U. S. Securities and Exchange Commission
Washington, D. C. 20549
Form 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 1997
Commission File Number 0-15910
Control Chief Holdings, Inc.
(Name of small business issuer in its charter)
New York 16-0955704
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P.O. Box 141, 200 Williams Street, Bradford, Pennsylvania 16701
Telephone 814-368-4132
(Address, including zip code, and telephone number, including area
code, of Registrant's principal executive offices)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Name of each exchange
Title of each class: on which registered:
Common Stock - $.50 par value The Nasdaq Small-Cap Market
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act during the past 12
months, and (2) has been subject to such filing requirements for the
past 90 days. Yes [X] No [ ]
Check if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained by reference in Part III of this Form 10-KSB or any amendment
to this Form 10-KSB [X].
Issuer's revenues for the fiscal year ended June 30, 1997 were $7,235,584.
At August 29, 1997, the aggregate market value of voting common stock held
by non-affiliates of the registrant computed at the last trade price of such
stock of $3.31 was $1,173,927. As of August 29, 1997, the issuer had
outstanding 811,553 shares of Common Stock, $.50 par value.
Documents incorporated by reference
Portions of the registrant's Proxy Statement for the Annual Meeting
of Shareholders to be held November 14, 1997 are incorporated by
reference into Part III of this Form 10-KSB.
CONTROL CHIEF HOLDINGS, INC.
INDEX TO ANNUAL REPORT ON FORM 10-KSB
For the Year Ended June 30, 1997
Part I
Item 1 Description of Business
Item 2 Description of Property
Item 3 Legal Proceedings
Item 4 Submission of Matters to a Vote of Security Holders
Part II
Item 5 Market for Common Equity and Related Stockholder Matters
Item 6 Management's Discussion and Analysis of Financial Condition
and Results of Operations
Item 7 Financial Statements
Item 8 Changes In and Disagreements with Accountants on Accounting
and Financial Disclosure
Part III
Item 9 Directors, Executive Officers, Promoters and Control
Persons; Complinace with Section 16(a) of the Exchange Act
Item 10 Executive Compensation
Item 11 Security Ownership of Certain Beneficial Owners and Management
Item 12 Certain Relationships and Related Transactions
Item 13 Exhibits and Reports on Form 8-K
Signatures
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
General Development of Business
Control Chief Holdings, Inc. ("the Company") was incorporated in New
York on June 12, 1968. The Company is a holding company and sole
shareholder of Control Chief Corporation, Control Chief (UK) Limited,
and Bradford Classics Woodworking, Inc. Changes in the corporate
structure during the year were as follows: Due to declining profits
and failure to increase its customer base and market share, a decision
was made by the Board of Directors on May 16, 1996 to cease the
operations of Bradford Classics and conduct an orderly liquidation of
the subsidiary. On September 14, 1996 an auction was held at the
subsidiary's location at which time the remaining assets and inventory
were sold. Proceeds from the auction were used to pay the remaining
secured and unsecured creditors of Bradford Classics. In addition, on
May 23, 1997, the Board of Directors of the Company approved the
transfer of its foreign subsidiary, Control Chief (UK) Limited, to one
of its former employees who is now operating the Company under the name
Aden Electronics Limited. The transfer was done in lieu of a closure
and liquidation of the subsidiary due to its lack of profitability.
The disposal of Control Chief (UK) Limited was effective as of June 30,
1997. In May, 1997, the Company moved the operations of its Lewis
Run, PA facility to its nearby facility located in Bradford, PA. In
July, 1997, the Lewis Run facility was sold. The Financial Statements
found in Part II, Item 7, presents the results of continuing operations
of the Company's remaining operating subsidiary, Control Chief
Corporation. The results of operations for Bradford Classics and
Control Chief (UK) Limited are included in the financial statements as
discontinued operations.
PRINCIPAL PRODUCTS AND SERVICES AND METHODS OF DISTRIBUTION
Control Chief Corporation, ("Control Chief"), is a Pennsylvania
corporation. Control Chief designs, engineers and produces remote
control devices for material handling equipment and other industrial
applications. These controls use either radio or infrared waves as
communications media to transmit control data from portable units to
receivers mounted on various types of apparatus. Control Chief was
among the first in its industry to apply infrared technologies to
industrial remote control applications. All models of products are
microprocessor based systems. Remote controls provide the customer a
cost effective means to achieve greater operational safety and
flexibility. These devices are utilized world-wide in concert with
various material handling equipment, industrial machines, process
equipment and mobile apparatus. Control Chief markets its products
through a network of independent manufacturer's representatives located
throughout the United States, Canada, Central and South America in key
geographical centers. Additionally, products are sold through direct
efforts, distributors, private labeling agreements and licensees.
PRODUCT DEVELOPMENT
The Company continues to enhance current product designs and develop
new designs within its established product lines. In order to remain
competitive in the market, the Company does not announce to the general
public continuing research and development programs. Research and
development programs are established to keep its products current with
the state of the art. New product designs and product line expansion
is anticipated for the future and is being developed. These programs
have not been released to the public and if prematurely released would
potentially reduce the anticipated return on its research investment.
Research and development expenditures for the Company's remote control
applications totaled $182,931 and $154,640 for the fiscal years ended
June 30, 1997 and 1996, respectively.
COMPETITION
The Company experiences competition for its remote controls from
several suppliers of similar products. Throughout the world there are
numerous remote control manufacturers. Several of the largest
manufactures in the world are located in Germany and France. The
Company believes that it is among the three largest suppliers of remote
control devices in the domestic market.
Control Chief Corporation competes principally on the basis of
technology and quality. Control Chief Corporation is unique in that it
was the first U.S. company to develop an infrared system to be used for
industrial short range remote control and incorporate it as a standard
product along side its extensive radio technology products.
Microprocessors have been incorporated into all products. The
incorporation of these "mini-computers" into the devices has greatly
reduced the size as well as the cost of the devices while increasing
their reliability. Control Chief Corporation was among the first to
successfully market devices including that technology. The Company
believes that by its use of radio and infrared technologies it better
serves the needs and requirements of the industrial market. Management
believes that none of its competitors provide a more diverse product
line.
Currently, worldwide competition is extremely price conscious with many
companies entering and exiting the market. While significant market
shares have not fluctuated with the traditional suppliers to the
market, new entrants have depressed prices. Management believes its
products are competitively priced taking into consideration the
Company's reputation as a long time, high quality manufacturer of
reliable, durable state of the art devices.
