<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
for the quarterly period ended March 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
for the transition period from ___________________ to __________________
Commission file number 1-10638
CAMBREX CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 22-2476135
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
ONE MEADOWLANDS PLAZA, EAST RUTHERFORD, NEW JERSEY 07073
(Address of principal executive offices)
(201) 804-3000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding twelve 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 ___
APPLICABLE ONLY TO CORPORATE ISSUERS
As of May 1, 1994, there were 5,226,497 shares outstanding of the
registrant's Common Stock, $.10 par value.
Page 1 of 14
<PAGE> 2
CAMBREX CORPORATION AND SUBSIDIARIES
Form 10-Q
For The Three Months Ended March 31, 1994
Table of Contents
Page No.
--------
Part I Financial information
Condensed consolidated balance sheets as of
March 31, 1994 and December 31, 1993 3
Condensed consolidated income statements
for the three months ended March 31, 1994 and 1993 4
Condensed consolidated statements of
cash flows for the three months ended
March 31, 1994 and 1993 5
Notes to condensed consolidated financial
statements 6 - 8
Management's Discussion and Analysis of
Financial Condition and Results of Operations 9 - 11
Part II Other information
Item 4. Matters Submitted to a Vote of Securities
Holders 12
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
Exhibit 11 - Computation of Earnings Per Share 14
<PAGE> 3
Part 1 - FINANCIAL INFORMATION
CAMBREX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1994 1993
--------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . $ 637 $ 161
Trade and other receivables, less allowances
for doubtful accounts of $291 and $355
at respective dates . . . . . . . . . . . . . . . . . . 32,457 28,015
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . 35,924 33,730
Deferred tax asset . . . . . . . . . . . . . . . . . . . . . 1,615 1,315
Other . . . . . . . . . . . . . . . . . . . . . . . . . . 3,673 3,557
------- -------
Total current assets . . . . . . . . . . . . . . . . . . 74,306 66,778
Property, plant and equipment, net . . . . . . . . . . . . . . . 96,662 89,784
Intangible assets, net . . . . . . . . . . . . . . . . . . . . . 8,689 7,621
Other noncurrent assets . . . . . . . . . . . . . . . . . . . . . 507 2,662
------- -------
Total assets . . . . . . . . . . . . . . . . . . . . . . $180,164 $166,845
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities . . . . . . . . . . $ 21,490 $ 20,872
Income taxes payable . . . . . . . . . . . . . . . . . . . . 3,699 3,409
Current portion of long-term debt . . . . . . . . . . . . . . 4,008 4,000
------- -------
Total current liabilities . . . . . . . . . . . . . . . 29,197 28,281
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . 45,770 36,261
Deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . 6,287 5,986
Other noncurrent liabilities . . . . . . . . . . . . . . . . . . 8,748 8,748
------- -------
Total liabilities . . . . . . . . . . . . . . . . . . . 90,002 79,276
------- -------
Stockholders' equity:
Common stock . . . . . . . . . . . . . . . . . . . . . . . . 602 601
Additional paid-in capital . . . . . . . . . . . . . . . . . 72,849 72,627
Retained earnings . . . . . . . . . . . . . . . . . . . . . . 27,717 25,859
Additional minimum pension liability . . . . . . . . . . . . . (692) (1,030)
Treasury stock, at cost; 803,532 and 819,049
shares at respective dates . . . . . . . . . . . . . . . . (10,314) (10,488)
------- -------
Total stockholders' equity . . . . . . . . . . . . . . . 90,162 87,569
------- -------
Total liabilities and stockholders' equity . . . . . . . $180,164 $166,845
======= =======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
- 3 -
<PAGE> 4
CAMBREX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED INCOME STATEMENTS
(unaudited)
(in thousands, except per-share amounts)
<TABLE>
<CAPTION>
Three months ended
March 31,
------------------------
1994 1993
---- ----
<S> <C> <C>
Net revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 51,047 $ 47,648
Operating expenses:
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . 39,644 35,729
Selling, general and administrative . . . . . . . . . . . . . . . . . . 6,276 6,990
Research and development . . . . . . . . . . . . . . . . . . . . . . . 1,213 1,359
------- -------
Total operating expenses . . . . . . . . . . . . . . . . . . . . . . 47,133 44,078
------- -------
Operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,914 3,570
Other (income) expenses:
Interest expense - net . . . . . . . . . . . . . . . . . . . . . . . . 363 677
Other - net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172 (69)
------- -------
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . 3,379 2,962
Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . 1,251 1,168
------- -------
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,128 $ 1,794
