osmic's SML technology used to manufacture X-ray optics,
Osmic has adapted, with U.S. Government funding support, multilayer mirrors for
use as neutron polarizing and non-polarizing dispersive reflectors to be used
in neutron waveguide systems, components and instrumentation. Osmic has begun
to commercialize this supermirror technology.
High-Performance Permanent Magnets
Permanent magnets are utilized in a wide range of commercial and
industrial applications, including automotive motors, industrial motors,
consumer appliances, loud speakers, microphones and headphones and nuclear
magnetic resonance imaging systems. Permanent magnets often are classified by
their "magnetic energy product," which provides an indication of the work which
can be done with motors or actuators using a fixed volume of magnet. With
permanent magnets that possess a high magnetic energy product, manufacturers
can design lighter, smaller and more efficient equipment and appliances.
Osmic has worked on developing rare earth-based, high-performance,
permanent magnets and has established a limited proprietary position. Osmic
has suspended its production and research activity and since fiscal year 1995
has concentrated on locating and enabling a strategic partner to commercialize
the Company's technology. The Company has begun a relationship with a Chinese
partner to commercialize this technology and is searching for additional
partners. (For additional information related to Osmic's efforts to
commercialize its magnet technology, see Item 1: Description of
Business--Competition--Magnets.)
Patents, Know-How and Technology
Osmic has a worldwide, exclusive license (including the right to grant
sublicenses) to make, use and sell under all of ECD's technology (including all
relevant United States and foreign patents and patent applications) for
application in specialized coatings, X-ray dispersive mirrors, high-performance
magnets, Atomic Ceramics(TM), and certain applications of superconductivity.
Many of the patents and patent applications included in this technology cover
inventions by Stanford R. Ovshinsky, ECD's President and Chief Executive
Officer and Osmic's Former Chief Executive Officer and Chairman of the Board,
who has irrevocably assigned all such patents and patent applications
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to ECD. The license also includes all future improvements in the licensed
technology conceived, developed or otherwise acquired by ECD during the term of
the license agreement. Osmic has granted ECD a cross-license on technology
developed or acquired by Osmic on a nonexclusive basis, limited, however, to
applications outside the fields of specialized coatings, X-ray dispersive
mirrors, high-performance magnets, certain aspects of superconductivity and
Atomic Ceramics(TM).
Osmic has been developing further technologies applicable to
specialized coatings, X-ray dispersive mirrors, high-performance magnets and
Atomic Ceramics(TM) and as of July 31, 1996 in these areas owned 2 United States
pending patent applications, 34 issued United States patents and approximately
111 corresponding foreign patent applications issued or pending. Osmic
believes that patent protection is important for it to compete effectively.
ECD patents, exclusively licensed to Osmic, and Osmic's patents and patent
applications have not been tested judicially and, accordingly, no assurance can
be given as to either the validity or scope of the patent protection. Osmic
has no knowledge of any patent infringement claims, formal or otherwise,
against Osmic although there has been substantial patent activity in the
high-performance magnet field by Magnequench International ("MQI"), a former
subsidiary of General Motors Corporation ("GM"), which may affect Osmic's
ability to commercialize its magnet technology. Pursuant to the terms of the
Termination Agreement, ECD received nonexclusive rights to Osmic's clear coat
and superconductivity technologies (see Item 13: Certain Relationships and
Related Transactions--Agreement to Terminate Consent Decree). (See also Item
1: Competition--Magnets.)
Summary of Revenues
See Item 6: Selected Financial Data. For discussion of Osmic's
working capital and liquidity, see Item 7: Management's Discussion and
Analysis of Financial Condition and Results of Operations.
Backlog
Osmic had a backlog as of July 31, 1996 of $757,000 compared to
$581,000 as of July 31, 1995. Osmic expects this backlog to be filled during
the current fiscal year.
Raw Materials
Raw materials used in Osmic's business are generally available from a
variety of sources.
Competition
General
Osmic competes with firms, both domestic and foreign, which perform
research and development, as well as manufacture and sell products. Some
competing manufacturers have well-established business organizations and
product lines, as well as extensive resources, research and development staffs
and facilities which greatly exceed those of Osmic. Because Osmic's principal
activities have been devoted to developing its technology, including production
technology, products and product applications, as well as the testing of
prototypes, Osmic has been competing primarily on the basis of its inventions,
its technology and its research and development activities.
Osmic's ability to compete will depend not only on the proprietary
nature of its products and know-how, but also on its ability to generate
substantial sales, establish efficient manufacturing procedures for volume
production and obtain funds for the increased financial requirements that
accompany increased production.
