<PAGE> 1
U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended July 31, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF
1934
Commission file number 0-15810
OSICOM TECHNOLOGIES, INC.
(Exact name of small business issuer as specified in its charter)
New Jersey 22-2367234
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification no.)
2800 28th St., Suite 100, Santa Monica, California 90405
(Address of principal executive offices)
(310) 828-7496
(Issuer's telephone number)
---------------------------------
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
--- ---
Number of shares outstanding of each of the issuer's classes of common equity
as of July 31,1996
Title of Each Class Number of Shares Outstanding
Common Stock, $.10 par value per share 3,889,359
<PAGE> 2
OSICOM TECHNOLOGIES, INC. AND SUBSIDIARIES
FORM 10-QSB
INDEX
<TABLE>
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Unaudited Balance Sheet at July 31, 1996 3
Consolidated Unaudited Statements of Operations for
the Three Months and Six Months Ended July 31, 1996
and 1995 4
Consolidated Unaudited Statements of Cash Flows for
the Six Months Ended July 31, 1996 and 1995 5
Notes to Consolidated Unaudited Financial Statements 6-16
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 17-18
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 19
Signature 20
</TABLE>
2
<PAGE> 3
OSICOM TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED UNAUDITED BALANCE SHEET
<TABLE>
<CAPTION>
July 31, 1996
- - ----------------------------------------------------------------------
<S> <C>
ASSETS
- - ------
CASH $ 5,075,363
ACCOUNTS RECEIVABLE 11,684,146
ALLOWANCE FOR DOUBTFUL ACCOUNTS (814,500)
NOTES RECEIVABLE (Note C) 143,190
INVENTORIES (Note B(4)) 17,213,209
PREPAID EXPENSES 843,328
- - ----------------------------------------------------------------------
TOTAL CURRENT ASSETS 34,144,736
- - ----------------------------------------------------------------------
PROPERTY AND EQUIPMENT, NET (Note D) 6,378,377
- - ----------------------------------------------------------------------
PURCHASED TECHNOLOGY, NET (Note E) 8,730,176
- - ----------------------------------------------------------------------
OTHER ASSETS 296,783
- - ----------------------------------------------------------------------
TOTAL ASSETS $49,550,072
======================================================================
LIABILITIES and STOCKHOLDERS' EQUITY
- - ------------------------------------
LIABILITIES
- - -----------
LOAN PAYABLE - BANK (Note F) $ 6,712,675
NOTES PAYABLE - Current (Note G) 967,858
NOTES PAYABLE - Affiliate (Note H) 676,963
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Note L) 13,458,400
PAYABLE DUE UPON ACQUISITION (Note M) 10,750,000
- - ----------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 32,565,896
- - ----------------------------------------------------------------------
COMMITMENT AND CONTINGENCIES (NOTE J)
LONG TERM DEBT (Note G) 5,376,961
- - ----------------------------------------------------------------------
STOCKHOLDERS' EQUITY (Note K)
- - --------------------
PREFERRED STOCK
Series A, 2,500 shares issued and outstanding
- Liquidation preference $3,087,500 250,000
Series C, 10,000 shares issued and outstanding
- Liquidation preference $10,000,000 7,524,850
Series D, 3,000 shares issued and outstanding
- Liquidation preference $3,000,000 3,000,000
COMMON STOCK
Par value $.10 per share, authorized 20,000,000 shares,
3,889,359 shares issued and outstanding 388,935
ADDITIONAL PAID-IN-CAPITAL 9,277,466
RETAINED EARNINGS (8,834,036)
- - ----------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 11,607,215
- - ----------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $49,550,072
======================================================================
</TABLE>
The accompanying notes to consolidated unaudited financial statements are an
integral part hereof.
3
<PAGE> 4
OSICOM TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED UNAUDITED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
July 31, July 31,
1996 1995 1996 1995
------------ ---------- ------------ ------------
<S> <C> <C> <C> <C>
NET SALES $ 10,757,370 $6,686,188 $ 22,028,800 $ 12,499,609
COST OF SALES 6,023,236 3,607,371 12,351,409 7,000,046
------------ ---------- ------------ ------------
GROSS MARGIN 4,734,134 3,078,817 9,677,391 5,499,563
------------ ---------- ------------ ------------
SELLING, GENERAL AND
ADMINISTRATION EXPENSES 12,838,107 2,646,747 17,085,578 5,481,191
------------ ---------- ------------ ------------
EARNINGS FROM OPERATIONS (8,103,973) 432,070 (7,408,187) 18,372
------------ ---------- ------------ ------------
OTHER EXPENSES, NET 179,420 126,864 423,416 241,278
------------ ---------- ------------ ------------
INCOME (LOSS) BEFORE INCOME TAXES (8,283,393) 305,206 (7,831,603) (222,906)
PROVISION FOR INCOME TAXES 27,260 -- 28,516 1,256
NET INCOME (LOSS) ($ 8,310,653) $ 305,206 ($ 7,860,119) ($ 224,162)
============ ========== ============ ============
EARNINGS PER COMMON SHARE (Note N)
Earnings per share - Primary (a) ($ 2.32) $ 0.09 ($ 2.31) ($ 0.11)
- Fully Diluted (a) N/A $ 0.09 N/A N/A
------------ ---------- ------------ ------------
Weighted average shares used in computation 3,592,760 2,919,170 3,432,010 2,797,817
============ ========== ============ ============
</TABLE>
(a) Adjusted for 2-for-1 stock split effected February 12, 1996.
The accompanying notes to consolidated unaudited financial statements are an
integral part hereof.
