UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended July 5, 1998
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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)
Maryland 06-0737363
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(State or other jurisdiction of (I.R.S Employer
incorporation or organization) Identification Number)
75 South St., Hopkinton, Massachusetts 01748
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(Address of principal executive offices) (Zip Code)
(508) 435-9039
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(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 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
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As of August 10, 1998, the number of shares outstanding of Registrant's
Common Stock, par value $.05 was 2,716,948.
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MATEC Corporation
Index
Page
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PART I. FINANCIAL INFORMATION
Consolidated Condensed Balance Sheets -
July 5, 1998 and December 31, 1997 ...................... 3
Consolidated Statements of Operations - Three Months and
Six Months Ended July 5, 1998 and June 29, 1997 ......... 4
Consolidated Condensed Statements of Cash Flows -
Six Months Ended July 5, 1998 and June 29, 1997 ......... 5
Consolidated Statements of Comprehensive Income -
Three Months and Six Months ended July 5, 1998
and June 29, 1997 ....................................... 6
Notes to Consolidated Condensed Financial Statements ..... 7-9
Management's Discussion and Analysis of Financial
Condition and Results of Operations ..................... 10-12
PART II. OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders 13
Item 6 - Exhibits and Reports on Form 8-K ................ 13
Signatures ..................................................... 14
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
MATEC Corporation and Subsidiaries
Consolidated Condensed Balance Sheets
(In thousands, except share data) (Unaudited)
7/5/98 12/31/97(a)
-------- --------
ASSETS
Current assets:
Cash and cash equivalents ............................ $ 4,254 $ 885
Receivables, less allowances of $60 and $45 .......... 2,028 1,921
Inventories .......................................... 3,168 2,598
Deferred income taxes and other current assets ....... 1,342 873
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Total current assets ............................... 10,792 6,277
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Property, plant and equipment, at cost ................. 7,375 10,583
Less accumulated depreciation ........................ 5,029 6,806
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2,346 3,777
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Marketable equity securities ........................... 3,946 4,658
Net assets of discontinued operations .................. 914 7,144
Other assets ........................................... 79 70
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$18,077 $21,926
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ..................................... $ 889 $ 933
Accrued liabilities .................................. 1,615 862
Income taxes ......................................... 1,077 416
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Total current liabilities .......................... 3,581 2,211
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Deferred income taxes .................................. 1,832 2,317
Long-term debt ......................................... 1,991 1,989
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 2,716,948 and
3,804,195 shares ................................... 136 190
Capital surplus ...................................... 5,513 6,443
Retained earnings .................................... 2,755 11,443
Net unrealized gain on marketable equity securities .. 2,269 2,696
Treasury stock at cost, 0 and 1,070,544 shares ....... - (5,363)
------- -------
Total stockholders' equity ...................... 10,673 15,409
------- -------
$18,077 $21,926
======= =======
(a) Restated to reflect discontinued operations.
See notes to consolidated condensed financial statements.
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MATEC Corporation and Subsidiaries
Consolidated Statements of Operations
(In thousands, except per share data) (Unaudited)
Three Months Ended Six Months Ended
7/5/98 6/29/97(a) 7/5/98 6/29/97(a)
------- ------- -------- --------
Net sales ..................... $ 3,397 $ 3,230 $ 6,896 $ 6,173
Costs and expenses:
Cost of sales ................ 2,583 2,451 5,267 4,755
Selling and administrative .. 751 732 1,514 1,420
------- ------- ------- -------
3,334 3,183 6,781 6,175
Operating profit .............. 63 47 115 (2)
Other income (expense):
Interest expense ............. (50) (57) (102) (112)
Gain on sale of property, plant
and equipment ............... - 386 -
Other, net ................... 42 15 55 3
------- ------- ------- -------
(8) (42) 339 (109)
Earnings (loss) from continuing
operations before income taxes 55 5 454 (111)
Income tax (expense) benefit .. (22) (2) (182) 44
------- ------- ------- -------
Earnings (loss) from continuing
operations ................... 33 3 272 (67)
Discontinued operations, net of
taxes:
Earnings from operations .... 9 38 111 90
Gain on sale ................ 198 - 198 -
------- ------- ------- -------
Net earnings .................. $ 240 $ 41 $ 581 $ 23
======= ======= ======= =======
Earnings (loss) per share:
Basic:
Continuing operations ....... $ .02 $ .00 $ .10 $(.02)
Discontinued operations:
Operations, net of taxes ... .00 .02 .04 .03
Gain on sale, net of taxes . .07 .00 .07 .00
----- ----- ----- -----
$ .09 $ .02 $ .21 $ .01
===== ===== ===== =====
Diluted:
Continuing operations ....... $ .02 $ .00 $ .10 $(.02)
Discontinued operations:
Operations, net of taxes ... .00 .01 .04 .03
Gain on sale, net of taxes . .07 .00 .07 .00
----- ----- ----- -----
$ .09 $ .01 $ .21 $ .01
===== ===== ===== =====
Weighted average shares:
Basic ....................... 2,747 2,734 2,740 2,741
Diluted ..................... 2,748 2,771 2,741 2,741
Cash dividends per share ...... $1.75 $ - $1.75 $ -
===== ===== ===== =====
(a) Restated to reflect discontinued operations.
See notes to consolidated condensed financial statements.
