UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended November 30, 1995
Commission File number 0-l87l6
MATRIX SERVICE COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 73-1352l74
(State of incorporation) (I.R.S. Employer
Identification No.)
l070l E. Ute St., Tulsa, Oklahoma 74ll6-l5l7
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code:
(9l8) 838-8822
Indicate by check mark whether the registrant (l) has filed all reports
required to be filed by Section l3 or l5(d) of the Securities Exchange Act of
1934 during the preceding l2 months (or for such shorter period that the reg-
istrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
As of January 12, 1996, there were 9,491,153 shares of the Company's com-
mon stock, $.01 par value per share, issued and 9,295,541 shares outstanding.
<PAGE>
PART I.- FINANCIAL INFORMATION
ITEM 1. Financial Statements
Matrix Service Company
Condensed Consolidated Statements of Income
(in thousands, except share and per share data)
[CAPTION]
Three Months Ended Six Months Ended
November 30 November 30
(unaudited) (unaudited)
1995 1994 1995 1994
[MULTIPLIER] 1,000
<TABLE>
<S> <C> <C> <C> <C>
Revenues $48,262 $59,239 $91,423 $103,059
Cost of revenues 43,948 53,801 82,788 93,315
Gross profit 4,314 5,438 8,635 9,744
Selling, general and
administrative expenses 2,695 3,196 5,286 5,682
Goodwill and noncompete
amortization 279 416 558 854
Operating income 1,340 1,826 2,791 3,208
Other income (expense):
Interest income 21 5 51 15
Interest expense (229) (185) (444) (290)
Other (8) 171 29 132
Income before income
tax expense 1,124 1,817 2,427 3,065
Provision for federal and
state income tax expense 454 440 1,206 967
Net income $670 $1,377 $1,221 $2,098
Net income per common and
common equivalent shares:
Primary $0.07 $0.15 $0.13 $0.22
Fully diluted $0.07 $0.15 $0.13 $0.22
Weighted average common and
common equivalent shares
outstanding:
Primary 9,443,620 9,411,886 9,426,047 9,424,051
Fully diluted 9,443,620 9,413,224 9,438,015 9,425,519
<FN>
See Notes to Condensed Consolidated Financial Statements
</TABLE>
[MULTIPLIER] 1,000
<TABLE>
Matrix Service Company
Condensed Consolidated Balance Sheets
(in thousands)
<CAPTION>
November 30, May 31,
1995 1995
(unaudited)
<S> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents $ 4,006 $ 1,976
Accounts receivable 29,244 26,948
Costs and estimated earnings
in excess of billings on
uncompleted contracts 12,595 9,582
Inventories 4,714 5,025
Prepaid expenses 530 426
Deferred taxes 871 871
Income tax receivable 2,212 3,716
Total current assets 54,172 48,544
Investment in undistributed equity
of a foreign joint venture 454 454
Property, plant and equipment at cost:
Land and buildings 13,403 13,356
Construction equipment 21,400 20,459
Transportation equipment 4,931 4,955
Furniture and fixtures 2,644 2,522
Construction in progress 227 135
42,605 41,427
Less accumulated depreciation 15,073 12,821
Net property, plant and equipment 27,532 28,606
Goodwill, net of accumulated
amortization 27,057 27,437
Other assets 506 688
Total assets $109,721 $105,729
See Notes to Condensed Consolidated Financial Statements
</TABLE>
[MULTIPLIER] 1,000
<TABLE>
Matrix Service Company
Condensed Consolidated Balance Sheets
(in thousands)
<CAPTION>
November 30, May 31,
1995 1995
(unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 8,531 $ 10,772
Billings on uncompleted contracts in
excess of costs and estimated earning 5,258 4,313
Accrued expenses 6,419 4,148
Current portion of long-term debt 1,653 2,511
Total current liabilities 21,861 21,744
Long-term debt:
Bank credit agreement 7,500 4,000
Acquisition payable 662 928
