SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
FORM 10-QSB
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _______ TO _______
COMMISSION FILE NO. 0-16293
LANXIDE CORPORATION
(EXACT NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
DELAWARE 51-0270253
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
1300 MARROWS ROAD, NEWARK, DE 19714
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(302) 456-6200
ISSUERS TELEPHONE NUMBER, INCLUDING AREA CODE
____________________
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.
[ X ] YES [ ] NO
THE NUMBER OF SHARES OF COMMON STOCK OUTSTANDING AS OF MAY 13, 1996,
WAS: 1,194,100.
TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT (CHECK ONE):
YES NO X
LANXIDE CORPORATION
TABLE OF CONTENTS
Page
Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheet at
March 31, 1996 (Unaudited) . . . . . . . . . . . . . 2
Consolidated Statement of Operations
for the Three Months and Six Months Ended
March 31, 1996 and 1995 (Unaudited) . . . . . . . . 3
Consolidated Statement of Cash Flows
for the Six Months Ended March 31, 1996
and 1995 (Unaudited) . . . . . . . . . . . . . . . . 4
Notes to Consolidated Financial
Statements (Unaudited) . . . . . . . . . . . . . . . 5
Item 2. Management s Discussion and Analysis
of Results of Operations and Financial
Condition . . . . . . . . . . . . . . . . . . . . 10
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of
Security Holders . . . . . . . . . . . . . . . . 19
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . 19
LANXIDE CORPORATION
CONSOLIDATED BALANCE SHEET
(Dollars in thousands, except per share data)
(Unaudited)
March 31, 1996
Assets
Cash and cash equivalents, including amounts
restricted for use by majority-owned affiliates $7,100
Accounts receivable - trade 1,430
Other receivable 1,250
Inventories 1,515
Deposits 400
---------------
Total current assets 11,695
Property and equipment, net 7,755
Investment in affiliates 1,561
Other assets 611
---------------
$21,622
===============
Liabilities and Shareholders' Deficit
Current portion of long-term debt $16
Accounts payable and accrued expenses 1,964
Deferred revenue 1,802
Payable to affiliate 716
---------------
Total Current liabilities 4,498
Long-term debt 15,970
Deferred credit 361
Deferred compensation 1,148
---------------
21,977
---------------
Minority interest in consolidated affiliates 8,603
Redeemable Series E preferred stock
(aggregate liquidation value, $261);
26,100 shares issued and outstanding 207
---------------
Shareholders' deficit
Preferred Stock 15,000,000 shares authorized
Series A preferred stock (aggregate
liquidation value, $88,933) $.01 par
value;
1,111,661 shares issued and outstanding 11
Common stock $.01 par value, 25,000,000
shares authorized: 1,194,100 issued and
outstanding 12
Additional paid-in capital 187,894
Accumulated deficit (198,473)
Cumulative translation adjustment 1,391
---------------
Shareholders' deficit (9,165)
---------------
$21,622
===============
See notes to consolidated financial statements.
LANXIDE CORPORATION CONSOLIDATED STATEMENT OF OPERATIONS
(Amounts in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31, Six Months Ended March 31,
---------------------------- --------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue:
Sales $784 $2,725 $1,746 $4,649
Licensing revenue 3,080 2,000 5,980 2,000
Research and development contract revenue 1,621 1,875 3,111 4,049
---------------- ------------ --------------- -------------
5,485 6,600 10,837 10,698
---------------- ------------ --------------- -------------
Operating costs:
Cost of sales 764 2,641 1,873 4,398
Research and development contract costs 1,148 1,906 2,207 3,904
Research and development 1,433 2,295 2,620 4,640
Selling, general and administration 1,309 4,076 2,749 7,035
---------------- ------------ --------------- -------------
4,654 10,918 9,449 19,977
---------------- ------------ --------------- -------------
Income (loss) from operations before minority allocation 831 (4,318) 1,388 (9,279)
Minority allocation of operating (income) loss (346) 779 90 1,255
---------------- ------------ --------------- -------------
Income (loss) from operations 485 (3,539) 1,478 (8,024)
Equity in net loss of unconsolidated affiliates (384) (1,353) (633) (1,799)
Interest expense (491) (528) (992) (915)
Other income 632 788 907 453
---------------- ------------ --------------- -------------
Income (loss) before income taxes 242 (4,632) 760 (10,285)
Income tax expense (40) (40)
---------------- ------------ --------------- -------------
Net income (loss) 202 (4,632) 720 (10,285)
Dividends on mandatorily redeemable preferred stock (9) (31)
---------------- ------------ --------------- -------------
Net income (loss) applicable to common shares $193 $(4,632) $689 $(10,285)
================ ============ =============== =============
Historical Income (Loss) Per Share
Primary $0.10 $(0.45) $0.10 $(1.00)
Fully diluted $0.10 $(0.45) $0.08 $(1.00)
Proforma Income Per Share
Primary $0.36
Fully Diluted $0.35
Historical Average Common Shares Outstanding
Primary 1,947 10,374 6,977 10,325
Fully diluted 1,989 10,374 8,656 10,325
Proforma Average Common Shares Outstanding
Primary 1,890
Fully Diluted 1,968
See notes to consolidated financial statements.
</TABLE>
<TABLE>
<CAPTION>
LANXIDE CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
Six Months Ended March 31,
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $720 $(10,285)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization 937 1,373
Minority allocation of operating income (loss) and equity in net loss of
unconsolidated affiliates 543 116
Changes in assets and liabilities, net of effects of acquisitions and changes in
consolidated affiliates:
(Increase) decrease in receivables (238) 645
Increase in inventories (591) (1,879)
Decrease (increase) in other assets 773 (39)
(Decrease) increase in accounts payable and accrued expenses (1,262) 901
Decrease in deferred revenue and deferred credit (4,918) (1,120)
Increase in other liabilities 51 117
-------------------- ------------------
Net cash used in operating activities (3,985) (10,171)
-------------------- ------------------
Cash provided by (used in) investing activities:
Capital additions (518) (2,276)
Proceeds from sale of property and equipment 6,853
Investment in unconsolidated affiliate (936)
-------------------- -----------------
Net cash provided by (used in) investing activities 6,335 (3,212)
-------------------- -----------------
Cash flows from financing activities:
Proceeds from common stock, net 3,212
Proceeds from preferred stock, net 331
Retirement of preferred stock (70)
Preferred stock dividends paid (1)
Capital contributions to consolidated affiliates by commercial venture partners 141 4,569
Proceeds from issuance of debt obligations 257 7,500
Repayment of debt obligations (4,328) (1,108)
-------------------- ------------------
Net cash provided by financing activities (458) 10,961
-------------------- ------------------
Effect of exchange rate translations (4) (253)
-------------------- ------------------
Net increase (decrease) 1,888 (2,675)
Cash and cash equivalents, beginning of year 5,212 11,453
-------------------- ------------------
Cash and cash equivalents, end of year $7,100 $8,778
==================== ==================
Cash paid for interest $891 $915
See notes to consolidated financial statements.