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MATEC Corporation and Subsidiaries
Consolidated Condensed Statements of Cash Flows
(In thousands)
(Unaudited)
Six Months Ended
7/5/98 6/29/97(a)
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Cash flows from operating activities:
Net earnings (loss) from continuing operations ... $ 272 $ (67)
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization .................. 268 283
Deferred income taxes .......................... (200) (20)
Gain on sale of property, plant and equipment .. (386) -
Other .......................................... 2 2
Changes in operating assets and liabilities .... (70) (276)
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Net cash (used) by operating activities (114) (78)
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Cash flows from investing activities:
Proceeds from sale of property, plant and equipment 1,862 -
Capital expenditures, net ........................ (314) (201)
Other, net........................................ (8) (2)
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Net cash provided (used) by investing activities 1,540 (203)
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Cash flows from financing activities:
Dividend paid .................................... (4,827) -
Net (repayments) under lines of credit ........... - (400)
Purchases of common stock ........................ (164) (80)
Stock options exercised .......................... 101 -
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Net cash (used) by financing activities ........... (4,890) (480)
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Net cash provided by discontinued operations ...... 6,833 986
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Net increase in cash and cash equivalents ......... 3,369 225
Cash and cash equivalents:
Beginning of period .............................. 885 610
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End of period .................................... $ 4,254 $ 835
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Non-cash investing and financing activities:
During 1998, the Company retired all of its treasury stock. The
total cost of the treasury shares of $5,527,000 reduced common stock,
capital surplus and retained earnings by $56,000, $1,028,000 and
$4,443,000, respectively.
(a) Restated to reflect discontinued operations.
See notes to consolidated condensed financial statements.
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MATEC Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income
(In thousands)
(Unaudited)
Three Months Ended
7/5/98 6/29/97
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Net earnings ................................. $ 240 $ 41
Other comprehensive income, net of tax:
Unrealized gain (loss) on marketable
equity securities, net of tax benefit
of $77 in 1998 and tax expense of $130
in 1997 ..................................... (116) 194
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Comprehensive income ......................... $ 124 $ 235
======= ========
Six Months Ended
7/5/98 6/29/97
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Net earnings ................................ $ 581 $ 23
Other comprehensive income, net of tax:
Unrealized gain (loss) on marketable
equity securities, net of tax benefit
of $284 in 1998 and tax expense of $78
in 1997 .................................... (427) 116
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Comprehensive income ........................ $ 154 $ 139
======= =======
See notes to consolidated condensed financial statements.
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MATEC Corporation and Subsidiaries
Notes to Consolidated Condensed Financial Statements
1. Financial Presentation:
The interim financial statements are unaudited but, in the opinion of
management, reflect all adjustments necessary for fair presentation of
results for such periods. The results of operations for any interim
period are not necessarily indicative of results for the full year.
The accounting policies followed by the Company are set forth
in Note 1 to the Company's financial statements in the 1997 MATEC
Corporation and Subsidiaries Annual Report which is incorporated by
reference in Form 10-K for the year ended December 31, 1997.
2. Description of Business:
As described below, the Company has disposed of its Steel Cable and
Instruments business segments. As a result, the Company's current
remaining business is conducted through its Valpey-Fisher subsidiary.
This operation was previously reported in the Electronics business
segment.
3. Inventories:
Inventories consist of the following (in thousands):
7/5/98 12/31/97
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Raw materials ....................... $ 1,472 $ 800
Work in process ..................... 949 1,078
Finished goods ...................... 747 720
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$ 3,168 $ 2,598
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4. Discontinued Operations:
On April 15, 1998, the Company sold all of the assets of its Bergen
Cable Technologies, Inc. ("Bergen") subsidiary. The purchase price
received consisted of $7.5 million in cash, a subordinated promissory
note in the principal amount of $1,250,000, a 10% stock and membership
interest in the acquiring entities, and assumption of certain liabilities
including trade payables. The gain on the sale was $198,000 after a tax
provision of $132,000.
Since the acquiring entity has significant third-party debt compared
to its equity and the Company's note is subordinated to the third party
debt, the Company will not record any gain realized on the note and stock
portions of the sale until cash payments are received by the Company.
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The operating results of Bergen have been reported as discontinued
operations, and previously reported financial statements have been
restated to reflect this classification. The operating results of Bergen
are presented in the Consolidated Statements of Operations under the
caption "Discontinued operations, net of taxes: Earnings (loss) from
operations" and include (in thousands):
Three Months Ended Six Months Ended
7/5/98 6/29/97 7/5/98 6/29/97
------- ------- ------- -------
Net sales $ 260 $ 3,633 $ 4,411 $ 7,322
Earnings (loss) before
income taxes (86) 17 (15) 129
Income tax (expense) benefit 34 (7) 6 (52)
Net earnings (loss) (52) 10 (9) 77
At December 31, 1997, the net assets of Bergen included in the
Balance Sheet caption "Net assets of discontinued operations" were (in
thousands): Current assets - $5,008; property, plant and equipment, net -
$2,407; and current liabilities - $1,753.
See footnote 7. Subsequent Events.
5. Stockholders' Equity:
On July 2, 1998, the Company reincorporated in Maryland. In
connection with the reincorporation, stockholders who owned less than 100
shares of Common Stock on July 2, 1998 ceased to be stockholders and
received cash of $4.03 per share ("the Cash Out"). The reincorporation
and Cash Out were approved by stockholders at the Company's Special in
Lieu of Annual Meeting held on June 18, 1998.