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X-ray Dispersive Mirrors / Supermirrors
Osmic is the leading commercial supplier of synthetically made X-ray
dispersive mirrors. Osmic sells these X-ray dispersive mirrors to leading
original equipment manufacturers of instruments such as X-ray fluorescence
(stand-alone) spectrometers and electron microprobe X-ray spectrometers,
including Philips, Rigaku and Siemens. Osmic's X-ray dispersive mirrors
compete against both acid phthalate crystals and Langmuir-Blodgett
pseudo-crystals for these commercial applications. To Osmic's knowledge, fewer
than 10 companies in the United States, Europe and Japan market acid phthalate
crystals and Langmuir-Blodgett pseudocrystals. Osmic has become aware of four
companies, Moxtek located in Utah, Opto-Line Assoc. located in Massachusetts,
Seifert located in Germany and FOM located in the Netherlands, that have
offered multilayer X-ray dispersive mirrors for sale. To Osmic's knowledge,
these companies have not reported any commercial sales of these products.
Osmic believes that many of these products will infringe upon its issued
patents and has notified these companies of possible infringement. Osmic also
sells X-ray dispersive mirrors for custom applications, such as scientific
research. Certain custom applications require highly focused or very large
X-ray dispersive mirrors. Osmic believes that both acid phthalate crystals and
Langmuir-Blodgett pseudo-crystals entail limitations that restrict their
usefulness for such custom applications.
Magnets
Osmic believes that approximately a dozen major companies in the U.S.
manufacture and sell high-performance, permanent, rare-earth magnets. No one
company presently dominates this market. However, MQI has historically
dominated the rapidly solidified iron-neodymium-boron powder segment of this
market which is the segment Osmic intends to enter through strategic partners.
Osmic has developed magnet materials and processes for making such materials
which exhibit an intergranular interaction effect and are covered by patents
and patent applications. MQI has been granted basic U.S. patents covering
certain high-performance magnet technology which relates to certain magnet
technology utilized by Osmic. MQI's patents may affect Osmic's ability to
commercialize its magnet technology in the U.S. and other areas as well.
Consequently, Osmic is presently evaluating its alternatives for
commercializing its high-performance magnet technology including joint
ventures, licensing and product sales.
Substantial patent activity by MQI in the high-performance magnet
field has resulted in the U.S. Navy disputing MQI's claim to priority regarding
the class of iron-neodymium-boron magnet materials. Successful resolution of
this dispute in favor of the U.S. Navy would remove an obstacle to Osmic's
commercialization of its improved high-performance magnet technology. On June
28, 1995, GM announced the sale of MQI to a company owned substantially by two
Chinese state-owned organizations. The effect of this sale on Osmic's ability
to commercialize this technology is currently unknown.
Product Research and Development
All of Osmic's research and development costs are expensed as
incurred.
The following is a summary of Osmic's direct expenditures for product
research and development (excluding patent, operating, general and
administrative and interest expenses) for the three years ended June 30, 1996.
<TABLE>
<CAPTION>
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Sponsored by Licensees
& Business Partners $ 136,733 $ 76,850 $ 54,180
Sponsored by Osmic 358,997 371,079 859,803
---------- ----------- -----------
$ 495,730 $ 447,929 $ 913,983
========= =========== ===========
</TABLE>
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Employees
As of August 31, 1996, Osmic had 22 full-time employees: 12 were
directly involved in production and the development of production techniques; 4
were involved in research and development; and 6 were involved in management,
marketing and administration. Osmic considers its relations with its employees
to be satisfactory.
ITEM 2. PROPERTIES
Osmic leases 12,480 square feet of space at 1788 Northwood, Troy,
Michigan at a current monthly rental of $4,576. The lease expires in 2002.
Management believes that this facility is generally adequate for its present
operations and is maintained in a good state of repair.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF STOCKHOLDERS
A tabulation of the proposals submitted to security holders for vote
at the Company's Special Stockholders Meeting on December 21, 1995 are included
in the Company's Quarterly Report on Form 10-Q dated December 31, 1995 and
incorporated herein by reference. No matters were submitted to a vote of
shareholders during the fourth quarter of the fiscal year covered by this
Report.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
Effective July 18, 1994, the Company exchanged each share of preferred
stock and resultant rights for one share of common stock as part of a Plan of
Recapitalization. Therefore, the Company has currently only common stock
issued and outstanding. On the same date, the Company authorized a new class
of preferred stock.
The total number of shares of all classes of stock which Osmic has
authority to issue is 6,000,000, of which 2,000,000 shares are designated Osmic
Preferred Stock and 4,000,000 shares are designated Osmic Common Stock. As of
August 31, 1996, Osmic had no shares issued and outstanding of Osmic Preferred
Stock and 1,970,894 shares issued and outstanding of Osmic Common Stock
representing approximately 400 holders of record.
Osmic's Common Stock is not traded in any publicly traded stock
market. Osmic has paid no dividend on Osmic Common Stock. As of August 31,
1996, the Company has issued and outstanding 69,250 stock options to purchase
Osmic Common Stock of which 24,063 were immediately exercisable.
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ITEM 6. SELECTED FINANCIAL DATA
Set forth below is certain financial information taken from the
Company's Financial Statements.
