FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[ Mark one ]
[ X ] Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For quarter ended September 30, 1994
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 1-9334
BALDWIN TECHNOLOGY COMPANY, INC
(Exact name of registrant as specified in its charter)
Delaware 13-3258160
(State or other jurisdiction of (I.R.S Employer
incorporation or organization) Identification No.)
65 Rowayton Avenue, Rowayton, Connecticut 06853
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 203-838-7470
(Former name, former address and former fiscal year, if changed
since last report.)
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
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 .
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
Class Outstanding at October 31, 1994
Class A Common Stock
$0.01 par value 15,976,230
Class B Common Stock
$0.01 par value 1,865,000
Total number of pages in this document 10
BALDWIN TECHNOLOGY COMPANY, INC.
INDEX
Page
Part I Financial Information
Consolidated Balance Sheet -
September 30, 1994 and June 30, 1994 1
Consolidated Statement of Income -
Three months ended
September 30, 1994 and 1993 2
Consolidated Statement of Changes in
Shareholders' Equity - three months
ended September 30, 1994 3
Consolidated Statement of Cash Flows -
Three Months ended
September 30, 1994 and 1993 4-5
Notes to Consolidated Financial Statements 6
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 7-8
Part II Other Information
Item 6 Exhibits and Reports on Form 8-K 9
Signatures 10
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
BALDWIN TECHNOLOGY COMPANY, INC.
CONSOLIDATED BALANCE SHEET
(in thousands, except share data)
(Unaudited)
September 30, June 30,
1994 1994
ASSETS
CURRENT ASSETS:
Cash $ 9,450 $ 9,768
Short-term interest bearing securities 2,948 8,766
Accounts receivable trade, net of allowance for
doubtful accounts of $2,510 ($3,209 at June 30, 1994) 36,106 31,253
Notes receivable trade 14,573 12,411
Inventories 35,208 32,939
Prepaid expenses and other 7,953 8,263
Total current assets 106,238 103,400
MARKETABLE SECURITIES, at cost:
(Market $1,081; $1,190 at June 30, 1994) 923 918
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land and buildings 2,317 2,284
Machinery and equipment 8,774 8,516
Furniture and fixtures 5,193 5,075
Leasehold improvement 1,752 1,615
Capital leases 7,511 7,295
25,547 24,785
Less: Accumulated depreciation and amortization 18,051 17,172
Net property, plant and equipment 7,496 7,613
PATENTS, TRADEMARKS AND ENGINEERING DRAWINGS at cost,
less accumulated amortization of $2,763 ($2,584 at
June 30, 1994) 6,041 6,123
GOODWILL, less accumulated amortization of $8,124
($7,579 at June 30, 1994) 61,017 60,584
OTHER ASSETS 8,463 8,578
TOTAL ASSETS $190,178 $187,216
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Loans payable $ 7,050 $ 5,891
Current portion of long-term debt 135 142
Accounts payable, trade 10,489 11,472
Notes payable, trade 10,321 11,079
Accrued salaries, commissions, bonus and profit-sharing 7,737 7,861
Customer deposits 6,062 4,139
Accrued and withheld taxes 1,647 1,742
Income taxes payable 3,759 4,374
Other accounts payable and accrued liabilities 12,042 11,602
Total current liabilities 59,242 58,302
LONG-TERM LIABILITIES:
Long-term debt 32,063 32,230
Other long-term liabilities 9,029 8,604
Total long-term liabilities 41,092 40,834
Total liabilities 100,334 99,136
SHAREHOLDERS' EQUITY:
Class A Common Stock, $.01 par, 45,000,000 shares
authorized, 16,011,586 shares issued
(16,010,706 at June 30, 1994) 160 160
Class B Common Stock, $.01 par, 4,500,000 shares
authorized, 2,000,000 shares issued 20 20
Capital contributed in excess of par value 54,841 54,837
Retained earnings 36,815 35,980
Cumulative translation adjustment (739) (1,900)
Less: Treasury stock, at cost:
Class A - 75,356 shares (21,756 at June 30, 1994)
Class B - 135,000 shares (135,000 at June 30, 1994) (1,253) (1,017)
Total shareholders' equity 89,844 88,080
COMMITMENTS ------ ------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $190,178 $187,216
The accompanying notes to consolidated financial statements
are an integral part of these statements.
- 1 -
BALDWIN TECHNOLOGY COMPANY, INC.