4
<PAGE> 5
OSICOM TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED UNAUDITED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------------------
Six Months Ended
July 31,
1996 1995
- - -----------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATIONS ($ 616,636) ($ 388,465)
- - -----------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Product enhancement costs (Notes B(2) and D) (919,700)
Capital expenditures (2,088,539) (304,462)
- - -----------------------------------------------------------------------------------------
NET CASH FLOWS FROM INVESTING ACTIVITIES (3,008,239) (304,462)
- - -----------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds (Repayments) of bank loan, net (2,320,943) 960,663
Increase in notes payable - affiliates 620,890
Proceeds (Repayments) of notes payable, net 920,671 (26,061)
Proceeds from note receivable - net 477,010
Acquisition liability repayments (5,000)
Proceeds from issuance of convertible debentures 7,246,682
Proceeds from issuance of convertible preferred stock 7,524,850
Redemption of preferred stock (6,269,487)
Proceeds from stock option exercises 278,500 9,948
- - -----------------------------------------------------------------------------------------
NET CASH FLOWS FROM FINANCING ACTIVITIES 8,001,163 1,416,560
- - -----------------------------------------------------------------------------------------
NET INCREASE IN CASH 4,376,288 723,633
CASH BALANCE (OVERDRAFT) AT BEGINNING OF PERIOD 699,075 (209,485)
- - -----------------------------------------------------------------------------------------
CASH BALANCE AT END OF PERIOD $5,075,363 $ 514,148
=========================================================================================
</TABLE>
The accompanying notes to consolidated unaudited financial statements are an
integral part hereof.
5
<PAGE> 6
OSICOM TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
Osicom Technologies, Inc. (the "Company") through its subsidiaries
designs, manufactures and markets transmission, networking, remote access and
connectivity products for use in local area networks, wide area networks and
broadband global networks. The Company's products include high-performance
network adapters, concentrators, routers, hubs and switches, remote access
products, printer servers, frame relay encryption devices, video switches and
routers, and a family of products to build broadcast systems over copper, fiber
optic or wireless transmission media.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates that affect
the reported amounts of assets, liabilities, revenues and expenses, and the
disclosure of contingent assets and liabilities. Actual results could differ
from these estimates.
(NOTE A) - The Company, Basis of Presentation and Acquisitions
The accompanying consolidated unaudited financial statements have been
prepared in accordance with the instructions to Form 10-QSB and, in the opinion
of management, include all adjustments (consisting of only normal recurring
adjustments) necessary for a fair presentation. The results of operations for
the three months and six months ended July 31, 1996 are not necessarily
indicative of the results that may be expected for the fiscal year ending
January 31, 1997. These statements should be read in conjunction with the
consolidated audited financial statements and notes thereto included in the
Company's annual report on Form 10-KSB for the year ended January 31, 1996.
Acquisitions:
(1) Digital Products, Inc:
In September 1996, the Company acquired Digital Products, Inc. ("DPI")
through a merger with a newly-formed subsidiary DPI Acquisition Corp. for the
Company's common stock valued at $5 million less agreed upon merger expenses of
DPI and DPI stock option repurchases. In addition, a new $3 million line of
credit with a lender will provide funds to repay approximately $1.3 million owed
to a lender and provide additional working capital. DPI produces and markets to
printer original equipment manufacturers, a broad line of print server products
that provide board level and chip level integrated solutions for local area
networks and remote access. The acquisition is accounted for as a pooling of
interests effective as of June 30, 1996.
(2) Cray Communications, Inc.:
In September 1996, the Company acquired 100% of CEH Holdings, Inc. and its
wholly owned subsidiaries including Cray Communications, Inc. (collectively
"Cray"), the U.S. division of UK-based Cray Electronics Holdings, PLC, for a
total of approximately $14 million. Under the acquisition agreement, the total
purchase consists of approximately $11 million in cash and $3 million in the
Company's preferred stock. The cash payment was used to purchase the stock
6
<PAGE> 7
OSICOM TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS (CONTINUED)
the U.S. division and for repayment of debt to the parent company. The funds for
the acquisition will include cash on hand, the proceeds of a new $5 million
credit facility and a loan from Builders Warehouse Association, Inc. for $8.2
million. Cray designs, manufactures, markets, and supports an extensive range of
communications products and systems for local area networks, and wide area
networks. Cray provides end-users with intelligent products to support data,
voice, and video transmission over a wide variety of carrier services as well as
being an industry leader in frame relay encryption.
(3) Rockwell Network Systems:
On January 31, 1996, Meret, the Company's wholly owned subsidiary,
acquired all the assets and assumed certain specified liabilities of Rockwell
Network Systems ("RNS") from Rockwell International Corporation ("Seller") for
approximately $11 million in cash and notes. In addition, approximately
$593,000 in finders fees and fees for providing collateral for the notes issued,
was paid with a combination of cash and stock. RNS provides high-speed LAN
solutions and connections to the extended workgroups and servers in high growth
networking (FDDI, Fast Ethernet) markets. In addition, RNS is a leading
supplier of remote access router-based technologies for connections to network
backbones via public switch facilities (ISDN and analog modems). RNS operates
as a division of Meret.
(NOTE B) - Significant Accounting Policies
(1) Principles of Consolidation:
The balance sheet reflects the accounts of Osicom, its wholly-owned
subsidiaries Meret Communications, Inc. ("Meret"), including its RNS division,
DPI and Cray. The consolidated unaudited statements of operations for the three
months and six months ended July 31, 1996 include the results of operations of
Osicom, Meret, including its RNS division, DPI, and Cray for the one month
subsequent to the effective acquisition date, June 30, 1996. The consolidated
unaudited statements of operations for the three months and six months ended
July 31, 1995 have been restated to account for the acquisition of DPI,
accounted for as a pooling of interests, and does not include results of
operations of Meret's RNS division which was acquired subsequent to July 31,
1995.
