<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1995
-----------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
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Commission file number 1-4184
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MATEC Corporation
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(Exact name of registrant as specified in its charter)
Delaware 06-0737363
- - ------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification number)
75 South St., Hopkinton, Massachusetts 01748
- - -------------------------------------- ----------
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (508) 435-9039
--------------
Securities registered pursuant to Section 12 (b) of the Act:
Title of each class: Name of each exchange on which registered:
-------------------- ------------------------------------------
Common Stock $.05 par value American Stock Exchange
Securities registered pursuant to Section 12 (g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or 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
------ -------
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (Sec.229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this Form 10-K. [ ]
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Aggregate market value of voting stock held by non-affiliates: $5,983,530
(computed by reference to the last sales price of such common stock on
March 21, 1996 as reported in the American Stock Exchange consolidated
trading index).
Number of shares of common stock outstanding at March 21, 1996: 2,764,331
Documents incorporated by reference:
Annual Report to Stockholders for the year ended December 31, 1995:
Parts I, II and IV
Proxy Statement for the 1996 annual meeting of stockholders: Part III
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PART I
Item 1. Business
- - -----------------
General
- - -------
MATEC Corporation ("MATEC" or "Registrant") is incorporated under the
laws of Delaware. As used herein the term "Company" refers to MATEC and
its subsidiaries.
Industry Segments
- - -----------------
The Company's business operates in three segments: Electronics,
Steel Cable, and Instruments, and is conducted primarily through its four
principal wholly owned operating subsidiaries.
The Company has two real estate complexes, located in Delaware and
Massachusetts, which are operated by its wholly owned subsidiaries, RSC
Realty Corporation and MEKontrol, Inc., respectively.
Financial information about industry segments is set forth in
Note 12 of the Notes to Consolidated Financial Statements in the 1995
Annual Report to Stockholders, which Note is incorporated herein by
reference.
Principal Products and Services
- - -------------------------------
Electronics
-----------
Valpey-Fisher Corporation ("Valpey") is involved in the design,
production, import, and sale of quartz crystals and oscillators. In
addition, Valpey manufactures and provides a wide variety of piezoelectric
products and related services.
The quartz crystals and oscillators are used in commercial, industrial,
military, and aerospace products which rely on electronic rather than
mechanical control of their function. To assure precise timing and
control, the electronic circuitry used in these products incorporates
quartz crystals and oscillators as integral components. Except for more
costly atomic standards, quartz crystals and oscillators continue to be one
of the most stable references for accurately controlling electronic
frequencies and time.
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Valpey's products and capabilities include:
- high-volume, low-cost crystals and oscillators for consumer
and commercial applications,
- high-reliability, precision crystals and oscillators used
in sophisticated industrial, military and aerospace
applications.
- ultra-high frequency crystals used in crystal filters and
oscillators for OEM telecommunications and microwave
applications.
Applications for Valpey's products include computers, computer
peripheral equipment such as modems and high resolution graphics terminals,
microprocessor-based instrumentation, communications equipment, and defense
and aerospace electronics. A significant portion of the high-volume,
low-cost product sales is derived from imported products. Crystal and
oscillator sales accounted for 40%, 30%, and 31% of the Company's sales for
the years ended December 31, 1995, 1994 and 1993, respectively.
Piezoelectric products manufactured by Valpey include ultrasonic
transducer crystals and assemblies, surface acoustic wave (SAW) substrates,
and precision quartz crystals. In addition, Valpey provides a variety of
related services to the electronic and optical markets of the research,
commercial, industrial, medical, and aerospace industries.
Products are sold by its direct sales personnel, independent
manufacturers' representatives and distributors.
Cultured quartz, which is available from a number of domestic and
foreign suppliers, is the principal raw material.
Valpey imports products from various Far East (including China, Japan,
South Korea, and Taiwan) suppliers for resale to its customers.
Historically, Valpey has not experienced significant quality or delivery
problems with these suppliers. In order to eliminate the effects of
currency fluctuations, Valpey purchases the product in U.S. dollars.
However, Valpey is subject to the inherent risks involved in international
trade such as political instability and restrictive trade policies.
Steel Cable
- - -----------
Bergen Cable Technologies, Inc. ("Bergen") is involved in the design
and manufacture of custom mechanical control assemblies. In addition,
Bergen manufactures or purchases and sells a wide range of small diameter
cables made primarily of stainless or galvanized steel. Current cable
capabilities range from a .0045" diameter miniature cable to a 0.187" wire
rope. Bergen's sales accounted for 34%, 42% and 46% of the Company's sales
for the years ended December 31, 1995, 1994 and 1993, respectively.
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A substantial portion of Bergen's cable assembly business is
custom-designed to meet customers' specifications and requirements.
Bergen's major markets include the OEM automotive, aerospace, medical and
marine.
Bergen also produces the Safety Cable (TM) System, a fastener retention
system, used in securing fasteners during the manufacture or repair of
aircraft components. This System, developed by Bergen and the GE Aircraft
Group, consists of Bergen's stainless steel cable, stainless steel
ferrules, and an exclusive, patented crimping and cutting tool.
Bergen's principal raw materials, which include carbon steel, stainless
steel and improved plow steel are available from both domestic and foreign
suppliers.
Products are sold by its direct sales personnel and through independent
manufacturers' representatives.
Sales to the aerospace and automotive markets accounted for
approximately 60% of Bergen's sales during each of the three years ended
December 31, 1995.
Instruments
-----------
The Company's Instruments segment includes Matec Applied Sciences, Inc.
("MASI") and Matec Instruments, Inc.("MI"). These subsidiaries develop and
manufacture computer-controlled ultrasonic test equipment to perform
real-time measurements and analysis. The Instruments segment accounted for
21%, 24%, and 20% of the Company's sales for the years ended December 31,
1995, 1994 and 1993, respectively.
The instruments are sold in the USA mainly through each subsidiary's
sales personnel, while foreign sales are performed through independent
manufacturers' representatives. Export sales accounted for 49%, 53%, and
41% of this segment's sales for the years ended December 31, 1995, 1994 and
1993, respectively.
Export sales are primarily shipped to customers located in Europe, the
Pacific Rim and Canada. Product is sold in U.S. dollars and may be shipped
on open account (based on credit history and rating), through a letter of
credit, or by payment of cash in advance.
Under the European Electromagnetic Compatibility ("EMC") Directive,
instruments shipped to Europe after December 31, 1995 will require the
Conformite European ("CE") marking signifying compliance to the EMC
standards. The CE mark indicates that the product complies with certain
standards set by the European nations. MASI and MI have completed the
compliance testing for the CE mark on certain of its products and will
complete compliance testing in the future for additional products. The
companies will not seek the CE mark for certain older products. The
Company does not believe that the inability to sell these older products to
the European nations will have a material effect on MASI's and MI's results
of operations.
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The principal raw materials used are electronic components. Generally,
most of the components are available from a number of sources. However, a
few electronic components are purchased from single suppliers. The Company
believes, however, that if necessary, alternate sources of supply for these
items could be developed and delays in obtaining alternate sources would
not have a material adverse effect on its business.
Matec Applied Sciences, Inc. ("MASI")
-------------------------------------
MASI produces and sells instruments that evaluate the stability of
colloidal dispersions (small particles in suspension) for fundamental and
applied research in both laboratory and industrial applications.
Currently, MASI sells three instruments: the ESA-8000 ("ESA"), the
AcoustoSizer(TM) and the CHDF 1100 Particle Sizer ("CHDF").
The ESA system measures the tendency of particles in suspension
either to remain in stable suspension or to precipitate out of suspension.
Unlike older methods which are limited to dilute dispersions, ESA
techniques permit measurements of opaque samples with particle
concentrations up to 75% by weight. The major markets for this system
include industries involved in the research and processing of pigments,
minerals and ores, ceramics and petrochemicals.
The CHDF, which was introduced in 1989, determines size and size
distribution of submicron particles (less than forty millionths of an
inch). The primary markets for this instrument are the latex,
pharmaceutical and pigment industries.
MASI began commercial shipments of the AcoustoSizer(TM) in the fourth
quarter of 1993. The AcoustoSizer(TM) was developed by MASI in a joint
effort with Colloidal Dynamics Pty Limited ("CD") and the University of
Sydney ("University"), both in Australia. The instrument is manufactured
and marketed by MASI under an exclusive worldwide license of the basic
technology patent owned by CD and the University. The AcoustoSizer(TM) has
the unique, patented capability of measuring particle size distribution and
particle charge of concentrated colloidal dispersions without the need for
dilution. The primary markets for the AcoustoSizer(TM) are the inorganic
pigments and ceramic markets.
Matec Instruments, Inc. ("MI")
------------------------------
MI designs, manufactures and sells:
- high power ultrasonic instrumentation and systems for the
non-destructive evaluation (NDE) and non-destructive testing (NDT)
of materials.
- Doppler blood flow, and heart, vascular and cell function
instruments, under the Crystal Biotech trade name, used mainly in
cardiovascular medical research.
- ultrasonic transducers and probes that allow these systems to
measure flow in blood vessels as small as 0.3 mm in diameter and
heart functions in all venues.
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Historically MI's main focus was on selling instrumentation to the
NDE/NDT market. During the last two years, MI's sales growth has been due
to its sales of custom designed systems used to inspect and detect for
flaws in materials. These systems may be integrated with a customer's
manufacturing or quality control process. MI believes that its future
growth will come from sales of these custom systems that combine ultrasonic
technology with custom software, hardware and mechanical design.
Instrumentation products for the NDE/NDT markets include the IMT-8000
and various custom Immersion Tank Imaging Test Systems, a family of
ultrasonic PC plug-in board instruments and several older, manually and
computer controlled toneburst instruments. Markets for these instruments
include government and academic research laboratories, as well as R&D and
quality assurance departments in industry.
The IMT-8000 system is a bench-top immersion testing system capable of
providing high-definition, full-color C-Scan representations of flaws deep
within materials and structures. The plug-in boards, when installed in
certain computers, provide the user certain material testing features.