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
(In thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Product sales $3,522 $2,192 $1,607 $1,392 $1,441
Revenues from business
agreements 246 107 69 28 417
Other revenues 77 83 96 133 107
Total revenues 3,845 2,382 1,772 1,553 1,965
Pre-tax income (loss) 1,061 394 (368) (671) (500)
Net income (loss) 671 236 (368) (671) (500)
Net income (loss) per
common share 0.34 0.12 (0.26) (0.48) (0.36)
Balance Sheet Data:
Working capital $1,719 $1,023 $ 544 $ 947 $1,523
Total assets 3,578 1,548 1,220 1,354 1,981
Stockholders' equity 2,992 1,170 747 1,115 1,786
Percentages and Ratios:
Gross profit 58% 70% 64% 66% 68%
Current ratio 3.93 3.71 2.15 4.97 8.79
Quick ratio 1.85 2.33 0.64 3.03 5.52
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion relating to the three years ended June 30,
1996 should be read in conjunction with the Company's Financial Statements and
related Notes.
Liquidity and Capital Resources
As of June 30, 1996, Osmic had working capital of approximately
$1,719,000 including cash of approximately $1,082,000.
Results of Operations
Year Ended June 30, 1996 Compared to Year Ended June 30, 1995
The increase in net income from $236,312 for the year ended June 30,
1995 to $671,259 for the year ended June 30, 1996 was primarily due to
increased product sales.
The increase in product sales of approximately $1,330,000 or 61% from
$2,191,771 in the year ended June 30, 1995 to $3,521,992 in the year ended June
30, 1996 was due to increases in standard x-ray product sales and custom
projects completed in fiscal year 1996 including laterally graded Gutman Optics
and neutron guide units.
The increase in revenues from business agreements from $106,564 in the
year ended June 30, 1995 to $246,031 in the year ended June 30, 1996 was
primarily due to Small Business Innovative Research ("SBIR")
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contracts with the Department of Commerce and NASA and a consulting agreement
for the development and commercialization of the Company's magnet technology.
Osmic generated revenues from four major customers representing
approximately 57% of total revenues for the year ended June 30, 1996 as
compared to 32% of total revenues from two major customers for the year ended
June 30, 1995. Revenues from unaffiliated customers in foreign countries
represent approximately 78% and 76% of total revenue for the years ended June
30, 1996 and 1995, respectively. All sales in foreign countries are in U.S.
dollars.
The increase in cost of product sales from $647,130 in the year ended
June 30, 1995 to $1,467,032 in the year ended June 30, 1996 was due to
increased unit product sales and a change in product mix. Gross profit as a
percentage of sales decreased by 12%, from 70% in fiscal year 1995 to 58% in
fiscal year 1996 as a result of a change in product mix, specifically a higher
percentage of total sales in 1996 were for custom and neutron products.
The increase in cost of revenue from business agreements from $76,850
for the year ended June 30, 1995 to $136,733 for the year ended June 30, 1996
was primarily due to increased revenue from contracts in 1996.
Direct product development and research expense remained relatively
constant at $371,079 for the year ended June 30, 1995 and $358,997 for the
year ended June 30, 1996.
The decrease in operating, general and administrative expenses from
$804,653 in the year ended June 30, 1995 to $724,085 in the year ended June 30,
1996 was primarily due to the separation with the Company's former President at
the end of fiscal year 1995.
The increase in the income tax provision from $158,000 for the year
ended June 30, 1995 to $390,000 for the year ended June 30, 1996 is a result of
the continued increase in the Company's profitability. The tax benefit
associated with utilizing the Company's net operating loss carryforwards are
reflected in the balance sheet as an increase in retained earnings. The
Company's current tax liability payable is $55,000.
The Company's balance sheet reflects a significant increase in the
Company's accounts receivable as a result of delivering a $560,000 neutron
guide order at the end of the fourth quarter of 1996.
Year Ended June 30, 1995 Compared to Year Ended June 30, 1994
The turnaround from a net loss of ($368,142) for the year ended June
30, 1994 compared to a net income of $236,312 for the year ended June 30, 1995
was primarily due to increases in product sales and implementation of a
reorganization plan inclusive of the suspension of the magnet program.
The increase in product sales of approximately $585,000 or 36% from
$1,606,699 in the year ended June 30, 1994 to $2,191,771 in the year ended June
30, 1995 was due to increases in standard x-ray product sales and custom
projects completed in fiscal year 1995 partially offset by a reduced amount of
neutron products sold under a distributorship agreement.
The increase in revenues from business agreements from $68,823 in the
year ended June 30, 1994 to $106,564 in the year ended June 30, 1995 was
primarily due to the award of both a Phase I SBIR Program and a Cooperative
Research and Development Agreement ("CRADA") in 1995.
Osmic generated revenues from two major X-ray dispersive mirror
customers representing approximately 32% of total revenues for the year ended
June 30, 1995 as compared to 12% of total revenues from one major customer for
the year ended June 30, 1994. Revenues from unaffiliated customers in foreign
countries represent approximately 76% and 58% of total revenue for the years
ended June 30, 1995 and 1994, respectively. All sales in foreign countries are
in U.S. dollars.