CONSOLIDATED STATEMENT OF INCOME
(in thousands, except per share data)
(Unaudited)
For the three months
ended September 30,
1994 1993
Net sales $47,639 $46,412
Cost of goods sold 31,280 30,219
Gross Profit 16,359 16,193
Operating expenses:
General and administrative 5,419 5,195
Selling 4,760 4,724
Engineering 2,716 2,578
Research and development 1,339 1,430
14,234 13,927
Operating income 2,125 2,266
Other (income) expense
Interest expense 821 1,062
Interest (income) (113) (79)
Other (income) expense, net (253) (74)
455 909
Income before taxes 1,670 1,357
Provision for income taxes 835 727
Net income $ 835 $ 630
Net income per common and
common equivalent share $ 0.05 $ 0.04
Dividends declared
Per share - Class A
Per share - Class B
Weighted average number of
shares outstanding 17,916 17,974
The accompanying notes to consolidated financial statements
are an integral part of these statements.
- 2 -
<PAGE>
<TABLE>
BALDWIN TECHNOLOGY COMPANY INC.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(in thousands, except share data)
(Unaudited)
<CAPTION>
Capital
Class A Class B Contributed Cumulative
Common Stock Common Stock in Excess Retained Translation Treasury Stock
Shares Amount Shares Amount of Par Earnings Adjustment Shares Amount
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at June 30, 1994 16,010,706 $160 2,000,000 $20 $54,837 $35,980 $(1,900) (156,756) $(1,017)
Net income for the three months 835
Stock options exercised 880 4
Purchase of treasury stock (53,600) (236)
Translation adjustment 1,161
Balance at September 30, 1994 16,011,586 $160 2,000,000 $20 $54,841 $36,815 $ (739) (210,356) $(1,253)
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
- 3 -<PAGE>
BALDWIN TECHNOLOGY COMPANY, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
(in thousands)
(Unaudited)
For the three months
ended September 30,
1994 1993
Cash Flows from operating activities:
Income from continuing operations $ 835 $ 630
Adjustments to reconcile net income to net cash
provided by operating activities -
Depreciation and amortization 1,161 1,217
Accrued retirement pay 85 52
Provision for losses on accounts receivable 19 73
Changes in assets and liabilities net of
effects from subsidiary purchase -
Accounts and notes receivable, net (6,556) (1,421)
Inventories (1,845) (2,020)
Prepaid expenses and other 384 (1,115)
Customer deposits 1,877 613
Accrued compensation (208) (561)
Accounts and notes payable, trade (1,861) (1,310)
Income taxes payable (604) 7
Accrued and withheld taxes (127) (300)
Other accounts payable and accrued liabilities (144) 250
Interest payable 503 (4)
Net cash used by continuing operations (6,481) (3,889)
Cash flows from investing activities:
Additions of property, net (356) (433)
Additions of patents, trademarks and drawings, net (70) (96)
Other assets 158 (215)
Net cash used by investing activities (268) (744)
Cash flows from financing activities:
Long-term borrowings 1,000 110
Long-term debt repayment (1,198) (2,535)
Short-term borrowings 984 4,240
Short-term debt repayment (2,852)
Stock options exercised 4
Principal payments under capital lease
obligations (129) (187)
Treasury stock purchased (236)
Other long-term liabilities 26 51
Net cash provided (used) by financing activities 451 (1,173)
Effects of exchange rate changes 162 123
Net decrease in cash and
cash equivalents (6,136) (5,683)
Cash and cash equivalents at beginning of year 18,534 19,676
Cash and cash equivalents at end of period $12,398 $13,993
The accompanying notes to consolidated financial statements
are an integral part of these statements.
- 4 -
<PAGE>
BALDWIN TECHNOLOGY COMPANY, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Supplemental disclosures of cash flow information:
For the three months
ended September 30,
1994 1993
(in thousands)
Cash paid during the period for:-
Interest $1,324 $1,066
Income taxes $1,450 $ 691
Supplemental schedule of non-cash investing and financing activities:
For the three months ended September 30, 1994:-
During the quarter ended September 30, 1994, the Company wrote off
accounts receivable, related to a Japanese customer that had filed for
reorganization, of approximately $700,000 against the allowance for bad debt
account. This action was taken based upon the terms of the reorganization
settlement.
The Company entered into capital lease agreements of $47,715 for the
three months ended September 30, 1994.
For the three months ended September 30, 1993:-
There were no significant non-cash transactions for the quarter ended
September 30, 1993.
The Company entered into capital lease agreements of $59,480 for the
three months ended September 30, 1993.
Disclosure of accounting policy:
For purposes of the statement of cash flows, the Company considers all
highly liquid instruments with original maturities of three months or less to
be cash equivalents.
The accompanying notes to consolidated financial statements
are an integral part of these statements.
- 5 -
<PAGE>
BALDWIN TECHNOLOGY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 - General:
Baldwin Technology Company, Inc. (Baldwin, or the Company) is engaged
primarily in the development, manufacture and sale of material handling,
accessory, control and pre-press equipment for the printing industry.