======= =======
Weighted average shares outstanding:
Primary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,638 5,169
Fully diluted . . . . . . . . . . . . . . . . . . . . . . . . . . 5,638 5,486
Net income per share:
Primary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.38 $ 0.35
======= =======
Fully diluted . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.38 $ 0.34
======= =======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
- 4 -
<PAGE> 5
CAMBREX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
<TABLE>
<CAPTION>
Three months ended
March 31,
-------------------------
1994 1993
------- -------
<S> <C> <C>
Cash flows from operations . . . . . . . . . . . . . . . . . . . . . . . . $ 5,261 $ 4,834
Changes in assets and liabilities:
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,203) (417)
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (780) (2,925)
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . (14) (157)
Accounts payable and accrued liabilities . . . . . . . . . . . . . . . (1,649) (1,002)
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . 188 829
Other noncurrent assets and liabilities . . . . . . . . . . . . . . . . 2,155 1,043
------- -------
Net cash provided from operations . . . . . . . . . . . . . . . . 1,958 2,205
------- -------
Cash flows from investing activities:
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . ( 3,861) (2,912)
Acquisition of businesses . . . . . . . . . . . . . . . . . . . . . . . ( 7,255) (5,800)
------- -------
Net cash (used in) investing activities . . . . . . . . . . . . . (11,116) (8,712)
------- ------
Cash flows from financing activities:
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (260) ( 236)
Long-term debt activity (including current portion): . . . . . . . . .
Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,797 14,000
Repayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . (13,300) (7,738)
Proceeds from the issuance of common stock . . . . . . . . . . . . . . 45 184
Proceeds from the sale of treasury stock . . . . . . . . . . . . . . . 352 336
------- ------
Net cash provided from financing activities . . . . . . . . . . . 9,634 6,546
------- -------
Net increase in cash . . . . . . . . . . . . . . . . . . . . . . . . . . . 476 39
Cash at beginning of period . . . . . . . . . . . . . . . . . . . . . . . . 161 564
------- -------
Cash at end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 637 $ 603
======= =======
Supplemental disclosure:
Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 502 $ 609
Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,033 $ 1,726
</TABLE>
See accompanying notes to condensed consolidated financial statements.
- 5 -
<PAGE> 6
CAMBREX CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(in thousands)
(1) Basis of Presentation
Unless otherwise indicated by the context, "Cambrex" or the "Company"
means Cambrex Corporation and subsidiaries.
The accompanying unaudited Condensed Consolidated Financial Statements
have been prepared from the records of the Company. In the opinion of
management, the financial statements include all adjustments, consisting of
only normal recurring accruals, necessary for a fair presentation of financial
position and results of operations in conformity with generally accepted
accounting principles. These interim financial statements should be read in
conjunction with the financial statements for the year ended December 31, 1993.
The results of operations for the three months ended March 31, 1994
are not necessarily indicative of the results to be expected for the full year.
(2) Inventories
Inventories are stated at the lower of cost, determined on a first-in,
first-out basis, or market and include material, labor, and overhead.
Inventories at March 31, 1994 and December 31, 1993 consist of the following:
<TABLE>
<CAPTION>
March 31, December 31,
1994 1993
--------- ------------
<S> <C> <C>
Finished goods . . . . . . . . . . . . . $17,822 $17,988
Raw materials . . . . . . . . . . . . . 16,382 13,878
Fuel oil and supplies . . . . . . . . . 1,720 1,864
------ ------
$35,924 $33,730
====== ======
</TABLE>
(3) Earnings Per Common Share
The calculation of primary earnings per common share is based on the
weighted average number of common shares and common share equivalents
outstanding during the applicable period. For 1993, fully diluted earnings per
share assumes conversion of the outstanding convertible subordinated notes that
were converted in September 1993, and the elimination of related interest
expense net of tax.
- 6 -
<PAGE> 7
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
4) Acquisition
On January 31, 1994, the Company completed the acquisition of the
assets of Hexcel Corporation's fine chemicals business located in
Middlesbrough, England, for approximately $7,300 and the assumption of
certain current liabilities in the amount of $2,700. The facility is
now known as Seal Sands Chemicals Ltd.