Term notes 2,994 3,539
Total long-term debt 11,516 8,467
Deferred income taxes 4,698 4,698
Stockholders' equity:
Common stock 95 95
Capital in excess of par value 51,188 51,188
Retained earnings 22,658 21,464
Total capital and
retained earnings 73,941 72,747
Less:
Treasury stock, at cost 1,797 1,826
Cumulative translation adjustment 138 101
Total stockholders' equity 72,006 70,820
Total liabilities and stockholders'
equity $109,721 $105,729
<FN>
See Notes to Condensed Consolidated Financial Statements
</TABLE>
<PAGE>
[MULTIPLIER] 1,000
<TABLE>
Matrix Service Company
Condensed Consolidated Cash Flow Statements
(in thousands)
<CAPTION>
Six Months Ended
November 30
(unaudited)
1995 1994
<S> <C> <C>
Cash flow from operating activities:
Net income $1,221 $2,098
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 2,945 2,953
Changes in current assets and
liabilities increasing
(decreasing) cash:
Accounts receivable (2,296) (8,727)
Costs and estimated earnings in
excess of billings on uncompleted
contracts (3,013) (1,095)
Inventories 311 (453)
Prepaid expenses (104) 106
Accounts payable (2,241) 4,222
Billings on uncompleted contracts
in excess of costs and estimated
earnings 945 (2,218)
Taxes receivable and other accruals 3,775 (603)
Other 42 226
Net cash provided by (used in)
operating activities 1,585 (3,491)
Cash flow from investing activities:
Capital expenditures (1,321) (3,977)
Marketable securities-sold - 238
Acquisition of subsidiary,
net of cash acquired - (750)
Other, net (18) 52
Net cash used in investing
activities (1,339) (4,437)
<PAGE>
Matrix Service Company
Condensed Consolidated Cash Flow Statements
(in thousands)
<CAPTION>
Six Months Ended
November 30,
(unaudited)
1995 1994
<S> <C> <C>
Cash flows from financing activities:
Repayment of acquisition payables (1,145) (1,636)
Repayment of equipment notes (30) (88)
Issuance under long-term credit
agreement 5,500 5,600
Repayments under long-term
credit agreement (2,000) -
Issuance of long-term debt - 4,900
Repayment of long-term debt (544) -
Issuance of stock 3 -
Change in treasury stock - (294)
Net cash provided by
financing activities 1,784 8,482
Increase in cash and cash
equivalents 2,030 554
Cash and cash equivalents at beginning
of period 1,976 2,948
Cash and cash equivalents at end
of period $4,006 $3,502
<FN>
See Notes to Condensed Consolidated Financial Statements
</TABLE>
<PAGE>
MATRIX SERVICE COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE A - BASIS OF PRESENTATION
The condensed consolidated financial statements include the accounts of the
Company and its subsidiaries, all of which are wholly-owned. All significant
inter-company balances and transactions have been eliminated in consolidation.
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with Rule 10-0l of Regulation S-X for interim financial
statements required to be filed with the Securities and Exchange Commission and
do not include all information and footnotes required by generally accepted
accounting principles for complete financial statements. However, the in-
formation furnished reflects all adjustments, consisting only of normal re-
curring adjustments which are, in the opinion of management, necessary for a
fair statement of the results for the interim periods.
The accompanying financial statements should be read in conjunction with the
audited financial statements for the year ended May 3l, 1995, included in the
Company's Annual Report on Form 10-K for the year then ended. The Company's
business is seasonal; therefore, results for any interim period may not
necessarily be indicative of future operating results.