As a result of the Cash Out, the Company acquired 35,705 shares of
Common Stock at a cost of $143,891. In connection with the
reincorporation, the 1,111,947 shares of treasury stock held by the
Company on July 2, 1998, which included the 35,705 shares of common stock
acquired as a result of the Cash Out, were retired and were reclassified
as reductions to common stock issued. The total cost of the treasury
shares of $5,526,880 reduced common stock, capital surplus, and retained
earnings by $55,597, $1,028,551 and $4,442,732, respectively.
6. New Accounting Standards:
The Company adopted Statement of Financial Accounting Standards
("SFAS") No. 130, "Reporting Comprehensive Income" during the first
quarter of 1998, as required. SFAS 130 establishes standards for
reporting and displaying comprehensive income and its components in a set
of financial statements. The adoption of SFAS 130 had no impact on the
Company's net earnings or stockholders' equity.
Comprehensive income is defined as the change in equity of a
business enterprise during a period from transactions and other events
and circumstances from nonowner sources. Presently, the only component
of comprehensive income for the Company is unrealized holding gains
(losses) on available for sale marketable equity securities.
The Company is evaluating its segment disclosures and will adopt
SFAS No. 131, "Disclosures about Segments of an Enterprise and related
Information" in the 1998 fourth quarter as required.
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7. Subsequent Event:
On August 3, 1998, the Company sold certain assets of its Matec
Instruments, Inc. ("MII") and Matec Applied Sciences, Inc. ("MASI")
subsidiaries to a newly formed corporation. Ken Bishop, who was
President of MII and MASI until August 3, 1998, owns 53% of the newly
formed corporation. MII and MASI had comprised the Company's Instruments
Segment of business.
The purchase price received consisted of approximately $847,000 in
cash, a subordinated promissory note in the principal amount of $250,000,
a $250,000 guaranteed royalty with payments based on 1.5% of future
sales, and the assumption of certain liabilities including trade
payables. The cash amount is subject to closing adjustments. In
addition, the buyer has entered into a 5 year lease agreement with the
Company to lease the space that it currently occupies and the buyer also
has a 5 year option to purchase the real estate that includes the leased
space. The Company will report an after-tax gain of approximately
$240,000 or $.09 per share in the third quarter of 1998.
As a result, the operating results of MII and MASI have been reported
as discontinued operations, and previously reported financial statements
have been restated to reflect this sale. The operating results of MII
and MASI are presented in the Consolidated Statements of Operations under
the caption "Discontinued operations, net of taxes: Earnings (loss) from
operations" and include (in thousands):
Three Months Ended Six Months Ended
7/5/98 6/29/97 7/5/98 6/29/97
------- ------- ------- -------
Net sales $ 1,263 $ 682 $ 2,337 $ 1,495
Earnings (loss) before
income taxes 100 47 199 20
Income tax (expense) benefit (39) (19) (79) (8)
Net earnings (loss) 61 28 120 12
Net assets of MII and MASI presented in the Consolidated Condensed
Balance Sheets under the caption "Net assets of discontinued operations"
include (in thousands):
7/5/98 12/31/97
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Current assets $ 1,421 $ 1,922
Property, plant and equipment, net 107 132
Current liabilities 614 572
------- -------
$ 914 $ 1,482
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Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
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Cash and cash equivalents increased $3,369,000 during the six months
ended July 5, 1998. The Company's continuing operations used $3,464,000
of cash as operating and financing activities used $114,000 and
$4,890,000 in cash, respectively, while investing activities generated
cash of $1,540,000. During this period, discontinued operations
generated $6,833,000 of cash.
The $114,000 use of cash from continuing operations was mainly due
to the $70,000 net increase in working capital. The $107,000 increase in
receivables is due to both a slight increase in the number of days sales
outstanding together with the sales increase. The inventory increase of
$540,000 is to support the current sales backlog and delivery
requirements. The $661,000 increase in income taxes is attributable to
the taxes due from operations and the sale of real estate and
discontinued operations.
During the six months ended July 5, 1998, the Company received
proceeds of $1,862,000 from the sale of its real estate complex located
in Delaware. None of the Company's operations were located at this
facility. During this period, the Company purchased $314,000 of
machinery and equipment. These additions are mainly geared toward adding
new and upgrading existing production capabilities and processes.
On May 15, 1998, the Company paid a special nonrecurring cash
distribution of a $1.75 per share to stockholders of record on May 4,
1998. This special nonrecurring distribution totaled $4,827,000 and
represents a substantial portion of the net cash proceeds from the sale
of its Bergen Cable subsidiary. During the six months ended July 5,
1998, the Company purchased $164,000 of treasury shares. The mandatory
cash-out of stockholders of record owning less than 100 shares accounted
for $144,000 of these treasury shares.
Management believes that based on its current working capital, the
expected cash flows from operations and its $1,850,000 lines of credit
availability, the Company's resources are sufficient to meet its
financial needs in 1998 including a remaining capital expenditures budget
of approximately $525,000.
Results of Operations
- ---------------------
Net sales from continuing operations for the quarter and six months
ended July 5, 1998 increased 5% and 12%, respectively, over the
comparable periods in 1997. The sales increases in both periods have
benefitted from a significantly higher beginning backlog compared to last
year. The Company has experienced weak bookings during 1998 due to the
slow down in the electronic component industry caused in part by the
financial difficulties in the Far East. As a result, the Company's July
5, 1998 backlog is 30% lower than the December 31, 1997 level and 15%
lower than the June 29, 1997 level.
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During both periods, the 1998 cost of sales as a percentage of sales
approximated the 1997 percentages. While sales increased over the
comparable periods in 1997, changes in the sales mix and increased
personnel and depreciation expenses negatively impacted the 1998 cost of
sales percentages.