The consolidated financial statements include the accounts of Baldwin
and its subsidiaries and reflect all adjustments (consisting of only normal
recurring adjustments) which are, in the opinion of management, necessary to
present a fair statement of the results for the interim periods. Operating
results for the three month period ended September 30, 1994 are not
necessarily indicative of the results that may be expected for the year
ending June 30, 1995.
All significant intercompany transactions have been eliminated in
consolidation. Net income per share is based on the weighted average number
of common shares and common stock equivalents outstanding during the period.
For the three month periods ended September 30, 1994 and 1993, net income was
divided by the total of the weighted average number of common shares
outstanding and common stock equivalents, which consisted of 105,184 shares
for stock options (no shares in 1993), in order to calculate net income per
share. The weighted average number of common equivalent shares outstanding
for the three month periods ended September 30, 1994 and 1993 were 17,915,744
and 17,973,651 respectively. Common stock equivalents calculated for fully
diluted earnings per share were not significantly different from those
calculated for primary.
Note 2 - Inventories:
Inventories consist of the following:-
September 30, June 30,
1994 1994
Raw material $15,730,000 $13,991,000
In process 10,570,000 10,032,000
Finished goods 8,908,000 8,916,000
$35,208,000 $32,939,000
Inventories increased $424,000 due to translation effects of exchange
from June 30, 1994 to September 30, 1994.
- 6 -
BALDWIN TECHNOLOGY COMPANY, INC.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain
significant factors which have affected the Company's financial position and
consolidated financial statements.
Three Months Ended September 30, 1994 vs Three Months
Ended September 30, 1993.
Net sales for the three months ended September 30, 1994 increased by
$1,227,000, or 2.6% to $47,639,000 from $46,412,000 for the three months
ended September 30, 1993. Currency rate fluctuations attributable to the
Company's overseas operations accounted for an increase of $1,699,000 in net
sales for the current period. Product volume accounted for the remainder of
the change. In terms of local currency, sales changes were mixed within the
European Sector. Sales were up 4.2% in Germany, were up 5.1% in Sweden and
were down 2% in the United Kingdom. Local currency Asian Sector sales were
down 16.9% in Japan, down 6.4% in China but were up 86.7% in Australia and 1%
in Hong Kong. In the Americas Sector, net sales increased 10.4%.
Gross profit for the three month period ended September 30, 1994 was
$16,359,000 (34.3% of net sales), as compared to $16,193,000 (34.9% of net
sales) for the three month period ended September 30, 1993, an increase of
$166,000 or 1%. Currency rate fluctuations increased gross profit by
$511,000 with the remainder due to volume changes, product mix and other
factors.
Selling, general and administrative expenses were $10,179,000 (21.4% of
net sales), for the three month period ended September 30, 1994 as compared
to $9,919,000 (21.4% of net sales) for the same period of the prior year.
The increase of $260,000 or 2.6% in these expenses includes currency rate
fluctuations which increased these expenses by $282,000 in the current
period. Other operating expenses decreased $117,000 over the same period of
the prior year after currency rate fluctuations of $164,000, which increased
other operating expenses, were removed.
Interest expense for the three month period ended September 30, 1994 was
$821,000 as compared to $1,062,000 for the three month period ended September
30, 1993. Decreased interest expense resulted from lower levels of
indebtedness and lower interest rates due to the Company's fiscal 1993 second
quarter debt refinancing. Currency rate fluctuations increased interest
expense by $17,000 for the current period. Interest income was $113,000 and
$79,000 for the three month periods ended September 30, 1994 and September
30, 1993, respectively. Other income and expense includes net foreign
currency transaction gains (losses) of $103,000 and ($25,000) for the three
months ended September 30, 1994 and 1993, respectively. Currency rate
fluctuations decreased other income by $20,000 for the current period.
The Company's effective tax rate on income before taxes was 50% for the
three month period ended September 30, 1994, as compared to 53.55% for the
three month period ended September 30, 1993. The difference in effective
rates reflects increased domestic income. The current period's effective
rate reflects the impact of foreign source income which is taxed at
substantially higher rates than domestic income.
Net income for the three month period ended September 30, 1994 increased
by 32.5% to $835,000 from $630,000 for the three month period ended September
30, 1993, or to $0.05 and $0.04 per share, respectively. Currency rate
fluctuations increased net income by $14,000 for the current period.
Weighted average equivalent shares outstanding during the three month periods
ended September 30, 1994 and September 30, 1993 were 17,915,744 and
17,973,651, respectively.
- 7 -
Liquidity and Capital Resources at September 30, 1994
Liquidity and Working Capital
On October 29, 1993, the Company completed the refinancing of it's long-
term debt with the issuance of $25,000,000 of 8.17% senior notes (the "Senior
Notes") due October 29, 2000. The Senior Notes require the payment of
interest only for the first three years with equal annual principal
repayments of $6,250,000 in each of years four through seven. The proceeds
of the Senior Notes along with approximately $5,000,000 in available cash
were used to retire all of the Company's indebtedness under a Credit
Agreement with a syndicate of banks dated September 27, 1990.