RAW MATERIAL
The principal raw materials used in the manufacturer of remote control
devices is electronic components produced by various manufacturers. No
particular manufacturer accounts for a substantial portion of the
electronic components. All components used are readily available in
the current market and it is not anticipated that there will be any
significant shortages in the foreseeable future.
MAJOR CUSTOMERS
Control Chief Corporation is not dependent for remote control sales on
a single customer or group of customers, the loss of which would have
a material adverse effect upon the operations of the Company.
PATENTS, TRADEMARKS AND LICENSES
Control Chief Corporation does not hold patents on its current line of
products. The trademarks, "Control Chief","Vella Willson", "Crane
Chief", "Remote" and "TeleChief" are registered for their lines of
remote control and wound component products in the U.S. and Europe.
Control Chief Corporation enters into exclusive marketing and sales
agreements for designated territories in the normal course of business.
These agreements typically arrange for exclusive sales and marketing
rights to specific geographical areas as well as private labeling,
marketing assistance, manufacturing rights and software licensing.
GOVERNMENTAL APPROVAL OF PRINCIPAL PRODUCTS OR SERVICES
Control Chief Corporation manufactures some products which transmit
data via radio waves. As a result, these products must be approved by
the Federal Communications Commission (FCC). Currently, these products
offered for sale have been approved by the FCC.
RESEARCH AND DEVELOPMENT
Company sponsored research and development expenditures for Control
Chief Corporation for the fiscal years ending June 30, 1997 and 1996
were $182,931 and $156,640, respectively.
The Company utilizes a consultant to evaluate, maintain, manage and
report on issues of compliance with Federal, State and local provisions
which have been enacted or adopted regulating the discharge of
materials into the environment. The cost of this service on an ongoing
basis is not material.
EMPLOYEES
As of August 29, 1997, 69 individuals were employed by the Company, of
which, 68 individuals were employed full time. The Company considers
its relations with its employees to be satisfactory.
ITEM 2. DESCRIPTION OF PROPERTY
Location Function Square Feet Ownership
200 Williams Street Manufacturing and 20,000 Leased
Bradford, PA Corporate Offices
455 William Pitt Way Engineering and 1,697 Leased
Pittsburgh, PA Sales Offices
14 Egbert Lane Vacant Facility 10,000 Owned
Lewis Run, PA (Sold July, 1997)
(1) None of the above properties are encumbered in connection with the
collateralization of the Company's indebtedness.
(2) The Company's Lewis Run, PA facility was formerly used for
manufacturing. In May, 1997 the operations were moved to the
Company's Williams Street facility located in nearby Bradford, PA.
In July, 1997 the vacant facility was sold.
(3) The Company's office and manufacturing space is adequate for its
existing requirements and its
projected business needs.
ITEM 3. LEGAL PROCEEDINGS
The Company is not involved in any litigation of a material nature.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of the security holders
during the fourth quarter of the fiscal year ended June 30, 1997.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's common stock trades on The Nasdaq Small-Cap Market under
the Symbol DIGM. The symbol DIGM relates to the Company's former name
"Digimetrics, Inc.", which was changed in November, 1992 to its present
name, "Control Chief Holdings, Inc."
The following is the range of trade information for the quarterly
periods ending September 30, 1995 through June 30, 1997. The trade
prices are actual historical sales information as supplied by Nasdaq
and represents "real-time" sales and price information for securities
traded in The Nasdaq Small-Cap Market.
High Low
Trade Trade
For the Quarter Ended Price Price
06/30/97 4.00 2.75
03/31/97 4.38 3.00
12/31/96 2.81 2.81
09/30/96 3.13 2.81
06/30/96 3.50 2.25
03/31/96 3.00 2.63
12/31/95 3.38 2.20
09/30/95 3.38 2.50
As of August 29, 1997, the Company's records indicated that there were
approximately 1,000 registered holders of the 811,553 shares of common
stock that were outstanding as of that date.
Dividends Paid
September 25, 1992 $.04 per share
September 24, 1993 $.07 per share
September 26, 1994 $.07 per share
September 25, 1995 $.07 per share
September 26, 1997 $.05 per share
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Overview
Where are we going? How are we going to get there? These are two
questions that a great deal of time has been spent on trying to answer.
These questions can be answered with two words; change and progress.
Change and progress doesn't come easily though, nor at times quickly or
without cost. We are making positive changes and positive progress.
Yes we have consolidated, and restructured, and sold a division. We
have changed in many ways, all with the idea of progress. Change and
progress are not inexpensive concepts; they do not come without costs.
Decisions made to accept those costs were not haphazard ones done out
of boredom or panic. These were decisions carefully thought out and
thoroughly discussed with a particular goal in mind; to progress not
only into the next year but also into the 21st Century.
The management and board of the Company will continue to make decisions
that will cause change within our organization. We will search for
ways to make it easier for our Company to change. We will take personal
responsibility to embrace new technologies. We will learn to work with
new tools and products. We may adopt new methods of doing business.
We will continue to work on and develop next generation products. We
will continue to look into the future; to anticipate what challenges
are coming. We will meet those challenges and go beyond them. We will
learn to let go of the past and to abandon the things that are
expendable. We will become more knowledgeable. We will stay flexible
and take whatever shape the situation demands. And last, but not
least, we will accept the responsibilities that come with being
motivators and leaders in our field.
Where are we going? We are going into the future! How are we going to
get there? We will get there by continuing to tear down the walls of
change and open the doors of progress!
Selected Financial Information
The following table summarizes certain selected financial information
with respect to the Company, and is qualified in its entirety by
reference to the Consolidated Financial Statements of the Company and
the Notes thereto. Additionally, this table has been restated as the
result of discontinued operations. Refer to the Notes to Consolidated
Financial Statements for further information.
Financial Highlights
Financial (in thousands, except current ratio and share data)
Years ended June 30, 1997 1996 1995 1994 1993
---- ---- ---- ---- ----
Net sales $7,207 $6,832 $6,077 $5,855 $5,592
Earnings (loss)
from continuing
operations 386 206 15 156 325
Working capital 1,844 1,349 1,162 1,505 1,424
Total assets 3,814 4,036 4,413 3,823 3,224
Long-term debt 457 385 572 679 351
Capital expenditures 342 68 87 123 66
Current ratio 2.51 1.75 1.69 2.39 2.68
Per Common Share
Years ended June 30, 1997 1996 1995 1994 1993
---- ---- ---- ---- ----
Earnings (loss) from:
Continuing
operations $.48 $.25 $.02 $.19 $.40
Discontinued
operations (.11) (.53) .15 (.10) (.01)
----- ------ ---- ----- -----
Net earnings (loss) $.37 ($.28) $.17 $.09 $.39
===== ====== ==== ===== =====
RESULTS OF OPERATIONS
Year ended June 30, 1997 compared to year ended June 30, 1996
Net sales from continuing operations for the fiscal year ended June 30,
1997, increased by $374,621 or 5.5% as compared to the fiscal year
ended June 30, 1996. This increase was primarily attributable to
increases in sales of parts and service. As a result of competitive
and market pressures, sales of the Company's systems remained
relatively constant. The Company does not experience a significant
fluctuation of business attributable to seasonal buying habits of its
customers.