5) Long-term Debt
Long-term debt at March 31, 1994 and December 31, 1993 consists of the
following:
<TABLE>
<CAPTION>
March 31, December 31,
1994 1993
---- ----
<S> <C> <C>
Bank credit facilities (a) . . . . . . . . . . . . . . . $ 45,608 $ 36,111
Capital lease . . . . . . . . . . . . . . . . . . . . . 20 -
Industrial development revenue bond . . . . . . . . . . 4,150 4,150
------ ------
Subtotal . . . . . . . . . . . . . . . . . . . 49,778 40,261
Less: current portion . . . . . . . . . . . . . . . . . 4,008 4,000
------ ------
Total . . . . . . . . . . . . . . . . . . . . $ 45,770 $ 36,261
====== ======
</TABLE>
(a) On January 31, 1994, the Company amended the Revolving Credit and
Term Loan Agreement (Credit Agreement) with NBD Bank, N.A., National
Westminster NJ, and United Jersey Bank. The new Credit Agreement provides for
additional revolving credit facility flexibility as follows: It is designed to
allow for automatic extensions of termination date. The current termination
date is January 31, 1997. It permits the Company to specify a portion of the
borrowing to be designated in various acceptable currencies. Under the Credit
Agreement, the interest rate options available approximate London Interbank
Offering Rates (LIBOR) for the appropriate currency plus no more than 1 1/2%,
or the U.S. Prime Rate. On March 31, 1994, the rate was LIBOR+1%. A
commitment fee of between 250/1000 of 1% and 125/1000 of 1% is paid on the
unused portion of the revolving credit facilities. Additionally, the
restrictive covenant for net worth was updated. All other covenants remain
unchanged. The Company met all bank covenants for the first quarter of 1994.
6) Postemployment Benefits
Statement of Financial Accounting Standard No. 112 "Employers'
Accounting for Postemployment Benefits" (SFAS 112) requires the recognition on
an accrual basis of all types of postemployment benefits provided to former or
inactive employees subsequent to employment but before retirement. The Company
currently provides limited benefits in this regard.
The Company will adopt SFAS 112 effective January 1, 1994, and is in
the process of performing calculations to determine the impact of SFAS 112
implementation upon the Company's operating results.
- 7 -
<PAGE> 8
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(7) Contingencies
There have been no significant changes in the existing contingencies
related to environmental issues. Refer to Form 10-K for the fiscal year ended
December 31, 1993.
- 8 -
<PAGE> 9
CAMBREX CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net revenues for the first quarter 1994 increased 7% to $51,047,000 from
$47,648,000 reported in the first quarter 1993. The $3,399,000 of increased
revenue included sales from the Company's Seal Sands Chemicals Ltd. facility
located in England, acquired on January 31, 1994, and sales from the March 12,
1993 acquisition of Viscosity Oil's fiber optic gel business. The first
quarter saw increases in specialty and fine chemicals, performance chemicals
and agricultural intermediates and additives.
<TABLE>
<CAPTION>
Three months ended
March 31,
-------------------
(in thousands)
1994 1993
---- ----
<S> <C> <C>
Revenues:
Health & pharmaceuticals . . . . . . . . . . . . . . . . . . $ 14,238 $ 14,815
Agricultural intermediates & additives . . . . . . . . . . . 13,914 12,558
Specialty & fine chemicals . . . . . . . . . . . . . . . . . 13,280 11,354
Performance chemicals . . . . . . . . . . . . . . . . . . . . 7,341 5,310
Coatings . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,014 4,867
------ ------
Total gross revenues . . . . . . . . . . . . . . . . . . . $ 52,787 $ 48,904
====== ======
Total net revenues . . . . . . . . . . . . . . . . . . . . $ 51,047 $ 47,648
====== ======
</TABLE>
Health and Pharmaceuticals' revenues decreased $577,000 (4%) from 1993. This
decrease was primarily due to reduced shipments of Vitamin B3 and its chemical
precursors to customers in Europe. This sales decrease was caused by a
combination of price competition and product quality issues. Partially
offsetting this decrease were sales of a product used as an intermediate for
cough syrups and a product used as a reducing agent in pharmaceutical
production; sales of these products increased 10% due to shipments to new
customers in India and in Europe. Also, a return to a normal sales level of
our generic drug for ulcerative colitis resulted in a 40% increase in sales of
this product.