</TABLE>
LANXIDE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per-share data)
(Unaudited)
1. CONSOLIDATED FINANCIAL STATEMENTS
The consolidated balance sheet at March 31, 1996, the consoli-
dated statement of operations for the three and six months ended
March 31, 1996 and 1995, and the consolidated statement of cash
flows for the six months ended March 31, 1996 and 1995 have been
prepared by Lanxide Corporation (the Company) and have not been
audited by the Company s Independent Auditors. In the opinion
of management, all adjustments (which include only normal
recurring adjustments and the adjustments described in Note 5)
necessary to present fairly the financial position, results of
operations and cash flows at March 31, 1996 and for all periods
presented have been made.
These consolidated financial statements should be read in
conjunction with the financial statements and notes thereto
included in the Company s Annual Report on Form 10-KSB for the
fiscal year ended September 30, 1995, filed with the Securities
and Exchange Commission. The results of operations for the
period ended March 31, 1996 are not necessarily indicative of
operating results for the full year.
2. CASH AND CASH EQUIVALENTS
All highly liquid investments with a maturity of three months or
less when purchased are considered to be cash equivalents.
Included in the cash balances at March 31, 1996 are $3,448 held
by subsidiary companies which amounts are not directly available
to the Company.
3. INVENTORIES
Inventories are valued at the lower of cost (primarily average
cost) or market and consist of the following:
Raw materials $ 707
Work in progress 626
Finished goods 182
$1,515
4. PER SHARE DATA
Historical net income (loss) per share is computed using the
weighted average number of common shares and potentially
dilutive securities outstanding during the period. On November
14, 1995, the Company completed its Recapitalization Plan (see
Note 5) and the number of common shares outstanding was signifi-
cantly reduced. Accordingly, the computation of historical
weighted average common shares outstanding reflects this recapi-
talization.
Proforma net income per share is computed using the weighted
average number of common shares and potentially dilutive securi-
ties outstanding from the completion of the Recapitalization
Plan (as if such recapitalization occurred at October 1, 1995).
During the three and six months ended March 31, 1995, all
potential dilutive securities have an antidilutive effect on the
loss per share and, therefore, have not been used in determining
the total weighted average number of common shares outstanding.
For the six months ended March 31, 1996:
Primary Av- Fully Diluted
erage Common Average
Shares Out- Common Shares
standing Outstanding
Historical
Prior to Recapitalization (25% of
Weighted Average)
Common Shares Outstanding 10,584,444 10,584,444
Assuming the conversion of
convertible preferred stock 11,651,014 18,135,452
__________ __________
22,235,458 28,719,896
========== ==========
After Recapitalization (75% of
Weighted Average)
Common Shares Outstanding 1,183,042 1,183,042
Assuming exercise of options
and warrants 495,346 495,346
Assuming purchase of shares with
proceeds of options and warrants (201,427) (123,969)
Assuming the conversion of convert-
ible preferred stock 413,478 413,478
--------- ---------
1,890,439 1,967,897
========= =========
Weighted average common shares 6,976,694 8,655,897
========= =========
Primary Av- Fully Diluted
erage Common Average
Shares Out- Common Shares
standing Outstanding
Proforma
Common Shares Outstanding 1,183,042 1,183,042
Assuming exercise of options
and warrants 495,346 495,346
Assuming purchase of shares with pro-
ceeds of options and warrants (201,427) (123,969)
Assuming the conversion of convert-
ible preferred stock 413,478 413,478
--------- ---------
Weighted average common shares 1,890,439 1,967,897
========= =========
For the three months ended March 31, 1996:
Historical Primary Av- Fully Diluted
erage Common Average
Shares Out- Common Shares
standing Outstanding
Common Shares Outstanding 1,183,754 1,183,754
Assuming exercise of options
and warrants 527,464 527,464
Assuming purchase of shares with pro-
ceeds of options and warrants (177,453) (135,751)
Assuming the conversion of convert-
ible preferred stock 413,478 413,478
--------- ---------
Weighted average common shares 1,947,243 1,988,945
========= =========
5. SIGNIFICANT EVENTS
Series D and E Securities Purchase Agreement:
On October 3, 1995, the Company entered into a securities
purchase letter agreement (the Securities Purchase Letter
Agreement), pursuant to which the Company sold to Bentley Blum,
a Director and principal stockholder of the Company, 7,000
shares of mandatorily redeemable Series D Preferred Stock, at an
aggregate price of $70, and 26,100 shares of mandatorily redeem-
able Series E Preferred Stock, at an aggregate price of $261.
The Series D Preferred Stock paid a dividend at the rate of 7%
per annum. Upon consummation of the Recapitalization Plan, each
share of Series D Preferred Stock was automatically converted
into an amount of cash equal to $10 per share (or an aggregate
of $70), plus any accrued but unpaid dividends and the shares of
Series D Preferred Stock were canceled and retired. Such
amounts were paid on November 16, 1995.
The Series E Preferred Stock will pay a dividend at the rate of
7% per annum. Upon consummation of the Recapitalization Plan,
each share of Series E Preferred Stock remained outstanding and
continued to represent one share of Series E Preferred Stock of
the surviving corporation. Each outstanding share of Series E
Preferred Stock is mandatorily redeemable by the Company at $10
per share, plus accrued but unpaid dividends out of assets
legally available therefor on October 3, 2000. Pursuant to the
Securities Purchase Letter Agreement, the Company issued Mr.
Blum a warrant to purchase 58,763 shares of Common Stock, at an
exercise price of $4.50 per share which is exercisable until
January 14, 1999.