These systems facilitate the detection of defects and anomalies in metals,
ceramics, composites and other types of materials. Industrial applications
for the system include the evaluation of bond quality, material integrity
and delamination detection.
Crystal Biotech(TN) products include the CBI-8000, the Myotrac System,
and the DataFlow(TN). The CBI-8000, an upgradable and modular instrument
introduced in 1994, replaces the older VF-1 model and measures blood flow
and myocardial dimensions in laboratory instrumented animals. Modules
offered by MI enhance the capabilities of the CBI-8000 to provide the user
simultaneous measurements of blood flow, organ dimensions, and tissue
thickness and volumetric flow. The Myotrac System, introduced in late
1994, measures cellular function and dimension. MI's DataFlow (TN) system
is a data acquisition tool that enables the user to record, analyze and
display data collected from the VF-1 or any other instrument. Primary
markets for these products include government and university laboratories,
research hospitals and the pharmaceutical industry.
Patents and Licenses
- - --------------------
The Company owns various patents and has additional patent applications
pending. While some of these patents are deemed to have value, the
business of the Company, in the opinion of management, is not substantially
dependent upon such patents, but is primarily based on know-how and market
acceptance.
In the Instruments Segment, MASI is a licensee of certain patented
technology relating to its AcoustoSizer(TM) and CHDF-1100 products. Under
the AcoustoSizer(TM) agreement, MASI is granted a world-wide sole and
exclusive license to manufacture and market instruments for scientific and
laboratory use. Under the CHDF agreement, MASI is granted the sole and
exclusive worldwide right to manufacture and sell products utilizing
certain technology.
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Seasonal Nature of the Business
- - -------------------------------
In recent years, the Company has experienced some softness in third
quarter sales offset by a rise in fourth quarter sales in the Instrument
segment. The Company attributes this third quarter decline to vacations
taken during the summer months in the research community (industry,
government and university).
Working Capital
- - ---------------
There are no unusual working capital requirements relating to the
Company's ongoing operations.
Customers
- - ---------
During the last three years, no customer accounted for 10% of the
Company's consolidated sales.
A majority of the sales in the Electronics segment are to the computer
and telecommunications markets. Approximately 33% of the Electronics'
segment sales in 1995 were made to its five largest customers. Sales to
the aerospace and automotive markets accounted for approximately 60% of the
1995 revenue in the Steel Cable segment. Approximately 36% of the Steel
Cable's segment sales in 1995 were made to its five largest customers.
Backlog Data
- - ------------
The Company's backlog of firm orders at December 31, 1995 and 1994 are
as follows (in thousands):
Segment 1995 1994
------------- ---- ----
Electronics ..................... $4,737 $3,062
Steel Cable ..................... 2,689 2,399
Instruments ..................... 373 134
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$7,799 $5,182
====== ======
The increase in the Electronics segment is attributable to the higher
backlog level in the import product line, partially offset by lower backlog
levels in the remaining product lines. The increase in the Steel Cable
segment is mainly due to an increase in the marine market backlog. The
increase in the Instruments segment is due to a higher level of custom
designed systems for the NDE/NDT market. In the Instruments segment,
management believes that backlog data is not as meaningful, since
customer's orders for instruments are normally shipped upon receipt of
order.
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Government Contracts
- - --------------------
Bergen's government contract-related business is in the form of firm
fixed-price contracts. These contracts are subject to the standard
government contract clause which permits the Government to terminate such
contracts at its convenience. In the event of such termination there are
provisions to enable the Company to recover its costs plus a fee. The
Company does not at this time anticipate the termination of any of its
major government contracts.
Competition
- - -----------
In most of the markets in which the Company operates there are numerous
competitors. A number of the competitors are larger and have greater
resources than the Company. Larger competitors include Teleflex Industries
in the Steel Cable segment and M-tron Industries, Inc. in the Electronics
segment. In addition, in the Electronics segment, foreign competitors,
particularly from the Far East, continue to dominate the U.S. markets.
However, based on the reasons below, the Company believes it can maintain a
competitive position in its businesses.
In the Electronics segment, the Company believes its quality, strong
design and application engineering, responsive customer service and a
willingness to provide specialty small quantity orders will continue to
enable the Company to remain competitive in its markets.
Management believes that in the Steel Cable segment, Bergen has a
strong competitive edge in the cable assembly market based on its
reputation for design capability, service, quality, and customer
responsiveness.
In the Instruments segment, the Company believes its strong design
work, application engineering and quality will enable it to remain
competitive in the markets in which it competes.
Research and Development
- - ------------------------
Expenditures for Company-sponsored research and development activities
amounted to approximately $536,000, $962,000 and $1,056,000 in 1995, 1994
and 1993, respectively. Such amounts represent 1.8%, 4.0% and 5.3%,
respectively, of sales for such periods.
The reduction in expenses is attributable to lower expenses in the
Electronics and Instruments segments as new product and process development
projects were completed in late 1994.
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Environmental Regulations
- - -------------------------
To the knowledge of the Company compliance with Federal, state and
local provisions which have been enacted or adopted regulating the
discharge of materials into the environment or otherwise relating to the
protection of the environment, has not had, nor will have a material effect
upon capital expenditures, earnings or competitive position.
Employees
- - ---------
No employees at the various locations of the Company are represented by
a collective bargaining unit. At December 31, 1995, the Company has 320
full-time and 19 part-time employees. The Company considers its relations
with its employees to be satisfactory.
Foreign and Domestic Operations and Export Sales
- - ------------------------------------------------
Financial information about foreign and domestic operations and export
sales is set forth in Note 12 of the Notes to Consolidated Financial
Statements in the 1995 Annual Report to Stockholders, which Note is
incorporated herein by reference.
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Item 2. Properties
- - ------- ----------
The Company has the following facilities, each of which contains
office and manufacturing space and all of which are owned (except as
noted).
Approximate
Location Square Feet Primary Use
-------- ----------- -----------
Wilmington, Delaware (1) 215,000 Real Estate Operation
Lodi, New Jersey 50,560 Steel Cable
Northboro, Massachusetts (2) 35,000 Real Estate Operation
Instruments
Hopkinton, Massachusetts (3) 32,400 Instruments
Electronics
Juarez, Mexico (4) 20,000 Steel Cable
Carlisle, PA (5) 3,200 Electronics
(1) At December 31, 1995 this facility is subject to one Industrial
Revenue Bond with a total balance due of $380,000. See Note 9
of the Notes to Consolidated Financial Statements in the 1995
Annual Report to Stockholders. Approximately 207,000 square
feet is leased and the remaining space is available for rent.
(2) Matec Instruments occupies approximately 5,500 square feet,
approximately 6,000 square feet is leased and the remaining
space is available for rent.
(3) At December 31, 1995 this facility is subject to an Industrial
Revenue Bond with a balance due of $48,333. See Note 9 of
the Notes to Consolidated Financial Statements in the 1995
Annual Report to Stockholders.
(4) Facilities under lease expiring in December 1997.
(5) Facilities under lease expiring in May 1996. The Company
intends to exercise its 1 year renewal option under the lease.
The Company believes its facilities (owned or leased) are suitable
for their current uses and are in good repair. The Company believes
that its facilities are adequate to satisfy its production capacity
needs for the immediate future.
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Item 3. Legal Proceedings
- - ------- -----------------
The Company is involved in litigation in the ordinary course of
business. The Company believes that the outcome of these actions
should not have a material adverse effect on the financial condition
of the Company.
Item 4. Submission of Matters to a Vote of Security Holders
- - ------- ---------------------------------------------------
No matters were submitted to a vote of the Registrant's security
holders during the last quarter of the fiscal year covered by this
report.
Executive Officers of the Registrant
- - ------------------------------------
The names, ages and offices of the executive officers of the
Registrant are as follows:
Name Age Office
---- --- ------
Robert B. Gill 54 President and Chief Executive Officer
Michael J. Kroll 47 Vice President and Treasurer
The term of office for each officer of the Registrant is until
the first meeting of the Board of Directors following the Annual
Meeting of Stockholders and until a successor is chosen and
qualified.
Mr. Gill has been President and Chief Executive Officer of the
Registrant since December 21, 1992. He was President of Laser Diode,
Inc., a manufacturer of communication equipment, from prior to 1991
to December 1992.
Mr. Kroll, a certified public accountant, has been Vice President
and Treasurer of the Registrant since prior to 1991.
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PART II
Item 5. Market for the Registrant's Common Stock and Related
- - ------- ----------------------------------------------------
Stockholder Matters
-------------------
The information set forth on the inside front cover of the 1995
Annual Report to Stockholders under the caption "Common Stock
Information" is incorporated by reference.
Item 6. Selected Financial Data
- - ------- -----------------------
The information set forth on page 4 of the 1995 Annual Report to
Stockholders under the caption "Five Year Financial Summary" is
incorporated by reference.
Item 7. Management's Discussion and Analysis of Financial
- - ------- -------------------------------------------------
Condition and Results of Operations
-----------------------------------
The information set forth on pages 4 through 6 of the 1995 Annual
Report to Stockholders under the caption "Management's Discussion and
Analysis" is incorporated by reference.
Item 8. Financial Statements and Supplementary Data
- - ------- -------------------------------------------
The information contained in the Consolidated Financial
Statements, Notes to Consolidated Financial Statements and the
Independent Auditors' Report appearing on pages 7 through the inside
back cover of the 1995 Annual Report to Stockholders is incorporated
by reference.
Item 9. Disagreements on Accounting and Financial Disclosure
- - ------- ----------------------------------------------------
None.
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PART III
The information called for by Part III is hereby incorporated by
reference from the information set forth and under the headings
"Voting Securities", "Security Ownership of Management", "Election of
Directors", and "Executive Compensation" in Registrant's definitive
proxy statement for the 1996 Annual Meeting of Stockholders, which
meeting involves the election of directors, such definitive proxy
statement to be filed with the Securities and Exchange Commission
pursuant to Regulation 14A within 120 days after the end of the
fiscal year covered by this Annual Report on Form 10-K. In addition,
information on Registrant's executive officers has been included in
Part I above under the caption "Executive Officers of the
Registrant".