Total selling and administrative expenses for the quarter and six
months ended July 5, 1998 increased $19,000 (3%) and $94,000 (7%),
respectively, over the 1997 comparable periods. Increased selling
expenses over 1997 of $84,000 and $171,000 during the quarter and six
months ended July 5, 1998 periods, respectively, were partially offset by
reductions in general and administrate expenses. The increases in
selling expenses were attributable increased personnel costs, increased
advertising expense and increased sales commissions paid to independent
sales representatives. The decreases in general and administrative
expenses mainly result from lower corporate payroll and travel expenses
as the Company has not replaced its former president since his
resignation as an employee in the third quarter of 1997.
During the quarter and six months ended July 5, 1998, interest
expense decreased $7,000 and $10,000, respectively, from the 1997 periods
due to lower levels of short-term debt. In February 1998, the Company
sold its real estate complex in Delaware and realized a $386,000 pre-tax
gain on the sale.
Other income (expense), net includes the following (in thousands):
Quarter Ended Six Months Ended
7/5/98 6/29/97 7/5/98 6/29/97
------- ------- ------- -------
Dividend income ........... $ 16 $ 16 $ 31 $ 31
Real estate operations .... (18) (10) (27) (37)
Interest income ........... 45 8 50 5
Other, net ................ (1) 1 1 4
------- ------- ------- -------
$ 42 $ 15 $ 55 $ 3
======= ======= ======= =======
The increases in interest income result from the higher cash levels
generated by the sales of real estate and the Bergen Cable subsidiary.
The fluctuations in the real estate operations are mainly due to either
increases or decreases in operating expenses.
The estimated effective income tax rate for both 1998 and 1997 is
40%.
During the quarter ended July 5, 1998, based on the increased sales
and gross margin, offset in part by an increase in operating expenses,
the Company reported a slight increase in operating profit. The net
nonoperating expenses decreased $34,000 from the corresponding 1997
period. As a result, the Company reported pre-tax earnings from
continuing operations of $55,000 during the quarter ended July 5, 1998
compared a pre-tax earnings of $5,000 in 1997. Earnings from
discontinued operations during 1998, including the gain on sale of
$198,000, amounted to $207,000 compared to $38,000 during the comparable
1997 period. In total, the Company reported net earnings of $240,000
during the quarter ended July 5, 1998 versus $41,000 in 1997.
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Based on the higher sales level and gross margin, partially offset by
increased operating expenses, the Company reported an operating profit of
$115,000 during the six months ended July 5, 1998 compared to an
operating loss of $2,000 during the comparable period in 1997. The six
months ended July 5, 1998 includes nonoperating income of $339,000 mainly
as a result of the gain on sale of real estate compared to $109,000 of
expense in the 1997 period. As a result, during the six months ended
July 5, 1998, the Company reported a pre-tax earnings from continuing
operations of $454,000 compared to a loss of $111,000 during the 1997
period. During the six months ended July 5, 1998, earnings from
discontinued operations, including the gain on sale of $198,000, amounted
to $309,000 versus $90,000 in 1997. In total, the Company reported net
earnings of $581,000 during the six months ended July 5, 1998 compared to
$23,000 in 1997.
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PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Special in Lieu of Annual Meeting of Stockholders was held
on June 18, 1998. Listed below are the matters submitted to stockholders
and the results of the stockholder votes.
(i) Election of six directors:
Nominee "For" "Withheld"
---------------------- --------- ----------
Eli Fleisher 2,305,119 7,320
Lawrence Holsborg 2,305,144 7,295
John J. McArdle III 2,305,634 6,805
Robert W. Muir, Jr. 2,305,348 7,091
Joseph W. Tiberio 2,305,119 7,320
Ted Valpey, Jr. 2,303,513 8,926
(ii) To reincorporate the Company in Maryland and cash out certain
stockholders:
"For" 1,820,706
"Against" 38,225
"Abstain" 4,916
"Broker non-votes" 448,592
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
2. Agreement of Merger and Recapitalization between MATEC
Corporation a Delaware corporation and MATEC Corporation
a Maryland corporation. Incorporated by reference to
Exhibit A to the Proxy Statement of Registrant for its
Special in Lieu of Annual Meeting of Stockholders held on
June 18, 1998.
3(a). Articles of Incorporation. Incorporated by reference to
Exhibit B to the Proxy Statement of Registrant for its
Special in Lieu of Annual Meeting of Stockholders held on
June 18, 1998.
3(b). By-Laws of Registrant as of July 2, 1998. Filed herein.
11. Statement re Computation of Per Share Earnings. Filed
herein.
27. Financial Data Schedule. Filed for electronic purposes
only.
(b) Reports on Form 8-K:
The Registrant filed a Report on Form 8-K on April 30,
1998 reporting under Item 2. Acquisition or disposition of
assets and Item 7. Financial statements, pro forma financial
information and Exhibits.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
MATEC Corporation
------------------------------------
Date: August 13, 1998 By /s/ Ted Valpey, Jr.
---------------------------------
Ted Valpey, Jr.
Chairman of the Board and
President
Date: August 13, 1998 By /s/ Michael J. Kroll
---------------------------------
Michael J. Kroll,
Vice President and Treasurer
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MATEC Corporation
By-Laws
ARTICLE I
OFFICES
Section 1. Offices. The Corporation shall maintain a registered
office in Maryland. The Corporation may maintain such other offices
and keep its books, documents and records at such other places both
within and without the State of Maryland as the Board of Directors may
from time to time determine or the business of the Corporation may
require.