Completion of Lanxide Recapitalization Plan:
On November 14, 1995, the Company completed its Recapitalization
Plan (the Plan). Pursuant to the Plan, stockholders subscribed
for 850,117 shares of the Company s common stock at $4.50 per
share, providing aggregate gross proceeds of $3,800. In addi-
tion, 331,679 shares of common stock were issued to Bentley Blum
upon conversion of shares of the Series C Preferred Stock. In
connection with the Plan, shares of Old Common Stock, Old Series
A Preferred Stock and Old Series B Preferred Stock were convert-
ed into a total of 1,111,661 Units. Each unit consists of one
share of the Company s New Series A Preferred Stock and one
warrant to purchase one-twentieth of a share of the Company s
New Common Stock. Each share of Series A Preferred Stock is
convertible into approximately 0.37 share of common stock and
has an annual cumulative dividend of $3.20 per share after
January 1, 2001, subject to the extent of fifty percent of
earnings of the Company and certain other limitations. The
Series A Preferred Stock is redeemable at any time at the option
of the Company at $80 per share plus accrued but unpaid divi-
dends.
Sale of Lanxide ThermoComposites, Inc.:
On December 13, 1995, the Company sold 51% of its stock owner-
ship in a wholly-owned subsidiary, Lanxide ThermoComposites,
Inc. (Lanxide Thermo), to A.P. Green Industries, Inc. (A.P.
Green). In consideration for its interest in Lanxide Thermo,
A.P. Green agreed to fund the venture s ongoing cash require-
ments. Concurrent with A.P. Green s acquisition, Lanxide Thermo
acquired Chiam Technologies, Inc. in exchange for a 20% common
stock interest in Lanxide Thermo. Lanxide Thermo was formed in
1994 to commercialize high performance refractory products for
the continuous casting segment in the steel industry.
Settlement of a Stockholder Demand for Appraisal Rights
In connection with the Recapitalization Plan, certain holders
(the Holders) of Old Common Stock sought appraisal rights
pursuant to Section 262 of the Delaware General Corporation Law.
On March 5, 1996, the Company entered into a letter agreement
with the Holders pursuant to which the Holders released all
claims against the Company relating to the Recapitalization Plan
in exchange for the following:
A. the right to convert each share of Old Common Stock
owned by each Holder into one-twentieth of a Unit,
comprised of one share of Series A Preferred Stock and
one Unit Warrant, on the terms described in the Recap-
italization Plan;
B. the right to purchase the number of shares of Common
Stock equal to one-twentieth of the number of shares
of Old Common Stock held by each Holder at an exercise
price of $4.50 per share; and
C. a Warrant to purchase a number of shares of Common
Stock equal to 1.479 times the number of shares of
Common Stock which such Holder purchased pursuant to
the above offer of Common Stock at an exercise price
of $18.00 per share for a four-year period.
The securities issued in connection with the foregoing settle-
ment will contain restrictions on the Holders' ability to sell
such securities.
The Company recorded a charge of $74 in March 1996 relating to
this settlement.
Sale and Leaseback of Marrows Road Facility:
On March 28, 1996, the Company sold the Marrows Road facility
for $8.6 million to QRS 12-16, Inc. (the Buyer), an entity
established by Corporate Property Associates (CPA:12), a real
estate investment trust sponsored by W.P. Carey, a purchaser and
lessor of corporate real estate. Concurrent with the sale, the
Company entered into a noncancelable twenty-year operating lease
with the Buyer with renewal options for another 20 years. The
lease terms require prepaid quarterly payments of $244 with
inflation adjustments every five years. The lease requires the
Company to comply with certain financial covenants and limits
the Company's ability, among other things, (i) to assume addi-
tional indebtedness, (ii) to become a guarantor of contingent
obligations and (iii) to make Restricted Payments (as defined
therein) including the declaration of dividends on the Common
Stock. The lease also grants the Company a right of first
refusal with respect to the purchase of the Marrows Road facili-
ty. In connection with the sale and leaseback, the Company
entered into sublease agreements with each of three commercial
venture companies that occupy the facility. The $361 gain on
the sale of the building is being deferred and will be recog-
nized over the noncancelable lease term.
As part of this transaction, the Company granted the Buyer a
warrant to purchase 15,500 shares of Common Stock at an exercise
price of $14.00 per share for a five year period.
The sale and leaseback transaction generated $3.3 million of
working capital after the prepayment of a $4.1 million mortgage
on the Marrows Road facility and the payment of associated fees
and closing costs. The Company also paid a non-cash brokerage
fee for the arrangement of the transaction in the amount of
10,700 shares of Common Stock. Under the terms of the lease,
the Company pledged a $400 security deposit with the buyer.
Sale of Celanx KK:
On March 28, 1996, the Company sold its remaining fifty percent
ownership interest in Celanx KK to Nihon Cement Co. Ltd. (Nihon
Cement) effectively giving Nihon Cement sole ownership of the
license to manufacture, market and sell precision instruments in
Japan. As consideration for the sale of its interest in Celanx
KK, Lanxide K.K., a subsidiary of the Company, will receive
ongoing royalties from precision instrument sales generated by
Nihon Cement. Concurrent with this sale, Lanxide K.K. reac-
quired its wear products license from Celanx KK. As a result of
this transaction, Lanxide K.K. recognized the remaining $2,826
deferred gain (net of its investment in Celanx KK) associated
with the 1994 sale of its fifty percent ownership in Celanx KK
to Nihon Cement, of which, $2,080 is being recorded as license
revenue.
6. UNAUDITED PROFORMA RESULTS OF OPERATIONS:
The following summarizes the unaudited proforma results of
operations of the Company for the three and six months ended
March 31, 1995, to give effect to the sale of Lanxide Precision,
Inc., the sale of substantially all of the assets and business
of Alanx Products, Inc. (Alanx) (with the exception of dividends
on the Alanx preferred stock which will be continuing), the sale
of the controlling interest in Lanxide Thermo, the sale of the
controlling interest in Lanxide Armor Company, L.P. and the
purchase of a controlling interest in Lanxide Electronic Compo-
nents, Inc. as if all had occurred on October 1, 1994.