Cost of products sold increased by $59,869 or 1.5% as compared to the
same period last year. This slight increase in cost of products as
compared to the corresponding increase in net sales for the comparable
period is a result of lower material and overhead costs related to the
product sales mix.
Selling, general and administrative costs increased by $4,884 or .2%.
This slight increase in selling, general and administrative costs as
compared to the overall increase in net sales reflects a relatively
stable work force and related costs in these areas.
Research and development costs increased by $28,291 or 18.3%. The
majority of this increase relates to the addition of staff exclusively
devoted to research and development. The Company expects to invest
funds annually of $175,000 or greater in the foreseeable future to stay
abreast of changes in technology and improve and expand its product
lines in the electronic components and devices segment.
Interest expense decreased by $24,584 or 21.9%. This decrease in
interest expense primarily reflects reduced bank indebtedness and an
overall improvement in the Company's cash flow. The Company's weighted
average short-term interest rates based upon weighted average
borrowing, were 7.7% in 1997 and 8.7% in 1996.
Net earnings from continuing operations increased by $180,032 or 87.5%.
The provision for income taxes at June 30, 1997 on pretax earnings from
continuing operations of $668,251 was $282,444 or 42.3% of pretax
income. This compares to a provision for income taxes at June 30, 1996
of $139,165 on pretax earnings from continuing operations of $344,940
or 40.3%. The increase in the provision for income taxes of 2% for the
current fiscal year as compared to the previous fiscal year primarily
reflects an increase in state income taxes. Overall earnings increased
from a net loss of $223,597 for the fiscal year ended June 30, 1996 to
a net profit of $298,609 for the fiscal year ended June 30, 1997. This
significant increase was attributable to the decrease in loss from
discontinued operations, net of taxes of $429,372 for the fiscal year
ended June 30, 1996 as compared to a loss from discontinued operations,
net of taxes of $87,198 for the fiscal year ended June 30, 1997.
Year ended June 30, 1996 compared to year ended June 30, 1995
Net sales from continuing operations for the period increased from the
previous fiscal year by $755,259 or 12.4%. The Company continued to
experience an increased demand for its finished products, parts and
service. The Company does not experience a significant fluctuation of
business attributable to seasonal buying habits of its customers.
Cost of products sold increased by $554,975 or 16.4%. This increase is
reflective of the Company's overall increase in net sales. Increases
have also occurred because of higher material costs and increased labor
costs. Additionally, short term fluctuations may result from changes
in product mix, as well as competitive discounting.
Selling, general and administrative costs decreased by $75,808 or 3.2%.
The overall decrease in selling, general and administrative costs is
attributable to a decrease in the Company's sales force and related
travel costs.
Research and development costs decreased by $67,760 or 30.5%. With the
acquisition of NTR Technologies, Inc. and addition of staff to its
internal engineering department, a significant portion of engineering
outsourcing is now being done internally. The Company maintains a
continued commitment of its resources to research and development to
stay abreast of technological changes, enhancement of current products
and development of new product lines.
Interest expense increased by $7,355 or 7.0%. This slight increase
relates to the increase in the Company's short-term borrowing offset by
decreases in the continuing Company's long-term borrowing. This
increase is also attributable to the financing of the acquisition of
NTR Technologies, Inc.
Net earnings from continuing operations increased by $131,162 or 16.4%.
The provision for income taxes at June 30, 1996 on pretax earning from
continuing operations of $344,940 was $139,165 or 40.3% of pretax
income. This compares to a provision for income taxes at June 30, 1995
of $8,003 on pretax earning from continuing operations of $22,531 or
35.6%. The Company experienced an overall net loss of $223,597 for the
fiscal year ended June 30, 1996, as compared with net earnings of
$138,709 for the fiscal year ended June 30, 1995. The net loss for the
fiscal year ended June 30, 1996 was attributable to continuing losses
at Tuna Valley Wood Products and Control Chief (UK) Limited.
LIQUIDITY AND CAPITAL RESOURCES
The Company funds its needs for liquidity and capital resources through
cash from operations, short-term and long-term borrowing.
Effective January 15, 1997, the Company refinanced the line of credit
and term loan agreements with National City Bank of Pennsylvania. The
Company obtained a new commercial demand line of credit in the amount
of $750,000, with a variable interest rate equal to the lender's prime
rate. An initial borrowing on the new line of credit was used to pay
off the balance of the old line of credit existing at December 31,
1996. The line of credit is being used to finance accounts receivable
and inventory of the Company. The line of credit is subject to an
annual review by the bank each November. At June 30, 1997, a total of
$245,000 was outstanding under Control Chief's line of credit at the
rate of interest of 8.50%.
In addition to the line of credit loan, the Company obtained a new
commercial term loan, dated January 15, 1997, in the amount of
$650,000. The proceeds of this loan were used to pay off the existing
term loan at December 31, 1996, and to finance the purchase of new
equipment. The new term loan bears interest at 8.47% and is being
repaid in forty-eight (48) monthly principal and interest installments
of $16,050. At June 30, 1997, a total of $591,884 was outstanding
under this term loan.
The Company's working capital continued to increase in fiscal 1997. At
June 30, 1997, the Company's net working capital increased by $495,352
as compared to an in increase of $186,583 at June 30, 1996 and a
decrease of approximately $343,000 at June 30, 1995. The Company's
current ratio improved in fiscal year 1997. At June 30, 1997, the
Company's current ratio was 2.51 as compared to 1.75 at June 30, 1996,
and 1.69 at June 30, 1995.
The Company's cash expenditures for property, plant and equipment
amounted to $342,245 in fiscal year 1997, $67,562 in fiscal year 1996
and approximately $87,000 in fiscal year 1995. These capital
expenditures primarily related to costs associated with facility
expansion and improvements for the consolidation of the Lewis Run
operation into the Bradford facility ($133,000), purchase of a new
computer system ($150,000) and additional transportation equipment
($22,000).