Agricultural Intermediates and Additives' revenues increased by $1,356,000
(11%) over 1993. Key increases occurred in shipments of a niacinamide
intermediate to India and the Asia-Pacific area and in the shipments of feed
additives for the poultry industry. New capacity for feed additives was
completed in the first quarter 1994.
Specialty and Fine Chemicals' revenues increased $1,926,000 (17%) over 1993.
The acquisition of Seal Sands Chemicals Ltd. on January 31, 1994 accounted for
a total of $2,440,000 in sales of specialty chemicals of which $2,200,000 are
new to the Cambrex list of products. Reduced sales in this category include a
product exported to a Japanese company for use as a photographic chemical
intermediate, a product used in fashioning stone-washed jeans, and products
used as catalysts in chemical manufacturing.
- 9 -
<PAGE> 10
Performance Chemicals' revenues increased $2,031,000 (38%) from prior year.
This increase was due to the acquisition of a complimentary fiber optic gel
business in March 1993. The increased sales in the first quarter from this
acquisition was $1,750,000. All the other telecommunication, encapsulants and
adhesive products in this category either maintained or had increased sales
levels.
Coatings' revenues decreased $853,000 (18%) from 1993. This decline was
primarily due to a tolling agreement for biocides products that ended in May
1993.
Gross profit in the first quarter 1994 of $11,403,000 (22.3%) compared to
$11,919,000 (25%) in the first quarter 1993. The decline in gross profit was
due to manufacturing variances caused by lower production volumes, overtime and
higher utility costs related to weather problems experienced in most of our
plants during January and February. These problems have not been encountered
since February and all of our plants are running at normal production levels.
Selling, general and administrative expenses as a percentage of net revenues
was 14.7% in the first quarter 1994 versus 17.5% in 1993. The first quarter
1994 expense of $7,489,000 was $860,000 below 1993. The major item was
recovery of $650,000 in legal costs as part of a settlement with insurance
companies relating to coverage of environmental remediation costs. Reduced
spending in selling and marketing, research and development and administration,
including staff reductions, added to the reduction.
Interest expense for the first quarter decreased $314,000 from 1993. This
decrease is due to recording the capitalization of interest costs of $175,000
in accordance with Statement of Financial Accounting Standard No. 34, and the
elimination of higher interest debt including a capital lease and convertible
9% notes.
Other expenses for the first quarter 1994 was $172,000 compared with $69,000 in
other income for the first quarter 1993. The key change was a settlement for
$250,000 included in 1993, related to the termination of a contract by a
customer.
Net income for the first quarter 1994 was $2,128,000 compared to $1,794,000 for
the first quarter 1993. The earnings per share (fully diluted) in the first
quarter 1994 were 38 cents, compared with 34 cents in 1993 (12% increase).
Statement of Financial Accounting Standard No. 112 "Employers' Accounting for
Postemployment Benefits" (SFAS 112) requires the recognition on an accrual basis
of all types of postemployment benefits provided to former or inactive
employees subsequent to employment but before retirement. The Company will
adopt SFAS 112 effective January 1, 1994, and is in the process of performing
calculations to determine the impact of SFAS 112 implementation upon the
Company's operating results.
- 10 -
<PAGE> 11
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity and capital resources, in the opinion of management,
adequately enable the Company to meet its needs for cash. Cash flow from
operations decreased by less than $250,000, when compared to the first quarter
of 1993, the most significant fluctuation reflecting increases in accounts
receivable.
The highest expenditures in the quarter were from investing activities.
Capital expenditures of $3,861,000 for the first quarter 1994 were $949,000
higher than the prior year. The key capital expenditures were for a new
manufacturing facility to meet a customer's requirements. Additional funds
were used to acquire the assets of Hexcel Corporation's fine chemicals business
located in Middlesbrough, England, now known as Seal Sands Chemicals Ltd. The
assets were purchased for approximately $7,300,000 and the assumption of
certain current liabilities in the amount of $2,700,000.