NOTE B - BUSINESS ACQUISITIONS
On June 10, 1993, the Company acquired substantially all of the assets and as-
ssumed certain liabilities of Heath Engineering, Ltd. and an affiliated company,
Heath Engineering (Tank Maintenance) Ltd. (collectively "Heath"), for $3.3 mil-
lion. The purchase price consisted of $2.5 million in cash and $782 thousand
(1,000 shares) in redeemable preferred stock, of a wholly owned subsidiary of
the company. The dividend rate on the preferred is bank prime (currently 6%),
and the preferred stock is redeemable at a rate of approximately $39 thousand
per quarter, (or 50 shares per quarter) for a 5-year period. The transaction
was accounted for as a purchase and created approximately $2.2 million of
goodwill and non-compete covenants.
On July 18, 1993, the Company executed a joint venture agreement with Saud Al
Shafai and Sons Constructors, a Saudi Arabian Company. The Company invested
$653 thousand for a 49% interest in Al Shafai-Midwest Constructors, Ltd. The
Al Shafai-Midwest joint venture was established to conduct maintenance services
and capital construction projects for the petroleum industry in the Middle East.
Adverse changes in economic conditions in Saudi Arabia, have caused a shortage
of work available of the nature performed by the joint venture. It is manage-
ment's opinion that these conditions could last for several years. The venture
partners, Saudi Al Shafai and Sons Contractors and the Company, are in the
process of liquidating the joint venture. The Company has reduced the carrying
value of its investment in this joint venture to the estimated recovery amount
upon completion of the liquidation. The Company recorded a loss of $1.4 million
for the year ended May 31, 1995 and $200 thousand loss for the year ended May
31, 1994, in conjunction with the joint venture.
On April 4, 1994, the Company acquired all of the outstanding common and special
stock of Georgia Steel Fabricators, Inc. and its wholly owned subsidiary Brown
Steel Contractors, Inc. (collectively "Brown Steel") for up to $8.0 million,
subject to certain adjustments. The purchase price consisted of $3.5 million in
cash and 45,452 shares of the Company's common stock valued at $ 500 thousand.
In addition, the stockholders of Brown Steel are entitled to receive in the
future up to an additional $4.0 million in cash if Brown Steel satisfies certain
earnings requirements. The transaction was accounted for as a purchase.
On August 26, 1994, the Company acquired certain assets of Mayflower Vapor Seal
Corporation for $660,000. The purchase price was paid in cash.
<PAGE>
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Results of Operations
Three Months Ended November 30, 1995 Compared With
The Three Months Ended November 30, 1994
Revenues for the quarter ending November 30, 1995 were $48.3 million as
compared to revenues of $59.2 million for the quarter ended November 30, 1994,
representing a decrease of approximately $10.9 million or 18%. The decrease
is due to decreased revenues from the Company's refinery maintenance operations
as compared with the same period in 1994. This decrease, resulted primarily
from a shortage of work available in the MidWest Division during the current
period.
Gross profit decreased to $4.3 million for the quarterly period ended November
30, 1995 from gross profit of $5.4 million for the quarterly period ended
November 30, 1994, a decrease of approximately $1.1 million or 20%. Gross
profit as a percentage of revenues decreased to 8.9% for the 1995 period from
9.2% for the 1994 period. The decrease of gross profit percentage for the
current period as compared with prior period is due to lower revenues. The
Company continues to experience pricing pressure as a result of lower demand
for the Company's products and services in its established markets.
Selling, general and administrative expenses decreased to $2.7 million for the
quarterly period ended November 30, 1995 from expenses of $3.2 million for the
quarterly period ended November 30, 1994, a decrease of $501 thousand or
approximately 16%. The decrease in selling, general and administrative
expenses was related to the decrease in operations for the current period
compared to the 1994 period. Selling, general and administrative expenses as
a percentage of revenues increased to 5.6% for the current period as compared
with 5.4% or the 1994 period. The increase in selling, general and admini-
strative expenses as a percentage of revenues for the current period as compared
to the prior period is due to the lower revenues.
Operating income decreased to $1.3 million for the quarterly period ended
November 30, 1995 from income of $1.8 million for the quarterly period ended
November 30, 1994, a decrease of $486 thousand or approximately 27%. The
decrease was due to a decrease in revenues and a lower gross profit, partially
offset by a decrease in selling, general and administrative expenses.