The Company currently does not have a material commitment for any
further capital expenditures and believes its current working capital
is sufficient for its operations.<PAGE>
ITEM 7. FINANCIAL STATEMENTS
Contents of Financial Statements
Report of Independent Certified Public Accountants
Financial Statements
Consolidated Balance Sheets
Consolidated Statements of Operations and Retained Earnings
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
<PAGE>
DIEFENBACH DELIO KEARNEY & DEDIONISIO
CERTIFIED PUBLIC ACCOUNTANTS
Report of Independent Certified Public Accountants
Board of Directors and Stockholders
Control Chief Holdings, Inc.
We have audited the accompanying consolidated balance sheets of Control
Chief Holdings, Inc. and Subsidiaries as of June 30, 1997 and 1996, and
the related consolidated statements of operations and retained
earnings, and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. These standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position
of Control Chief Holdings, Inc. and Subsidiaries as of June 30, 1997
and 1996, and the consolidated results of their operations and their
consolidated cash flows for the years then ended in conformity with
generally accepted accounting principles.
DIEFENBACH DELIO KEARNEY & DEDIONISIO
CERTIFIED PUBLIC ACCOUNTANTS
Erie, Pennsylvania
August 27, 1997
<TABLE>
<PAGE>
CONTROL CHIEF HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, 1997 and 1996
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
ASSETS
Current Assets
Cash $132,007 $123,285
Receivables
Trade, less allowance for
doubtful accounts of $59,750
and $62,093 1,387,739 1,404,382
Other 6,730 4,952
Inventories
Raw materials and subassemblies 1,122,751 1,236,640
Work in process 251,950 196,231
Prepaid income taxes 89,368 92,818
Other prepaid items 20,512 21,529
Deferred income taxes 55,737 59,453
---------- ----------
Total current assets 3,066,794 3,139,290
---------- ----------
Property, Plant and Equipment, at cost
Land and improvements - 19,874
Buildings and improvements 121,422 239,789
Machinery and other equipment 1,568,280 1,372,075
---------- ----------
Total cost 1,689,702 1,631,738
Less accumulated depreciation 1,175,486 1,307,272
---------- ----------
Undepreciated cost 514,216 324,466
---------- ----------
Other Assets
Net assets of discontinued operations - 372,103
Property of continuing operations held
for sale,less accumulated depreciation
of $214,458 53,927 -
Note receivable-SPC Technologies, Inc. 96,147 98,059
Trade receivable-Aden Electronics Limited 71,304 -
Cash surrender value of officers' life
insurance,less policy loans of $71,113
and $68,770 11,525 10,620
Goodwill, less accumulated amortization
of $100,325 and $8,918 - 91,407
---------- ----------
Total other assets 232,903 572,189
---------- ----------
$3,813,913 $4,035,945
========== ==========
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
<TABLE>
CONTROL CHIEF HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - CONTINUED
June 30, 1997 and 1996
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Short-term debt $245,000 $654,895
Current maturities of long-term debt 155,464 203,976
Trade accounts payable 452,085 496,670
Accrued items
Salaries, wages, commissions and
related payroll taxes 363,748 427,170
Other 6,408 7,842
---------- ----------
Total current liabilities 1,222,705 1,790,553
---------- ----------
Other Liabilities
Long-Term Debt, less current maturities 456,582 385,365
Deferred income taxes 23,910 25,842
---------- ----------
Total other liabilities 480,492 411,207
---------- ----------
Stockholders' Equity
Common stock, authorized 5,000,000
shares of $.50 par value; issued
and outstanding 811,553 shares 405,776 405,776
Capital in excess of par value 1,223,701 1,223,701
Retained earnings 481,239 182,630
Foreign currency translation adjustment - 22,078
---------- ----------
Total stockholders' equity 2,110,716 1,834,185
---------- ----------
$3,813,913 $4,035,945
========== ==========
<FN>
The accompanying notes are and integral part of these statements.
</TABLE>
<TABLE>
CONTROL CHIEF HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
Year ended June 30,
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Revenues
Net sales $7,206,996 $6,832,375
Other income 28,588 11,438
---------- ----------
Total revenues 7,235,584 6,843,813
---------- ----------
Costs and expenses
Cost of products sold 4,003,392 3,943,523
Selling general and administrative 2,293,124 2,288,240
Research and development 182,931 154,640
Interest expense 87,886 112,470
---------- ----------
Total costs and expenses 6,567,333 6,498,873
---------- ----------
Earnings from continuing operations
before income taxes 668,251 344,940
Provision for income taxes 282,444 139,165
---------- ----------
Earnings from continuing operations 385,807 205,775
Loss from discontinued operations,
net of taxes (87,198) (429,372)
---------- ----------
Net earnings (loss) 298,609 (223,597)
Retained earnings at beginning of year 182,630 463,036
Cash dividends paid - (56,809)
---------- ----------
Retained earnings at end of year $481,239 $182,630
========== ==========
Earnings (loss) per common share:
Continuing operations $.48 $.25
Discontinued operations (.11) (.53)
----- ------
$.37 ($.28)
===== ======
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
<TABLE>
CONTROL CHIEF HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended June 30,
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Cash flows from continuing operating
activities
Earnings from continuing operations $385,807 $205,774
Adjustments to reconcile earnings
from continuing operations
to net cash provided by operating
activities:
Depreciation and amortization 188,995 115,987
Deferred income taxes 1,784 7,155
(Gain) loss on sale of fixed assets 881 (260)
Change in assets and liabilities:
(Increase) decrease in receivables 14,866 (436,348)
(Increase) decrease in inventories 58,170 83,017
(Increase) decrease in prepaid items
and other assets (67,743) 28,181
Increase (decrease) in accounts
payable and accruals (109,442) (34,201)
---------- ----------
Net cash provided by (used in)
continuing operating activities 473,318 (30,695)
---------- ----------
Cash flows from discontinued activities
Earnings (loss) from discontinued
operations (87,198) (429,372)
Adjustments to reconcile earnings (loss)
from discontinued operations
to net cash provided by (used in)
discontinued activities:
Depreciation and amortization 47,177 97,257
Deferred income taxes - (43,336)
Gain on sale of fixed assets 14,310 (225)
Proceeds from sale of fixed assets 276,690 3,000
Write-down of net assets of
discontinued operations 278,011 328,585
(Increase) decrease in net assets of
discontinued operations (218,898) 216,815
---------- ----------
Net cash provided by
discontinued activities 310,092 172,724
---------- ----------
Total net cash provided 783,410 142,029
---------- ----------
Cash flows from investing activities
Proceeds from sale of property, plant
and equipment 100 260
Purchase of property, plant and equipment,
including property held for sale (342,245) (67,562)
Receipts of principal on note receivable 1,912 1,591
---------- ----------
Net cash used in investing
activities (340,233) (65,711)
---------- ----------
Cash flows from financing activities
Net borrowing (repayments) of short-
term debt (409,895) 134,895
Proceeds from long-term borrowing 671,995 637,833
Repayments of long-term debt (649,290) (822,830)
Cash dividends paid - (56,809)
---------- ----------
Net cash used in financing
activities (387,190) (106,911)
---------- ----------
Effect of exchange rate changes on cash (47,265) (3,908)
---------- ----------
Net increase (decrease) in cash 8,722 (34,501)
Cash at beginning of year 123,285 157,786
---------- ----------
Cash at end of year $132,007 $123,285
========== ==========
Cash paid during the year for:
Interest $90,348 $150,388
Income taxes - -
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
CONTROL CHIEF HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1997 and 1996
1. Summary of Significant Accounting Policies
Company Operations
The Company currently operates exclusively in a single industry in the
United States as a manufacturer of remote control devices for material
handling equipment and other industrial applications. The Company had
a similar operation that was located in the United Kingdom. However,
effective June 30, 1997, this operation was discontinued. Previously,
the Company's operations included a wood products business. However,
effective May 16, 1996, this operation was also discontinued. During
the years ended June 30, 1997 and 1996, the Company's continuing
operation in the United States had export sales totaling $384,342 and
$1,068,837, respectively.