ARTICLE II
STOCKHOLDERS
Section 2. Annual Meetings. Annual meetings of stockholders shall
be held on the last Wednesday in April, in each year, if not a legal
holiday, and if a legal holiday, then on the next secular day
following, or on such other day as shall be fixed by the Board of
Directors and stated in the notice of the meeting, when stockholders
shall elect by a plurality vote a Board of Directors, and transact such
other business as may properly be brought before the meeting. The
annual meeting shall be held at a time determined by the Board of
Directors and stated in the notice of the meeting.
Section 3. Notice of Annual Meeting. Written or printed notice of
the annual meeting stating the place, date and hour of the meeting
shall be delivered not less than ten nor more than ninety days before
the date of the meeting, by mail, by or at the direction of the chief
executive officer, the Secretary, or the officer or persons calling the
meeting, to each stockholder of record entitled to vote at such
meeting.
Section 4. Special Meetings. Special meetings of the
stockholders, for any purpose or purposes, unless otherwise prescribed
by statute or by the Articles of Incorporation, may be called by the
chief executive officer or the Board of Directors. The business
transacted at any special meeting of stockholders shall be limited to
the purposes stated in the notice of the meeting.
Section 5. Notice of Special Meetings. Written or printed notice
of a special meeting stating the place, date and hour of the meeting
and the purpose or purposes for which the meeting is called, shall be
delivered not less than ten nor more than ninety days before the date
of the meeting, by mail, by or at the direction of the chief executive
officer, the Secretary, or the officer or persons calling the meeting,
to each stockholder of record entitled to vote at such meeting. The
notice shall also indicate that it is being issued by, or at the
direction of, the person calling the meeting.
Section 6. Quorum. The holders of a majority of the shares issued
and outstanding and entitled to vote, represented in person or by
proxy, shall constitute a quorum at all meetings of the stockholders
for the transaction of business except as otherwise provided by statute
or by the Articles of Incorporation. If, however, such quorum shall
not be present or represented at any meeting of the stockholders, the
<PAGE>
stockholders present in person or represented by proxy shall have power
to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting at which a quorum shall be
present or represented any business may be transacted which might have
been transacted at the meeting as originally noticed.
Section 7. Voting. At any meeting of stockholders each
outstanding share having voting power shall be entitled to one vote on
each matter submitted to a vote. A stockholder may vote either in
person or by proxy executed in writing by the stockholder or by his
duly authorized attorney-in-fact. All elections shall be determined by
plurality vote, and except as otherwise provided by statute or in the
Articles of Incorporation, all other matters shall be determined by
vote of a majority of the shares present or represented at such meeting
and voting on such matters.
Section 8. Inspectors of Election. The Board of Directors in
advance of any meeting of stockholders may appoint one or more
inspectors to act at the meeting or any adjournment thereof. If
inspectors are not so appointed, the person presiding at a meeting of
stockholders may, and, on the request of any stockholder entitled to
vote thereat, shall appoint one or more inspectors. In case any person
appointed as inspector fails to appear or act, the vacancy may be
filled by the Board of Directors in advance of the meeting or at the
meeting by the person presiding thereat. Each inspector, before
entering upon the discharge of his duties shall take and sign an oath
faithfully to execute the duties of inspector at such meeting with
strict impartiality and according to the best of his ability.
Section 9. List of Stockholders. A list of stockholders as of the
record date, certified by the officer of the Corporation responsible
for its preparation or by the transfer agent, shall be produced at any
meeting of stockholders upon the request thereat or prior thereto of
any stockholder. If the right to vote at any meeting is challenged,
the inspectors of election, or person presiding thereat shall require
such list of stockholders to be produced as evidence of the right of
the persons challenged to vote at such meeting, and all persons who
appear from such list to be stockholders entitled to vote thereat may
vote at such meeting.
ARTICLE III
DIRECTORS
Section 1. Number, Qualification and Term. The property and
business of the Corporation shall be managed by its Board of Directors
consisting of not less than Five (5) nor more than Thirteen (13)
persons. The number of directors constituting the entire Board shall
be Six (6); provided, however, that from time to time, such number may
be decreased to not less than Five (5) or increased to not more than
Thirteen (13) persons by amendment of this section of the By-laws by a
majority of the entire Board of Directors. Directors need not be
stockholders. They shall be elected at the Annual Meeting of
Stockholders and each director shall be elected to serve until his
successor shall be elected and shall qualify.
-2-
<PAGE>
Section 2. Removal. Any or all of the directors may be removed
for cause at any time by the vote of the stockholders.
Section 3. Any vacancy occurring in the Board of Directors for any
cause other than by reason of an increase in the number of directors
may be filled by a majority of the remaining members of the Board of
Directors, although such majority is less than a quorum. Any vacancy
occurring by reason of an increase in the number of directors may be
filled by action of a majority of the entire Board of Directors. A
director elected by the Board of Directors to fill a vacancy shall be
elected to hold office until the next annual meeting of stockholders or
until his successor is elected and qualifies.
Section 4. Additional Powers. In addition to the powers and
authorities by these By-Laws expressly conferred upon it, the Board of
Directors may exercise all such powers of the Corporation and do all
such lawful acts and things as are not by statute or by the Articles of
Incorporation or by these By-Laws directed or required to be exercised
or done by the stockholders.
ARTICLE IV
MEETINGS OF THE BOARD OF DIRECTORS
Section 1. Place. Meetings of the Board of Directors, regular or
special, may be held either within or without the State of Maryland.