Interest expense increased to $229 thousand for the quarterly period ended
November 30, 1995 from $185 thousand of interest expense for the quarterly
period ended November 30, 1994. The increase resulted primarily from a
slightly increased level of borrowing under the Company's credit facility.
Net income decreased to $670 thousand for the quarterly period ended November,
30, 1995 from net income of $1.4 million for the quarterly period ended
November 30, 1994. The decrease was due to decreased revenues and decreased
gross profit margin from the Company's established markets, and partially off-
set by a decrease in selling, general and administrative expenses for the 1995
period as compared with the 1994 period.
Six Months Ended November 30, 1995 Compared With
The Six Months Ended November 30, 1994
Revenues for the six months ended November 30, 1995 were $91.4 million as
compared to revenues of $103.1 million for the six months ended November 30,
1994, representing a decrease of approximately $11.7 million or 11%. The de-
crease was due to decreased revenues from the Company's refinery maintenance
operations in the six month period ended November 30, 1995, as compared with
the same period in 1994. This decrease, resulted primarily from a shortage
of work available in the MidWest Division during the current period.
Gross profit decreased to $8.6 million for the six months ended November 30,
1995 from gross profit of $9.7 million for the six months ended November 30,
1994, a decrease of approximately $1.1 million. Gross profit as a percentage
of revenues decreased to 9.4% for the 1995 period from 9.5% for the 1994
period. The decrease in gross profit percentage for the current period as
compared with prior period is due to lower revenues.
Selling, general and adminstrative expenses decreased to $5.3 million for the
six months ended November 30, 1995 from expenses of $5.7 million for the six
months ended November 30, 1994, a decrease of $396 thousand or approximately
7%. The decrease in expenses was related to the decrease in operations for
the current period compared to the 1994 period. Selling, general and
administrative expenses as a percentage of revenues increased to 5.8% for the
current period as compared with 5.5% for the 1994 period. The increase in the
selling, general and administrative expenses as a percentage of revenues for
the current period as compared to the prior period is due to the lower
revenues.
Operating income decreased to $2.8 million for the six months ended November
30, 1995 from income of $3.2 million for the six months ended November 30,
1994, a decrease of $417 thousand or approximately 13%. The decrease was due
to decreased revenues and a lower gross profit margin, offset in part by a
decrease in selling, general and administrative expenses.
Net income decreased to $1.2 million in the 1995 period from net income of
$2.1 million in 1994. The decrease was due to decreased revenues, a lower
gross profit margin, and offset in part by decreased selling, general and
administratiave expenses.
Liquidity and Capital Resources
The Company has financed its operations recently with cash generated by opera-
tions and advances under the Company's credit facility. The Company has a
credit facility with a commercial bank under which the Company may borrow a
total of $20.0 million. The Company may borrow up to $15.0 million under a rev-
olving credit agreement based on the level of the Company's eligible receiv-
ables. The agreement provides for interest at the Prime Rate minus one-half of
one percent (1/2 of 1%), or a LIBOR based option, and matures on October 31,
1996. At November 30, 1995, the interest rate was 8.25% and the outstanding ad-
vances under the revolver totaled $7.5 million. The credit facility also pro-
vides for a term loan up to $5.0 million. On October 5, 1994, a term loan of
$4.9 million was made to the Company. The term loan is due on August 31, 1999
and is to be repaid in 54 equal payments beginning in March 1995 at an interest
rate based upon the Prime Rate. At November 30, 1995, the interest rate on the
term loan was 8.75%, and the outstanding balance was $4.1 million.