(2) Amortization of Intangibles:
Software assets acquired are amortized over 10 years on a straight-line
basis. Software development costs where technological feasibility has not been
established are expensed in the period in which they occurred, otherwise,
development costs that will become an integral part of the Company's products
are deferred in accordance with FASB 2. The deferred cost is amortized on a
straight-line basis over the remaining estimated economic life of the product.
(3) Depreciation and Amortization:
Depreciation of property and equipment is computed using the straight-line
method over the estimated useful lives of the assets (generally 3 to 5 years).
Leasehold improvements are amortized over the shorter of their estimated useful
lives or the term of the lease. Depreciation of land and building is computed
using the straight-line method over 39 years.
7
<PAGE> 8
OSICOM TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS (CONTINUED)
(4) Inventories:
Inventories, comprised of raw materials, work in process, finished goods
and spare parts, are stated at the lower of cost (first-in, first-out method) or
market. Spares parts are amortized over three years at the time of acqusition.
Accumulated amortization of spare parts was $17,764 at July 31, 1996.
Inventories consist of:
<TABLE>
<CAPTION>
Raw Work in Finished Spare Reserve for
materials process goods Parts, Net Subtotal obsolescence Net
- - ----------- --------- --------- ------- ---------- --------- -----------
<C> <C> <C> <C> <C> <C> <C>
$13,117,385 4,497,489 5,019,123 622,204 23,256,201 6,042,992 $17,213,209
</TABLE>
(5) Per Share Data:
Earnings (loss) per common share is computed based on the weighted average
number of common and dilutive common equivalent shares outstanding during each
period presented. All references in the financial statements to common shares
and per share data give effect to the 2:1 split effective February 12, 1996.
(6) Revenue Recognition:
Revenues are recognized upon shipment of product.
(7) Cash Equivalents:
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three months and
nine months or less to be cash equivalents.
(8) Allowance for Doubtful Accounts:
The Company provides an allowance for doubtful accounts based on its
continuing evaluation of its customers' credit risk. The Company does not
require collateral from its customers.
8
<PAGE> 9
OSICOM TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS (CONTINUED)
(NOTE C) - Notes Receivable
Agama, Inc., owed the Company $140,690. The amount is due on demand
accrues interest at 1% over the prime rate.
(NOTE D) - Property and Equipment
Property and equipment at cost, less accumulated depreciation and amortization,
consists of:
<TABLE>
<S> <C>
Automobile $ 53,576
Plant Equipment 16,405,621
Office Furniture and Fixtures 2,306,053
Leasehold Improvements 823,376
Land and Building 1,779,350
Product Enhancement Costs 1,359,026
-----------
Total 22,727,002
Less accumulated depreciation 16,348,625
-----------
$ 6,378,377
===========
</TABLE>
(NOTE E) - Purchased Technology
The Company has purchased technology in connection with the acquisitions
of Cray and the RNS division of Meret. Accumulated amortization was $269,709
as of July 31, 1996.
(NOTE F) - Loan Payable - Bank
At July 31, 1996, the Company had outstanding indebtedness under its
revolving demand loan agreement with Banca di Roma of $410,209. The agreement
provides for interest at 1% above the bank's base lending rate, which was 9.25%,
at July 31, 1996. The line of credit is collateralized by accounts receivable
and personally guaranteed by a director of the Company.
In addition, the Company's wholly-owned subsidiary, Meret, had outstanding
indebtedness under its $8 million line of credit with a bank of $1,708,140 at
July 31, 1996. The line of credit is collateralized by accounts receivable,
inventory and property, plant and equipment. Osicom has guaranteed this line,
for which Meret is the borrower, to the extent of $1,000,000. This line of
credit provides for interest at prime plus 2.5% which was 10.75%, at July 31,
1996.
The Company's DPI subsidiary had outstanding indebtedness under its
$2,250,000 line of credit with a lender of $1,344,326 at July 31, 1996. The line
of credit allows DPI to borrow 75% of eligible trade accounts receivable, at the
lender's prime interest rate plus 4% which was 12.25%, at July 31, 1996.
Borrowings are secured by substantially all assets of DPI.
9
<PAGE> 10
OSICOM TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS (CONTINUED)
The Cray subsidiary had outstanding borrowings of $3,250,000 under its $4
million line of credit with a lender as of July 31, 1996. The line of credit was
secured by a $3.5 million irrevocable letter of credit and a $500,000 guarantee
issued by Cray Electronics Holdings, PLC. This line of credit provides for
interest at 1.5% over Eurodollar rate which was 6.94%, at July 31, 1996 for the
first $3 million of borrowings, prime less .25% which was 8.0% at July 31, 1996
for the remaining $1 million of borrowings. Under the acquisition agreement, a
new lender will replace the line of credit with a $5 million credit facility
guaranteed by the Company.
(NOTE G) - Notes Payable and Long Term Debt
Notes payable and long term debt consisted of:
<TABLE>
<S> <C>
8.95% Notes Payable $1,329,581
10.75% Term Notes Payable 1,048,350
8% Convertible Debentures 2,886,809
11% Notes Payable 122,032
11.25% Notes Payable - Stockholder 82,933
12.25% Notes Payable - Stockholders 100,000
5.5% Notes Payable - Stockholder 483,882
Capital Lease Obligations 291,232
----------
Total 6,344,819
Less: Current Portion 967,858
----------
$5,376,961
==========
</TABLE>
(1) On March 25, 1996, Meret purchased land and building in San Diego,
California for $1,779,350 paid in cash. On April 24, 1996, Meret entered into a
mortgage agreement with a lender in the amount of $1,331,000, amortized over 30
years with an adjustable interest rate of 5.50% over the LIBOR rate, with an
initial rate of 8.95% for the initial six months. The amount outstanding as of
July 31, 1996 was $1,329,581.