Three Six Months
Months Ended Ended
March 31, March 31,
1995 1995
Revenue:
Sales $ 645 $ 1,271
Licensing revenue 2,000 2,000
Research and development
contract revenue 1,378 2,987
----- -----
4,023 6,258
----- -----
Operating costs:
Cost of sales 731 1,312
Research and development
contract costs 1,478 2,931
Research and development 1,738 3,577
Selling, general and
administrative 2,791 4,674
----- ------
6,738 12,494
----- ------
Loss from operations before
minority allocation (2,715) (6,236)
Minority allocation of operating
loss 681 918
----- -----
Loss from operations (2,034) (5,318)
Equity in net loss of unconsoli-
dated affiliates (997) (1,139)
Interest expense (520) (901)
Other income 773 460
------ ------
Net loss $ (2,778) $ (6,898)
====== ======
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERA-
TIONS AND FINANCIAL CONDITION
The following is a discussion of the consolidated financial condition
and results of operations of Lanxide Corporation and its majority-
owned affiliates (the Company) for the three and six months ended
March 31, 1996 and 1995, as well as certain factors that may affect
the Company's prospective financial condition. This section should
be read in conjunction with the Consolidated Financial Statements and
the Notes thereto included elsewhere in this 10-QSB. All dollar
amounts in this section, unless otherwise noted, are in thousands of
dollars, except per share data.
OVERVIEW
Historically, the Company's revenues have been derived primarily from
research contracts and development agreements with E.I. DuPont de
Nemours & Company (DuPont) and the U.S. Government and, more recent-
ly, from technology licensing revenues and sales to outside custom-
ers. In addition, a substantial portion of the Company's research
and development (R&D) and other operating costs have been funded by
Alcan Aluminium Limited and its affiliates (Alcan), DuPont and
Kanematsu Corporation (Kanematsu) through the Company's consolidated
affiliates. The Company operates principally in the United States
and to some degree through its subsidiary in Japan.
During fiscal year 1995, the Company embarked on a program to license
its technology in certain specific market sectors by product and
geography in order to generate immediate cash for the Company. Since
implementing this strategy, the Company consummated license agree-
ments with A.P. Green Industries, Inc. (A.P. Green), Waupaca Foundry,
Inc. (Waupaca), Sturm Ruger & Company, Inc. (Sturm Ruger) and Brembo
S.p.A. (Brembo) which generated initial license fees, as well as
future license fees and royalties which are subject to certain
termination clauses. Additionally, in March 1996, the Company
converted Celanx KK, its joint venture with Nihon Cement Co. Ltd.
(Nihon Cement), into a licensing and royalty arrangement.
In fiscal year 1996, the Company anticipates that its revenues will
continue to be derived primarily from research and development
contracts, technology licenses and sales.
RESULTS OF OPERATIONS
Revenues from research and development contracts and commercial
development agreements (other than the Company's agreements with its
consolidated affiliates) are reported under "Research and development
contract revenue" in the Company's Consolidated Statement of Opera-
tions. Expenses related to these contracts and agreements are
reported under operating costs as "Research and development contract
costs."
Research and development costs represent costs incurred for projects
sponsored by the Company and/or its commercial venture partners
through the Company's consolidated affiliates. This includes re-
search costs to develop and provide patent protection for the
Company's technology. Operating losses funded by commercial venture
partners through the Company's consolidated affiliates are allocated
to such partners as "Minority allocation of operating (income) loss."
Significant Customers; Commercial Relationships With the U.S.
Government
The Company's significant revenue sources consist primarily of (i)
technology licensing revenues; (ii) U.S. Government contract funding;
(iii) revenues from a brake component agreement between the Company
and Nihon Cement; (iv) product development revenues received from
unconsolidated commercial ventures; and (v) revenues of consolidated
subsidiaries of the Company.
The U.S. Government is a significant customer of the Company.
Contract revenues received from the Government amounted to $1,201 and
$1,506 for the six months ended March 31, 1996 and 1995, respective-
ly. Currently, the Company has five government contracts totaling
$4.1 million dollars of which $1.9 million has been billed through
March 31, 1996. The Company anticipates revenues of $2.3 million in
1996 associated with these government contracts. These contracts may
be terminated at the convenience of the government upon written
notice to the Company. Termination of these contracts would adverse-
ly affect the Company.
Commercial Relationships With DuPont
Since 1987, the Company and DuPont have formed three commercial joint
ventures -- Lanxide Electronic Components, Inc. (LEC), Lanxide Armor
Company, L.P. (LAC) and Du Pont Lanxide Composites, L.P. (DLC).
The current ownership interests of the commercial joint ventures are
as follows:
LANXIDE OWNERSHIP DUPONT OWNERSHIP
LEC 80% 20%
LAC 27% 73%
DLC 30% 70%
DuPont's and the Company's current funding responsibilities for each
of LAC and LEC are based upon their respective ownership interests.
Also, DuPont is required to provide 100% of the funding requirements
of DLC through 1999, after which funding will be based on ownership
interest. If either DuPont or the Company fails to meet these
funding obligations, its respective ownership interest in any such
unfunded venture will be diluted if such funding obligations are met
by the other owner. The Company anticipates that it will provide all
of LEC s funding needs in 1996. The Company does not currently
intend to meet any further funding requirements of LAC and, accord-
ingly, its interest therein will be diluted if further requirements
exist and they are met by DuPont.
LAC, LEC and DLC sublease space from the Company in the Marrows Road
manufacturing facility. Also, the Company provides accounting,
purchasing, payroll and human resource services to these ventures.
Amounts received by the Company from unconsolidated affiliates for
administrative and facilities costs and services are reflected as a
reduction to selling, general and administrative expense, which
totaled $1,262 and $561 for the six months ended March 31, 1996 and
1995, respectively. On March 28, 1996, the Company sold its Marrows
Road manufacturing facility to QRS 12-16, Inc. as part of a sale and
leaseback transaction. See "-- Liquidity and Capital Resources."
These three commercial ventures also contract R&D services from the
Company. Revenue received by the Company from unconsolidated affili-
ates are recorded as contract revenue, which totaled $612 and $1,994
for the six months ended March 31, 1996 and 1995, respectively.
Percentage Relationship to Net Revenues
The following table sets forth the percentage relationship to net
revenues of certain items in the Company's Consolidated Statements of
Operations for the periods presented:
Six months Three months
ended ended
---------- ------------
March 31, March 31,
--------- ---------
1996 1995 1996 1995
---- ---- ---- ----
Revenues 100% 100% 100% 100%
Operating costs:
Cost of sales (17) (41) (14) (40)
Research and development
contract costs (20) (36) (21) (29)
Research and development (24) (43) (26) (35)
Selling, general and adminis-
trative (25) (66) (24) (62)
Minority allocation of operating
(income) loss 1 12 (6) 12
Equity in net loss of unconsolidat-
ed affiliates (6) (17) (7) (20)
Interest expense (9) (9) (9) (8)
Other income 8 4 12 12
Net income (loss) 7 (96) 4 (70)
Six months ended March 31, 1996 compared to six months ended March 31, 1995
The Company reported a net income of $720 on revenues of $10,837
during the six months ended March 31, 1996, as compared to a net loss
of $10,285 on revenues of $10,698 during the six months ended March
31, 1995. The Company's revenue was generated primarily from licens-
ing revenues, commercial sales and research and development contracts
as discussed in greater detail below.