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PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
- - -------- -------------------------------------------------------
Form 8-K
--------
(a) 1. The following Consolidated Financial Statements are
incorporated by reference from the indicated pages of the
1995 Annual Report to Stockholders:
Page Number(s) in
Annual Report
Consolidated Balance Sheets,
December 31, 1995 and 1994 .................... 7
Consolidated Statements of Operations
for the Years Ended December 31, 1995,
1994 and 1993 ................................. 8
Consolidated Statements of Cash Flows
for the Years Ended December 31, 1995,
1994 and 1993 ................................. 9
Consolidated Statements of Stockholders' Equity
for the Years Ended December 31, 1995,
1994 and 1993 ................................. 10
Notes to Consolidated Financial Statements ..... 10-16
Independent Auditors' Report ................... Inside back
cover
(a) 2. The following schedule to the Consolidated Financial
Statements and the Independent Auditors' Report on Schedule
are filed as part of this report.
Page Number
-----------
Independent Auditors' Report ...................... 18
Schedule II - Valuation Reserves .................. 19
All other schedules are omitted because they are not applicable,
not required or because the required information is included in
the Consolidated Financial Statements or notes thereto.
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(a) 3. The exhibits filed in this report or incorporated by
reference, listed on the Exhibit Index on page 20, are as
follows:
Exhibit No. Description
----------- ---------------------------------------------
3. (a) Certificate of Incorporation
3. (c) By-Laws
4. Instruments defining the rights of holders of
long-term debt
4. (a) Common Stock Purchase Warrant
10. (a) * 1982 Incentive Stock Option Plan
10. (b) * Management Incentive Plan
10. (c) * 1992 Stock Option Plan
11. Calculation of Earnings Per Share
13. 1995 Annual Report to Stockholders
21. Subsidiaries of the Registrant
23. Consent of Independent Auditors
27. Financial Data Schedule
* Management contract or compensatory plan or arrangement
required to be filed as an Exhibit pursuant to Item 14(c) of this
report.
(b) Reports on Form 8-K
The Registrant did not file any reports on Form 8-K during the
last quarter of its year ended December 31, 1995.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the
Securities Exchange Act of 1934, Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto
duly authorized.
MATEC Corporation
Date: March 25, 1996 By:/s/ Robert B. Gill
-------------------
Robert B. Gill
President and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following persons
on behalf of the Registrant and in the capacities and on the
dates indicated.
Signature Title Date
--------- ----- ----
/s/ Robert B. Gill President, Chief Executive March 25, 1996
- - ------------------------ Officer, and Director
Robert B. Gill
/s/ Michael J. Kroll Vice President and Treasurer
- - ------------------------ (Principal Financial Officer March 25, 1996
Michael J. Kroll and Principal Accounting
Officer)
/s/ Eli Fleisher Director March 25, 1996
- - ------------------------
Eli Fleisher
/s/ Lawrence Holsborg Director March 25, 1996
- - ------------------------
Lawrence Holsborg
/s/ John J. McArdle III Director March 25, 1996
- - ------------------------
John J. McArdle III
/s/ Joseph W. Tiberio Director March 25, 1996
- - ------------------------
Joseph W. Tiberio
/s/ Robert W. Valpey Director March 25, 1996
- - ------------------------
Robert W. Valpey
/s/ Ted Valpey, Jr. Chairman of the Board and March 25, 1996
- - ------------------------ Director
Ted Valpey, Jr.
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INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
MATEC Corporation
Hopkinton, Massachusetts
We have audited the consolidated financial statements of MATEC
Corporation and subsidiaries as of December 31, 1995 and 1994, and for
each of the three years in the period ended December 31, 1995, and have
issued our report thereon dated March 1, 1996; such consolidated
financial statements and report are included in the MATEC 1995 Annual
Report to Stockholders and are incorporated herein by reference. Our
audits also included the financial statement schedule of MATEC
Corporation and subsidiaries, listed in Item 14. This financial
statement schedule is the responsibility of the Company's management.
Our responsibility is to express an opinion based on our audits. In
our opinion, such financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a
whole, presents fairly in all material respects the information set
forth therein.
Deloitte & Touche LLP
Boston, Massachusetts
March 1, 1996
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<PAGE>
MATEC Corporation and Subsidiaries
----------------------------------
Schedule II - Valuation and Qualifying Accounts
-----------------------------------------------
Additions
Balance at Charged to Balance
Beginning Costs and at End
Description of Period Expenses Deductions of Period
----------- ---------- ---------- ---------- ----------
Allowance for
Doubtful Accounts:
Year ended
December 31, 1995 $ 199,000 $ 23,652 $ 28,652 $ 194,000
========= ========= ========= =========
December 31, 1994 $ 194,000 $ 59,881 $ 54,851 $ 199,000
========= ========= ========= =========
December 31, 1993 $ 194,000 $ 45,604 $ 45,604 $ 194,000
========= ========= ========= =========
Inventory Reserve:
Year Ended:
December 31, 1995 $ 853,000 $ 388,040 $ 311,040 $ 930,000
========== ========= ========= ==========
December 31, 1994 $1,121,000 $ 264,863 $ 532,863 $ 853,000
========== ========= ========= ==========
December 31, 1993 $1,164,000 $ 401,421 $ 444,421 $1,121,000
========== ========= ========= ==========
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EXHIBIT INDEX
-------------
Exhibit No. (inapplicable items are omitted)
- - -----------
3. (a) Certificate of Incorporation (incorporated by reference to
Exhibit 3. (a) to Registrant's Annual Report on Form 10-K
for the year ended December 31, 1992).
3. (c) By-Laws (incorporated by reference to Exhibit 3. (c) to
Registrant's Form 10-Q for the quarterly period ended
April 2, 1995).
4. Each instrument which defines the rights of holders of
long-term debt of Registrant and its subsidiaries under
which the amount authorized does not exceed 10% of total
assets of Registrant and subsidiaries on a consolidated
basis has not been filed as an exhibit to this Annual
Report on Form 10-K. Registrant hereby undertakes and
agrees to furnish a copy of each instrument to the
Securities and Exchange Commission upon request.
4. (a) Common Stock Purchase Warrant dated April 12, 1995 between
the Registrant and Massachusetts Capital Resource Company
(incorporated by reference to Exhibit 4.(a) on Form 10-Q
for the quarterly period ended July 2, 1995.
10. (a) 1982 Incentive Stock Option (incorporated by reference to
Exhibit 10. (a) to Registrant's Annual Report on Form 10-K
for the year ended December 31, 1992).
10. (b) Management Incentive Plan. Filed herewith.
10. (c) 1992 Stock Option Plan (incorporated by reference to
Exhibit 10. (c) to Registrant's Annual Report on Form 10-K
for the year ended December 31, 1992).
11. Calculation of Earnings Per Share. Filed herewith.
13. Portions of 1995 Annual Report to Stockholders. Filed
herewith.
21. Subsidiaries of the Registrant. Filed herewith.
23. Consent of Independent Auditors. Filed herewith.
27. Financial Data Schedule. Filed for electronic purposes
only.
-20-
<PAGE>
Exhibit 10 (b)
MATEC Corporation Management Incentive Plan
The MATEC Corporation Management Incentive Plan is established to motivate
subsidiary and corporate management to optimize short and long-term
operating profit. The Plan consists of two separate incentive pools.
Subsidiary Pool
---------------
1. Funding
- - ----------
Each subsidiary will generate an incentive pool based on the
percentage achievement of that subsidiary's budgeted operating profit for
the current fiscal year. The incentive pool will be determined by
multiplying the subsidiary's operating profit prior to profit sharing,
401(k), incentive, and LIFO but after corporate charges and corporate
interest expense/income by the percentage contained in the graph shown in
Exhibit 1. This pool is independent of MATEC's overall performance.
2. Awards
- - ---------
Eligibility
-----------
Unless otherwise approved by MATEC's Board, all participants must be
employed at the beginning and end of the fiscal year for which the award
is to be made.
Distribution
------------
A proposed primary distribution of the incentive pool among the
subsidiary president and his immediate staff shall be submitted to and
approved by the Stock Option Compensation Committee at the time of the
budget approval. A portion of the pool may be reserved to recognize
outstanding performance below the executive level. At the conclusion of
the fiscal year, the subsidiary president will submit a final recommended
list of awards to MATEC's president. The recommendations should be based
upon subjective evaluations of each participant's performance,
contribution and effort. Individual awards are subject to MATEC Board and
Stock Option Compensation Committee approval.
Corporate Pool
--------------
1. Funding
- - ----------
Corporate will generate an incentive pool based on the percentage
achievement of corporate's budgeted total pre-tax profit for the current
fiscal year. The incentive pool will be determined by multiplying MATEC's
pre-tax profit prior to profit sharing, 401(k), incentives, and LIFO by
the percentage contained in the graph shown in Exhibit 2.
<PAGE>
2. Awards
- - ---------
Eligibility
-----------
Unless otherwise approved by MATEC's Board, all participants must
be employed at the beginning and end of the fiscal year for which the
award is to be made.
Distribution
------------
A proposed distribution of the incentive pool among the Corporate
Staff shall be submitted to and approved by the Stock Option Compensation
Committee and Board at the time of budget approval. The final
recommendation for pool distribution shall be made by MATEC's President
and Chairman. All awards shall be approved by MATEC's Stock Option
Compensation Committee and Board.
Incentive Funding
-----------------
Funding %
---------
Budget Achievement Sub Corp Pool Rel. Size
- - ------------------ ---- ---- --------------
less than 75% 0 0 0
75% 4.7 5.5 50%
100% 7.0 8.5 100%
less than 125% 8.4 10.2 150%
greater than 125% 8.4 10.2
<PAGE>
MATEC Corporation Management Incentive Plan
Exhibit 1 Subsidiary Incentive Pool
- - --------- -------------------------
The X-axis of the graph represents the "incentive pool accrual %" and the
Y-axis of the graph represents the "% budgeted operating profit achieved".