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The increase in cost of product sales from $583,065 in the year ended
June 30, 1994 to $647,130 in the year ended June 30, 1995 was due to increased
unit product sales. Gross profit as a percentage of sales was increased by
6%, from 64% in fiscal year 1994 to 70% in fiscal year 1995 as a result of a
higher percentage of standard and custom X-ray projects as compared to neutron
products sold through a distribution agreement with a French company which was
terminated in fiscal year 1995.
The increase in cost of revenue from business agreements from $54,180
for the year ended June 30, 1994 to $76,850 for the year ended June 30, 1995
was primarily due to performing under both a SBIR and CRADA contract in fiscal
year 1995.
The decrease in direct product development and research expense from
$859,803 in the year ended June 30, 1994 to $371,079 in the year ended June 30,
1995 was primarily due to the suspension of the magnet research and development
program.
The increase in operating, general and administrative expenses from
$571,011 in the year ended June 30, 1994 to $804,653 in the year ended June 30,
1995 was due to a separation agreement with the Company's former President and
increases in directors and consulting fees, employee bonuses accrued and
marketing expenses.
The income tax provision of $158,000 for the year ended June 30, 1995
is a result of the turnaround in the Company's profitability. The tax benefit
associated with utilizing the Company's net operating loss carryforwards are
reflected in the balance sheet as an increase in retained earnings. The
Company has no current tax liability payable.
Due to the completion of a neutron contract under the Company's
terminated distributorship agreement, accounts receivable and accounts payable
were reduced by approximately $211,000 and $182,000, respectively, representing
the most significant balance sheet fluctuation from 1994 to 1995.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary financial information
included in this report are set forth on the Index to Financial Statements and
Financial Statement Schedules appearing on page F-1 of this Report.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
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PART III
The information called for by the items within this part is included
in the Company's 1996 Proxy Statement, and is incorporated herein by reference,
as follows:
<TABLE>
<CAPTION>
Caption(s) in 1996
Proxy Statement
------------------
<S> <C> <C>
ITEM 10. Directors and Executive Officers
of the Registrant "Election of Directors"
ITEM 11. Executive Compensation "Executive Compensation"
ITEM 12. Security Ownership of Certain
Beneficial Owners and Management "Voting Securities and Principal Holders Thereof" and
"Election of Directors"
ITEM 13. Certain Relationships and
Related Transactions "Certain Relationships and Related Transactions"
</TABLE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. Financial Statements:
The financial statements filed with this Report are listed on
page F-1.
2. Financial Statement Schedules:
The financial statement schedules are not required under the
Securities and Exchange Commission's instructions or are
inapplicable and, therefore, have been omitted.
3. Exhibits:
The exhibits filed with this Report are listed on the "Exhibit
Index" on page E-1.
(b) Reports on Form 8-K
The Company filed a Report on Form 8-K, dated July 11, 1996,
reporting a change in the Company's independent auditors, from
Coopers & Lybrand LLP to Arthur Andersen LLP.
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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.
Osmic, Inc.
By /s/ Wes L. Hardenburg
--------------------------
Wes L. Hardenburg, Secretary
Dated: September 19, 1996
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:
<TABLE>
<CAPTION>
<S> <C> <C>
/s/ Joseph Ben-Gal Director and Chairman September 19, 1996
- --------------------- of the Board and Principal
Joseph Ben-Gal Executive Officer
/s/ Joel C. Domino Director September 19, 1996
- ---------------------
Joel C. Domino
/s/ Emil Strumban Director September 19, 1996
- ---------------------
Emil Strumban
/s/ Wes L. Hardenburg Principal Financial and September 19, 1996
- ----------------------- Accounting Officer
Wes L. Hardenburg
</TABLE>
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OSMIC, INC.
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
The following financial statements of Osmic, Inc. are referred to in Item 8:
Report of Independent Public Accountants F-2
Balance Sheet - June 30, 1996 and 1995 F-3
Statements of Operations - years ended
June 30, 1996, 1995, and 1994 F-4
Statements of Stockholders' Equity - years
ended June 30, 1996, 1995 and 1994 F-5
Statements of Cash Flows - years ended
June 30, 1996, 1995 and 1994 F-6
Notes to Financial Statements F-7
All other schedules, for which provision is made in Regulation S-X,
have been omitted because they are not required under the instructions
contained therein, are inapplicable, or information required is included in a
note to the financial statements.
F-1
<PAGE> 13
Report of Independent Public Accountants
Board of Directors
Osmic, Inc.
We have audited the accompanying balance sheets of Osmic, Inc. (a Delaware
Corporation) as of June 30, 1996 and 1995, and the related statements of
operations, stockholders' equity and cash flows for each of the three years in
the period ended June 30, 1996. 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 provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Osmic, Inc. as of June 30,
1996 and 1995, and the results of its operations and cash flows for each of the
three years in the period ended June 30, 1996, in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
Detroit, Michigan
August 23, 1996
F-2
<PAGE> 14
Osmic, Inc.
BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
June 30,
---------------------------------------
1996 1995
---- ----
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,082,413 $ 879,922
Accounts receivable 1,064,041 355,275
Inventories 156,298 163,153
Prepaid expenses 2,347 3,150
----------- -----------
Total current assets 2,305,099 1,401,500
Other assets 40,000 60,000
Deferred income taxes 816,000 -
Net property and equipment 416,706 86,310
----------- ------------
$ 3,577,805 $ 1,547,810
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable $ 139,278 $ 55,075
Accrued expenses 277,057 188,236
Accrued compensation 169,558 134,846
----------- -----------
Total current liabilities 585,893 378,157
Stockholders' equity:
Preferred stock, no par value, 2,000,000 shares
authorized; none outstanding - -
Common stock, par value $.01 per share- 4,000,000
shares authorized; 1,970,894 shares issued 19,709 19,709
Additional paid-in capital 755,632 755,632
Retained earnings 2,216,571 394,312
----------- -----------
Total stockholders' equity 2,991,912 1,169,653
----------- -----------
$ 3,577,805 $ 1,547,810
=========== ===========
</TABLE>
- -------
See notes to financial statements.
F-3
<PAGE> 15
Osmic, Inc.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Years ended June 30,
-------------------------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Total revenue $ 3,801,423 $ 2,368,853 $ 1,765,947
=========== =========== ===========
Net product sales $ 3,521,992 $ 2,191,771 $ 1,606,699
Cost of products sold 1,467,032 647,130 583,065
----------- ----------- -----------
Gross profit 2,054,960 1,544,641 1,023,634
Other operating revenue:
Revenue from business agreements 246,031 106,564 68,823
Other revenue 33,400 70,518 90,425
----------- ----------- -----------
Total other operating revenue 279,431 177,082 159,248
Operating expenses:
Cost of revenues from business agreements 136,733 76,850 54,180
Product development and research 358,997 371,079 859,803
Patent fees and expenses 96,693 87,815 72,265
Selling, general and administrative 724,085 804,653 571,011
----------- ----------- -----------
Total operating expenses 1,316,508 1,340,397 1,557,259
----------- ----------- -----------
Operating income (loss) 1,017,883 381,326 (374,377)
Interest income 43,376 12,986 6,235
----------- ----------- -----------
Income (loss) before provision for income taxes 1,061,259 394,312 (368,142)
Provision for income taxes 390,000 158,000 -
----------- ----------- -----------
Net income (loss) $ 671,259 $ 236,312 $ (368,142)
=========== =========== ===========
Net income (loss) per common share $ 0.34 $ 0.12 $ (0.26)
=========== =========== ===========
</TABLE>
- ----------
See notes to financial statements.
F-4
<PAGE> 16
Osmic, Inc.
STATEMENTS OF STOCKHOLDERS' EQUITY
For the Years Ended June 30, 1996, 1995 and 1994
<TABLE>
<CAPTION>
$27 Par Value $.01 Par Value
Preferred Stock Common Stock
----------------------------- ------------------------- Retained
Number Number Additional Earnings
of of Paid-In (Accumulated Stockholders'
Shares Amount Shares Amount Capital Deficit) Equity
-------- ------------ --------- --------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at July 1, 1993 556,463 $ 15,024,501 1,400,000 $ 14,000 $ 9,013,347 $(22,936,701) $ 1,115,147
Preferred shares exchanged
for ECD Common Stock (5,524) (149,148) 149,148
Net loss for the year
ended June 30, 1994 (368,142) (368,142)
-------- ------------ --------- --------- ------------ ------------ -----------
Balance at June 30, 1994 550,939 14,875,353 1,400,000 14,000 9,162,495 (23,304,843) 747,005
Common shares issued in
exchange of preferred stock
and quasi-reorganization (550,939) (14,875,353) 550,939 5,509 (8,434,999) 23,304,843
Non-employee directors
common stock issued 19,955 200 28,136 28,336
Net income for the year
ended June 30, 1995 236,312 236,312
Benefit of NOL carryforward 158,000 158,000
-------- ----------- --------- --------- ----------- ------------ -----------
Balance at June 30, 1995 - - 1,970,894 19,709 755,632 394,312 1,169,653
Net income for the year
ended June 30, 1996 671,259 671,259
Benefit of NOL carryforward 1,151,000 1,151,000
-------- ----------- --------- --------- ----------- ------------ -----------
Balance at June 30, 1996 - $ - 1,970,894 $ 19,709 $ 755,632 $ 2,216,571 $ 2,991,912
======== =========== ========= ========= =========== ============ ===========
</TABLE>
See notes to financial statements.