(2) In addition, Meret has term loans outstanding of $1,048,350. The term
loans are collateralized by machinery and equipment and bears interest at prime
plus 2.5%, which was 10.75% at July 31, 1996. Combined monthly principal
payments of $38,900 per month and $233,400 is reflected as long-term debt.
(3) In April 1996, the Company received net proceeds of $2,464,363
from placement of convertible debentures to unaffiliated parties. As of July
31, 1996, $172,568 was still outstanding. The debentures mature on December
31, 1999 and accrue interest at 8% with various commencement dates.
(4) In May 1996, the Company received net proceeds of $4,782,319 of 8%
convertible debentures due December 31, 1999. The debentures are convertible at
$13.75 per share or market price. Should the Company's stock price fall below
$10.50 per share the holders cannot convert the debentures. The Company has the
right to buy back the debentures at a premium of 15%. As of July 31, 1996, the
outstanding balance was $2,714,241.
(5) The DPI subsidiary has a note payable to a unrelated party in the
amount of $122,032 bearing interest at the prime rate plus 2.75% which was 11%
as of July 31, 1996. Subsequent to July 31, 1996, the note payable was paid in
full.
(6) In addition, DPI has various notes payable to certain stockholders
totalling $666,815 as of July 31, 1996. Under the acquisition agreement, the
terms of the notes were renegotiated as follows:
Note payable in the amount of $82,933, payable monthly in monthly
installments of $8,000, including interest payable monthly at the prime
rate plus 4% (11.25% at July 31, 1996);
Notes payable in the amount of $100,000, due September 1997, interest
payable monthly at the prime rate plus 4% (12.25% at July 31, 1996); and
Note payable in the amount of $483,882, $120,000 payable upon acquisition,
the remaining portion due September 1997, interest payable monthly at
5.5%. Subsequent to July 31, 1996, the $120,000 payment was made.
10
<PAGE> 11
OSICOM TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS (CONTINUED)
The principal payments under notes payable and long-term debt for years ended
January 31, and thereafter are as follows, by year:
<TABLE>
<S> <C>
1997 $ 734,458
1998 1,055,943
1999 355,497
2000 2,895,002
2001 8,708
Thereafter 1,295,211
----------
Total 6,344,819
Less: Current Portion 967,858
----------
$5,376,961
==========
</TABLE>
(NOTE H) - Note Payable - Affiliate
As of July 31, 1996, a net amount of $676,963 was due to an entity owned
by two directors of the Company. The amount is due on demand and does not
accrue interest.
(NOTE I) - Income Taxes
At July 31, 1996 the Company has accumulated federal net operating losses
which may be potentially available to reduce future taxable income. However,
among potential adjustments which may reduce available loss carryforwards, the
Internal Revenue Code of 1986, as amended, (IRC), reduces the extent to which
net operating loss carryforwards may be utilized in the event there has been an
"ownership change" of a company as defined by applicable IRC provisions. The
Company believes that the issuances of its equity securities and transfers of
ownership of outstanding equity securities may have resulted in one or more such
ownership changes and intends to analyze the impact of such transfers on the
continued availability, for tax purposes, of the Company's net operating losses
incurred through fiscal 1997. Further ownership changes in the future, as
defined by the IRC may reduce the extent to which any net operating losses may
be utilized. The income tax provision for the periods presented as follows:
<TABLE>
<CAPTION>
Three months ended Six months ended
July 31, July 31,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Income taxes:
Current................................ $27,260 $ 0 $28,516 $ 1,256
Deferred............................... 0 0 0 0
------- ------- ------- -------
Total income tax provision......... $27,260 $ 0 $28,516 $ 1,256
======= ======= ======= =======
</TABLE>
The reconciliation between income tax expense and a theoretical United
States tax computed by applying a rate of 35% for the fiscal periods presented,
is as follows:
<TABLE>
<CAPTION>
Three months ended Six months ended
July 31, July 31,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Earnings before income taxes: $(8,283,393) $ 305,206 $(7,831,603) $(222,906)
=========== ========= =========== =========
Theoretical tax (benefit) at 35%............. (2,899,188) 106,822 (2,741,061) (78,017)
Loss for which no benefit was recorded as
there is no assurance of realization....... 391,879 -- 265,008 184,362
Permanent differences........................ 2,502,453 (106,822) 2,502,453 (106,345)
Other........................................ 32,116 -- 2,116 1,256
----------- --------- ----------- ---------
Total................................. $ 27,260 $ 0 $ 28,516 $ 1,256
=========== ========= =========== =========
</TABLE>
11
<PAGE> 12
OSICOM TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS (CONTINUED)
(Note J) - Commitments and Contingencies
(1) Osicom and its subsidiary lease a total of 226,100 square feet. Lease
terms generally range from month to month to 5 years with options to renew at
varying terms.
Future minimum annual rentals for the Company and its subsidiaries are as
follows:
<TABLE>
<CAPTION>
Period ended
January 31, Net Rent
------------ ----------
<S> <C>
1997 $ 697,906
1998 1,100,146
1999 688,483
2000 523,826
2001 122,328
Thereafter 30,582
==========
Total $3,163,271
==========
</TABLE>
(2) The Company is party to several lawsuits related to trade claims made
by and against the Company. The majority of such claims have been assigned to
Agama, Inc. in conjunction with the sale of the Company's former computer
business and as such Agama, Inc. has indemnified the Company against any
unfavorable outcomes. Interphase, Inc. sued the Company and Rockwell
International Corporation in connection with the Company's acquisition of RNS.