In November, 1993, the Company entered into a three-year $20,000,000
Revolving Credit Agreement (the "Revolver") with NationsBank of North
Carolina, as Agent. The Senior Notes and the Revolver require the Company to
maintain certain financial covenants and have certain restrictions regarding
the payment of dividends, limiting them throughout the terms of the Senior
Notes and the Revolver to $3,000,000 plus 50% of the Company's net income
after June 30, 1993. In addition, the Company was required to pledge certain
of the shares of it's domestic subsidiaries as collateral for both the Senior
Notes and the Revolver.
Both the Senior Notes and the Revolver require the Company to maintain
a ratio of current assets to current liabilities (as those terms are defined
in the agreements) of not less than 1.4 to 1. At September 30, 1994, this
ratio was 1.79 to 1.
Net cash used by investing activities decreased by $476,000 from
$744,000 at September 30, 1993 to $268,000 at September 30, 1994 primarily
due to lower capital expenditures and a reduction in a long-term note
receivable. Net cash provided by financing activities increased by
$1,624,000 to $451,000 at September 30, 1994 as compared to net cash used by
financing activities of $1,173,000 at September 30, 1993 primarily due to the
difference in debt borrowing and repayment activity.
The Company's working capital increased from $34,998,000 at September
30, 1993, to $46,996,000 at September 30, 1994, an increase of $11,998,000 or
34.3%. Currency rate fluctuations increased working capital by $2,075,000.
The remainder of the increase was due primarily to the effects of reductions
in loans payable and the current portion of long-term debt resulting from the
Company's debt refinancing and loans made to officers to purchase Common
Stock of the Company. The Company's working capital increased by $1,898,000
or 4.2% from $45,098,000 at June 30, 1994 to $46,996,000 at September 30,
1994. Currency rate fluctuations increased working capital by $564,000.
Decreases in cash and short term securities were more than offset by
increases in trade accounts and notes receivable. The remainder of the
increase was due to increased inventory levels and decreased trade and income
tax payables which were offset by increased customer deposits.
The Company maintains relationships with foreign and domestic banks
which have extended credit facilities to the Company totaling $34,810,000,
including amounts available under the Revolver. As of September 30, 1994,
the Company had outstanding $10,415,000 under these lines of credit, of which
$3,365,000 is classified as long-term debt. Total debt levels as reported on
the balance sheet at September 30, 1994 are $199,000 higher then they would
have been if June 30, 1994 exchange rates had been used.
Net capital expenditures made to meet the normal business needs of the
Company for the three months ended September 30, 1994 and September 30, 1993,
including commitments for capital lease payments, were $426,000 and $529,000,
respectively.
The Company believes its cash flow from operations and bank lines of
credit are sufficient to finance its working capital and other capital
requirements for the near and long-term future.
Impact of Inflation
The Company's results are affected by the impact of inflation on
manufacturing and operating costs. Historically, the Company has used
selling price adjustments, cost containment programs and improved operating
efficiencies to offset the otherwise negative impact of inflation on its
operations.
- 8 -
BALDWIN TECHNOLOGY COMPANY, INC
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
4.1 Baldwin Technology Company, Inc. Second Amended and
Restated 1986 Stock Option Plan (filed herewith)
27 Financial Data Schedule (filed herewith)
(b) Reports on Form 8-K. There were no reports on Form 8-K
filed for the three months ended September 30, 1994.
- 9 -
<PAGE>
SIGNATURES
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.
BALDWIN TECHNOLOGY COMPANY, INC.
BY s\ William J. Lauricella
Treasurer and
Chief Financial Officer
Dated: November 04, 1994
- 10 -
<PAGE>
BALDWIN TECHNOLOGY COMPANY, INC.
SECOND AMENDED AND RESTATED 1986 STOCK OPTION PLAN
1. Purpose. The purpose of the Baldwin Technology Company, Inc.
Second Amended and Restated 1986 Stock Option Plan (the "Plan") is
to secure for Baldwin Technology Company, Inc. (the "Company") and
its stockholders the benefits of the additional incentive, inherent
in the ownership of the Company's Class A Common Stock, par value
$.01 per share (the "Class A Common Stock"), and the Company's
Class B Common Stock, par value $.01 per share (the "Class B Common
Stock"; collectively with the Class A Common Stock, the "Common
Stock"), by selected key employees of, and consultants to, the
Company and any subsidiary thereof who are important to the success
and growth of the business of the Company and its subsidiaries and
to help the Company and its subsidiaries secure and retain the
services of such employees and consultants. Options granted under
the Plan will be either "incentive stock options," intended to
qualify as such under the provisions of section 422 of the Internal
Revenue Code of 1986, as from time to time amended, or any
successor statute of similar purpose (the "Code"), or "non-
qualified stock options." Stock appreciation rights ("SARs") also
may be granted under the Plan in tandem with either incentive stock
options or non-qualified stock options. For purposes of the Plan,
the terms "parent" and "subsidiary" shall mean "parent corporation"
and "subsidiary corporation," respectively, as such terms are
defined in sections 424(e) and (f) of the Code.