Basis of Presentation
The financial statements include the accounts of the Company and its
subsidiaries after elimination of significant intercompany
transactions, and have been restated for discontinued operations (See
Note 2). The reporting of amounts in the financial statements and
related disclosures in conformity with generally accepted accounting
principles requires management to make assumptions and estimates.
Actual results could differ from the estimates.
Fair Value of Financial Instruments
The carrying amounts of cash, accounts receivable, accounts payable,
and accrued liabilities approximate fair value due to the short term
maturities of these assets and liabilities. The interest rates on
substantially all of the Company's long-term debt reflect current
market rates available to the Company. Accordingly, the carrying
amounts of the Company's short-term and long-term borrowing also
approximate fair value. The fair values of financial instruments
classified as other assets also approximate their carrying values.
Revenues Recognition and Concentration of Credit Risk
In general, the Company recognizes revenues on product sales when items
are shipped. Long-term contracts are not entered into by the Company.
The Company markets its products through a network of independent
manufacturer's representatives. The Company grants credit to its
customers, most of whom are in the manufacturing industry, principally
located throughout the United States, in addition to having customers
who are located in Canada, United Kingdom, Central and South America.
Periodic credit evaluations of customers are performed, and generally
the Company does not require advance payments or collateral. Credit
losses to customers have not been material.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all
highly liquid money market instruments with a maturity of three months
or less to be cash equivalents.
Warranties
The Company's products are generally under warranty against defects in
material and workmanship, the duration of which varies. Actual
experience has indicated that costs under warranty expense have not
been significant and are therefore charged against earnings in the year
incurred.
Inventories
Inventories are valued at the lower of cost, average cost (first-in,
first-out), which includes material, labor, and manufacturing overhead,
or market.
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation and
amortization are provided over their estimated lives by the straight-line
method. Expenditures for maintenance and repairs are charged
against earnings in the year incurred; major replacements, renewals and
betterments are capitalized and depreciated over their estimated useful
lives. The cost and accumulated depreciation of assets sold or retired
are removed from the respective accounts and any gain or loss is
reflected in earnings.
Intangible Assets
Due to an impairment in value, the remaining value of goodwill was
charged to expense during the year ended June 30, 1997. Previously
goodwill was being amortized on a straight-line basis over five and
fifteen year periods.
Income Taxes
The Company uses the liability method in accounting for income taxes.
Deferred tax assets and liabilities are recorded for temporary
differences between the tax basis of assets and liabilities and their
reported amounts in the financial statements. General business credits
are accounted for by the flow through method.
Research and Development
Research and development costs are expensed as incurred. Research and
development expense amounted to $182,931 in 1997, and $154,640 in 1996.
Foreign Currency Translation
The assets and liabilities of the foreign subsidiary are translated in
U.S. dollars at current exchange rates. Revenue and expense accounts
of these operations are translated at average using the end of month
exchange rates prevailing during the year. These translation
adjustments are accumulated in a separate component of stockholders'
equity.
Stock-Based Compensation
Stock options granted by the Company are accounted for in accordance
with Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees" ("APB 25"). In accordance with APB 25, no stock-based
compensation expense has been recognized in the accompanying
financial statements, since the exercise price of the Company's
employee stock options equals the market price of the underlying stock
on the date of option grant.
Earnings Per Common Share
Earnings per common share is computed based on the weighted average
number of shares common stock outstanding during the year. The
weighted average number of shares was 811,553 in 1997 and 1996.
Although the Company has issued potentially dilutive common stock
equivalents in the form of stock options, the dilutive effect of these
securities in the aggregate is less than three percent of earnings per
common share.
2. Discontinued Operations
Effective May 14, 1996, the Company adopted a formal plan to
discontinue its wood products operations and to sell off the related
assets of Bradford Classics Woodworking, Inc., d/b/a Tuna Valley Wood
Products, a wholly-owned subsidiary of the Company located in Bradford,
Pennsylvania. This business unit has been accounted for as a
discontinued operation, and an estimated loss on its disposal in the
amount of $328,585 was provided for and charged against income during
the year ended June 30, 1996. On September 14, 1996, the inventory and
fixed assets of Bradford Classics were sold for their approximate
carrying amounts as of June 30, 1996.
On May 23, 1997, the Company's Board of Directors approved the transfer
of its foreign subsidiary, Control Chief (UK) Limited, to one of its
former employees who is now operating the Company under the name Aden
Electronics Limited. The transfer was done in lieu of a closure and
liquidation of the subsidiary due to its lack of profitability. The
disposal of Control Chief (UK) Limited was effective as of June 30,
1997. This business unit has also been accounted for as a discontinued
operation in the accompanying financial statements and amounts for
prior periods have been restated.