Section 2. First Meeting. The first meeting of each newly elected
Board of Directors shall be held immediately after the annual meeting
of stockholders at the same place as such meeting is held and no notice
of such meeting to the newly elected directors shall be necessary in
order legally to constitute the meeting provided a quorum shall be
present, or it may convene at such place and time as shall be specified
in a notice given as hereinafter provided for special meetings of the
Board of Directors, or as shall be specified in a duly executed waiver
of notice thereof.
Section 3. Regular Meetings. Regular meetings of the Board of
Directors may be held upon such notice, or without notice, and at such
time and at such place as shall from time to time be determined by the
Board.
Section 4. Special Meetings. Special meetings of the Board of
Directors may be called by the chief executive officer on written
notice to each director, deposited in the United States mail no later
than the third calendar day preceding the meeting date or delivered by
hand or to the telegraph company no later than the first calendar day
preceding the meeting date; special meetings shall be called by the
chief executive officer or Secretary in like manner and on like notice
on the written request of two directors.
Section 5. Quorum. A majority of the entire Board of Directors
shall constitute a quorum for the transaction of business unless a
greater or lesser number is required by law or by the Articles of
Incorporation. The vote of a majority of the directors present at any
meeting at which a quorum is present shall be the act of the Board of
-3-
<PAGE>
Directors, unless the vote of a greater number is required by law or by
the Articles of Incorporation. If a quorum shall not be present at any
meeting of directors, the directors present may adjourn the meeting
from time to time. Notice of any such adjournment shall be given to
any director who was not present at the time of such adjournment and
unless announced at the meeting to the other directors.
Section 6. Consent in Lieu of Meeting. Any action required or
permitted to be taken by the Board of Directors or any committee
thereof may be taken without a meeting if all members of the Board or
the committee consent in writing to the adoption of a resolution
authorizing the action. The resolution and the written consents
thereto by the members of the Board or committee shall be filed with
the minutes of the proceedings of the Board or committee.
Section 7. Telephone Participation at Meetings. Any one or more
of the Board of Directors or any committee thereof may participate in a
meeting of the Board of Directors or of such committee by means of
conference telephone or similar communications equipment allowing all
persons participating in the meeting to hear each other at the same
time. Participation in a meeting by such means shall constitute
presence in person at a meeting.
ARTICLE V
COMMITTEES
Section 1. Committees. The Board of Directors, by resolution
adopted by a majority of the entire board, may designate, from among
its members, an executive committee and other committees consisting of
three or more directors, which, to the extent provided in the
resolution, shall have all the authority of the Board, except as
otherwise required by law. Vacancies in the membership of such
committees shall be filled by the Board of Directors at a regular or
special meeting. Such committees shall keep regular minutes of its
proceedings and report the same to the Board when required.
Subject to the provisions of these By-Laws, the executive committee
and each other committee shall fix its own rules of procedure and shall
meet as provided by such rules or by resolution of the Board of
Directors and it shall also meet at the call of the Chairman of the
Board or President of the Corporation or any two members of such
committee. A majority of the executive committee and of each other
committee shall constitute a quorum for the transaction of business and
the vote of a majority of the members of such committee present at any
meeting at which there is a quorum shall be the act of such committee.
ARTICLE VI
NOTICES
Section 1. Form; Delivery. Whenever, under the provisions of the
statutes or of the Articles of Incorporation or of these By-Laws,
notice is required to be given to any director or stockholder, such
notice may be given in writing, by mail, addressed to such director or
stockholder, at his address as it appears on the records of the
Corporation, with postage thereon prepaid, and such notice shall be
-4-
<PAGE>
deemed to be given at the time when the same shall be deposited in the
United States mail. Notice to directors may also be given by hand
delivery, effective upon such delivery, or by telegram which notice
shall be deemed to have been given when delivered to the telegraph
company. Neither the business to be transacted at, nor the purpose of,
any regular or special meeting of the Board of Directors need be
specified in the notice or waiver of notice of such meeting.
Section 2. Waiver of Notice. Whenever any notice is required to
be given under the provisions of any statute or under the provisions of
the Articles of Incorporation or these By-Laws, a waiver thereof in
writing signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice. In addition, any stockholder
attending a meeting of stockholders in person or by proxy without
protesting prior to the conclusion of the meeting, the lack of notice
thereof to him, and any director attending a meeting of the Board of
Directors without protesting prior to the meeting or at its
commencement such lack of notice shall be conclusively deemed to have
waived notice of such meeting.
ARTICLE VII
OFFICERS AND AGENTS
Section 1. Officers. The officers of the Corporation shall be
chosen by the Board of Directors and shall be a Chairman of the Board,
a President, a Vice-President, a Secretary and a Treasurer. The Board
of Directors may also choose additional Vice-Presidents, and one or
more Assistant Secretaries and Assistant Treasurers.
Section 2. Election. The Board of Directors at its first meeting
after each annual meeting of stockholders shall choose a Chairman of
the Board, a President, one or more Vice-Presidents, a Secretary and a
Treasurer. Any two or more offices may be held by the same person.
Section 3. Additional Officers and Agents. The Board of Directors
may appoint such other officers and agents as it shall deem necessary
who shall hold their offices for such terms and shall exercise such
powers and perform such duties as shall be determined from time to time
by the Board of Directors.
Section 4. Compensation. The salaries of all officers of the
Corporation shall be fixed by the Board of Directors and the
compensation of employees and agents shall be so fixed or shall be
fixed by officers thereunto duly authorized.