The graph shows the following results:
% budgeted operating incentive pool
profit achieved accrual %
-------------------- --------------
less than 75 0.0
75 4.7
80 5.2
85 5.6
90 6.1
95 6.5
100 7.0
105 7.3
110 7.6
115 7.9
120 8.15
125 8.4
greater than 125 8.4
<PAGE>
MATEC Corporation Management Incentive Plan
Exhibit 2 Corporate Incentive Pool
- - --------- ------------------------
The X-axis of the graph represents the "incentive pool accrual %" and the
Y-axis of the graph represents the "% budgeted operating profit achieved".
The graph shows the following results:
% budgeted operating incentive pool
profit achieved accrual %
-------------------- --------------
less than 75 0.0
75 5.5
80 6.1
85 6.7
90 7.3
95 7.9
100 8.5
105 8.8
110 9.2
115 9.5
120 9.9
125 10.2
greater than 125 10.2
<PAGE>
MATEC Corporation and Subsidiaries Exhibit 11
Calculation of Earnings Per Share
(amounts in thousands, except per share data)
Years Ended December 31,
1995 1994 1993
------- ------- -------
Net earnings (loss):
Continuing operations:
Net earnings (loss) before cumulative effect
of accounting change ........................ $ 303 $ (114) $(1,153)
Discontinued operations:
Net earnings ................................. - - 218
Gain on disposal ............................. - - 1,068
------- ------- -------
Net earnings (loss) before cumulative effect
of accounting change ......................... 303 (114) 133
Cumulative effect of accounting change ........ - - 135
------- ------- -------
Net earnings (loss) ........................... $ 303 $ (114) $ 268
======= ======= =======
CALCULATION OF PRIMARY EARNINGS (LOSS) PER SHARE:
Weighted average common shares outstanding .... 2,765 2,765 2,884
Increase from assumed exercise of stock options
and investment of proceeds in treasury stock,
based upon average market prices (A) ......... 30 - 19
----- ----- -----
Average common stock and common equivalent
shares outstanding (B) ....................... 2,795 2,765 2,903
===== ===== =====
Net earnings (loss) per common and common
equivalent share: (C)
Continuing operations:
Earnings (loss) before cumulative effect of
accounting change .......................... $ .11 $(.04) $(.40)
Discontinued operations:
Earnings .................................... - - .07
Gain on disposal ............................ - - .37
Cumulative effect of accounting change ....... - - .05
----- ----- -----
$ .11 $(.04) $ .09
===== ===== =====
(A) In loss periods, dilutive common equivalent shares are excluded as the
effect would be anti-dilutive.
(B) The effect of the outstanding warrants is excluded since they do not
meet either test of paragraph 37 of APB Opinion No. 15.
(C) Dilution from stock options is less than 3%, therefore primary earnings
per share is based on the weighted average number of shares outstanding.
<PAGE>
MATEC Corporation and Subsidiaries Exhibit 11
Calculation of Earnings Per Share
(amounts in thousands, except per share data)
Years Ended December 31,
1995 1994 1993
------- ------- -------
Net earnings (loss):
Continuing operations:
Net earnings (loss) before cumulative effect
of accounting change ........................ $ 303 $ (114) $(1,153)
Discontinued operations:
Net earnings ................................. - - 218
Gain on disposal ............................. - - 1,068
------- ------- -------
Net earnings (loss) before cumulative effect
of accounting change ......................... 303 (114) 133
Cumulative effect of accounting change ........ - - 135
------- ------- -------
Net earnings (loss) ........................... $ 303 $ (114) $ 268
======= ======= =======
CALCULATION OF FULLY DILUTED EARNINGS (LOSS) PER SHARE:
Weighted average common shares outstanding .... 2,765 2,765 2,884
Increase from assumed exercise of stock options
and investment of proceeds in treasury stock,
based upon the higher of average or
quarter-end market prices .................... 33 28 20
----- ----- -----
Average common stock and common equivalent
shares outstanding (A) ....................... 2,798 2,793 2,904
===== ===== =====
Net earnings (loss) per common and common
equivalent share assuming full dilution: (B)
Continuing operations:
Earnings (loss) before cumulative effect of
accounting change .......................... $ .11 $(.04) $(.40)
Discontinued operations:
Earnings .................................... - - .07
Gain on disposal ............................ - - .37
Cumulative effect of accounting change ....... - - .05
----- ----- -----
$ .11 $(.04) $ .09
===== ===== =====
(A) The effect of the outstanding warrants is excluded since they do not
meet either test of paragraph 37 of APB Opinion No. 15.
(B) Dilution is less than 3%, therefore the primary basis was used for per
share calculations.
<PAGE>
<PAGE>
COMMON STOCK INFORMATION
MATEC common stock is listed and traded on the American Stock Exchange
under the symbol MXC. The range of high and low prices during each
quarter for the past two years is shown below:
For the years ended December 31, 1995 1994
- - ---------------------------------------------------------------------
High Low High Low
- - ---------------------------------------------------------------------
4th quarter 4 5/8 3 7/8 4 5/8 4
3rd quarter 4 3/4 3 7/8 4 3/4 3 5/8
2nd quarter 4 5/8 3 7/8 3 7/8 3 1/2
1st quarter 4 1/2 4 4 1/8 3 3/4
The Company paid no dividend in 1995 or 1994. Under the Term Debt
Agreement, the Company is restricted to the amount of cash dividends
paid in any one year. See Note 9 of the Notes to Consolidated Financial
Statements.
The approximate number of stockholders of record on February 29, 1996
was 3,100. This number does not include stockholders for whom shares
are held in a "nominee" or "street" name.
(Remaining information on "inside front cover" not incorporated by
reference.)
inside front cover
<PAGE>
<PAGE>
<TABLE>
Five Year Financial Summary
<CAPTION>
Years Ended December 31, 1995 1994 1993 1992 1991
- - ---------------------------------------------------------------------------------------------------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Continuing operations:
Net sales $28,837 $24,229 $19,899 $19,732 $19,527
Gross profit 8,314 7,201 5,212 5,337 6,387
Earnings (loss) before income taxes and cumulative
effect of accounting change 522 (156) (1,765) (1,339) 892
Income taxes (benefit) 219 (42) (612) (431) 363
Earnings (loss) before cumulative effect
of accounting change 303 (114) (1,153) (908) 529
Discontinued operations - net - - 1,286 184 695
Cumulative effect of accounting change - - 135 - -
- - ---------------------------------------------------------------------------------------------------
Net earnings (loss) $ 303 $ (114) $ 268 $ (724) $ 1,224
===================================================================================================
Earnings (loss) per share:
Continuing operations $ .11 $ (.04) $ (.40) $ (.31) $ .18
Discontinued operations - - .44 .06 .24
Cumulative effect of accounting change - - .05 - -
- - ---------------------------------------------------------------------------------------------------
Earnings (loss) $ .11 $ (.04) $ .09 $ (.25) $ .42
===================================================================================================
Average shares outstanding 2,765 2,765 2,884 2,896 2,900
===================================================================================================
Cash dividends per share $ - $ - $ - $ .10 $ .10
===================================================================================================
Total assets, end of year:
Continuing operations $24,225 $20,448 $18,063 $15,658 $16,201
Discontinued operations - - - 2,210 2,207
- - ---------------------------------------------------------------------------------------------------
$24,225 $20,448 $18,063 $17,868 $18,408
===================================================================================================
Long-term debt, end of year $ 2,180 $ 428 $ 652 $ 1,102 $ 1,356
===================================================================================================
</TABLE>
Management's Discussion and Analysis
Financial Condition
Cash and cash equivalents increased $286,000 from December 31, 1994 and the
Company borrowed $3,520,000 through the use of its line of credit arrangement
and the issuance of term debt. The main uses of the cash were operations
($1,880,000) and capital expenditures ($1,354,000).
Increases in working capital components, partially offset by depreciation
expense of $1,271,000, were the main uses of cash by operations. While all
segments reported higher levels of inventory, an increase of $1,745,000 in
the electronics segment inventory accounted for the majority of the overall
change. The higher levels of inventory in the electronics segment are mainly
needed to support the increased levels of current and projected future
business and to meet customer demands for quick delivery of product.
<PAGE>
<PAGE>
The increase in accounts receivable is attributable to the higher overall
sales volume.
Capital expenditures amounted to $1,354,000 during 1995 with additions of
$923,000 in the steel cable segment accounting for the majority of the
increase. These additions are mainly geared toward adding new and
upgrading existing production capabilities and processes within this
segment. Capital expenditures for 1996 are planned to approximate
$1,800,000 with additions of $1,100,000 and $500,000 projected for the
electronics and steel cable segments, respectively. These additions will
mainly be focused on adding additional capacity, manufacturing cost
reductions, and upgrading existing production capabilities.
During the year, the Company obtained $2 million in secured term debt
financing due in 2000. As part of the agreement, the lender was issued
warrants to purchase 85,000 shares of the Company's common stock. The
Company believes that this transaction improves the overall debt structure
and provides financing flexibility necessary to continue to grow the
business.
In addition, the Company has secured lines of credit with banks totaling
$2,850,000. At December 31, 1995, the unused portion of these lines was
$415,000.
The Company believes that based on its current working capital, the
expected cash flows from operations, and its current debt arrangements its
resources are sufficient to meet the financial needs and to fund the
capital expenditures for the projected levels of business in 1996.
New Accounting Standards
The Company has not yet adopted Statement of Financial Accounting
Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of" and SFAS No. 123,
"Accounting for Stock-Based Compensation". Adoption of both Statements is
required in 1996. The adoption of SFAS No. 121 is not expected to have a
material impact on the Company's financial statements. As allowed by SFAS
123, the Company will continue to apply Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees" for employee
stock compensation measurement. The anticipated effect of adopting this
new standard is not expected to have a material effect on the Company's
financial position or results of operations.
Results of Operations -- Overview -- 1995 versus 1994
Net sales increased $4,608,000 (19%) in 1995 to $28,837,000, mainly as a
result of the record sales level reported in the electronics segment.