F-5
<PAGE> 17
Osmic, Inc.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years Ended June 30,
-------------------------------------------
1996 1995 1994
---- ---- -----
<S> <C> <C> <C>
Operating activities:
Net income (loss) $ 671,259 $ 236,312 $ (368,142)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation 37,542 53,279 74,355
Amortization 20,000 20,000 20,000
Gain on sale of equipment (18,400) - (9,226)
Increase in deferred income taxes (816,000) - -
Benefit of NOL carryforward 1,151,000 158,000 -
Non-employee director common stock issued - 28,336 -
Changes in operating assets and liabilities:
Accounts receivable, net (708,766) 151,570 (260,193)
Inventory 6,855 43,153 11,199
Other current assets 803 (3,150) -
Accounts payable 84,203 (74,644) 38,935
Accrued expenses 88,821 (112,652) 199,474
Accrued compensation 34,712 91,986 (3,429)
----------- ---------- ----------
Net cash provided by (used in) operations 552,029 592,190 (297,027)
----------- ---------- ----------
Investing activities:
Purchases of capital equipment (367,938) (16,600) (33,571)
Purchases of other assets - - (100,000)
Proceeds from sale of capital equipment 18,400 - 13,110
----------- ---------- ----------
Net cash (used in) investing activities (349,538) (16,600) (120,461)
----------- ---------- ----------
Net increase (decrease) in cash
and cash equivalents 202,491 575,590 (417,488)
Cash and cash equivalents at beginning of period 879,922 304,332 721,820
----------- ---------- ----------
Cash and cash equivalents at end of period $ 1,082,413 $ 879,922 $ 304,332
=========== ========== ==========
</TABLE>
- -------
See notes to financial statements.
F-6
<PAGE> 18
Osmic, Inc.
Notes to Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
Osmic, Inc. ("Osmic"), formerly Ovonic Synthetic Materials Company,
Inc., was incorporated as a Delaware corporation in October 1985. Until August
18, 1993, Osmic was a wholly-owned subsidiary of Energy Conversion Devices,
Inc. ("ECD").
Osmic is engaged in the research, development and production of
synthetic materials products. Building upon the patents, know-how and
technology of Osmic in amorphous and disordered materials, Osmic is developing
and produces tailored amorphous and related materials to replace or improve
upon pre-existing materials.
Cash and cash equivalents
Cash and cash equivalents include cash on hand, amounts due from banks
and debt instruments with an original maturity of three months or less.
Inventories
Inventories are valued at the lower of cost (first-in, first-out
method) or market.
Other assets
Other assets reflect a patent license purchased at cost, net of
accumulated amortization. The license is amortized utilizing the straight-line
method over the estimated useful life of the asset. Accumulated amortization
is $60,000 at June 30, 1996. The estimated useful life of the license is
considered to be five years.
Property and Equipment
All property and equipment are stated at cost. Depreciation is
provided on the straight-line method over the estimated useful lives of the
individual assets. The estimated lives of the assets range from 3 to 10 years.
Repairs and maintenance are charged to expense as incurred.
Income taxes
Effective July 1, 1991, Osmic elected to adopt Statement of Financial
Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes." This
statement mandates the use of the liability method of accounting for deferred
income taxes.
F-7
<PAGE> 19
Osmic, Inc.
Notes to Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Revenue Recognition
Revenue from product sales are recognized upon shipment of the
product. Revenue from business agreements which are on a cost-plus basis
are recognized in accordance with the terms of the agreement. Revenues from
other business agreements are accounted for on a percentage of completion
basis; if there are losses, Osmic records losses at the time such losses become
apparent. All costs incurred by Osmic in connection with its performance under
these agreements are recorded in Osmic's financial statements as cost of
revenues from business agreements.
Major Customers
The Company had four major customers for the year ended June 30, 1996
and two major customers for the years ended June 30, 1995 and 1994. Revenues
from these customers accounted for approximately 57%, 32% and 28% of net
product sales, respectively. These customers represented approximately 55% and
24% of accounts receivable at June 30, 1996 and 1995, respectively. Revenues
from unaffiliated customers in foreign countries represent approximately 78%,
76% and 58% of total revenue for the years ended June 30, 1996, 1995 and 1994,
respectively. All sales in foreign countries are in U.S. dollars.
Retirement plans
The Company has a defined contribution plan covering substantially all
employees. The Company's policy is to fund retirement costs accrued.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles 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 those estimates.
Net income (loss) per common share
Net income (loss) per share is based on the weighted average number of
common shares outstanding during the year.
F-8
<PAGE> 20
Osmic, Inc.