A summary of certain operating results of the discontinued operations
for the years ended June 30, 1997 and 1996 are as follows:
1997 1996
---------- ----------
Net sales
Bradford Classics Woodworking, Inc. $ - $1,718,229
Control Chief (UK) Limited 1,034,215 867,430
---------- ----------
$1,034,215 $2,585,659
========== ==========
Bradford Classics Woodworking, Inc.
Loss from operations before
income tax benefit ($42,444) ($204,721)
Write-down of net assets of
discontinued operations - (328,585)
---------- ----------
(42,444) (533,306)
Income tax benefit 18,748 193,163
---------- ----------
Net loss (23,696) (340,143)
========== ==========
Control Chief (UK) Limited
Loss from operations before
income tax benefit (55,174) (89,229)
Write-down of net assets of
discontinued operations (278,011) -
Income tax benefit 269,683 -
---------- ----------
Net loss (63,502) (89,229)
---------- ----------
Total loss from discontinued
operations, net of taxes ($87,198) $429,372
========== ==========
The income tax benefit of $269,683 of Control Chief (UK) Limited
includes an additional reduction in federal and state income taxes that
occurs because the Company is entitled to report a tax loss in the
amount of $657,313 for the year ended June 30, 1997, which is in excess
of the financial reporting loss of $333,189 for the year.
The net assets of discontinued operations have been segregated in the
accompanying consolidated balance sheets at June 30, and consist of:
Bradford Classics Woodworking, Inc.
1997 1996
--------- ---------
Assets
Accounts receivable $ - $163,630
Inventories - 75,000
Prepaid items - 5,258
Plant and equipment, net - 216,000
--------- ---------
- 459,888
--------- ---------
Liabilities
Accounts payable and accrued items - 159,536
Long-term debt - 248,966
--------- ---------
- 408,502
--------- ---------
Net assets of discontinued operations $ - $51,386
========= =========
Control Chief (UK) Limited
1997 1996
--------- ---------
Assets
Accounts receivable $ - $173,065
Inventories - 220,334
Prepaid items - 16,091
Plant and equipment, net - 81,344
Goodwill, net - 31,981
--------- ---------
- 522,815
--------- ---------
Liabilities
Accounts payable and accrued items - 199,628
Long-term debt - 2,470
--------- ---------
- 202,098
--------- ---------
Net assets of discontinued operations $ - $320,717
========= =========
Total net assets of discontinued
operations $ - $372,103
========= =========
Included under the caption Other Assets in the accompanying balance
sheet at June 30, 1997, is a trade receivable in the amount of $71,304
that is due from Aden Electronics Limited. Aden Electronics Limited
was formerly the Company's foreign subsidiary, Control Chief (UK)
Limited, prior to its change in ownership effective June 30, 1997. The
Company anticipates payment of this trade receivable over the next
eighteen months beginning in September, 1997.
3. Property of Continuing Operations Held for Sale
Included under the caption Other Assets in the accompanying balance
sheet at June 30, 1997 is property of continuing operations held for
sale. This property with an original cost basis of $268,385, less
accumulated depreciation of $214,458, represents the Company's former
production facility located in Lewis Run, Pennsylvania. This facility
was shut down in May, 1997 upon the relocation of the operations to the
Company's facility located in nearby Bradford, Pennsylvania. In July,
1997, the vacant facility was sold for $150,000.
4. Short-Term Debt
At June 30, 1997 and 1996, short-term debt consisted of borrowing under
a line of credit with a bank, secured by substantially all of the
assets of the Company, excluding real estate, with a floating interest
rate at prime (8.50% at June 30, 1997 and 8.25% at June 30, 1996).
During the years ended June 30, 1997 and 1996, the line of credit
reached month-end maximums of $684,895 and $722,849 respectively.
Weighted average borrowing amounted to $375,660 in 1997 and $599,065 in
1996, with average interest rates of 7.65% in 1997 and 8.7% in 1996
being calculated by dividing the interest expense during the year for
such borrowing by the weighted average short-term borrowing. At June
30, 1997 and 1996, the Company had additional borrowing available under
the line of credit of $505,000 and $95,105, respectively. The line of
credit agreement is subject to an annual review in November, 1997.
5. Long-Term Debt
Long-term debt at June 30, 1997 and 1996 consists of the following:
1997 1996
-------- --------
8.47% term loan, amortized over four years,
due January, 2001,payable in monthly
installments of $16,050, including interest $591,884 $ -
Prime plus 5/8% term loan (repaid during year
end June 30, 1997) - 742,313
3% term loan (repaid during year end June 30,
1997) - 63,268
9.50% term loan, amortized over three years,
due April, 2000, payable in monthly
installments of $611, including interest 20,162 -
8% term loan, amortized over two years, due
March, 1997 - 31,504
Other liabilities - 3,692
-------- --------
612,046 840,777
Less debt reclassified to discontinued
operations - 251,436
-------- --------
612,046 589,341
Less current maturities 155,464 203,976
-------- --------
$456,582 $385,365
======== ========
The aggregate maturities of long-term debt during each of the four
years ending June 30, 1998 through 2001, are $155,464, $168,510,
$180,871 and $107,201. The above indebtedness is secured by
substantially all of the assets of the Company, excluding real estate.
6. Income Taxes
For the years ended June 30, 1997 and 1996, pretax earnings from
continuing operations were $668,251 and $344,251, respectively. The
provision for taxes on earnings from continuing operations consists of
the following:
1997 1996
-------- --------
Currently payable
Federal $209,213 $99,054
State 71,447 32,956
Deferred 1,784 7,155
-------- --------
$282,444 $139,165
======== ========
The difference between the provision for income taxes and the amounts
computed by applying the U.S. federal income tax rate in effect for the
years ended June 30, 1997 and 1996 consists of the following:
1997 1996
-------- --------
Statutory federal income tax $227,205 $117,279
State income taxes, net of federal tax
benefit 47,155 21,751
General business tax credit (9,719) -
Other items 17,803 135
-------- --------
$282,444 $139,165
======== ========
At June 30, 1997 and 1996 the net deferred tax asset (liability)
component consists of the following:
1997 1996
-------- --------
Allowance for doubtful accounts $24,255 $25,205
Compensated absences 31,482 34,248
Depreciation (23,910) (25,842)
-------- --------
$31,827 $33,611
======== ========
Balance Sheet Classification
Current asset $55,737 $59,453
Noncurrent liability (23,910) (25,842)
-------- --------
$31,827 $33,611
======== ========
7. Employee Savings Plan
The Company has an employee savings plan which permits participants to
make contributions by salary reduction pursuant to section 401(k) of
the Internal Revenue Code. The Company has adopted a discretionary
match that is limited to 6% of compensation and may, at its discretion,
make additional contributions to the plan. In connection with the
discretionary match, the Company's contribution to the plan was $16,058
in 1997 and $17,279 in 1996. There were no additional discretionary
contributions to the plan for 1997 and 1996.