The Company believes the suit is frivolous and without merit. The Company is
also indemnified by Rockwell International Corporation against any losses
arising from this action. Management believes that the ultimate outcome of these
lawsuits will not have a material adverse effect on the Company's financial
position and future operations.
(3) Under the terms of the purchase agreement, the Company is obligated to
pay the Seller of Dynair additional cash consideration equal to a percentage of
net revenues in excess of $5,000,000 within a post-closing year derived from
sale of Dynair products, for each of the five years subsequent to the
acquisition date. As of July 31, 1996, no liability related to this additional
consideration has been incurred.
(NOTE K) - Stockholders' Equity
(1) The Company has two stock option plans in effect: The 1987 Stock
Option Plan and the 1988 Stock Option Plan. The stock options have been made
available to certain employees and consultants. All options were granted at not
less than fair market value at date of grant.
(2) Pursuant to the acquisition of RNS, the Company granted 64,000 options
at an exercise price of $3.50 per share, 227,600 options at an exercise price of
$6.32 per share and agreed to issue 161,282 shares of its common stock to the
employees of RNS, conditioned upon their continuous employment by the Company
through January 31, 1998. Furthermore, the Company granted 40,000 non-qualified
stock options at an exercise price of $3.50 per share to a
12
<PAGE> 13
OSICOM TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS (CONTINUED)
key employee of RNS, which are immediately exercisable. All the options were
granted at or above the market price of the Company's common stock.
(3) During Fiscal 1993, in conjunction with the retirement of its United
Jersey Bank debt, the Company issued United Jersey Bank options to purchase
100,000 shares of its common stock at an exercise price of $4.00 per share. This
option expires on December 31, 2002. Under a redemption agreement, the Company
can redeem the options for $600,000 if redeemed by September 30, 1996, and $1
million thereafter.
(4) On August 21, 1992, the Company issued 2,500 shares of Series A
Convertible Preferred stock in exchange for $2,500,000 of trade debt. The
preferred stock was ascribed a value of $250,000 based on the estimated market
value of the underlying common stock of the Company. The preferred stock accrues
cumulative dividends at 6% and is convertible into common stock (i) at the
option of the holder at the market price of the common stock provided the market
price is equal to or exceeds $67.50, and (ii) at the option of the Company at
110% of the market price of the common stock. In no event shall a conversion
result in the holder having more than 49% of the outstanding common stock of the
Company. The shares of preferred stock are redeemable at the option of the
Company at $1,000 per share. At July 31, 1996, there was $587,500 of cumulative
preferred stock dividends.
(5) In February 1996, the Company issued convertible preferred stock in
the amount of $6,269,487 to refinance the promissory note issued in conjunction
with the RNS acquisition to an entity owned by two of the Company's directors.
The entity also indemnified the Company for any non-performance. The preferred
stock has no dividends and the Company can redeem the preferred stock for cash
at any time or convert it to common stock if not redeemed after two years from
the date of issuance at the current market price. As of July 31, 1996, the
Company had fully redeemed the preferred stock.
(6) In July 1996, the Company issued 10,000 shares of 8% Series C
preferred stock with a $0.01 par value and a $1,000 liquidation value. The
received net proceeds of $7,524,850. Holders of Series C preferred stock are
not entitled to vote. The Series C preferred stock bears a cumulative 8% annual
dividend payable annually on July 31 of each year. Such dividend is payable at
the Company's option in either cash or common stock at the immediately
preceding business day's closing price as reported by NASDAQ. Each share of
Series C preferred stock is convertible into common shares at a maximum of
$18.00 or at market or at conditions thereof.
(7) In conjunction with the acquisition of Cray, the Company issued
3,000 shares of Series D preferred stock with a liquidation value of $1,000.
The Series D preferred stock bears no dividend and is convertible into the
Company's common shares having an aggregate market value at the time of
conversion equal to $3,000,000. The holder of Series D preferred stock is not
entitled to vote.
(NOTE L) - Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses consisted of:
<TABLE>
<S> <C>
Accounts Payable $ 8,568,015
Deferred Revenue 812,680
Accrued Vacations 506,437
Accrued Warranty Reserve 353,539
Accrued Payroll Related Expenses 740,019
Other 2,477,710
===========
Total $13,458,400
===========
</TABLE>
13
<PAGE> 14
OSICOM TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS (CONTINUED)
(NOTE M) - Payable Due Upon Acquisition
In conjunction with the acquisition of Cray, the purchase consisted of
approximately $11 million in cash and $3 million in the Company's preferred
stock. The cash payment was used to purchase the stock of the U.S. division and
for repayment of debt to a bank and the parent company. The net due to Cray
Electronics Holdings, PLC is $10,750,000.