2. Administration.
2.1. In General. The Plan shall be administered by a
committee of not less than three persons appointed by the Board of
Directors (the "Committee"). No person shall serve on the
Committee who is not a disinterested person within the meaning of
Rule 16b-3(d)(3), promulgated under the Securities Exchange Act of
1934, as amended, as such Rule may be amended from time to time, or
any successor Rule, and the interpretations of the Securities and
Exchange Commission thereunder. Any member of the Committee may be
removed at any time, either with or without cause, by resolution
adopted by the Board of Directors, and any vacancy on the
Committee, whether due to action of the Board of Directors or due
to any other cause, may at any time be filled by resolution adopted
by the Board of Directors.
2.2. Procedures. The Committee shall select one of its
members as Chairman and shall adopt such rules and regulations as
it shall deem appropriate concerning the holding of its meeting and
the administration of the Plan. The Committee shall act only with
the consent of a majority of its members then in office.
3. Shares Subject to Options.
3.1. Number of Shares. Subject to the provisions of Section
12 (relating to adjustments upon changes in capitalization), the
number of shares of Common Stock subject at any one time to options
granted under the Plan, plus the number of shares of Common Stock
theretofore issued or delivered pursuant to the exercise of options
granted under the Plan, shall not exceed 2,220,000 shares of Class
A Common Stock and 590,000 shares of Class B Common Stock. If and
to the extent that options granted under the Plan terminate, expire
or are cancelled without having been exercised, new options may be
granted under the Plan with respect to the shares of Common Stock
covered by such terminated, expired or cancelled options; provided
that the granting and terms of such new options shall in all
respects comply with the provisions of the Plan. An option that is
terminated upon the exercise of an SAR shall be deemed to have been
exercised at the time of the exercise of such tandem SAR and the
Common Stock subject thereto shall not be available to be granted
under the Plan.
3.2. Character of Shares. Shares of Common Stock delivered
upon the exercise of options or SARs granted under the Plan may be
authorized and unissued Common Stock, issued Common Stock held in
the Company's treasury, or both.
3.3. Reservation of Shares. There shall be reserved at all
times for sale under the Plan a number of shares of Class A Common
Stock and Class B Common Stock (authorized and unissued Class A
Common Stock and Class B Common Stock, issued Class A Common Stock
and Class B Common stock held in the Company's treasury, or both)
equal to the maximum number of shares of Class A Common Stock and
Class B Common Stock which may be purchased pursuant to options or
SARs granted or that may be granted under the Plan.
4. Grant of Options.
4.1. In General. The Committee shall determine, within the
limitations of the Plan, the employees and consultants of the
Company and its subsidiaries, if any, to whom options are to be
granted, the number and class of shares of Common Stock that may be
purchased under each option, the option price, the terms and
conditions relating to the exercise of the options and shall
designate options at the time of grant as either "incentive stock
options" or "non-qualified options."
4.2. Factors to be Considered. In determining the key
employees and consultants to whom options shall be granted and the
number of shares to be covered by each such option, the Committee
shall take into consideration the employee's or consultant's
present and potential contribution to the success of the Company
and its subsidiaries and such other factors as the Committee may
deem proper and relevant.
4.3. Stock Option Agreement. Each option granted under the
Plan shall be evidenced by a written agreement between the Company
and the Optionee (as defined in Section 5) in such form, not
inconsistent with the provisions of the Plan or with section 422 of
the Code with respect to incentive stock options, as the Committee
shall provide.
5. Persons Eligible. Options may be granted under the Plan to
(i) any key employee or prospective key employee (conditioned upon,
and effective not earlier than, his becoming an employee) of the
Company or any of its subsidiaries and (ii) any consultant or
prospective consultant (conditioned upon, and effective not earlier
than, such person or entity becoming a consultant) of the Company
or any of its subsidiaries. Officers or directors who are also
full-time employees of the Company or any of its subsidiaries shall
not by reason of such offices be ineligible to receive options
under the Plan. Notwithstanding any of the foregoing, no member of
the Committee while serving as such shall be eligible to receive
options under the Plan or any other plan of the Company or
affiliate of the Company. No incentive stock options may be
granted under the Plan to any person who owns, directly or
indirectly (within the meaning of Sections 422(b)(6) and 424(d) of
the Code), at the time the incentive stock option is granted, stock
possessing more than 10% of the total combined voting power of all
classes of stock of the Company or of its parent, if any, or any of
its subsidiaries, unless the option price is at least 110% of the
fair market value of the shares subject to the option, determined
on the date of the grant (said fair market value, in the case of
shares of Class B Common Stock, shall in no event be less than 125%
of the fair market value of shares of the Class A Common Stock on
such date), and the option by its terms is not exercisable after
the expiration of five years from the date such option is granted.