8. Common Stock Options
The Company has several plans which provide for granting to officers,
directors, key employees and advisors options to purchase shares of the
Company's Common Stock. The option price is not less than the market
price for the Company's stock on the date of the grant. The options
become exercisable at varying dates and expire no later than ten years
from the date of grant. At June 30, 1997, options to purchase 34,300
shares of Common Stock were available for grant.
A summary of the stock option data for the years ended June 30, 1997
and 1996 is as follows:
Number -----------Option Price----------
of shares Weighted
under option Per share Average Aggregate
------------ --------- -------- ---------
Outstanding-
June 30, 1995 6,200 $2.16-3.19 $2.36 $14,628
Granted during
the year 3,000 2.93 2.93 8,790
Exercised during
the year - - - -
Cancellations (300) 2.93 2.93 (879)
------------ ---------- -------- ---------
Outstanding-
June 30, 1996 8,900 2.16-3.19 2.53 22,539
Granted during
the year 1,500 2.91 2.91 4,365
Exercised during
the year - - - -
Cancellations (300) 2.93 2.93 (879)
------------ ---------- -------- ---------
Outstanding-
June 30, 1997 10,100 $2.16-3.19 $2.58 $26,025
============ ========== ======== =========
Exercisable-
June 30, 1997 10,100 $2.16-3.19 $2.58 $26,025
============ ========== ======== =========
Exercisable-
June 30, 1996 8,900 $2.16-3.19 $2.53 $22,539
============ ========== ======== =========
In accordance with the terms of Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees", the Company records no
compensation expense for its stock option awards. During the year ended
June 30, 1997, the weighted average fair value of options granted
amounted to $0.69 per share. At June 30, 1997, the weighted average
remaining contractual life of outstanding options was 2.5 years.
The Company has elected to follow Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees", and related
interpretations in accounting for its stock options because the
alternative fair value accounting provided for under Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS No. 123") requires use of options valuation models
that were not developed for use in valuing employee stock options.
Pro forma information regarding net earnings and earnings per share,
required by SFAS No. 123, has been determined as if the Company had
accounted for its employee stock options under the fair value method of
SFAS No. 123. The fair value of options granted in 1997 was estimated
using a Black-Scholes option pricing model with the following
assumptions: risk free interest rate of 6.00%; volatility factor of the
expected market price of the Company's Common Stock of 0.20; a weighted
average expected option life of five years; and a 2.00% dividend yield.
For purposes of pro forma disclosures, the estimated fair value of
options is amortized to expense over the options' vesting period. For
the year ended June 30, 1997, the Company's reported and pro forma net
earnings and earnings per share are as follows:
As Reported Pro Forma
----------- ---------
Earnings from continuing operations $385,807 $385,186
Loss from discontinued operations (87,198) (87,198)
-------- --------
Net earnings $298,609 $297,988
======== ========
Earnings (loss) per common share:
Continuing operations $.48 $.48
Discontinued operations (.11) (.11)
----- -----
$.37 $.37
===== =====
9. Operating Leases
The Company has several operating lease agreements, primarily relating
to real estate and equipment. These leases are noncancelable and expire
at various dates through July, 2002. Leases that expire generally are
expected to be renewed or replaced by other leases. Future minimum
rental payments for the succeeding five years under these operating
leases are as follows:
Year Ended June 30,
-------------------
1998 $102,740
1999 101,238
2000 90,439
2001 80,000
2002 80,000
Total rent expense under operating leases amounted to $110,512 in 1997
and $104,636 in 1996.
10. Related Party Transactions
The Company leases its corporate headquarter facility located in
Bradford, Pennsylvania from a principal stockholder and Director. This
lease agreement expires July, 2002 and is renewable at the then fair
rental value for a five year period. In addition to the annual rental,
the Company is responsible for the real estate taxes, insurance and
other occupancy expenses applicable to the leased premises. Rent
expense under this operating lease was $80,00 for 1997 and 1996. The
minimum rental commitment under this agreement is included with the
Company's other operating leases as described in Note 9 of the
financial statements.
The Company also receives certain legal and insurance services from
enterprises which are related to the Company because of common
Directors or Officers of the Company. The total services provided by
these related parties was $194,585 in 1997 and $255,037 in 1996.
At June 30, 1997 and 1996, SPC Technologies, Inc., a related party
through a common Director, owed the Company $96,147 and $98,059
respectively, under a 10% interest bearing note. The note is secured
by the assets of SPC Technologies, Inc., as well as a second position
in the stock of the Company that is owned by the common Director. The
note is being repaid in monthly installments of $957 with a balloon
payment of $86,996 due August 1, 2001.
At June 30, 1997, the Company owed National City Bank of Pennsylvania,
a related party through a Director of the Company also being an Officer
of National City Bank, $245,000 under a line of credit borrowing
agreement that bears interest at the prime rate. In addition, at June
30, 1997, the Company owed National City Bank $591,884 under a term
loan that bears interest at 8.47%. A description of these loans is
described in Notes 4 and 5 of the financial statements. National City
Bank is also the Company's principal depository.
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Information required by Item 9 is incorporated by reference from the
Company's proxy statement to be issued in connection with its 1997
Annual Meeting of Shareholders and to be filed with the Commission not
later than 120 days after the end of fiscal year 1997.
ITEM 10. EXECUTIVE COMPENSATION
Information required by Item 10 is incorporated by reference from the
Company's proxy statement to be issued in connection with its 1997
Annual Meeting of Shareholders and to be filed with the Commission not
later than 120 days after the end of fiscal year 1997.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information required by Item 11 is incorporated by reference from the
Company's proxy statement to be issued in connection with its 1997
Annual Meeting of Shareholders and to be filed with the Commission not
later than 120 days after the end of fiscal year 1997.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required by Item 12 is incorporated by reference from the
Company's proxy statement to be issued in connection with its 1997
Annual Meeting of Shareholders and to be filed with the Commission not
later than 120 days after the end of fiscal year 1997.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The following Exhibits are filed herewith or incorporated by reference
herein. (For incorporation references, see Exhibit Index attached
hereto.)
Exhibit
3-1 Certificate of Incorporation of Digimetrics, Inc.
3-2 By-laws of Digimetrics, Inc.