<PAGE>
Operations of the Company provided $1.6 million of cash for the six months
ended November 30, 1995 as compared with using cash in operations of $3.5
million for the six months ended November 30, 1994, representing an increase
of approximately $5.1 million. The increase was primarily the result of in-
creased collections of accounts receivables of $6.4 million, a decrease in
inventory of $764 thousand, a net decrease of $3.2 million in billings on
uncompleted contracts in excess of costs and estimated earnings and $3.1
million of taxes receivable and other accruals, offset by net decreases of
$1.9 million in costs and estimated earnings in excess of billings on
uncompleted contracts and $6.5 million decrease from accounts payable and a
decrease in current income of $877 thousand.
Capital expenditures during the six month period ended November 30, 1995 total-
ed approximately $1.3 million. Of this amount approximately $951 thousand was
used to purchase welding and construction equipment for field operations. In
addition, the Company has invested approximately $111 thousand in transpor-
tation equipment to be used to support field operations. The Company has
currently budgeted approximately $2.2 million for additional capital expend-
itures primarily to be used to purchase construction equipment during the re-
mainder of fiscal year 1996. The Company expects to be able to finance any
such expenditures with available working capital.
The Company believes that its existing funds, amounts available for borrowing
under its credit facility, and cash generated by operations will be sufficient
to meet the Company's working capital needs at least through fiscal 1996 and
possibly thereafter unless significant expansions of operations not now planned
are undertaken, in which case the Company would arrange additional financing
as a part of any such expansion.
PART II
OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security Holders:
At the Company's 1995 Annual Meeting of Stockholders held October
25, 1995, the stockholders approved the Matrix Service Company
1995 Nonemployee Directors' Stock Option Plan in the aggregate
amount of 250,000 shares.
Number of Votes Cast
For Against Abstain Non-Votes
5,130,529 3,032,960 402,600 714,452
ITEM 6. Exhibits and Reports on Form 8-K:
A. Exhibit 10.1 - 1995 Nonemployee Directors' Stock Option Plan.
Exhibit 11 - Computation of earnings per share.
Exhibit 27 - Financial Data Schedule
B. Reports on Form 8-K: None
Signature
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.
MATRIX SERVICE COMPANY
Date: January 12, 1996 By: /s/C. William Lee
C. William Lee
Vice President-Finance
Chief Financial Officer
Signing on behalf of the
registrants the registrant's
chief financial officer.
I. Purpose of the Plan
The MATRIX SERVICE COMPANY 1995 NONEMPLOYEE DIRECTORS' STOCK OPTION
PLAN (the "Plan") is intended to promote the interests of MATRIX
SERVICE COMPANY, a Delaware corporation (the "Company"), and its
stockholders by helping to award and retain highly-qualified
independent directors and allowing them to develop a sense of
proprietorship and personal involvement in the development and
financial success of the Company. Accordingly, the Company shall
grant to directors of the Company who are not employees or
consultants of the Company or any of its subsidiaries ("Nonemployee
Directors") the option ("Option") to purchase shares of the common
stock of the Company ("Stock"), as hereinafter set forth. Options
granted under the Plan shall be options which do not constitute
incentive stock options, within the meaning of section 422(b) of
the Internal Revenue Code of 1986, as amended.
II. Option Agreements
Each Option shall be evidenced by a written agreement in the form
attached to the Plan.
III. Eligibility of Optionee
Options may be granted only to individuals who are Nonemployee
Directors of the Company. Each Nonemployee Director who is elected
or reelected to the Board of Directors of the Company (the "Board
on the effective date of the Plan and each Nonemployee Director who
is elected to the Board for the first time after the effective date
of the Plan shall receive, as of the date of his or her election
and without the exercise of the discretion of any person or
persons, an Option exercisable for 10,000 shares of Stock (subject
to adjustment in the same manner as provided in Paragraph VII
hereof with respect to shares of Stock subject to Options then
outstanding). As of the date of the annual meeting of the
stockholders of the Company in each year that the Plan is in effect
as provided in Paragraph VI hereof, each Nonemployee Director then
in office who is not then entitled to receive an Option pursuant to
the preceding sentence shall receive, without the exercise of the
discretion of any person or persons, an Option exercisable for
5,000 shares of Stock (subject in each case to adjustment in the
same manner as provided in Paragraph VII hereof with respect to
shares of Stock subject to Options then outstanding). If, as of
any date that the Plan is in effect, there are not sufficient
shares of Stock available under the Plan to allow for the grant to
each Nonemployee Director of an Option for the number of shares
provided herein, each Nonemployee Director shall receive an Option
for his or her pro-rata share of the total number of shares of
Stock then available under the Plan. All Options granted under the
Plan shall be at the Option price set forth in Paragraph V hereof
and shall be subject to adjustment as provided in Paragraph VII
hereof.