The Company s net income of $720 for the six months ended March 31,
1996 as compared to a $10,285 loss for the prior period was primarily
a result of three factors:
(1) 1996 license fees of $5,980 versus $2,000 in the first six
months of 1995.
(2) a reduction in losses attributable to its commercial ven-
tures because of the following events:
(A) During the second quarter of fiscal year 1995, the
Company discontinued the Lanxide Sports International,
Inc. and Lanxide Surgical Devices Company commercial
ventures.
(B) In May 1995, the Company sold all of its stock owner-
ship in Lanxide Precision, Inc. (LPI) to LNX Acquisi-
tion Company.
(C) In June 1995, the Company sold 85% of the business of
Alanx Products, Inc. (Alanx) to Alanx Wear Solutions.
(D) In June 1995, the Company sold a 30% interest in LAC
to DuPont which reduced its ownership percentage to 27%.
(E) In December 1995, the Company sold its majority owner-
ship in Lanxide ThermoComposites, Inc. (Lanxide
Thermo) to A.P. Green.
These events were partially offset by the Company s June
1995 purchase of an additional 30% interest in LEC from
DuPont raising the Company s ownership percentage and
corresponding funding obligation to 80%.
(3) a 20% reduction in the Company s work force during the
second quarter of fiscal year 1995.
The Company believes these factors will continue to have a
favorable impact on future operations.
Net Sales and Cost of Sales
Consolidated sales decreased 62% to $1,746 from $4,649, and cost
of sales decreased 57% to $1,873 from $4,398 compared to the prior
period. These decreases are primarily attributable to the fact that
the sales of LPI and Alanx were not consolidated during the first six
months of fiscal year 1996. Partially offsetting this decrease is
the consolidation of LEC sales during fiscal 1996.
Licensing Revenue
Licensing revenue of $5,980 and $2,000 during the six months
ended March 31, 1996 and 1995, respectively, relates to the following
license agreements:
Six months ended March 31,
1996 1995
---- ----
Waupaca $2,000 $2,000
A.P. Green 500
Brembo 400
Sturm Ruger 1,000
Nihon Cement 2,080
------ ------
$5,980 $2,000
====== ======
The Waupaca license is in the area of automotive brake system
components and certain agricultural machine wear components. Subject
to its right to unilaterally terminate this license, Waupaca is
required to make additional license payments totaling $11,000 over
the next three years: $2,500 in March 1997; $4,000 in March 1998;
and $4,500 in March 1999. In December 1995, Waupaca firmly committed
to pay the $2,000 due in January 1996 which amount was subsequently
received. In addition, the license agreement includes a royalty to
the Company amounting to 1% of sales of licensed products following
the first $150 million in cumulative sales.
Pursuant to the A.P. Green license agreement, A.P. Green has the
exclusive and perpetual right to use LANXIDE technology to make, use
and sell industrial refractories, other than those employed in the
ferrous metal industry, worldwide except for Japan. Subject to its
unilateral right to terminate this license, A.P. Green is required to
make the following additional payments totaling $1,300 over the next
two years: $250 in July 1996; $250 in April 1997; $300 in July 1997;
and $500 in January 1998. A.P. Green will also pay to the Company
royalties of 3% on the first $20 million in annual sales of products
manufactured and sold under the license and 4% on annual sales
exceeding $20 million.
The Brembo license agreement is in the area of certain brake
system components for motor vehicles. Subject to its unilateral
right to terminate the license, Brembo is required to make the
following additional payments totaling $1,600 over two years: $400
in June 1996; $400 in December 1996; $400 in June 1997; and $400 in
December 1997. In addition, the license agreement includes a royalty
to the Company amounting to 4% of sales of licensed products. A
minimum royalty payment of $250 is applicable for years three through
six of the license agreement.
Pursuant to the Sturm Ruger license agreement, which grants
Sturm Ruger the right to produce and sell certain sporting goods
components outside of Japan, the Company received an initial license
fee of $1,000 in April 1995. Since the initial license agreement
with Sturm Ruger granted the licensee a one-year option to terminate
the license and be repaid the $1 million by the Company in the form
of either cash or common stock at the Company s option, the Company
deferred recognition of the license fee revenue. In January 1996,
the Company and Sturm Ruger signed a new license agreement which
grants the licensee some additional product rights to certain sport-
ing goods components outside of Japan. In consideration for the
expanded license, Sturm Ruger waived its one-year option to terminate
the license. Thus, the original deferred amount of $1,000 was
recorded as revenue during the second quarter of fiscal year 1996.
In addition, the license agreement includes a royalty to the Company
amounting to 3% of sales of licensed products following the first
$33.3 million in cumulative sales.
On March 28, 1996, the Company sold its remaining fifty percent
ownership interest in Celanx KK to Nihon Cement effectively giving
Nihon Cement sole ownership of the license to manufacture, market and
sell precision instruments in Japan. As consideration for the sale
of its interest in Celanx KK, Lanxide K.K., a subsidiary of the
Company, will receive ongoing royalties from precision instrument
sales generated by Nihon Cement. Concurrent with this sale, Lanxide
K.K. reacquired its wear products license from Celanx KK. As a
result of this transaction, Lanxide K.K. recognized the remaining
$2,826 deferred gain (net of its investment in Celanx KK) associated
with the 1994 sale of its fifty percent ownership in Celanx KK to
Nihon Cement, of which, $2,080 is being recorded as license revenue.
The Company expects to continue to license its technology in
certain specific market sectors by product and geography in order to
generate immediate cash for the Company. Although the Company will,
subject to the availability of capital, continue to commercialize
products using the LANXIDE technology through its wholly or partial-
ly owned ventures, the Company plans to seek advantageous licensing
arrangements with third parties which have the ability to commercial-
ize products in those areas where there are significant barriers to
entry (i.e., substantial up-front costs or the need for a substantial
industry presence or where LANXIDE technology provides only a
portion of the necessary solution).