An individual receiving an option under the Plan is hereinafter
referred to as an "Optionee." Any reference herein to the
employment or retention of an Optionee (whether as an employee or
consultant) by the Company shall include such Optionee's employment
or retention by the Company or any of its subsidiaries.
6. Option Price. Subject to Section 12, the option price of each
share of Common Stock purchasable under any option granted under
the Plan shall be not less than the fair market value of such share
of Common Stock at the time the option is granted (which, in the
case of each share of Class B Common Stock, shall in no event be
less than 125% of the fair market value of a share of Class A
Common Stock at the time the option is granted). For purposes of
this Section 6, the time at which an option is granted, in case of
the grant of an option to a prospective key employee or consultant,
shall be deemed to be the effective date of such grant. Anything
contained in this Section 6 to the contrary notwithstanding, the
option price of an incentive stock option issued under the Plan in
connection with a transaction described in section 424(a) of the
Code may be an amount which conforms to the requirements of that
Code section and the regulations thereunder.
7. Exercisability and Duration of Options.
7.1. Determination of Committee; Acceleration. Each option
granted under the Plan shall be exercisable at such time or times,
or upon the occurrence of such event or events, and in such
amounts, as the Committee may provide upon the granting thereof.
Subsequent to the grant of an option which is not immediately
exercisable in full, the Committee, at any time before complete
termination of such option, may accelerate the time or times at
which such option may be exercised in whole or in part. Any option
granted under the Plan shall be exercisable upon the death of the
Optionee or upon the termination of the Optionee's employment or
retention by the Company by reason of such Optionee's illness or
disability only to the extent such option was exercisable by the
Optionee immediately prior to such event, unless otherwise
expressly provided in the option at the time it is granted.
7.2. Limitation. In the event the aggregate fair market
value of the Common Stock (determined at the time the option is
granted and which, in the case of Class B Common Stock, shall in no
event be less than 125% of the fair market value of the Class A
Common Stock at such time) with respect to which incentive stock
options are exercisable for the first time by any employee or
consultant during any calendar year (under all stock option plans
of the Company and its parent and subsidiaries, if any) shall
exceed $100,000, such options, to the extent of such excess, shall
be treated for all purposes as non-qualified options.
7.3. Automatic Termination. The unexercised portion of any
option granted under the Plan shall automatically and without
notice terminate and become null and void at the time of the
earliest to occur of the following:
(a) The expiration of ten years from the date on which
such option was granted;
(b) The expiration of three months from the date of
termination of the Optionee's employment or retention by the
Company (other than a termination described in paragraph (c), (d)
or (e) below); provided, that such period may be extended by the
Committee, in its discretion, but in no event for a period longer
than one year from the date of termination; and, provided, further,
that if the Optionee shall die during such three-month period (or
other period determined by the Committee), the time of termination
of the unexercised portion of any such option shall be determined
under the provisions of paragraph (d) below;
(c) The expiration of one year from the date of
termination of the employment or retention of an Optionee due to
permanent and total disability (other than a termination described
in paragraph (e) below);
(d) The expiration of six months following the issuance
of letters testamentary or letter of administration to the executor
or administrator of a deceased Optionee, if the Optionee's death
occurs either during such Optionee's employment or retention by the
Company or during the three-month period (or other period
determined by the Committee) following the date of termination of
such employment or retention (other than a termination described in
paragraph (e) below), but in no event later than one year after the
Optionee's death;
(e) The termination of the Optionee's employment or
retention by the Company if such termination constitutes or is
attributable to a breach by the Optionee of an employment or
consulting agreement with the Company, its parent, if any, or any
of its subsidiaries, or if the Optionee is discharged for cause.
The Committee shall have the right to determine whether the
Optionee has been discharged for cause and the date of such
discharge, and such determination of the Committee shall be final
and conclusive; or
(f) The expiration of such period of time or the
occurrence of such event as the Committee in its discretion may
provide upon the granting thereof.