<PAGE>
IV. Shares Subject to the Plan
The aggregate number of shares which may be issued under Options
granted under the Plan shall not exceed 250,000 shares of Stock.
Such shares may consist of authorized but unissued shares of Stock
or previously issued shares of Stock acquired by the Company. Any
of such shares which remain unissued and which are not subject to
outstanding Options at the termination of the Plan shall cease to
be subject to the Plan, but, until termination of the Plan, the
Company shall at all times make available a sufficient number of
shares to meet the requirements of the Plan. Should any Option
hereunder expire or terminate prior to its exercise in full, the
shares theretofore subject to such Option which may be issued under
the Plan shall be subject to adjustment in the same manner as
provided in Paragraph VI hereof with respect to shares of Stock
subject to Options then outstanding. Exercise of an Option shall
result in a decrease in the number of shares of Stock which may
thereafter be available, both for purposes of the Plan and for sale
to any one individual, by the number of shares as to which the
Option is exercised.
V. Option Price
The purchase price of Stock issued under each Option shall be the
fair market value of Stock subject to the Option as of the date the
Option is granted. For all purposes under the Plan, the fair
market value of a share of Stock on a particular date shall be
equal to the closing sales price of the Stock (i) reported by the
Nasdaq Stock Market on that date or (ii) if the Stock is listed on
a national stock exchange, reported on the stock exchange composite
tape on that date; or, in either case, if no prices are reported on
that date, on the last preceding date on which such price of the
Stock is so reported. If the Stock is traded over the counter at
the time a determination of its fair market value is required to be
made hereunder, its fair market value shall be deemed to be equal
to the average between the reported high and low or closing bid and
asked prices of Stock on the most recent date on which Stock was
publicly traded. In the event Stock is not publicly traded at the
time a determination of its value is required to be made hereunder,
the determination of its fair market value shall be made by the
Board in such manner as it deems appropriate.
VI. Term of Plan
The Plan shall be effective on the date the Plan is approved by the
stockholders of the Company. Except with respect to Options then
outstanding, if not sooner terminated under the provisions of
Paragraph VII, the Plan shall terminate upon and no further Options
shall be granted after the expiration of ten years from the date
the Plan is approved by the stockholders of the Company.
VII. Recapitalization or Reorganization
A. The existence of the Plan and the Options granted hereunder
shall not affect in any way the right or power of the Board or the
stockholders of the Company to make or authorize any adjustment,
recapitalization, reorganization, or other change in the Company's
capital structure or its business, any merger or consolidation of
the Company, any issue of debt or equity securities, the
dissolution or liquidation of the Company or any sale, lease,
exchange or other disposition of all or any part of its assets or
business or any other corporate act or proceeding.
<PAGE>
B. The shares with respect to which Options may be granted are
shares of Stock as presently constituted, but if, and whenever,
prior to the expiration of an Option theretofore granted, the
Company shall effect a subdivision or consolidation of shares of
Stock or the payment of a stock dividend on Stock without receipt
of consideration by the Company, the number of shares of Stock with
respect to which such Option may thereafter be exercised (i) in the
event of an increase in the number of outstanding shares shall be
proportionately increased, and the purchase price per share shall
be proportionately reduced, and (ii) in the event of a reduction in
the number of outstanding shares shall be proportionately reduced,
and the purchase price per share shall be proportionately
increased.