Contract Revenue and Contract Costs
Research and development contract revenue decreased $938, from
$4,049 to $3,111, and contract costs decreased $1,697, from $3,904 to
$2,207, compared to the prior period. Beginning in July 1995,
product development, including both revenue and costs, performed by
the Company for LEC is eliminated in consolidation due to the Compa-
ny s ownership in LEC increasing to 80%. Likewise, contract revenue
work performed by LAC for other companies is no longer included in
the Company s consolidated financial statements due to its ownership
in LAC decreasing from 57% to 27%. These ownership changes occurred
at the end of June 1995.
Partially offsetting these decreases was the work performed in
support of a brake component development agreement with Nihon Cement,
including the amortization of equipment purchased under the contract.
Under this agreement, Nihon Cement and the Company have funded $3,000
and $1,000, respectively, of development costs, of which $218 remains
in deferred revenue at March 31, 1996.
Research and Development Costs
R&D spending decreased by $2,020, from $4,640 to $2,620, for the
periods presented. This decrease is primarily attributable to the
Company s emphasis on reducing its expenses associated with the
parent company and its subsidiaries. Such expense reductions include
the previously mentioned 20% work force reduction in March 1995, the
discontinuance of two of its commercial ventures, the sale of one of
its subsidiaries and the sale of a majority interest in three of its
other subsidiaries.
Selling, General and Administrative Expenses
Selling, general and administrative expenses decreased $4,286,
from $7,035 to $2,749, over the prior period, principally for the
same reasons cited above for the R&D cost reduction.
Included in selling, general and administrative expenses are
reimbursements of $1,262 and $561 for 1996 and 1995, respectively,
received from unconsolidated affiliates for administrative and
facilities costs and services.
Minority Allocation of Operating (Income) Loss
Minority allocation of operating loss decreased 93% from $1,255
to $90. The decrease is primarily attributable to the income gener-
ated by Lanxide K.K., a 65% owned subsidiary of the Company. This
income is a direct result of the March 28, 1996 transaction in which
Lanxide K.K. sold its remaining 50% ownership interest in Celanx KK
to Nihon Cement, and the recognition of a deferred gain as discussed
previously. See "-- Licensing Revenues."
Equity in Net Loss of Unconsolidated Affiliates
The equity in net loss of unconsolidated affiliates decreased
$1,166 from $1,799 to $633. This decrease was mainly due to consoli-
dation of LEC and deconsolidation of LAC, both of which were effec-
tive as of June 30, 1995. Also, the 1995 period included significant
costs associated with the start up of the Celanx KK commercialization
venture.
Interest Expense
Interest expense increased 8%, from $915 to $992, compared to
the prior period. This increase was principally attributable to the
draw-down of the remaining $6,000 of the $10,000 Kanematsu line of
credit during the first half of fiscal year 1995.
Other Income
Other income increased $454 from $453 to $907, compared to the
prior period. The change was primarily attributable to a gain
associated with the sale of a majority interest in Lanxide Thermo.
Additionally, the Company recorded a $200 charge in 1995 associated
with the accrued dividends on preferred stock of a subsidiary company.
Income Tax Expense
In 1996, the $40 in income tax expense is a result of taxes
withheld on foreign income relating to the Brembo license agreement.
Three months ended March 31, 1996 compared to three months ended
March 31, 1995
The following table presents the results of operations for the
three months ended March 31, 1996 and 1995. Additionally, the table
presents the differences between the quarters in terms of dollars and
percentages. The analysis of the six month changes presented on the
previous pages also serves to explain the quarterly changes presented
below.
<TABLE>
<CAPTION>
For the three months ended March 31,
____________________________________
1996 1995 Difference % Difference
---- ---- ----------- ------------
<S> <C> <C> <C> <C>
Sales $ 784 $2,725 $ (1,941) (71)%
Licensing revenue 3,080 2,000 1,080 54
Research and development contract
revenue 1,621 1,875 (254) (14)
Cost of sale 764 2,641 (1,877) (71)
Research and development contract
costs 1,148 1,906 (758) (40)
Research and development 1,433 2,295 (862) (38)
Selling, general and administrative 1,309 4,076 (2,767) (68)
Minority allocation of operating
(income) loss (346) 779 (1,125) (144)
Equity in net loss of unconsolidated
affiliate (384) (1,353) 969 72
Interest expense (491) (528) 37 7
Other income 632 788 (156) (20)
Income tax expense $ 40 $ 0 $ 40 --
LIQUIDITY AND CAPITAL RESOURCES
Since its inception, the Company has financed its working
capital and capital expenditure requirements with the proceeds from
the sale of stock, borrowings, product sales, research and develop-
ment contracts and, more recently, technology licensing revenues.
The Company had working capital of $7.2 million at March 31, 1996, as
compared to $0.5 million at September 30, 1995. The consolidated
cash balance at March 31, 1996 was $7.1 million (including $3.4
million held by subsidiary companies which amounts are not available
to the Company).
At March 31, 1996, the Company had no significant commitment to
purchase capital equipment. However, the Company has a $165 obliga-
tion on previously purchased capital equipment that contains deferred
payment terms of approximately $33 per quarter.
On November 14, 1995, the Company completed its Recapitalization
Plan. Pursuant to the Recapitalization Plan, stockholders subscribed
for 850,117 shares of the Company s Common Stock at $4.50 per share,
providing aggregate gross proceeds of $3,800.
On March 28, 1996, the Company consummated the sale and lease-
back of the Marrows Road facility. This transaction generated $3.3
million after prepayment of a $4.1 million mortgage on the Marrows
Road facility and payment of associated fees and closing costs.
In March 1995, the Company implemented a licensing strategy and
has since signed four technology licensing agreements which have
provided funds for continuing the operations of the Company. These
license agreements begin to form a financial base to cover operating
expenses in 1996 and beyond. License agreements which are in place
but subject to cancellation by the licensor provide the following
funds in addition to various royalty provisions (Dollars in Mil-
lions):
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
1. Waupaca 2.00 2.00 2.50 4.00 4.50
2. A. P. Green - 0.75 0.55 0.50 -
3. Brembo - 0.80 0.80 0.40 -
4. Sturm Ruger 1.00 - - - -
The Company s cash needs through 1996 calendar year end are
expected to be met through: (i) projected licensing revenues
including those revenues described above; (ii) cash flow from
operations; (iii) proceeds from the sale and leaseback of the
Marrows Road facility; (iv) $600 of proceeds from the exercise of a
part of the Blum Warrants by Bentley J. Blum, which expire on June
30, 1996; and (v) $1,250 of payments on non-recourse notes which
were issued to the Company in connection with the sale of the Compa-
ny s interest in LPI and which mature on June 4, 1996. No assurances
can be given that all of the proceeds described above will be real-
ized by the Company. Moreover, Mr. Blum is under no obligation to
exercise any of the Blum Warrants and could let them expire without
the payment of any proceeds to the Company and, in the event payments
are not made with respect to the non-recourse notes, the Company will
be entitled to foreclose on the stock of LPI but will have no other
right to receive proceeds therefrom. Further cash needs are antici-
pated to be met by a combination of the existing license agreements,
government contracts and product sales, together with proceeds from
future license agreements.