Notes to Financial Statements
2. INVENTORIES
Inventories are summarized below:
<TABLE>
<CAPTION>
June 30
-------------------------------
1996 1995
---------- -----------
<S> <C> <C>
Finished products $ 66,446 $ 51,629
Work in progress 64,772 77,991
Raw Materials 25,080 33,533
-------- ---------
$156,298 $ 163,153
======== =========
</TABLE>
3. PROPERTY AND EQUIPMENT
A summary of property and equipment is shown below:
<TABLE>
<CAPTION>
June 30
---------------------------------
1996 1995
----------- -----------
<S> <C> <C>
Leasehold improvements $ 362,033 $ 285,877
Machinery and equipment 3,711,857 3,420,075
---------- ----------
4,073,890 3,705,952
Less accumulated depreciation 3,657,184 3,619,642
---------- ----------
$ 416,706 $ 86,310
========== ==========
</TABLE>
4. INCOME TAXES
The provision for income taxes for the years ended June 30, 1996 and
1995 was different than the amount computed using the United States statutory
income tax rate and is summarized below:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Tax at the statutory rate (34%) $361,000 $134,000
Effect of book / tax
depreciation differences (5,000) 5,000
State income taxes 29,000 18,000
Other 5,000 1,000
-------- --------
Income tax provision $390,000 $158,000
Effect of utilizing net operating
loss carryforwards:
Federal income taxes $335,000 $140,000
State income taxes - 18,000
-------- --------
Current income tax liability $ 55,000 $ -
======== ========
</TABLE>
F-9
<PAGE> 21
Osmic, Inc.
Notes to Financial Statements
4. INCOME TAXES - CONTINUED
Temporary differences and carryforwards which give rise to deferred tax assets
at June 30 are as follows:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Net operating loss carryforwards (@34%) $ 3,571,000 $ 3,917,000
Research and development credit 128,000 128,000
Depreciation 28,000 33,000
Alternative minimum tax credit 12,000 -
Valuation allowance (2,923,000) (4,078,000)
----------- -----------
Total deferred tax assets $ 816,000 $ -
=========== ===========
</TABLE>
In accordance with SFAS No. 109, a valuation allowance on the deferred
tax assets has been established to reduce the total to an amount that
management believes will ultimately be realized. Realization of deferred tax
assets is dependent upon sufficient future taxable income during the period
that temporary differences and carryforwards are expected to be available to
reduce taxable income. The tax benefit of utilizing available net operating
loss carryforwards is credited to retained earnings as a result of the
quasi-reorganization discussed in Note 5.
At June 30, 1996, Osmic's remaining net tax operating loss carryforwards expire
as follows:
<TABLE>
<CAPTION>
<S> <C>
2002 $ 4,628,000
2003 3,347,000
2004 990,000
2005 401,000
2006 189,000
2007 625,000
2008 322,000
------------
$ 10,502,000
============
</TABLE>
5. QUASI-REORGANIZATION AND PLAN OF RECAPITALIZATION
Effective July 18, 1994, the shareholders approved a capital
reorganization of the Company which resulted in the exchange of all issued and
outstanding preferred shares for common shares on a one-for-one basis. In
connection with this plan of recapitalization, the Company reclassified its
accumulated deficit as of July 1, 1994 as a reduction of the additional
paid-in-capital to better reflect the financial position and new operating
focus of the Company. The quasi-reorganization did not involve any revaluation
of assets or liabilities.
F-10
<PAGE> 22
Osmic, Inc.
Notes to Financial Statements
6. RELATED PARTY TRANSACTION
The Company paid $50,000 to the Chairman of Board, Dr. Zvi Yaniv, for
consulting services performed during the year ended June 30, 1995.
7. LEASES
Rental expense under an operating lease agreement for the Company's
facilities approximated $54,900 in 1996, 1995 and 1994. The lease expires in
2002 and as of June 30, 1996, has future minimum lease commitments as follows:
For year ending June 30:
<TABLE>
<CAPTION>
<S> <C>
1997 $ 54,900
1998 58,200
1999 59,300
2000 59,300
2001 61,600
Thereafter 78,000
---------
$ 371,300
=========
</TABLE>
8. STOCK OPTION PLAN
Under the 1994 Employees' Incentive Stock Option Plan, the Company has
made available 200,000 shares of common stock for key employees. The options
vest and become exercisable in equal annual installments over three years. All
options have an exercise price equal to market value at date of grant. As of
June 30, 1996, there were 130,750 shares that remained available for grant
under this plan.
A summary of activity during fiscal years 1996 and 1995 follows:
<TABLE>
<CAPTION>
Number of Shares Per Share
1996 1995 Option Price
------ ------ ------------
<S> <C> <C> <C>
Outstanding at July 1 27,000 - $1.42
Options granted 42,750 39,500 $1.42
Options cancelled (500) (12,500) $1.42
------ -------
Outstanding at June 30 69.250 27,000 $1.42
====== =======
Exercisable at June 30 24,063 6,750 $1.42
====== =======
</TABLE>
F-11
<PAGE> 23
Osmic, Inc.
Notes to Financial Statements
9. NON-EMPLOYEE DIRECTORS' STOCK PLAN
Under the 1994 Non-Employee Directors' Stock Plan, the Company has made
available 150,000 shares of common stock for non-employee directors. Under the
Plan, each non-employee director is entitled to receive an award grant of such
number of shares of common stock as equal a fair market value of $10,000. As
of June 30, 1996, 19,955 shares of common stock have been cumulatively issued
pursuant to this plan.