C. If the Company recapitalizes, reclassifies its capital stock,
or otherwise changes its capital structure (a "recapitalization"),
the number and class of shares of Stock covered by an Option
theretofore granted shall be adjusted so that such Option shall
thereafter cover the number and class of shares of stock and
securities to which the optionee would have been entitled pursuant
to the terms of the recapitalization if, immediately prior to the
recapitalization, the optionee had been the holder of record of the
number of shares of Stock then covered by such Option.
D. Any adjustment provided for in Subparagraph (B) or (C) above
shall be subject to any required stockholder action.
E. Except as hereinbefore expressly provided, the issuance by the
Company of shares of stock of any class or securities convertible into shares
of stock of any class, for cash, property, labor or services, upon direct
sale, upon the exercise of rights or warrants to subscribe
therefor, or upon conversion of shares or obligations of the
Company convertible into such shares or other securities, and in
any case whether or not for fair value, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the
number of shares of Stock subject to Options theretofore granted or
the purchase price per share.
<PAGE>
VIII. Amendment or Termination of the Plan
The Board in its discretion may terminate the Plan at any time with
respect to any shares for which Options have not theretofore been
granted. The Board shall have the right to alter or amend the Plan
or any part thereof from time to time; provided, that no change in
any Option theretofore granted may be made which would impair the
rights of the optionee without the consent of such optionee and
provided, further, that the Board may not make any alteration or
amendment which would materially increase the benefits accruing to
participants under the Plan, increase the aggregate number of
shares which may be issued pursuant to the provisions of the Plan,
change the class of individuals eligible to receive Options under
the Plan or extend the term of the Plan, without the approval of
the stockholders of the Company.
IX.Securities Laws
A. The Company shall not be obligated to issue any Stock pursuant
to any Options granted under the Plan at any time when the offering
of the shares covered by such Option have not been registered under
the Securities Act of 1933, as amended, and such other state and
federal laws, rules or regulations as the Company deems applicable
and, in the opinion of legal counsel for the Company, there is no
exemption from the registration requirements of such laws, rules or
regulations available for the offering and sale of such shares.
B. It is intended that the Plan and any grant of an Option made to
a person subject to Section 16 of the Securities Exchange Act of
1933, as amended (the "1934 Act"), meet all of the requirements of
Rule 16b-3, as currently in effect or as hereinafter modified or
amended ("Rule 16b3"), promulgated under the 1934 Act. If any
provision of the Plan or any such Option would disqualify the Plan
or such Option under, or would otherwise not comply with, Rule 16b-
3, such provision or Option shall be construed or deemed amended to
conform to Rule 16b-3.
[ARTICLE] 5
[MULTIPLIER] 1,000
<TABLE>
<S> <C>
[PERIOD-TYPE] 3-MOS
[FISCAL-YEAR-END] May-31-1996
[PERIOD-START] Sep-01-1995
[PERIOD-END] Nov-30-1995
[COMMON] 9,444
[NET-INCOME] 670
[EPS-PRIMARY] 0.07
[COMMON] 9,444
[NET-INCOME] 670
[EPS-DILUTED] 0.07
[FISCAL-YEAR-END] May-31-1995
[PERIOD-START] Sep-01-1994
[PERIOD-END] Nov-30-1994
[COMMON] 9,412
[NET-INCOME] 1,377
[EPS-PRIMARY] 0.15
[COMMON] 9,413
[NET-INCOME] 1,377
[EPS-DILUTED] 0.15
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[PERIOD-END] Nov-30-1995
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[NET-INCOME] 1,211
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[COMMON] 9,438
[NET-INCOME] 1,211
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[PERIOD-START] Jun-01-1994
[PERIOD-END] Nov-30-1994
[COMMON] 9,424
[NET-INCOME] 2,098
[EPS-PRIMARY] 0.22
[COMMON] 9,426
[NET-INCOME] 2,098
[EPS-DILUTED] 0.22
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0
0
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