The overall gross profit percentage decreased from 30% in 1994 to 29% in
1995 as lower margins in the steel cable and instruments segments exceeded
the improved margin in the electronics segment.
Selling and administrative expenses increased $570,000 (9%) over 1994
mainly due to higher selling expenses in the electronics and instruments
segments.
The $426,000 (44%) reduction in research and development expenses was
principally a result of lower expenses in the electronics and instruments
segments.
<PAGE>
<PAGE>
Other income (expense), net amounted to $374,000 of expense in 1995
compared to $82,000 of expense in 1994. Interest expense increased
$337,000 over 1994 due to the higher levels of short and long-term debt.
The real estate operations loss declined $13,000 from 1994 mainly as a
result of lower overall operating expenses. Other income includes $26,000
of dividend income in 1995.
The effective income tax rate in 1995 was 42% compared to a benefit rate
of 27% in 1994. The difference in rates is mainly due to the effective
state income tax rate and the limited state tax benefit of operating
losses within a state. As disclosed in the Notes to Consolidated
Financial Statements, the Company recorded a valuation allowance to fully
reserve for the potential state tax benefits of the state net operating
loss carryforwards during both years. The change in the valuation
allowance in 1995 includes the utilization of a portion of prior year
state net operating loss carryforwards.
Based on the higher sales level, the increased gross margin and the lower
percentage of operating expenses to sales, operating profit was $896,000
in 1995 versus an operating loss of $73,000 in 1994. Nonoperating
expenses increased $291,000 over 1994 mainly as a result of increased
interest expense. As a result, the Company reported a pre-tax profit from
continuing operations of $522,000 in 1995 versus a loss of $156,000 in
1994. The after tax earnings amounted to $303,000 in 1995 compared to a
loss of $114,000 in 1994.
Business Segment Results -- 1995 versus 1994
Sales in the electronics segment increased $4,646,000 (56%) over 1994 as
all product lines reported significant increases. The sales increases
were mainly attributable to higher sales to both OEM and contract
manufacturers in the telecommunications market and to the distributor
markets. The overall gross profit percentage increased 36% over last year
mainly as a result of the favorable effects of allocating the fixed
overhead expenses over the increased sales level and manufacturing
efficiencies and product yield improvements on internally manufactured
products. Total operating expenses remained level with 1994 as lower
general and administrative and research and development expenses were
offset by a 24% rise in selling expenses. The reduction in G&A expense was
due to lower personnel expenses. The decrease in R&D expenses resulted
from the completion of product and process development projects in late
1994. Increased sales commission, personnel, and advertising expenses
were the major items causing the higher selling expense. As a result of
the significant increase in sales and gross margin, coupled with level
overall operating expenses, the electronics segment's operating profit
rose to $1,870,000 compared to an operating loss of $63,000 in 1994.
Sales in the steel cable segment decreased $369,000 (4%) from 1994. While
sales to most major markets were comparable to last year, sales to the
fitness equipment market dropped about $750,000. The Company continues to
pursue product opportunities in the automotive market and other markets it
serves, but continues to see softness in the fitness equipment, aerospace
and government markets. The overall gross profit percentage decreased
about 20% from 1994, prior to the favorable effects of the LIFO adjustment
in 1994.
<PAGE>
<PAGE>
The lower margin resulted from the start-up expenses and operating
inefficiencies associated with several new programs beginning production
during the year, increased depreciation expense, and the effect of the
fixed operating costs over the lower sales volume. Total operating
expenses increased 7% over last year primarily due to legal fees related
to a suit against a former sales representative. As a result of the lower
sales, the reduced gross margin and the increased operating expenses, the
steel cable segment reported an operating loss of $261,000 compared to an
operating profit of $628,000 in 1994.
The instruments segment reported a 6% increase in sales over 1994 to a
record level of $6,178,000. Higher sales to the NDT/NDE markets partially
offset by a 9% decrease in sales to both the colloidal and medical
research markets accounted for the net sales gain. The increased sales to
the NDT/NDE markets were attributable to higher sales of the Company's
custom test systems. The reduction in sales to the colloidal market was
due to lower foreign sales of the ESA product partially offset by
increased sales of the CHDF product. Lower foreign sales was the main
reason for the decrease in sales to the medical research market. The
overall gross profit percentage decreased 7% from 1994 as a result of
higher occupancy costs due to increased space requirements, increased
personnel costs caused by additional employees and changes in the product
mix of sales. Total operating expenses increased 5% over 1994 as higher
selling expenses were partially offset by lower R&D expenses. Increased
advertising, promotional and commission expenses accounted for the higher
selling expenses. The decrease in R&D expense was mainly attributable to
a reduction in expenses associated with the development of the
AcoustoSizer(TM) partially offset by increased product development
expenses in the medical research and NDT/NDE market segments. While sales
increased slightly over 1994, lower gross margins and higher operating
expenses resulted in the instruments segment reporting $298,000 in
operating profit versus an operating profit of $404,000 in 1994.
Results of Operations -- Overview -- 1994 versus 1993
Net sales rose $4,330,000 (22%) in 1994 to a record level of $24,229,000
as all three segments reported sales increases.
The overall gross profit percentage improved to 30% in 1994 from 26% in
1993 and was attributable to higher margins achieved in all segments. The
increased margin in the steel cable segment during 1994 was mainly
attributable to the favorable LIFO adjustment.
Selling and administrative expenses increased $549,000 (10%) over 1993
principally as a result of higher selling expenses in the instruments and
electronics segments.
The $94,000 (9%) decrease in research and development expenses was mainly
due to lower expenses in the instruments segment.
Other income (expense), net amounted to $82,000 in expense in 1994
compared to $157,000 in expense in 1993. The real estate operations
generated a loss of $68,000 in 1994 compared to a $125,000 loss in 1993.
The reduction in loss was mainly due to a combination of higher rental
income and lower operating expenses. Interest expense decreased $22,000
from 1993 primarily due to lower levels of short-term borrowings.
<PAGE>
<PAGE>
The effective income tax rate for 1994 was a benefit of 27% compared to a
benefit of 35% in 1993. The difference in the applicable rates is
primarily due to the effect of nondeductible expenses in 1994.
As a result of both significantly higher sales and an overall increase in
the gross margin percentage compared to last year, the operating loss
decreased from $1,608,000 in 1993 to $73,000 in 1994. Non-operating
expense declined $74,000 due to a lower real estate operations loss and
decreased interest expense. As a result, the Company reported a pre-tax
loss from continuing operations of $156,000 in 1994 versus a loss of
$1,765,000 in 1993. The after tax loss amounted to $114,000 in 1994
compared to a loss of $1,153,000 in 1993.
Business Segment Results -- 1994 versus 1993
Steel cable segment sales increased $1,028,000 (11%) over 1993. This
improvement resulted from a 19% increase in the sales of assembly
products, partially offset by a 16% decrease in bulk cable sales. Higher
sales to the automotive and marine markets, partially offset by lower
sales to the fitness equipment market, accounted for the sales increase in
assembly products. Lower sales to the government and the aerospace market
contributed to the decrease in bulk cable sales. The Company continues to
actively pursue assembly product opportunities within the markets it
serves. The Company continues to see softness in the fitness equipment,
aerospace, and government markets. Prior to the favorable effects of the
$151,000 LIFO adjustment this year, the overall gross profit percentage
increased slightly over 1993. Total operating expenses decreased slightly
from last year mainly due to lower advertising and related expenses. As a
result of the higher sales level, the increase in overall margin, and the
slight reduction in operating expenses, the operating profit in the steel
cable segment increased to $628,000 in 1994 versus a $160,000 operating
profit in 1993.
The instruments segment sales rose $1,857,000 (47%) over 1993 to a record
level of $5,847,000. About 65% of the sales increase was attributable to
higher export sales. The majority of the sales improvement was generated
by increased sales to the colloidal market and to a lesser extent, higher
sales to the nondestructive testing/evaluation markets. Sales to the
medical research market remained relatively flat with 1993. The sales
increase in the colloidal market was primarily due to unit sales of the
AcoustoSizer(TM), the Company's new instrument that was introduced in
December 1993. The overall gross profit percentage increased 6% as a
result of the manufacturing efficiencies from the higher sales volume and
a lower provision for obsolete inventory. Higher selling expenses, offset
by a $110,000 reduction in research and development expenses, accounted
for the $211,000 (9%) increase in total operating expenses. Increased
advertising and promotion expense to promote the AcoustoSizer, and higher
commission expense due to the increased sales level were the main reasons
for the selling expense increase. The reduction in research and
development expense was primarily attributable to lower expenses related
to the development of the AcoustoSizer. As a result of the increased sales
level and the improved margins, offset in part by the higher operating
expenses, the instruments segment reported an operating profit of $404,000
in 1994 compared to an operating loss of $445,000 in 1993.
<PAGE>
<PAGE>
Sales in the electronics segment increased $1,445,000 (21%) over 1993. The
improvement in sales was attributable to higher sales to both OEM and
contract manufacturers in the telecommunications market and to the
distributor markets. All major product areas reported sales gains over the
prior year. The overall gross profit percentage improved 17% over 1993
partly as a result of increased sales of internally manufactured products
which produce a higher margin than that from the resale of imported
product. In addition, manufacturing efficiencies and product yield
improvements and a lower provision for slow-moving inventory contributed
to the higher margin. Total operating expenses increased $258,000 (17%)
over 1993 primarily due to higher selling expenses. Increases in
personnel, advertising and product promotion, and sales commission
expenses accounted for the higher selling expense. As a result of the
higher sales and improvement in the overall margins, partially offset by
increased operating expenses, the electronics segment's operating loss
decreased from $322,000 in 1993 to $63,000 in 1994.