10. BANK COMMITMENT
The Company has available $500,000 under a bank commitment to purchase
capital equipment at prime plus one percent (1%). No amounts have been drawn
down under the bank commitment.
F-12
<PAGE> 24
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Sequential
Number Description of Exhibit Page Number
- ------ ---------------------- -----------
<S> <C>
3(a) Certificate of Incorporation, as amended (1)
3(b) By-Laws, as amended (1)
10.23 Court Order dated August 18, 1993 (2)
10.24 Letter of Resignation of Stanford R. Ovshinsky as (2)
Chairman and Director, dated August 20, 1993
10.25 Letter of Resignation of Masat Izu as Director, (2)
dated August 20, 1993
10.26 Amended and Restated License Agreement between (3)
ECD and Osmic, dated August 18, 1993
10.27 Amended and Restated Royalty Trust Agreement by (3)
and among ECD, William Manning, William J. Napier
Christopher W. Beal and Manning & Napier, dated
August 18, 1993
10.28 Employees' Incentive Stock Plan* (4)
10.29 Non-Employee Directors' Stock Plan* (4)
10.30 Commitment Letter from Comerica Bank dated April 6, 1995 (5)
10.31 Commitment Letter from Comerica Bank dated June 26, 1996 E-2
27 Financial Data Schedule
</TABLE>
- ----------------------------
* Indicates compensatory plan.
(1) Previously filed under the corresponding Exhibit Number as an exhibit
to the Registrant's Annual Report on Form 10-K for the year ended June
30, 1994 and incorporated herein by reference.
(2) Previously filed under the corresponding Exhibit Number as an exhibit
to the Registrant's Current Report on Form 8-K dated August 18, 1993
and incorporated herein by reference.
(3) Previously filed under the corresponding Exhibit Number as an exhibit
to the Registrant's Annual Report on Form 10-K for the year ended June
30, 1993 and incorporated herein by reference.
(4) Previously filed as a part of Osmic's Proxy Statement for Annual
Meeting of Stockholders held on July 18, 1994 and
incorporated herein by reference.
(5) Previously filed under the corresponding Exhibit Number as an exhibit
to the Registrant's Annual Report on Form 10-K for the year ended June
30, 1995 and incorporated herein by reference.
E-1
<PAGE> 1
[COMERICA LETTERHEAD]
June 26, 1996 EXHIBIT 10.31
Mr. Wes Hardenburg
Chief Financial Officer
Osmic, Inc.
1788 Northwood Drive
Troy, MI 48084
Dear Wes:
On behalf of Comerica Bank, I am pleased to provide the following arrangements:
Borrower : Osmic, Inc.
Facility : Up to a $450,000.00 installment loan
Purpose : Acquisition of machinery and equipment
Amortization Term : Up to sixty (60) months
Advance Rate : Up to ninety percent (90%) of cost
Security : First lien on all corporate assets
including Accounts Receivable,
Inventory, and Machinery and Equipment.
Rate : Prime + 1%, floating
Fees : None
The terms of this commitment include the following conditions:
-Annual audited financial statements
-Quarterly direct statements
E-2
<PAGE> 2
[COMERICA LETTERHEAD]
MR. WES HARDENBURG
JUNE 26, 1996
PAGE TWO
As a condition to funding this credit facility, Comerica must be provided with
all documents and information required by Comerica in form and substance
satisfactory to Comerica. A further condition of advancing under this credit
facility is Comerica's continued satisfaction with Borrower's financial
condition, operations, and economic environment which may be reviewed by
Comerica at any time.
This commitment must be accepted by July 31, 1996, and closed by August 31,
1996.
Upon your acceptance of the terms outlined above, please sign and return this
Commitment Letter to me at your earliest convenience.
Sincerely,
Michael D. Malaga
Michael D. Malaga
Accepted and Agreed to this ____________________ day of ______________, 1996
OSMIC, INC.
By: ________________
Its: ________________
E-3
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<CASH> 1,082,413
<SECURITIES> 0
<RECEIVABLES> 1,082,041
<ALLOWANCES> 18,000
<INVENTORY> 156,298
<CURRENT-ASSETS> 2,305,099
<PP&E> 4,073,890
<DEPRECIATION> 3,657,184
<TOTAL-ASSETS> 3,577,805
<CURRENT-LIABILITIES> 585,893
<BONDS> 0
0
0
<COMMON> 19,709
<OTHER-SE> 755,632
<TOTAL-LIABILITY-AND-EQUITY> 3,577,805
<SALES> 3,521,992
<TOTAL-REVENUES> 3,801,423
<CGS> 1,467,032
<TOTAL-COSTS> 2,783,540
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,061,259
<INCOME-TAX> 390,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 671,259
<EPS-PRIMARY> 0.34
<EPS-DILUTED> 0
</TABLE>