3-3 Certificate of Amendment of the Certificate of Incorporation of
Digimetrics, Inc.
4-1 Specimen of Common Stock Certificate.
10-1 Digimetrics/Control Chief Amended and Restated Profit-Sharing
Plan Adoption Agreement and Plan Document.
10-2 Asset Purchase Agreement between Digimetrics, Inc. and SPC
Technologies, Inc.
10-3 Agreement for Purchase and Sale between C. Lawrence Shields and
Dorothy V. Shields for the real estate located at 200 Williams
Street, Bradford, PA.
10-4 Lease Agreement dated July 15, 1992 between C. Lawrence
Shields and Dorothy V. Shields for the real estate located at
200 Williams Street, Bradford, PA.
10-5 1994 Stock Option Plan.
10-6 SPC Technologies, Inc. Amended and Restated Promissory Note,
Security Agreement and Pledge Agreement.
21-1 Subsidiaries of the Registrant.
23-1 Consent of Independent Auditors.
27-1 Financial Data Schedule.
(b) Reports on Form 8-K.
None.
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Control Chief Holdings, Inc.
(Registrant)
Date: September 26, 1997 By:/S/Douglas S. Bell
Douglas S. Bell
Chairman of the Board,
Chief Executive Officer and
President
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant in the capacities
and on the dates indicated.
Signature Title Date
/s/ Douglas S. Bell Chief Executive Officer September 26, 1997
Douglas S. Bell and Director
/s/ Stephen J. Pachla Chief Financial Officer September 26, 1997
Stephen J. Pachla
/s/ Robert E. Crofford Director September 26, 1997
Robert E. Crofford
/s/ Christopher G. Hauser Director September 26, 1997
Christopher G. Hauser
/s/ Arvid R. Nelson Director September 26, 1997
Arvid R. Nelson
/s/ N. James Sekel Director September 26, 1997
N. James Sekel
/s/ C. Lawrence Shields Director September 26, 1997
C. Lawrence Shields
/s/ Patrick G. Shields Director September 26, 1997
Patrick G. Shields
<PAGE>
INDEX OF EXHIBITS
No. Exhibit Location
3-1 Certificate of Incorporation Incorporated by reference
of Digimetrics, Inc. from Digimetrics, Inc.'s
Registration Statement on
Form 10 File No. 0-15919
("Form 10")
3-2 By-laws of Digimetrics, Inc. Incorporated by reference
from Digimetrics, Inc.'s
Form 10
3-3 Certificate of Amendment of Incorporated by reference
the Certificate of Incorporation from Form 10-KSB for the
of Digimetrics, Inc. fiscal year ended June 30,
1993 as Exhibit 3-3
4-1 Specimen of Common Stock Incorporated by reference
Certificate from Digimetrics, Inc.'s
Form 10
10-1 Digimetrics/Control Chief Incorporated by reference
Amended and Restated Profit- from Form 10-KSB for the
Sharing Plan Adoption Agreement fiscal year ended June 30,
and Plan Document 1994 as Exhibit 10-2
10-2 Asset Purchase Agreement Incorporated by reference
between Digimetrics, Inc. from Form 8-K filed on
and SPC Technologies, Inc. February 8, 1991 as Exhibit
2-1
10-3 Agreement for Purchase and Incorporated by reference
Sale between C. Lawrence from Form 8-K filed on
Shields and Dorothy V. Shields July 27, 1992 as Exhibit 2-1
for the real estate at 200
Williams Street, Bradford, PA
10-4 Lease Agreement dated July 15, Incorporated by reference
1992 between C. Lawrence Shields from Form 8-K filed on
and Dorothy V. Shields for the July 27, 1992 as Exhibit 2-2
real estate at 200 Williams
Street, Bradford, PA
10-5 1994 Stock Option Plan Incorporated by reference
from 1994 Proxy, Exhibit A
10-6 SPC Technologies, Inc. Amended Incorporated by reference
and Restated Promissory Note, from Form 10-KSB for the
Security Agreement and Pledge fiscal year ended June 30,
Agreement 1994 as Exhibit 10-12
21-1 Subsidiaries of the Registrant Filed herewith
23-1 Consent of Independent Auditors Filed herewith
27-1 Financial Data Schedule Filed herewith
<PAGE>
SUBSIDIARIES OF THE REGISTRANT Exhibit 21-1
(1)Control Chief Corporation
100% - Owned by Control Chief Holdings, Inc.
Incorporated in the State of Pennsylvania
Operating Company
(2)Control Chief(UK) Limited
100% - Owned by Control Chief Holdings, Inc.
Incorporated as a limited trading company in the United Kingdom
Discontinued Operation, effective June 30, 1997.
(3)Bradford Classics Woodworking, Inc.
100% - Owned by Control Chief Holdings, Inc.
Incorporated in the State of Pennsylvania
Discontinued Operation, effective May 16, 1996
<PAGE>
CONSENT OF INDEPENDENT AUDITORS Exhibit 23-1
We hereby consent to the incorporation by reference in the
Registration Statement on Form S-8 dated April 25, 1995 pertaining to
the 1994 Stock Option Plan of Control Chief Holdings, Inc. of our
report dated August 27, 1997 appearing in item 7 on Form 10-KSB.
DIEFENBACH DELIO KEARNEY & DEDIONISIO
CERTIFIED PUBLIC ACCOUNTANTS
Erie, Pennsylvania
September 23, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from SEC
Form 10-KSB and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<CASH> 132,007
<SECURITIES> 0
<RECEIVABLES> 1,454,219
<ALLOWANCES> 59,750
<INVENTORY> 1,374,701
<CURRENT-ASSETS> 3,066,794
<PP&E> 1,689,702
<DEPRECIATION> 1,175,486
<TOTAL-ASSETS> 3,813,913
<CURRENT-LIABILITIES> 1,222,705
<BONDS> 0
0
0
<COMMON> 405,776
<OTHER-SE> 1,704,940
<TOTAL-LIABILITY-AND-EQUITY> 3,813,913
<SALES> 7,206,996
<TOTAL-REVENUES> 7,235,584
<CGS> 4,003,392
<TOTAL-COSTS> 4,003,392
<OTHER-EXPENSES> 2,476,055
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 87,886
<INCOME-PRETAX> 668,251
<INCOME-TAX> 282,444
<INCOME-CONTINUING> 385,807
<DISCONTINUED> (87,198)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 298,609
<EPS-PRIMARY> .37
<EPS-DILUTED> .37
</TABLE>