(NOTE N) - Earnings Per Share Calculation
Earnings per share were calculated as follows, giving effect to accrued
preferred share dividends:
Common stock equivalents for periods reporting a loss were
anti-dilutive and therefore excluded. Earnings per share were calculated as
follows at July 31, 1996, giving full effect to accrued preferred share
dividends:
<TABLE>
<CAPTION>
Three months ended July 31, Six months ended July 31,
1996 1995 1996 1995
---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Net earnings (loss) $(8,310,653) $ 305,206 $(7,860,119) $ (224,162)
Accrued undeclared dividends 37,500 37,500 75,000 75,000
---------- ---------- ----------- -----------
Earnings (loss) used for computation $(8,348,153) $ 267,706 $(7,935,119) $ (299,162)
========== ========== =========== ===========
Weighted average number of shares outstanding 3,592,760 2,798,072 3,432,010 2,797,817
Primary shares issued:
Shares issuable upon exercise of dilutive
warrants and options, net of shares assumed
to have been purchased, at the average market
price for the period, with assumed exercise
proceeds 121,098
---------- ---------- ----------- -----------
Weighted average shares used in computation 3,592,760 2,919,170 3,432,010 2,797,817
Primary earnings per share $ (2.32) $ 0.09 $ (2.31) $ (0.11)
========== ========== =========== ===========
Fully diluted shares issued:
Shares issuable upon exercise of dilutive
warrants and options, net of shares assumed
to have been purchased, at the market price
at the end of the period, with assumed exercise
proceeds 121,098
---------- ---------- ----------- -----------
Weighted average shares used in computation N/A 2,919,170 N/A N/A
Fully diluted earnings per share $ N/A 0.09 N/A N/A
========== ========== =========== ===========
</TABLE>
(NOTE O) - Supplemental Cash Flow Disclosures
Interest expense approximated interest paid of $179,000 and $423,000 for
the three months and six months then ended July 31, 1996. Interest expense was
approximately interest paid of $127,000 and $241,000, during the three months
and six months then ended July 31, 1995.
Summary of non-cash financing and investing activities during the three months
and six months ended July 31, 1996:
(1) The Company issued 11,056 and 46,384 shares of common stock from
the exercise of stock options during the three months and six months then ended
July 31, 1996.
(2) During the three months ended July 31, 1996, $3,082,055 of the 8%
convertible debentures were retired by the issuance of 362,500 shares of common
stock. During the six months ended July 31, 1996, $4,359,873 of the 8%
convertible debentures were retired by the issuance of 529,166 shares of
common stock.
(3) In conjunction with the DPI acquisition a finders fee was accrued
by issuing 14,000 shares of common stock. In addition, 414,368 shares of the
Company's common stock has been recorded as issued for the outstanding shares
of DPI common stock.
(4) In conjunction with the Cray acquisition a finders fee was accrued
by issuing 26,000 shares of common stock.
There were no non-cash financing and investing activities during the
three months and six months ended July 31, 1995.
(NOTE P) - Subsequent Events
The Company is completing a $10,000,000 private placement of 8% Series E
convertible preferred stock. Net proceeds will be approximately $7,500,000.
Holders of Series E preferred stock will not be entitled to vote. The Series E
preferred stock will bear a cumulative 8% annual dividend, commencing December
1, 1996 and will be payable annually. Such dividends will be payable at the
Company's option in either cash or common stock at the immediately preceding
business day's closing price as reported by NASDAQ. Each share of Series E
preferred stock will be convertible into common shares at a maximum price of
$15.00 or at market or at conditions thereof. The Series E preferred stock may
be redeemed at the Company's option between $11.00 and $15.00, subject to
certain conditions.
14
<PAGE> 15
OSICOM TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS (continued)
NOTE Q - PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
The following unaudited pro forma summary presents the consolidated
results of operations of the Company as if the acquisitions of RNS and Cray had
occurred at the beginning of each period presented. This pro forma presentation
does not necessarily reflect the results as they would have been had the
acquisitions actually occurred at the beginning of the periods presented.
Six Months Ended July 31, 1996
<TABLE>
<CAPTION>
Company RNS Cray Pro Forma Pro Forma
Consolidated (1) (ii) Adjustments Ref Consolidated
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenues $22,029,000 $ - $11,751,000 $ 33,780,000
Costs of Sales 12,351,000 7,202,000 19,553,000
--------------------------------------------------------------------------------
Gross Profit 9,678,000 - 4,549,000 - 14,227,000
Operating Expenses 17,086,000 6,060,000 180,000 (iii) 23,326,000
--------------------------------------------------------------------------------
Operating Income (Loss) (7,408,000) - (1,511,000) (180,000) (9,099,000)
Other Income (Charges) (423,000) (152,000) (605,000) (iv) (1,180,000)
--------------------------------------------------------------------------------
Income (Loss) Before Income Taxes (7,831,000) - (1,663,000) (785,000) (10,279,000)
Provision for Income Taxes (29,000) (7,000) (36,000)
--------------------------------------------------------------------------------
Net Income (Loss) $(7,860,000) $ - $(1,670,000) $(785,000) $(10,315,000)
================================================================================
Weighted Average Shares Outstanding 3,432,010 21,571 (v) 3,453,581
Loss Per Share - Primary $ (2.31) $ (3.01)
Loss Per Share - Fully Diluted N/A N/A
</TABLE>
Six Months Ended July 31, 1995
<TABLE>
<CAPTION>
Company RNS Cray Pro Forma Pro Forma
Consolidated (1) (ii) Adjustments Ref Consolidated
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenues $12,500,000 $5,780,000 $14,379,000 $ 32,659,000
Costs of Sales 7,000,000 3,079,000 9,158,000 19,237,000
--------------------------------------------------------------------------------
Gross Profit 5,500,000 2,701,000 5,221,000 - 13,422,000
Operating Expenses 5,482,000 6,448,000 8,473,000 216,000 (iii)
234,000 (vi)
7,114,000 (vii) 27,967,000
--------------------------------------------------------------------------------