On January 31, 1994, the Company amended the Revolving Credit and Term Loan
Agreement (Credit Agreement) with NBD Bank, N.A., National Westminster NJ, and
United Jersey Bank. The new Credit Agreement provides for additional revolving
credit facility flexibility as follows: It is designed to allow for automatic
extensions of termination date. The current termination date is January 31,
1997. It permits the Company to specify a portion of the borrowing to be
designated in various acceptable currencies. Under the Credit Agreement, the
interest rate options available approximate London Interbank Offering Rates
(LIBOR) for the appropriate currency plus no more than 1 1/2%, or the U.S.
Prime Rate. A commitment fee of between 250/1000 of 1% and 125/1000 of 1% is
paid on the unused portion of the revolving credit facilities. Additionally,
the restrictive covenant for net worth was updated. All other covenants remain
unchanged.
The quarterly cash dividend declared on January 27, 1994 was paid on February
25, 1994. On April 28, 1994, the Board of Directors declared a quarterly cash
dividend on its common stock of 5 cents per share for all shareholders of
record as of May 13, 1994. The dividend is payable on May 27, 1994.
- 11 -
<PAGE> 12
PART II - OTHER INFORMATION
CAMBREX CORPORATION AND SUBSIDIARIES
Item 4. Matters Submitted to a Vote of Securities Holders.
At the annual meeting of stockholders held on April 28, 1994, Cyril C.
Baldwin, Jr., George J. W. Goodman, Kathryn Rudie Harrigan, and Robert
LeBuhn were elected to hold office as directors of the Company until
the 1997 annual meeting of stockholders.
The stockholders ratified the approval of the 1993 Senior Executive
Stock Option Plan and awards thereunder. Of the 5,208,566 shares
represented at the meeting, 3,460,543 votes were cast in favor of the
ratification, 616,071 votes were cast against, and 1,629 abstained.
The stockholders ratified the approval of the 1994 Stock Option Plan
which includes a program of awards for non-employee directors. Of the
5,208,566 shares represented at the meeting, 3,444,043 votes were cast
in favor of the ratification, 630,771 votes were cast against, and
3,529 abstained.
In addition, the stockholders ratified the appointment of Coopers &
Lybrand as the Company's independent accountants for 1994. Of the
5,208,566 shares represented at the meeting, 4,235,333 votes were cast
in favor of the ratification of the appointment of Coopers & Lybrand as
auditors, 604 votes were cast against, and 900 abstained.
Item 6. Exhibits and Reports on Form 8-K
a) The exhibit filed as part of this report is listed below.
Exhibit No. Description
----------- ------------
11 Statement of computation of per share earnings.
- 12 -
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CAMBREX CORPORATION
By /s/ Peter Tracey
-----------------------------------------
Peter Tracey
Vice President
(On behalf of the Registrant and
as the Registrant's Principal
Financial Officer)
Date: May 11, 1994
- 13 -
<PAGE> 14
EXHIBIT INDEX
--------------
Exhibit Page
No. Description No.
- - -------- --------------------------------- ------
11 Statement of computation of per
share earnings.
<PAGE> 1
EXHIBIT 11
CAMBREX CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(in thousands)
<TABLE>
<CAPTION>
Three months ended
March 31,
---------------------
1994 1993
---- ----
<S> <C> <C>
Income (loss) applicable to common shares:
Primary earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,128 $ 1,794
Add:
Interest reduction from assumed conversion of convertible
subordinated notes (net of taxes):
Notes issued June 11, 1985 . . . . . . . . . . . . . . . . . . . . - 34
Notes issued October 3, 1985 . . . . . . . . . . . . . . . . . . . - 20
------ ------
Fully diluted earnings . . . . . . . . . . . . . . . . . . . . . . . . $ 2,128 $ 1,848
====== ======
Weighted average number of common shares and common share
equivalents outstanding during the period:
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,208 4,833
Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . 430 336
----- -----
Shares outstanding - primary . . . . . . . . . . . . . . . . . . . . . 5,638 5,169
Notes issued June 11, 1985 . . . . . . . . . . . . . . . . . . . . - 189
Notes issued October 3, 1985 . . . . . . . . . . . . . . . . . . . - 113
Additional stock options . . . . . . . . . . . . . . . . . . . . . - 15
----- -----
Shares outstanding - fully diluted . . . . . . . . . . . . . . . . . . 5,638 5,486
===== =====
</TABLE>
- 14 -