The Company has been engaged in discussions with a number of
industrial entities in the United States, Europe and Asia regarding
the potential licensing of the Company s technology to such entities
for up-front fees and ongoing royalty interests. However, no assur-
ance can be given that any of these discussions will actually lead to
the licensing of the Company s technology to any of these entities or
that any licensing fees actually received will be sufficient to
maintain the Company s operations.
Except for LEC and Lanxide Performance Materials, Inc., a
wholly-owned subsidiary, the Company anticipates that there will be
no future funding requirements placed on it by its commercial ven-
tures. It is anticipated that any cash requirements of LAC will be
met by DuPont, which would lead to minor dilution in the Company s
percentage ownership of LAC. DuPont is also responsible for all
funding of DLC. The Company sold its majority ownership in Lanxide
Thermo in December 1995. The new majority owner, A.P. Green, has
assumed responsibility for its ongoing funding needs.
After giving effect to the sale and leaseback of the Marrows
Road facility mentioned above and the prepayment of a $4,100 mortgage
on the facility held by PNC Bank, Delaware, principal payments on
outstanding indebtedness for the remaining two quarters of 1996 is
$13 and for the years 1997 through 2001 are $273, $2,000, $12,100,
$1,600 and $0, respectively. No assurances can be given that the
Company will be able to make these payments when they become due.
The Company has a $6 million revolving credit and term note with
PNC Bank, Delaware (PNC) guaranteed by DuPont, under which all
available amounts have been drawn. The note bears interest at the
prime rate and is payable in installments beginning in March 1997 and
maturing in March 2000. The Company has a $10 million secured
revolving credit and time note with Kanematsu under which all avail-
able amounts have been drawn. This note bears interest at 2% above
LIBOR and matures in full in December 1998.
The Company currently has no availability under its lines of
credit. Moreover, the terms of the agreements relating to (i) the
loan from Kanematsu and (ii) the lease with QRS 12-16, Inc. as
Landlord for the Marrows Road facility currently prohibit the Company
from incurring additional indebtedness.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On February 28, 1996, the Company held its Annual Meeting of
Stockholders. The following four proposals were approved by stock-
holders entitled to vote thereon:
1. The election of Bentley J. Blum and Stephen A. Weiss
as two Class III Directors of the Company, each to
serve for a term of three years. Shares of Common
Stock were voted as follows:
Abstained
In Favor Against From Voting
Bentley J. Blum 861,262 0 1,763
Stephen A. Weiss 860,162 0 2,863
2. The approval of the Company's 1995 Nonemployee
Directors' Stock Option Plan. 811,431 shares of
Common Stock were voted in favor of this proposal;
10,031 shares of Common Stock were voted against this
proposal and 41,563 shares of Common Stock abstained
from voting on this proposal.
3. An amendment to the Company's Restated Certificate of
Incorporation to provide for the declassification of
the Board of Directors to commence with the 1997
Annual Meeting of Stockholders. 811,956 shares of
Common Stock were voted in favor of this proposal;
4,563 shares of Common Stock were voted against this
proposal and 41,713 shares of Common Stock abstained
from voting on this proposal.
4. The ratification of the appointment of Price Water-
house LLP as the Company's independent accountants for
fiscal year 1996. 861,162 shares of Common Stock were
voted in favor of this proposal; 1,150 shares of
Common Stock were voted against this proposal and 713
shares of Common Stock abstained from voting on this
proposal.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) *4.12 Warrant Agreement, dated as of March 28, 1996,
between QRS 12-16, Inc. and the Company. Incorpo-
rated by reference to Exhibit 4.12 of the
Company's Post-Effective Amendment No. 1 to the
Registration Statement on Form S-4 under cover of
Form SB-1 (No. 33-94186).
*4.13 Form of Warrant Agreement among the Company and
the individuals listed on Schedule A thereto.
Incorporated by reference to Exhibit 4.13 of the
Company's Post-Effective Amendment No. 1 to the
Registration Statement on Form S-4 under cover of
Form SB-1 (No. 33-94186).
*4.14 Warrant Agreement, dated as of December 22, 1995,
among the Company and the officers listed on
Schedule A thereto. Incorporated by reference to
Exhibit 4.14 of the Company's Post-Effective
Amendment No. 1 to the Registration Statement on
Form S-4 under cover of Form SB-1 (No. 33-94186).
*10.23.1 License Agreement between the Company, Lanxide
Technology Company L.P. and Sturm, Ruger and Com-
pany, Inc., dated January 5, 1996. Incorporated
by reference to Exhibit 10.23.1 of the Company's
Post-Effective Amendment No. 1 to the Registration
Statement on Form S-4 under cover of Form SB-1
(No. 33-94186).
*10.49 Special Warranty Deed, dated as of March 28, 1996,
from the Company to QRS 12-16, Inc. with respect
to the Marrows Road Facility. Incorporated by
reference to Exhibit 10.49 of the Company's Post-
Effective Amendment No. 1 to the Registration
Statement on Form S-4 under cover of Form SB-1
(No. 33-94186).
*10.50 Lease Agreement, dated as of March 28, 1996, be-
tween QRS 12-16, Inc., as landlord, and the Compa-
ny, as tenant. Incorporated by reference to Ex-
hibit 10.50 of the Company's Post-Effective Amend-
ment No. 1 to the Registration Statement on Form
S-4 under cover of Form SB-1 (No. 33-94186).
*10.51 Sublease Agreement, dated as of March 28, 1996,
between the Company, as landlord, and Lanxide
Armor Company, L.P., a Delaware limited partner-
ship ("LAC"), as subtenant. Incorporated by ref-
erence to Exhibit 10.51 of the Company's Post-
Effective Amendment No. 1 to the Registration
Statement on Form S-4 under cover of Form SB-1
(No. 33-94186).