Operating Income (Loss) 18,000 (3,747,000) (3,252,000) (7,564,000) (14,545,000)
Other Income (Charges) (241,000) (191,000) (605,000) (iv)
(641,000) (viii) (1,678,000)
--------------------------------------------------------------------------------
Income (Loss) Before Income Taxes (223,000) (3,747,000) (3,443,000) (8,810,000) (16,223,000)
Provision for Income Taxes (1,000) (17,000) (18,000)
--------------------------------------------------------------------------------
Net Income (Loss) $ (224,000) $(3,747,000) $(3,460,000) $(8,810,000) $(16,241,000)
================================================================================
Weighted Average Shares Outstanding 2,797,817 87,224 (v) 2,885,041
Loss Per Share - Primary $ (0.11) $ (5.66)
Loss Per Share - Fully Diluted N/A N/A
</TABLE>
15
<PAGE> 16
Three Months Ended July 31, 1996
<TABLE>
<CAPTION>
Company RNS Cray Pro Forma Pro Forma
Consolidated (1) (ii) Adjustments Ref Consolidated
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenues $10,757,000 $ - $ 5,174,000 $ 15,931,000
Costs of Sales 6,023,000 2,930,000 8,953,000
--------------------------------------------------------------------------------
Gross Profit 4,734,000 - 2,224,000 - 6,978,000
Operating Expenses 12,838,000 1,636,000 72,000 (iii) 14,546,000
--------------------------------------------------------------------------------
Operating Income (Loss) (8,104,000) - 608,000 (72,000) (7,568,000)
Other Income (Charges) (180,000) (41,000) (303,000) (iv) (524,000)
--------------------------------------------------------------------------------
Income (Loss) Before Income Taxes (8,284,000) - 567,000) (375,000) (8,092,000)
Provision for Income Taxes (27,000) (7,000) (34,000)
--------------------------------------------------------------------------------
Net Income (Loss) $(8,311,000) $ - $ 560,000) $(375,000) $ (8,126,000)
================================================================================
Weighted Average Shares Outstanding 3,592,760 17,239 (v) 3,609,999
Loss Per Share - Primary $ (2.32) $ (2.26)
Loss Per Share - Fully Diluted N/A N/A
</TABLE>
Three Months Ended July 31, 1995
<TABLE>
<CAPTION>
Company RNS Cray Pro Forma Pro Forma
Consolidated (1) (ii) Adjustments Ref Consolidated
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenues $ 6,686,000 $2,698,000 $ 7,414,000 $ 16,798,000
Costs of Sales 3,607,000 1,377,000 4,417,000 9,401,000
--------------------------------------------------------------------------------
Gross Profit 3,079,000 1,321,000 2,997,000 - 7,397,000
Operating Expenses 2,647,000 3,152,000 3,189,000 216,000 (iii)
234,000 (vi)
7,114,000 (vii) 16,552,000
--------------------------------------------------------------------------------
Operating Income (Loss) 432,000 (1,831,000) (192,000) (7,564,000) (9,155,000)
Other Income (Charges) (127,000) (80,000) (605,000) (iv)
(641,000) (viii) (1,453,000)
--------------------------------------------------------------------------------
Income (Loss) Before Income Taxes 305,000 (1,831,000) (272,000) (8,810,000) (10,608,000)
Provision for Income Taxes - - -
--------------------------------------------------------------------------------
Net Income (Loss) $ 305,000 $(1,831,000) $ (272,000) $(8,810,000) $(10,608,000)
================================================================================
Weighted Average Shares Outstanding 2,919,170 87,224 (iii) 3,006,394
Earnings (Loss) Per Share - Primary $ 0.09 $ (3.55)
Earnings Per Share - Fully Diluted 0.09 N/A
</TABLE>
References for pro forma financial information:
(i) The RNS acquisition, recorded as a purchase, occurred January 31, 1996
and consolidated results reported herein reflect the results of RNS from
January 31, 1996.
(ii) The Cray acquisition, recorded as a purchase, occurred June 30, 1996 and
consolidated results reported herein reflect the results of Cray from
June 30, 1996.
(iii) To amortize the excess cost over net assets of $4,327,000 arising from
the Cray acquisition, using an estimated 10 year useful life.
(iv) To recognize interest expense which results from the assumption that the
Company borrowed $11,000,000 at 11% per annum interest to effectuate the
Cray acquisition.
(v) To adjust weighted average shares outstanding as if shares issued in
connection with the acquisitions of RNS and Cray had occurred at the
beginning of the periods presented.
(vi) To amortize the excess cost over net assets of $4,673,000 arising from
the RNS acquisition, using an estimated 10 year useful life.
(vii) To recognize in-process research and development arising from the Cray
acquisition.
(viii) To recognize interest expense which results from the assumption that the
Company borrowed $11,648,000 at 11% per annum interest to effectuate the
RNS acquisition.
16
<PAGE> 17
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results
of Operations should be read in conjunction with the consolidated unaudited
financial statements contained herein and related notes thereto.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JULY 31, 1996 AND 1995
See Note A to the consolidated unaudited financial statements contained
herein.
Consolidated net sales increased by 61 % to $10,757,000 from $6,686,000
due to the acquisitions of RNS, Cray, Dynair and Digital Products, Inc. (DPI).
Consolidated gross profit increased by 54 % to $4,734,000 from
$3,079,000, due to the increase in net sales, related to the acquisitions. Gross
margins decreased to 44 % from 46 % due to the slightly lower gross margins
achieved by DPI.
Selling, general and administrative expenses increased to $12,838,000
from $2,647,000. Included in the S G & A expense for the period was a one-time
charge of $7,637,000 related to acquisition costs and the write-off of
in-process R & D costs associated with the acquisitions of Cray and DPI.
Excluding the one-time charge, S G & A expenses for the period were $5,201,000
or 48 % of sales compared to 40 % of sales achieved last year, due to an
increase in selling expense from 22 % of sales to 26 % of sales, related to the
higher costs associated with the OEM sales force. Certain large OEM orders
shifted out of the quarter having the effect of increasing the sales expense as
a percent of revenues. Amortization of negative goodwill was $87,000 or 1 % of
sales compared to $238,000 or 4 % of sales. This was the final amortization
period of negative goodwill related to the acquisition of Meret.