<PAGE>
<PAGE>
Consolidated Balance Sheets
December 31, 1995 1994
- - --------------------------------------------------------------------------
Assets
Current assets:
Cash and cash equivalents $ 830,340 $ 544,455
Receivables, net 5,672,411 4,852,046
Inventories 7,719,160 5,628,541
Deferred income taxes and other current assets 1,032,328 1,144,896
- - --------------------------------------------------------------------------
Total current assets 15,254,239 12,169,938
- - --------------------------------------------------------------------------
Property, plant and equipment, at cost:
Land and improvements 1,005,895 996,033
Buildings and improvements 6,149,253 6,044,175
Machinery and equipment 11,177,306 10,433,916
- - --------------------------------------------------------------------------
18,332,454 17,474,124
Less accumulated depreciation 11,637,820 10,887,500
- - --------------------------------------------------------------------------
6,694,634 6,586,624
- - --------------------------------------------------------------------------
Other assets:
Marketable equity securities 2,134,799 1,552,581
Miscellaneous 140,907 139,319
- - --------------------------------------------------------------------------
$24,224,579 $20,448,462
==========================================================================
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable $ 2,435,000 $ 915,000
Current portion of long-term debt 228,333 223,333
Accounts payable 2,636,689 3,151,971
Accrued liabilities 1,378,184 1,374,270
Income taxes 350,305 326,097
- - --------------------------------------------------------------------------
Total current liabilities 7,028,511 5,990,671
- - --------------------------------------------------------------------------
Deferred income taxes 1,435,568 1,123,772
Long-term debt 2,179,960 428,333
Stockholders' equity:
Preferred stock, $1.00 par value-
Authorized 1,000,000 shares; issued, none - -
Common stock, $.05 par value-Authorized
10,000,000 shares; issued 3,793,695 shares 189,685 189,685
Capital surplus 6,397,485 6,374,485
Retained earnings 11,030,591 10,727,167
Net unrealized gain on marketable
equity securities 1,181,415 832,197
Treasury stock at cost, 1,029,315 and
1,029,145 shares (5,218,636) (5,217,848)
- - --------------------------------------------------------------------------
Total stockholders' equity 13,580,540 12,905,686
- - --------------------------------------------------------------------------
$24,224,579 $20,448,462
=========================================================================
See notes to consolidated financial statements.
<PAGE>
<PAGE>
<TABLE>
Consolidated Statements of Operations
<CAPTION>
For the Years Ended December 31, 1995 1994 1993
- - -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $28,837,026 $24,228,683 $19,899,113
Cost of sales 20,522,548 17,028,131 14,687,529
- - -----------------------------------------------------------------------------------------
Gross profit 8,314,478 7,200,552 5,211,584
- - -----------------------------------------------------------------------------------------
Selling and administrative expenses 6,882,748 6,312,283 5,763,636
Research and development expenses 535,619 961,768 1,056,219
- - ----------------------------------------------------------------------------------------
7,418,367 7,274,051 6,819,855
- - ----------------------------------------------------------------------------------------
Operating profit (loss) 896,111 (73,499) (1,608,271)
Other income (expense):
Interest expense (374,832) (37,691) (59,367)
Other, net 1,145 (44,669) (97,529)
- - -----------------------------------------------------------------------------------------
(373,687) (82,360) (156,896)
- - -----------------------------------------------------------------------------------------
Earnings (loss) from continuing operations
before income taxes and cumulative
effect of accounting change 522,424 (155,859) (1,765,167)
Income tax (expense) benefit (219,000) 42,000 612,000
- - -----------------------------------------------------------------------------------------
Earnings (loss) from continuing operations
before cumulative effect of accounting change 303,424 (113,859) (1,153,167)
Earnings from discontinued operations - - 1,285,804
- - -----------------------------------------------------------------------------------------
Earnings (loss) before cumulative effect of
accounting change 303,424 (113,859) 132,637
Cumulative effect of accounting change - - 135,000
- - -----------------------------------------------------------------------------------------
Net earnings (loss) $ 303,424 $ (113,859) $ 267,637
=========================================================================================
Earnings (loss) per share:
Continuing operations before cumulative
effect of accounting change $ .11 $ (.04) $ (.40)
Discontinued operations - - .44
Cumulative effect of accounting change - - .05
- - -----------------------------------------------------------------------------------------
$ .11 $ (.04) $ .09
=========================================================================================
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<PAGE>
<TABLE>
Consolidated Statements of Cash Flows
<CAPTION>
For the Years Ended December 31, 1995 1994 1993
- - ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Earnings (loss) from continuing operations before
accounting change $ 303,424 $ (113,859) $(1,153,167)
Adjustments to reconcile net earnings (loss) to net cash
provided (used) by operating activities:
Depreciation and amortization 1,270,785 1,101,471 997,742
Changes in deferred income taxes 132,000 (42,000) 92,000
Other 2,960 - -
Changes in assets and liabilities:
Receivables, net (1,070,365) (1,363,072) 629,434
Inventories (2,090,619) (1,915,987) 423,655
Other current assets 58,936 (163,054) (9,624)
Accounts payable and accrued liabilities (511,368) 1,874,927 340,014
Income taxes, net 24,636 159,830 (738,248)
- - ---------------------------------------------------------------------------------------------------------
Net cash provided (used) by operating activities (1,879,611) (461,744) 581,806
- - ---------------------------------------------------------------------------------------------------------
Cash Flows from Investing Activities:
Capital expenditures, net (1,354,383) (1,903,830) (860,880)
Purchases of marketable equity securities - (150,000) (300,001)
Collection of amount due from sale of discontinued operations 250,000 155,000 -
Other, net (26,000) (22,688) (92,201)
- - ---------------------------------------------------------------------------------------------------------
Net cash (used) by investing activities (1,130,383) (1,921,518) (1,253,082)
- - ---------------------------------------------------------------------------------------------------------
Cash Flows from Financing Activities:
Proceeds from issuance of long-term debt and warrants 2,000,000 - -
Net borrowings (repayments) under lines of credit 1,520,000 915,000 (850,000)
Payments on long-term debt (223,333) (208,334) (496,432)
Purchases of common stock, net (788) (881) (504,054)
- - ---------------------------------------------------------------------------------------------------------
Net cash provided (used) by financing activities 3,295,879 705,785 (1,850,486)
- - ---------------------------------------------------------------------------------------------------------
Cash Provided by Discontinued Operations - - 4,030,039
Net Increase (Decrease) in Cash and Cash Equivalents 285,885 (1,677,477) 1,508,277
Cash and Cash Equivalents at beginning of year 544,455 2,221,932 713,655
- - ---------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at end of year $ 830,340 $ 544,455 $ 2,221,932
=========================================================================================================
Supplemental Disclosures of Cash Flow Information
Cash paid during the year by continuing operations for:
Interest $ 403,462 $ 78,879 $ 120,078
Income taxes $ - $ 25,620 $ 45,655
</TABLE>
<PAGE>
<PAGE>
Consolidated Statements of Cash Flows - continued
Noncash Investing and Financing Activities:
Under Statement of Financial Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities", the Company recorded the
following increases (decreases):
1995 1994 1993
- - --------------------------------------------------------------------------
Marketable Equity Securities $ 582,000 $ (248,000) $1,090,000
Deferred Income Taxes 233,000 (100,000) 110,000
Net Unrealized Gain on Marketable
Equity Securities 349,000 (148,000) 980,000
In connection with the sale of its Alloy Surfaces Company, Inc. subsidiary
in 1993, the Company recorded a $405,000 receivable.
See notes to consolidated financial statements.
<PAGE>
<PAGE>
<TABLE>
Consolidated Statements of Stockholders' Equity
<CAPTION>
Unrealized
Gain (Loss)
on
Marketable
Common Stock Capital Retained Equity Treasury
Shares Amount Surplus Earnings Securities Stock
- - ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1993 3,793,695 $189,685 $6,374,485 $10,573,389 $ - $(4,712,913)
Net earnings - - - 267,637 - -
Purchases of common stock, net - - - - - (504,054)
Unrealized gain on marketable
equity securities - - - - 979,818 -
- - ----------------------------------------------------------------------------------------------------------------
Balance, December 31, 1993 3,793,695 189,685 6,374,485 10,841,026 979,818 (5,216,967)
Net (loss) - - - (113,859) - -
Purchases of common stock - - - - - (881)
Unrealized (loss) on marketable
equity securities - - - - (147,621) -
- - ----------------------------------------------------------------------------------------------------------------
Balance, December 31, 1994 3,793,695 189,685 6,374,485 10,727,167 832,197 (5,217,848)
Net earnings - - - 303,424 - -
Purchases of common stock - - - - - (788)
Unrealized gain on marketable
equity securities - - - - 349,218 -
Issuance of detachable
common stock purchase
warrants - - 23,000 - - -
- - ----------------------------------------------------------------------------------------------------------------
Balance, December 31, 1995 3,793,695 $189,685 $6,397,485 $11,030,591 $1,181,415 $(5,218,636)
================================================================================================================
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<PAGE>
Notes to Consolidated Financial Statements
(1) Summary of Significant Accounting Policies:
Principles of consolidation -- The accompanying consolidated financial
statements include the accounts of MATEC Corporation and its wholly owned
subsidiaries. Significant intercompany balances and transactions have
been eliminated in consolidation.
Use of estimates -- The preparation of the Company's financial
statements in conformity with generally accepted accounting principles
necessarily requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the balance sheet dates. Estimates
include reserves for accounts receivable and inventory, useful lives of
property, plant and equipment, accrued liabilities, and deferred income
taxes.
Fair value of financial instruments -- Statement of Financial
Accounting Standards No. 107 "Disclosures About Fair Value of Financial
Instruments" requires disclosure of the fair value of certain financial
instruments. The carrying amounts of cash, cash equivalents, accounts
payable and accrued expenses approximate fair value because of their
short-term nature. Marketable equity securities are recorded in the
financial statements at aggregate fair value. The carrying amounts of the
Company's debt instruments approximate fair value (Notes 8 and 9).
Cash equivalents -- For purposes of the statements of cash flows, the
Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents. Cash equivalents
are stated at cost plus accrued interest, which approximates market value.
Inventories -- Inventories are stated at the lower of cost or market.
Steel cable product inventory costs are determined by the last-in,
first-out method (LIFO). The remaining product inventory costs are
determined by the first-in, first-out method (FIFO).