*10.52 Sublease Agreement, dated as of March 28, 1996,
between the Company, as landlord, and Du Pont
Lanxide Composites, L.P., a Delaware limited part-
nership ("DLC"), as subtenant. Incorporated by
reference to Exhibit 10.52 of the Company's Post-
Effective Amendment No. 1 to the Registration
Statement on Form S-4 under cover of Form SB-1
(No. 33-94186).
*10.53 Sublease Agreement, dated as of March 28, 1996,
between the Company, as landlord, and Lanxide
Electronic Components, Inc., a Delaware corpora-
tion ("LEC"), as subtenant. Incorporated by ref-
erence to Exhibit 10.53 of the Company's Post-
Effective Amendment No. 1 to the Registration
Statement on Form S-4 under cover of Form SB-1
(No. 33-94186).
*10.54 Assignment of Subleases and Rents, dated as of
March 28, 1996, between Lanxide and QRS 12-16,
Inc. Incorporated by reference to Exhibit 10.54
of the Company's Post-Effective Amendment No. 1 to
the Registration Statement on Form S-4 under cover
of Form SB-1 (No. 33-94186).
*10.55 Promissory Note, dated as of March 28, 1996, from
QRS 12-16, Inc. to the Company. Incorporated by
reference to Exhibit 10.55 of the Company's Post-
Effective Amendment No. 1 to the Registration
Statement on Form S-4 under cover of Form SB-1
(No. 33-94186).
*10.56 Purchase and Sale Agreement, dated as of February
29, 1996, among Nihon Cement Co. Ltd., Lanxide
K.K. and Celanx, K.K. Incorporated by reference
to Exhibit 10.56 of the Company's Post-Effective
Amendment No. 1 to the Registration Statement on
Form S-4 under cover of Form SB-1 (No. 33-94186).
*10.57 Form of Settlement Agreement among the Company and
the individuals listed on Schedule A thereto.
Incorporated by reference to Exhibit 10.57 of the
Company's Post-Effective Amendment No. 1 to the
Registration Statement on Form S-4 under cover of
Form SB-1 (No. 33-94186).
*10.58 Registration Rights Agreement, dated as of April
11, 1996, between Mees Pierson, Inc. and the Com-
pany. Incorporated by reference to Exhibit 10.58
of the Company's Post-Effective Amendment No. 1 to
the Registration Statement on Form S-4 under cover
of Form SB-1 (No. 33-94186).
* previously filed.
(b) The Company filed a Current Report on Form 8-K on April 4,
1996 reporting (i) the consummation of the sale and lease-
back of the Company's manufacturing facility in Newark,
Delaware on March 28, 1996 and (ii) the conversion of the
Celanx KK joint venture agreement into a licensing arrange-
ment as of March 28, 1996.
SIGNATURES
In accordance with the requirements of the Securities Exchange
Act of 1934, the registrant caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
LANXIDE CORPORATION
Dated: May 14, 1996 By: /s/ Robert J. Ferris
_______________________________
Robert J. Ferris
Vice President - Administration
Secretary and Treasurer (Duly
Authorized Officer and Principal
Accounting Officer)
EXHIBIT 27
FINANCIAL DATA SCHEDULE
(Dollars In Thousands Except Per Share Data)
This Schedule contains summary financial information
extracted from the Company's Consolidated Balance Sheet
at March 31, 1996 (unaudited) and Consolidated Statement
of Operations for the six months ended March 31, 1996
(unaudited) and is qualified in its entirety by reference
to such financial statements.
Period type . . . . . . . . . . . . . . . 6 Mos.
Fiscal year end . . . . . . . . . . . . . September 30, 1996
Period start . . . . . . . . . . . . . . October 1, 1995
Period end . . . . . . . . . . . . . . . March 31, 1996
Cash and cash items . . . . . . . . . . . 7,100
Marketable securities . . . . . . . . . . 0
Notes and accounts receivable - trade . . 2,680
Allowances for doubtful accounts . . . . 0
Inventory . . . . . . . . . . . . . . . . 1,515
Total current assets . . . . . . . . . . 11,695
Property, plant and equipment . . . . . . 20,529
Accumulated depreciation . . . . . . . . (12,774)
Total assets . . . . . . . . . . . . . . 21,622
Total current liabilities . . . . . . . . 4,498
Bonds, mortgages and similar debt . . . . 17,118
Preferred stock - mandatory redemption . 207
Preferred stock - no mandatory redemption 11
Common stock . . . . . . . . . . . . . . 12
Other stockholders' equity . . . . . . . 187,894
Total liabilities and stockholders' equity 21,622
Net sales of tangible products . . . . . . 1,746
Total revenues . . . . . . . . . . . . . 10,837
Cost of tangible goods sold . . . . . . . 1,873
Total costs and expenses applicable to
sales and revenues . . . . . . . . . . . 4,080
Other costs and expenses . . . . . . . . 5,369
Provision for doubtful accounts and notes 0
Interest and amortization of debt discount (992)
Income before taxes and other items . . . 760
Income tax expense . . . . . . . . . . . 40
Income/loss continuing operations . . . . 720
Discontinued operations . . . . . . . . . 0
Extraordinary items . . . . . . . . . . . 0
Cumulative effect - changes in accounting 0
principles . . . . . . . . . . . . . . .
Net income or loss . . . . . . . . . . . 720
Earnings per share - primary . . . . . . .10
Earnings per share - fully diluted . . . .08
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from the
Company's Consolidated Balance Sheet at March 31, 1996 (unaudited) and
Consolidated Statement of Operations for the six months ended March 31, 1996
(unaudited) and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> MAR-31-1996
<CASH> 7,100
<SECURITIES> 0
<RECEIVABLES> 2,680
<ALLOWANCES> 0
<INVENTORY> 1,515
<CURRENT-ASSETS> 11,695
<PP&E> 20,529
<DEPRECIATION> (12,774)
<TOTAL-ASSETS> 21,622
<CURRENT-LIABILITIES> 4,498
<BONDS> 17,118
207
11
<COMMON> 12
<OTHER-SE> 187,894
<TOTAL-LIABILITY-AND-EQUITY> 21,622
<SALES> 1,746
<TOTAL-REVENUES> 10,837
<CGS> 1,873
<TOTAL-COSTS> 4,080
<OTHER-EXPENSES> 5,369
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (992)
<INCOME-PRETAX> 760
<INCOME-TAX> 40
<INCOME-CONTINUING> 720
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 720
<EPS-PRIMARY> .10
<EPS-DILUTED> .08
</TABLE>