Amortization of purchased technology was $152,900 or 1% of sales due to
the acquisitions of RNS and Cray. Due to the offsetting of non-current assets
against negative goodwill in the broadband acquisitions, as required by
generally accepted accounting principles, productive fixed assets which cost
$6.1 million and with a net book value of approximately $1.9 million at
acquisition, have not been recorded. Accordingly, there is no depreciation
charge to operations for these assets which are used in the broadband
operations.
Net interest expense incurred increased to $179,000 from $127,000
primarily due to the higher interest rates related to the DPI credit facility.
After taking into effect all of the above, the consolidated net loss
from operations was $8,311,000 compared to income of $305,000.
17
<PAGE> 18
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JULY 31, 1996 AND 1995
See Note A to the Consolidated Financial Statements contained herein.
Consolidated net sales increased by 76 % to $22,029,000 from
$12,500,000 due to the acquisitions of RNS, Cray and Dynair.
Consolidated gross profit increased by 76 % to $9,677,000 from
$5,500,000, due to the increase in net sales, related to the acquisitions. Gross
margins were 44 % of sales for both periods.
Selling, general and administrative expenses increased to $17,086,000
from $5,481,000. Excluding the one-time charge of $7,754,000 related to certain
costs and a non-recurring write-off of in-process R & D arising from the
acquisitions, S G & A was $9,332,000, as a percentage of sales, S G & A
decreased from 44 % to 42 %. This decrease was related to a decrease in
engineering expense as a percentage of sales from 14% to 12%. Amortization of
negative goodwill was $325,000 compared to $476,000.
Amortization of purchased technology was $270,000 or 1% of sales due to
the acquisitions of RNS and Cray. Due to the offsetting of non-current assets
against negative goodwill in the Meret and Catel acquisitions, as required by
generally accepted accounting principles, productive fixed assets which cost
$6.1 million and with a net book value of approximately $1.9 million at
acquisition, have not been recorded. Accordingly, there is no depreciation
charge to operations for these assets which are used in the operations of Meret
and Catel.
Net interest expense incurred increased to $423,000 from $241,000 due
to the borrowings against the working capital line to fund the increased level
of business and the acquisition of RNS, which was financed in part by $3.5
million of bank debt.
After giving effect to all of the above, consolidated net loss from
operations was $7,408,000 compared to net income of $18,000.
LIQUIDITY AND CAPITAL RESOURCES
The Company had a cash balance of $5,075,000 and working capital of
$1,579,000 at the period ended July 31, 1996, which management believes is
adequate to meet its planned level of growth.
Operations of the Company consumed cash of approximately $617,000 as
compared to $388,000 for the six months ended July 31, 1995. Cash flows from
financing activities for the six months ended July 31, 1996 were $8,001,000
compared to $1,417,000 for the same period last year. During the six months
ended July 31, 1996, the Company paid $50,000 against the Banca di Roma bank
loan, and paid down a net amount of $2,321,000 against the credit lines. In
addition, the Company received $7,247,000 in net proceeds from the issuance of
convertible debentures and $7,525,000 in net proceeds from the issuance of
convertible preferred stock.
During the six months ended July 31, 1996, the Company fully redeemed
the series B preferred stock in the amount of $6,269,487. Capital expenditures
were $2,089,000 and $304,000 for the six months ended July 31, 1996, and 1995,
respectively. In March of 1996, the Company's wholly-owned subsidiary, Meret,
purchased land and building in San Diego,
<PAGE> 19
California for $1,779,000 which is Meret's corporate headquarters and
manufacturing facility.
Management believes that the Company has sufficient working capital to
meet the needs of the current level of operations. Management is implementing
plans which it believes will enable the Company to increase its working capital
for internal growth and acquisitions. There can be no assurance that these
mechanisms to improve liquidity will be effective.
18
<PAGE> 20
OSICOM TECHNOLOGIES, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
See Note J(2) in the "Notes to Consolidated Unaudited Financial
Statements" herein.
Item 6. Exhibits and Reports on Form 8-K
April 12, 1996 - Financial Statements of RNS
September 20, 1996 - Acquisition of Digital Products, Inc
September 23, 1996 - Acquisition of Cray Communications, Inc
19
<PAGE> 21
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf the
undersigned thereunto duly authorized.
OSICOM TECHNOLOGIES, INC.
(Registrant)
Date: September 23, 1996
By: /s/ Christopher E. Sue
------------------------------
Christopher E. Sue
Chief Financial Officer
20
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET, CONSOLIDATED STATEMENT OF OPERATIONS AND
CONSOLIDATED STATEMENTS OF CASH FLOW AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-31-1997
<PERIOD-END> JUL-31-1996
<CASH> 5,075,363
<SECURITIES> 0
<RECEIVABLES> 11,684,146
<ALLOWANCES> 814,500
<INVENTORY> 17,213,209
<CURRENT-ASSETS> 34,144,736
<PP&E> 22,727,002
<DEPRECIATION> 16,348,625
<TOTAL-ASSETS> 49,550,072
<CURRENT-LIABILITIES> 32,565,896
<BONDS> 5,376,961
0
10,774,850
<COMMON> 388,935
<OTHER-SE> 443,430
<TOTAL-LIABILITY-AND-EQUITY> 49,550,072
<SALES> 22,028,800
<TOTAL-REVENUES> 22,028,800
<CGS> 12,351,409
<TOTAL-COSTS> 17,085,578
<OTHER-EXPENSES> 423,416
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 423,416
<INCOME-PRETAX> (7,831,603)
<INCOME-TAX> 28,516
<INCOME-CONTINUING> (7,860,119)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,860,119)
<EPS-PRIMARY> (2.31)
<EPS-DILUTED> 0
</TABLE>