Section 5. Term of Office; Removal. The officers of the
Corporation shall hold office until their successors are chosen and
qualify. Any officer or agent elected or appointed by the Board of
Directors may be removed at any time with or without cause by the
Board. Any vacancy occurring in any office of the Corporation may be
filled by the Board of Directors.
-5-
<PAGE>
Section 6. Powers and Duties of the Chairman of the Board. The
Chairman of the Board of Directors shall preside at all meetings of the
Board and all meetings of the stockholders at which he shall be present
and shall have such other powers and duties as may from time to time be
assigned to him by the Board of Directors.
Section 7. Powers and Duties of the President. The President
shall be the Chief Executive Officer of the Corporation, and shall have
the general management and superintendence of the affairs of the
Corporation, subject, however, to the control of the Board of
Directors; and in all cases where, and to the extent that, the duties
of the other officers of the Corporation are not specifically
prescribed by By-Laws or rules or regulations of the Board of
Directors, the President may prescribe such duties. He shall have
general and active supervision over the property, business and affairs
of the Corporation and may sign, execute, and deliver in the name of
the Corporation deeds, mortgages, bonds, contracts, powers of attorney,
and other instruments, except in cases where the signing and execution
thereof shall be expressly delegated by the Board of Directors or these
By-Laws to some other officer or agent of the Corporation or shall be
required by law or otherwise to be signed or executed, and may exercise
any and all powers and perform any and all duties relating to such
supervision, or which are imposed upon him by the By-Laws, or by the
Board of Directors.
Subject to such limitations as the Board of Directors may from time
to time prescribe, the Chief Executive Officer shall have power to
appoint and to dismiss all such agents and employees of the Corporation
who are not officers thereof (including any appointed by the Board) as
he may deem proper, and to prescribe their duties, and subject to like
limitations, delegate to other officers of the Corporation any other of
the powers and duties conferred upon him by the By-Laws or by the Board
of Directors.
Section 8. Powers and Duties of the Vice President. The
Vice-President shall perform the duties as may be prescribed by the
Board of Directors and subject to the chief executive officer.
Section 9. Powers and Duties of the Secretary. The Secretary
shall attend all sessions of the Board and all meetings of the
stockholders and record all votes and the minutes of all proceedings in
a book to be kept for that purpose, and shall perform like duties for
any committee of the Board when required. He shall cause to be given
notice of all meetings of stockholders and directors and shall perform
such other duties as pertain to his office. He shall keep in safe
custody the seal of the Corporation and when authorized by the Board of
Directors, affix it when required to any instrument.
Section 10. Powers and Duties of the Treasurer. The Treasurer
shall have the custody of all the corporate funds and securities and
shall keep full and accurate accounts of receipts and disbursements in
books belonging to the Corporation and shall deposit all moneys and
other valuable effects in the name and to the credit of the Corporation
in such depositories as may be designated by the Board of Directors.
He shall disburse the funds of the Corporation as may be ordered by the
-6-
<PAGE>
Board, taking proper vouchers for such disbursements, and shall render
to the chief executive officer and directors at the regular meetings of
the Board, or whenever they may require it, an account of all his
transactions as treasurer and of the financial condition of the
Corporation.
Section 11. Powers and Duties of Other Officers. All other
officers shall have such duties and exercise such powers as generally
pertain to their respective offices and all officers shall have such
other duties and exercise such other powers as from time to time may be
prescribed by the chief executive officer or the Board of Directors.
ARTICLE VIII
SHARES
Section 1. Form; Signature. The shares of the Corporation shall
be represented by certificates signed by the President or a
Vice-President and the Secretary or an Assistant Secretary or the
Treasurer or an Assistant Treasurer of the Corporation and may be
sealed with the seal of the Corporation or a facsimile thereof. The
signatures of the officers of the Corporation upon a certificate may be
facsimiles if the certificate is countersigned by a transfer agent or
registered by a registrar other than the Corporation itself or an
employee of the Corporation. In case any officer who has signed or
whose facsimile signature has been placed upon a certificate shall have
ceased to be such officer before such certificate is issued, it may be
issued by the Corporation with the same effect as if he were such
officer at the date of issue.
Section 2. Lost Certificates. The Board of Directors may
authorize the officers or agents of the Corporation to issue a new
certificate in place of any certificate theretofore issued by the
Corporation alleged to have been lost or destroyed and as a condition
precedent to the issuance thereof, may prescribe such terms and
conditions as it deems expedient, and may require such indemnities as
it deems adequate to protect the Corporation from any claim that may be
made against it with respect to any such certificate alleged to have
been lost or destroyed.
Section 3. Transfer of Shares. Upon surrender to the Corporation
or the transfer agent of the Corporation of a certificate representing
shares duly endorsed or accompanied by proper evidence of succession,
assignment or authority to transfer, a new certificate shall be issued
to the person entitled thereto, and the old certificate cancelled and
the transaction recorded upon the books of the Corporation.
Section 4. Fixing Record Date. For the purpose of determining
stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent to or
dissent from any proposal without a meeting, or for the purpose of
determining stockholders entitled to receive payment of any dividend or
the allotment of any rights, or for the purpose of any other action,
the Board of Directors may fix, in advance, a date at the record date
for any such determination of stockholders. Such date shall not be
more than sixty nor less than ten days before the date of any meeting
nor more than sixty days prior to any other action. When a
-7-
<PAGE>
determination of stockholders of record entitled to notice of or to
vote at any meeting of stockholders has been made as provided in this
section, such determination shall apply to any adjournment thereof,
unless the Board fixes a new record date for the adjourned meeting.