8. Exercise of Options; Certain Legal and Other Restrictions.
8.1. Exercise. Options granted under the Plan shall be
exercised by the Optionee (or by such Optionee's executors or
administrators, as provided in Section 9) as to all or part of the
shares covered thereby, by the giving of written notice of exercise
to the Company, specifying the number of shares to be purchased,
accompanied by payment of the full purchase price for the shares
being purchased. Payment of such purchase price shall be made (a)
by check payable to the Company, or (b) with the consent of the
Committee, by delivery of shares of Class A Common Stock, in the
event options to purchase Class A Common Stock are being exercised,
and shares of Class B Common Stock, in the event options to
purchase Class B Common Stock are being exercised, in each case
having a fair market value (determined as of the date such option
is exercised and which, in the case of Class B Common Stock, shall
in no event be less than 125% of the fair market value of the Class
A Common Stock at such date) equal to all or part of the purchase
price and, if applicable, of a check payable to the Company for any
remaining portion of the purchase price. Such notice of exercise,
accompanied by such payment, shall be delivered to the Company at
its principal business office or such other office as the Committee
may from time to time direct, and shall be in such form, containing
such further provisions consistent with the provisions of the Plan,
as the Committee may from time to time prescribe. The Company
shall effect the transfer of the shares so purchased to the
Optionee (or such other person exercising the option pursuant to
Section 9 hereof) as soon as practicable, and within a reasonable
time thereafter, such transfer shall be evidenced on the books of
the Company. No Optionee or other person exercising an option
shall have any of the rights of a shareholder of the Company with
respect to shares subject to an option granted under the Plan until
certificates for such shares shall have been issued following the
exercise of such option. No adjustment shall be made for cash
dividends or other rights for which the record date is prior to the
date of such issuance. In no event may any option granted
hereunder be exercised for a fraction of a share.
8.2. Withholding Tax. Whenever under the Plan shares of
stock are to be delivered upon exercise of an option or an SAR, the
Company shall be entitled to require as a condition of delivery
that the Optionee remit or, in appropriate cases, agree to remit
when due an amount sufficient to satisfy all federal, state and
local withholding tax requirements relating thereto.
8.3. Restrictions on Delivery of Shares. Each award granted
under the Plan is subject to the conditions that if at any time the
Committee, in its discretion, shall determine that the listing,
registration or qualification of the shares covered by such award
upon any securities exchange or under any state or federal law is
necessary or desirable as a condition of or in connection with the
granting of such option or the purchase or delivery of shares
thereunder, the delivery of any or all shares pursuant to exercise
of the option may be withheld unless and until such listing,
registration or qualification shall have been effected. The
Committee may require, as a condition of exercise of any option,
that the Optionee represent, in writing, that the shares received
upon exercise of the option are being acquired for investment and
not with a view to distribution and agree that the shares will not
be disposed of except pursuant to an effective registration
statement, unless the Company shall have received an opinion of
counsel satisfactory to the Company that such disposition is exempt
from such requirement under the Securities Act of 1933, as amended.
The Company may endorse on certificates representing shares issued
upon the exercise of an option such legends referring to the
foregoing representations or any applicable restrictions on resale
as the Company, in its discretion, shall deem appropriate.
9. Non-Transferability of Options. No option or SAR granted
under the Plan or any right evidenced thereby shall be transferable
by the Optionee other than by will or by the laws of descent and
distribution, and an option or SAR may be exercised, during the
lifetime of an Optionee, only by such Optionee. In the event of an
Optionee's death during such Optionee's employment or retention by
the Company, its parent, if any, or any of its subsidiaries, or
during the three-month period following the date of termination of
such employment or retention, such Optionee's option or SAR shall
thereafter be exercisable, during the period specified in Section
7.3(d), by such Optionee's executors or administrators.
10. Stock Appreciation Rights. The Committee may in its
discretion grant SARs in connection with an option, either at the
time the option is granted or at any time thereafter while the
option remains outstanding, to any employee or consultant who or
which at that time is eligible to be granted an option. The number
of SARs granted to an employee or consultant which shall be
exercisable during any given period of time shall not exceed the
number of shares of stock which he or it may purchase upon the
exercise of the related option or options during such period of
time. Upon the exercise of an option pursuant to the Plan, the
SARs relating to the stock covered by such exercise shall
terminate. Upon the exercise of SARs pursuant to the Plan, the
related option to the extent of an equal number of shares of stock
shall terminate. Upon an employee's or consultant's exercise of
some or all of such Optionee's SARs with respect to any option,
such employee or consultant shall receive an amount payable in
cash, stock or a combination thereof as determined by the
Committee, equal to the difference between (i) the fair market
value of the shares of Common Stock subject to such SARs then being
exercised determined on the date of such exercise (which, in the
case of shares of Class B Common Stock, shall in no event be less
than 125% of the fair market value of shares of Class A Common
Stock on such date) and (ii) the option price for such shares as
specified in the related option. In no event shall fractional
shares be issued in connection with the exercise of any SARs.
An SAR is exercisable only during the period when the option to
which it is related is also exercisable. However, to the extent
required to comply with the requirements of Rule 16b-3, as
promulgated under Section 16(b) of the Securities Exchange Act of
1934, as amended (relating to "insider trading"), no SAR shall be
exercisable during the first six months after being granted, except
that an SAR shall be exercisable at the time of death or disability
of the option holder if the related option is then exercisable, and
no SAR shall be exercised for cash, in whole or in part, except
during the period beginning on the third business day following the
date of release of the Company's quarterly and annual summary
statements of sales and earnings and ending on the twelfth business
day following such date.