Property, plant and equipment -- The Company uses the straight-line
method of providing for depreciation and amortization of property, plant
and equipment for financial reporting purposes and accelerated methods for
tax purposes. The estimated lives used to compute depreciation and
amortization are as follows: land improvements - 10 years, buildings and
improvements - 15 to 40 years and machinery and equipment - 3 to 10 years.
Marketable equity securities -- Marketable equity securities consist
of common stocks and are valued under Statement of Financial Accounting
Standards No. 115 ("SFAS 115") "Accounting for Certain Investments in Debt
and Equity Securities". Under SFAS 115, the Company has classified these
securities as "available for sale" and are valued at fair value, with
unrealized gains, net of taxes excluded from earnings and reported as a
separate component of stockholders' equity.
<PAGE>
<PAGE>
Notes continued
At December 31, 1995 and 1994, the fair market value (based on quoted
market prices) of these securities was $2,134,799 and $1,552,581,
respectively, and the amortized cost was $710,384. Gross unrealized gains
amounted to $1,424,415 and $842,197 at December 31, 1995 and 1994,
respectively, and there were no unrealized loses at either date. During
1995, the Company recorded a $349,218 increase in the "Unrealized Gain
(Loss) on Marketable Equity Securities" component of stockholders' equity
and a $147,621 decrease in the same account during 1994.
Revenue recognition -- Revenue is recognized when product is shipped.
Income taxes -- The Company accounts for income taxes under Statement
of Financial Accounting Standards No. 109 ("SFAS 109") "Accounting for
Income Taxes". This Statement requires the Company to compute deferred
income taxes based on the differences between the financial statement and
tax basis of assets and liabilities using enacted rates in effect in the
years in which the differences are expected to reverse.
Earnings (loss) per share -- Earnings (loss) per share have been
computed based on the weighted average number of shares outstanding during
the years -- 2,764,503 shares in 1995, 2,764,687 shares in 1994 and
2,883,712 shares in 1993. No effect has been given to outstanding stock
options and warrants as no material dilutive effect would result from the
exercise of these items.
(2) Discontinued Operations: In September 1993, the Company sold the stock
of its Alloy Surfaces Company, Inc. ("Alloy") subsidiary for approximately
$4.3 million in cash and $405,000 in receivables. The gain on the sale
was $1,068,000 after a tax provision of $570,000. Accordingly, the
operating results of Alloy have been reported as discontinued operations.
The earnings relating to Alloy for 1993 are comprised of the
following:
1993
- - --------------------------------------------------------------------------
Earnings from operations (less applicable income
taxes of $95,000) $ 152,904
Gain on disposal (less applicable income taxes of $570,000) 1,067,900
Cumulative effect of income tax accounting change 65,000
- - --------------------------------------------------------------------------
Earnings from discontinued operations $1,285,804
==========================================================================
(3) Receivables, net: Receivables, net of allowances, consist of the
following:
1995 1994
- - --------------------------------------------------------------------------
Accounts receivable, less allowance for doubtful
accounts of $194,000 and $199,000 $5,672,411 $4,602,046
Amount due on the sale of Alloy Surfaces Co., Inc - 250,000
- - --------------------------------------------------------------------------
$5,672,411 $4,852,046
==========================================================================
<PAGE>
<PAGE>
Notes continued
(4) Inventories: Inventories consist of the following:
1995 1994
- - --------------------------------------------------------------------------
Raw materials $3,415,021 $3,006,702
Work in process 925,168 698,022
Finished goods 3,378,971 1,923,817
- - --------------------------------------------------------------------------
$7,719,160 $5,628,541
==========================================================================
Inventories of $2,897,000 in 1995 and $2,752,000 in 1994 are
determined by the LIFO method. In 1995 and 1994 the amounts of LIFO
inventories were approximately $23,000 and $45,000 less than the amount of
such inventories determined on the FIFO basis.
(5) Income Taxes: The components of the provision (benefit) for income
taxes are as follows:
1995 1994 1993
- - --------------------------------------------------------------------------
Current provision (benefit):
Federal $ - $ - $(704,000)
State 87,000 - -
- - --------------------------------------------------------------------------
87,000 - (704,000)
- - --------------------------------------------------------------------------
Deferred provision (benefit):
Federal 133,000 (62,000) 92,000
State (1,000) 20,000 -
- - --------------------------------------------------------------------------
132,000 (42,000) 92,000
- - --------------------------------------------------------------------------
Total $ 219,000 $ (42,000) $(612,000)
==========================================================================
The tax effects of significant items comprising the Company's net
deferred tax liability as of December 31, 1995 and 1994 are as follows:
1995 1994
- - --------------------------------------------------------------------------
Deferred tax liabilities:
Depreciation $ 584,700 $ 598,600
DISC commissions 535,200 468,000
Unrealized gain on marketable equity securities 243,000 10,300
Installment sale - 25,700
- - --------------------------------------------------------------------------
Total deferred tax liabilities 1,362,900 1,102,600
- - --------------------------------------------------------------------------
Deferred tax assets:
Inventory reserves 485,600 481,400
State net operating loss carryforwards 311,600 264,800
Federal net operating loss carryforwards 18,700 94,700
Allowance for doubtful accounts 70,800 80,000
Accrued expenses 100,400 124,300
- - --------------------------------------------------------------------------
Total deferred tax assets 987,100 1,045,200
Valuation allowance (311,600) (264,800)
- - --------------------------------------------------------------------------
Deferred tax assets, net 675,500 780,400
- - --------------------------------------------------------------------------
Net deferred tax liabilities $ 687,400 $ 322,200
==========================================================================
<PAGE>
<PAGE>
Notes continued
Other current assets include deferred income taxes of $748,000 and
$802,000 in 1995 and 1994.
Valuation allowances have been provided at December 31, 1995 and 1994
for "state net operating loss carryforwards". The allowances have been
recorded since it is more likely than not that the Company may not be able
to generate operating income to realize the benefit of these losses, by
the expiration dates beginning in 1997.
The valuation allowance increased slightly during 1995 as a result of
additional state net operating losses in 1995.
The total income tax provision (benefit) differs from that computed by
applying the Federal income tax rate to income before income taxes. The
reasons for the difference are as follows:
1995 1994 1993
- - --------------------------------------------------------------------------
Income taxes at statutory rates $ 177,624 $ (52,992) $(600,157)
State income tax, net of Federal
tax benefit 57,000 13,000 -
Benefit of state operating
loss carryforward (25,000) - -
Non-deductible expenses 17,000 15,000 8,000
Other, net (7,624) (17,008) (19,843)
- - --------------------------------------------------------------------------
$ 219,000 $ (42,000) $(612,000)
==========================================================================
(6) Profit Sharing and Savings Plan: The Company has a trusteed profit
sharing 401(k) plan that covers all qualified employees. Under the profit
sharing section of the plan, the Company may make contributions to the
plan at the discretion of the Board of Directors. Under the 401(k)
section of the plan, the Company matched 50% of employee contributions up
to 6% of compensation. Total Company contributions charged to operations
were $142,000 in 1995, $115,000 in 1994 and $103,300 in 1993.
(7) Accrued Liabilities: Accrued liabilities consists of the following
items:
1995 1994
- - --------------------------------------------------------------------------
Employee compensation $ 364,267 $ 274,164
Other 1,013,917 1,100,106
- - --------------------------------------------------------------------------
$1,378,184 $1,374,270
==========================================================================
(8) Notes Payable: The Company has secured demand lines of credit with
two banks amounting in total to $2,850,000. The $2,000,000 line of credit
is secured by all assets except real estate and marketable equity
securities. Advances under this line are based on percentage formulas of
specific receivable and inventory balances of certain subsidiaries. The
Company had $1,585,000 of borrowings outstanding under this line of
credit at December 31, 1995. The $850,000 line of credit is secured by
marketable equity securities. The Company had $850,000 of borrowings
outstanding under this line of credit at December 31, 1995. There are no
compensating balance requirements or significant commitment fees under
either arrangement. The weighted average interest rate on outstanding
notes payable was 9.4% at December 31, 1995 and 9.25% at December 31,
1994.
<PAGE>
<PAGE>
Notes continued
(9) Long-Term Debt:
Long-term debt consists of the following:
1995 1994
- - --------------------------------------------------------------------------
11% Term Debt, $2 million face amount, due in 2000;
interest payable quarterly $1,979,960 $ -
Industrial Revenue Bonds:
Principal payments of $180,000 in 1996
and $200,000 in 1997; interest payable
semi-annually at a rate of 7.0% 380,000 555,000
Semi-annual principal payments of $24,167
through 1996; interest payable semi-annually
at a rate of 65% of the trustee's prime rate 48,333 96,666
- - --------------------------------------------------------------------------
2,408,293 651,666
Less current portion 228,333 223,333
- - --------------------------------------------------------------------------
$2,179,960 $ 428,333
===========================================================================
The Term Debt Note is secured by all the Company's assets, except for
real estate, marketable equity securities, and certain specific equipment
with a total book value of $255,000. The Term Debt Agreement includes
covenants covering debt to equity and interest expense ratios and
restrictions as to the total amount of debt, dividends, and capital stock
repurchases. Dividend payments in any fiscal year are limited to 30% of
the Company's net earnings of the prior fiscal year. The Company is in
compliance with all such covenants at December 31, 1995. Under the
Agreement, the lender will subordinate its security interest for up to $4
million in debt, with corresponding increases in the interest rate from
the 10% stated rate to 12% based on the subordination amount. The lender
subordinated its security interest to the $2 million bank line of credit.
As part of the Agreement, the Company issued the lender transferable
common stock warrants to purchase 85,000 shares of the Company's common
stock at $4.75 per share. The warrants were valued at $23,000 on the date
of issuance. The warrants expire on June 30, 2000.
The Industrial Revenue Bonds are secured by certain assets with
carrying values of $2,936,000.
The aggregate principal payments on long-term debt due in each of the
next five years are as follows; 1996 - $228,333; 1997 - $200,000; 1998 -
$0; 1999 - 0; and 2000 - $2,000,000.