Section 5. Registered Stockholders. The Corporation shall be
entitled to recognize the exclusive right of a person registered on its
books as the owner of shares to receive dividends, and to vote as such
owner, and to hold liable for calls and assessments a person registered
on its books as the owner of shares, and shall not be bound to
recognize any equitable or other claim to or interest in such share or
shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the
laws of Maryland.
ARTICLE IX
GENERAL PROVISIONS
Section 1. Dividends. Subject to the provisions of law and of the
Articles of Incorporation relating thereto, dividends may be declared
by the Board of Directors at any regular or special meeting, pursuant
to law. Dividends may be paid in cash, the Corporations bonds or its
property, including the shares or bonds of other corporations, subject
to any provisions of law and of the Articles of Incorporation.
Section 2. Reserves. Before payment of any dividend, there may be
set aside out of any funds of the Corporation available for dividends
such sum or sums as the directors from time to time, in their absolute
discretion, think proper as a reserve fund to meet contingencies, or
for equalizing dividends, or for repairing or maintaining any property
of the Corporation, or for such other purposes as the directors shall
think conducive to the interest of the Corporation, and the directors
may modify or abolish any such reserve in the manner in which it was
created.
Section 3. Checks. All checks or demands for money and notes of
the Corporation shall be signed by such officer or officers or such
other person or persons as the Board of Directors may from time to time
designate.
Section 4. Fiscal Year. The fiscal year of the Corporation shall
begin on January 1st and end on December 31st of each year, unless
otherwise provided by the Board of Directors.
Section 5. Seal. The corporate seal shall have inscribed thereon
the name of the Corporation, the year of its organization and the words
CORPORATE SEAL, MARYLAND. This seal may be used by causing it or a
facsimile thereof to be impressed or affixed or in any manner
reproduced.
ARTICLE X
AMENDMENTS
Section 1. Amendments. The Board of Directors shall have the
exclusive power to adopt, alter or repeal any provision of these Bylaws
and to make new Bylaws.
-8-
<PAGE>
<PAGE>
MATEC Corporation and Subsidiaries Exhibit 11
Calculation of Earnings Per Share
(amounts in thousands, except per share data)
Three Months Ended
7/5/98 6/29/97(A)
------ -------
Net earnings from continuing operations .......... $ 33 $ 3
Discontinued operations:
Net earnings from operations ................... 9 38
Gain on sale ................................... 198 -
------ ------
Net earnings ..................................... $ 240 $ 41
====== ======
Calculation of basic earnings per share:
- ----------------------------------------
Weighted average common shares outstanding ...... 2,747 2,734
===== =====
Basic earnings per common share:
Continuing operations ......................... $ .02 $ .00
Discontinued operations:
Operations .................................. .00 .02
Gain on sale ................................ .07 -
------ ------
$ .09 $ .02
====== ======
Calculation of diluted earnings per share:
- ------------------------------------------
Weighted average common shares outstanding ...... 2,747 2,734
Increase from assumed exercise of stock options
and investment of proceeds in treasury stock,
based upon the average market prices (B) ....... 1 37
----- -----
Average common stock and common equivalent
shares used to calculate diluted earnings
per share ...................................... 2,748 2,771
===== =====
Diluted earnings per common share:
Continuing operations ......................... $ .02 $ .00
Discontinued operations:
Operations .................................. .00 .01
Gain on sale ................................ .07 -
------ ------
$ .09 $ .01
====== ======
(A) Restated to reflect discontinued operations.
(B) The dilutive effect of outstanding warrants to purchase 85,000 shares
of common stock were not included in the 1997 and 1998 computations
since the exercise price was greater than the average market price of
the common shares.
<PAGE>
<PAGE>
MATEC Corporation and Subsidiaries Exhibit 11
Calculation of Earnings Per Share
(amounts in thousands, except per share data)
Six Months Ended
7/5/98 6/29/97(A)
------ -------
Net earnings (loss) from continuing operations ... $ 272 $ (67)
Discontinued operations:
Net earnings (loss) from operations ............ 111 90
Gain on sale ................................... 198 -
------ ------
Net earnings ..................................... $ 581 $ 23
====== ======
Calculation of basic earnings per share:
- ----------------------------------------
Weighted average common shares outstanding ...... 2,740 2,741
===== =====
Basic earnings (loss) per common share:
Continuing operations ......................... $ .10 $ (.02)
Discontinued operations:
Operations .................................. .04 .03
Gain on sale ................................ .07 -
------ ------
$ .21 $ .01
====== ======
Calculation of diluted earnings per share:
- ------------------------------------------
Weighted average common shares outstanding ...... 2,740 2,741
Increase from assumed exercise of stock options
and investment of proceeds in treasury stock,
based upon the average market prices (B) (C) ... 1 -
----- -----
Average common stock and common equivalent
shares used to calculate diluted earnings
(loss) per share ............................... 2,741 2,741
===== =====
Diluted earnings (loss) per common share:
Continuing operations ......................... $ .10 $ (.02)
Discontinued operations:
Operations .................................. .04 .03
Gain on sale ................................ .07 -
------ ------
$ .21 $ .01
====== ======
(A) Restated to reflect discontinued operations.
(B) The dilutive effect of stock options and warrants was not considered
in 1997 since the Company reported a loss from continuing operations.
(C) The dilutive effect of outstanding warrants to purchase 85,000 shares
of common stock were not included in the 1998 computations since the
exercise price was greater than the average market price of the common
shares.
<PAGE>
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