11. Right to Terminate Employment or Retention. Nothing in the
Plan or in any option or SAR granted under the Plan shall confer
upon any Optionee the right to continue in the employment of the
Company, or to continue to be retained as a consultant by the
Company, or affect the right of the Company or any of its
subsidiaries to terminate the Optionee's employment or retention as
a consultant at any time, subject, however, to the provisions of
any agreement of employment or consulting agreement between the
Optionee and the Company, its parent, if any, or any of its
subsidiaries.
12. Adjustment Upon Changes in Capitalization, Etc. In the event
of any stock split, stock dividend, reclassification or
recapitalization which changes the character or amount of the
Company's outstanding Common Stock while any portion of any option
theretofore granted under the Plan is outstanding but unexercised,
the Committee shall make such adjustments in the character and
number of shares subject to such options and in the option price,
as shall be equitable and appropriate in order to make the option,
as nearly as may be practicable, equivalent to such option
immediately prior to such change; provided, however, that no such
adjustment shall give any Optionee any additional benefits under
such Optionee's option; and provided further, that, with respect to
any outstanding incentive stock option, if any such adjustment is
made by reason of a transaction described in section 424(a) of the
Code, it shall be made so as to conform to the requirement of that
section and the regulation thereunder.
If any transaction (other than a change specified in the preceding
paragraph) described in section 424(a) of the Code affects the
Company's Common Stock subject to any unexercised option
theretofore granted under the Plan (hereinafter for purposes of
this Section 12 referred to as the "old option"), the Board of
Directors of the Company or any surviving or acquiring corporation
may take such action as it deems appropriate, and in conformity
with the requirements of that section and the regulations
thereunder, to substitute a new option for the old option, in order
to make the new option, as nearly as may be practicable, equivalent
to the old option, or to assume the old option.
If any such change or transaction shall occur, the number and kind
of shares for which options may thereafter be granted under the
Plan shall be adjusted to give effect thereto.
13. Expiration and Termination of the Plan.
13.1. General. Options may be granted under the Plan at any
time and from time to time on or prior to the tenth anniversary of
the Original Effective Date (as defined in Section 14), on which
date (the "Expiration Date") the Plan will expire except as to
options then outstanding under the Plan. Such outstanding options
shall remain in effect until they have been exercised, terminated
or have expired. The Plan may be terminated, modified or amended
by the Board of Directors at any time on or prior to the Expiration
Date, except with respect to any options then outstanding under the
Plan; provided, however, that the approval of the Company's
stockholders will be required for any amendment which (i) changes
the class of persons eligible for the grant of options, as
specified in Section 5, (ii) increases the maximum number of shares
subject to options, as specified in Section 3 (unless made pursuant
to the provisions of Section 12) or (iii) materially increases the
benefits accruing to participants under the Plan, within the
meaning of Rule 16b-3.
13.2. Modifications. No modification, extension, renewal or
other change in any option granted under the Plan may be made,
after the grant of such option, without the Optionee's consent,
unless the same is permitted by the provisions of the Plan and does
not disqualify an incentive stock option from being considered as
such under the provisions of section 422 of the Code.
14. Effective Date of Plan. The Plan, as originally stated,
became effective on October 14, 1986 (the "Original Effective
Date"). The Plan, as amended and restated hereby, shall become
effective as of September 30, 1993, the date of its adoption by the
Board of Directors of the Company, subject, however, to the
approval of the Plan by the Company's stockholders within 12 months
of such adoption.
15. Fair Market Value. For purposes of the Plan, fair market
value shall be determined by the Committee in a reasonable and
consistent manner in accordance with established procedures.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS IN THE COMPANY'S CURRENT REPORT ON FORM 10-Q AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH UNAUDITED FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> QTR-1
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> SEP-30-1994
<CASH> 9450
<SECURITIES> 2948
<RECEIVABLES> 53189
<ALLOWANCES> 2510
<INVENTORY> 35208
<CURRENT-ASSETS> 106238
<PP&E> 25547
<DEPRECIATION> 18051
<TOTAL-ASSETS> 190178
<CURRENT-LIABILITIES> 59242
<BONDS> 0
<COMMON> 180
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 190178
<SALES> 47639
<TOTAL-REVENUES> 47639
<CGS> 31280
<TOTAL-COSTS> 31280
<OTHER-EXPENSES> 14234
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 821
<INCOME-PRETAX> 1670
<INCOME-TAX> 835
<INCOME-CONTINUING> 835
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 835
<EPS-PRIMARY> .05
<EPS-DILUTED> .05
</TABLE>