(10) Stock Options: The MATEC Corporation 1992 Stock Option Plan allows
for the granting of options to officers, key employees, and other
individuals to purchase a maximum of 300,000 shares of the Company's
common stock. The option price and terms are determined by the Company's
Stock Option-Compensation Committee. The options granted may qualify as
incentive stock options. At December 31, 1995, there were 73,750 options
available for future grant under this Plan.
<PAGE>
<PAGE>
Notes continued
The 1982 Incentive Stock Option Plan allowed for the granting of options
to employees, including officers, to purchase a maximum of 150,000 shares of
the Company's common stock at a price not less than the fair market value of
the stock at or about the time of grant. Options may be exercisable in
installments or under such terms as the Company's Stock Option-Compensation
Committee may determine. As of March 23, 1992, there were no further options
to be granted under this Plan. All options granted and outstanding under the
1982 Plan remain outstanding and exercisable in accordance with their terms.
At December 31, 1995, the Company has reserved 327,000 shares of common
stock for these Plans.
A summary of the changes in stock options of the above Plans is as
follows:
<TABLE>
<CAPTION>
1995 1994 1993
- - -------------------------------------------------------------------------------------------------------
Number Option price Number Option price Number Option price
of shares per share of shares per share of shares per share
- - -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding, January 1, 241,750 $3.50 - 5.25 189,500 $3.50-5.25 190,500 $3.50-5.25
Exercised - - - - - -
Granted 12,500 4.38 55,250 3.69-4.25 8,500 3.63
Expired/cancelled (1,000) 5.25 (3,000) 4.94 (9,500) 4.94
- - -------------------------------------------------------------------------------------------------------
Outstanding, December 31, 253,250 $3.50 - 5.25 241,750 $3.50-5.25 189,500 $3.50-5.25
=======================================================================================================
Exercisable, December 31, 131,450 $3.50 - 5.25 81,575 $3.50-5.25 45,500 $3.50-5.25
=======================================================================================================
</TABLE>
(11) Other Income (Expense), net: Other, net consists of the following items:
1995 1994 1993
- - --------------------------------------------------------------------------
Interest income $ 21,006 $ 25,872 $ 22,011
Real estate operations (54,698) (67,652) (125,090)
Other items, net 34,837 (2,889) 5,550
- - --------------------------------------------------------------------------
$ 1,145 $(44,669) $ (97,529)
==========================================================================
Interest expense in 1995, 1994 and 1993 of $32,725, $44,608,
and $64,267, respectively, is included in real estate operations.
(12) Business Segments: The Company operates in three industry segments:
Electronics, Steel Cable, and Instruments. In addition, the Company
operates two real estate subsidiaries. Operating profit (loss) represents
net sales less all identifiable operating expenses. General corporate
expenses, income taxes, and other income or expense are excluded from
segment operations.
<PAGE>
<PAGE>
Notes continued
1995 1994 1993
- - -----------------------------------------------------------------------------
(in thousands)
Net Sales:
Electronics $ 12,911 $ 8,265 $ 6,820
Steel Cable 9,748 10,117 9,089
Instruments 6,178 5,847 3,990
- - -----------------------------------------------------------------------------
Total $ 28,837 $ 24,229 $ 19,899
=============================================================================
Operating Profit (Loss):
Electronics $ 1,870 $ (63) $ (322)
Steel Cable (261) 628 160
Instruments 298 404 (445)
- - -----------------------------------------------------------------------------
Total 1,907 969 (607)
General Corporate Expenses (1,011) (1,043) (1,001)
Real Estate Operations, Net (55) (68) (125)
Other Income (Expense), Net (319) (14) (32)
- - -----------------------------------------------------------------------------
Earnings (loss) before income taxes $ 522 $ (156) $ (1,765)
=============================================================================
Identifiable Assets:
Electronics $ 8,109 $ 5,398 $ 3,657
Steel Cable 7,111 6,601 4,878
Instruments 3,511 3,058 1,871
Corporate 3,258 2,968 5,090
Real Estate Operations 2,236 2,423 2,567
- - -----------------------------------------------------------------------------
$ 24,225 $ 20,448 $ 18,063
=============================================================================
Capital Expenditures:
Electronics $ 209 $ 667 $ 151
Steel Cable 923 1,021 498
Instruments 179 180 140
Corporate - 2 8
Real Estate Operations 43 41 64
- - -----------------------------------------------------------------------------
$ 1,354 $ 1,911 $ 861
=============================================================================
Depreciation and Amortization:
Electronics $ 330 $ 298 $ 249
Steel Cable 527 385 305
Instruments 190 195 220
Corporate 3 5 6
Real Estate Operations 221 218 217
- - -----------------------------------------------------------------------------
$ 1,271 $ 1,101 $ 997
=============================================================================
Corporate assets consist mainly of cash and cash equivalents and
marketable equity securities.
<PAGE>
<PAGE>
Notes continued
Summarized financial information covering the Company's domestic and
foreign (Mexico) operations is outlined below:
1995 1994 1993
- - -----------------------------------------------------------------------------
(in thousands)
Net Sales:
Domestic $24,634 $19,739 $15,672
Foreign 4,203 4,490 4,227
- - -----------------------------------------------------------------------------
$28,837 $24,229 $19,899
=============================================================================
Operating Profit (Loss):
Domestic $ 2,358 $ 1,301 $ (118)
Foreign (451) (332) (489)
- - -----------------------------------------------------------------------------
$ 1,907 $ 969 $ (607)
=============================================================================
Identifiable Assets:
Domestic $22,044 $18,448 $16,148
Foreign 2,181 2,000 1,915
- - -----------------------------------------------------------------------------
$24,225 $20,448 $18,063
=============================================================================
Export sales amounted to approximately $5,248,000, $4,704,000 and
$2,621,000 in 1995, 1994 and 1993, respectively.
(13) Quarterly Financial Data (unaudited): Selected unaudited quarterly
financial data for 1995 and 1994 is set forth below:
First Second Third Fourth
- - ------------------------------------------------------------------------
1995 (in thousands, except per share data)
Net sales $6,319 $7,026 $7,118 $8,374
Gross profit 1,818 2,129 1,958 2,410
Earnings before income taxes 8 47 76 391
- - ------------------------------------------------------------------------
Net earnings $ 5 $ 28 $ 49 $ 221
========================================================================
Net earnings per share $ .00 $ .01 $ .02 $ .08
========================================================================
1994
Net sales $5,686 $5,817 $6,043 $6,683
Gross profit 1,590 1,773 1,731 2,107
Earnings (loss) before income taxes (253) (146) 25 218
- - ------------------------------------------------------------------------
Net earnings (loss) $ (167) $ (103) $ 18 $ 138
========================================================================
Net earnings (loss) per share $ (.06) $ (.04) $ .01 $ .05
========================================================================
In the 1994 fourth quarter, adjustments relative to the LIFO valuation of
inventories increased gross profit by $74,000 and increased net earnings by
$54,000 or $.02 per share.
(14) Contingencies: The Company is involved in litigation in the ordinary
course of business. The Company believes that the outcome of these actions
should not have a material adverse effect on the financial condition of the
Company.
<PAGE>
<PAGE>
Independent Auditors' Report
To the Stockholders and Board of Directors of MATEC Corporation:
We have audited the accompanying consolidated balance sheets of MATEC
Corporation and subsidiaries as of December 31, 1995 and 1994, and the
related consolidated statements of operations, stockholders' equity and
cash flows for each of the three years in the period ended December 31,
1995. 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. Those 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 consolidated financial statements present fairly,
in all material respects, the financial position of MATEC Corporation and
subsidiaries as of December 31, 1995 and 1994, and the results of their
operations and their cash flows for each of the three years in the period
ended December 31, 1995 in conformity with generally accepted accounting
principles.
Deloitte & Touche LLP
Boston, Massachusetts
March 1, 1996
(Remaining information on inside back cover is not incorporated by
reference.)
inside back cover
<PAGE>
Exhibit (21) . Subsidiaries of the Registrant
-------------- ------------------------------
The following is a list of the Registrant's subsidiaries (all
of which are 100% owned):
State or Other Jurisdiction
Of Incorporation
---------------------------
Bergen Cable Technologies, Inc. New Jersey
Cable Bergen de Mexico, S.A. de C.V. Mexico
Matec Applied Sciences, Inc. Delaware
MATEC EFO Corp. Massachusetts
Matec Fiberoptics, Inc. Massachusetts
Matec Instruments, Inc. Delaware
Matec International, Inc. Massachusetts
Matec Microelectronics, Inc. Massachusetts
MEKontrol, Inc. Massachusetts
RSC Realty Corporation Delaware
Valpey-Fisher Corporation Massachusetts
<PAGE>
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
MATEC Corporation
We consent to the incorporation by reference in these
Registrations Nos. 2-77851 and 33-77554 of MATEC Corporation on
Form S-8, as amended, of our reports dated March 1, 1996,
appearing in the Annual Report on Form 10-K of MATEC Corporation
for the year ended December 31, 1995.
Deloitte & Touche LLP
Boston, Massachusetts
March 25, 1996
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 830,340
<SECURITIES> 0
<RECEIVABLES> 5,866,411
<ALLOWANCES> 194,000
<INVENTORY> 7,719,160
<CURRENT-ASSETS> 15,254,239
<PP&E> 18,332,454
<DEPRECIATION> 11,637,820
<TOTAL-ASSETS> 24,224,579
<CURRENT-LIABILITIES> 7,028,511
<BONDS> 2,179,960
0
0
<COMMON> 189,685
<OTHER-SE> 13,390,855
<TOTAL-LIABILITY-AND-EQUITY> 24,224,579
<SALES> 28,837,026
<TOTAL-REVENUES> 28,837,026
<CGS> 20,522,548
<TOTAL-COSTS> 20,522,548
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 23,652
<INTEREST-EXPENSE> 374,832
<INCOME-PRETAX> 522,424
<INCOME-TAX> 219,000
<INCOME-CONTINUING> 303,424
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 303,424
<EPS-PRIMARY> .11
<EPS-DILUTED> .11
</TABLE>
