<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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 June 30, 1999
OR
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Transition Period from____ to ____
Commission File Number 001-12986
INTERLOTT TECHNOLOGIES, INC.
(Exact name of Registrant as specified in its charter)
Delaware 31-1297916
(State of Incorporation) (I.R.S. Employer
Identification No.)
10830 Millington Ct., Cincinnati, Ohio 45242
(Address of principal executive offices, including zip code)
(513) 792-7000
(Registrant's telephone number, including area code)
--------------------
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding twelve months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
---- -----
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock as of the latest practicable date.
Class Outstanding at August 13,1999
- ---------------------------- -----------------------------
Common Stock, $.01 Par Value 3,210,000 shares
Page 1 of 14
Exhibit Index on page 12
<PAGE> 2
INTERLOTT TECHNOLOGIES, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1999
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ITEM PAGE
NUMBER NUMBER
------ ------
<S> <C>
PART I. FINANCIAL INFORMATION
1 Financial Statements:
Condensed Balance Sheets (unaudited) as of June 30,
1999 and December 31, 1998 3
Condensed Statements of Income (unaudited) for the
three months and six months ended June 30, 1999 and
1998 4
Condensed Statements of Cash Flows (unaudited)
for the six months ended June 30, 1999 and 1998 5
Notes to Condensed Financial Statements 6 - 7
2 Management's Discussion and Analysis of
Financial Condition and Results of Operations 8 - 12
3 Quantitative and Qualitative Disclosures about 12
Market Risk
PART II. OTHER INFORMATION
4 Submission of Matters to a Vote of Security Holders 13
6 Exhibits and Reports on Form 8-K 13
SIGNATURES 14
Exhibit Index 15
</TABLE>
2
<PAGE> 3
ITEM 1. FINANCIAL STATEMENTS PART I. FINANCIAL INFORMATION
INTERLOTT TECHNOLOGIES, INC.
CONDENSED BALANCE SHEETS (UNAUDITED)
JUNE 30, 1999 AND DECEMBER 31, 1998
<TABLE>
<CAPTION>
ASSETS June 30, 1999 December 31, 1998
------------- -----------------
<S> <C> <C>
Current assets:
Cash $ 47,214 $ 30,004
Accounts receivable, less allowance for doubtful accounts of $201,501
in 1999 and $153,501 in 1998 2,152,437 2,816,589
Investment in sales type lease, current portion 900,198 888,627
Inventories 4,234,521 3,129,959
Prepaid expenses 178,009 82,105
----------- -----------
Total current assets 7,512,379 6,947,284
Property and equipment:
Leased machines 33,448,961 29,484,623
Machinery and equipment 634,907 631,111
Building and improvements 274,216 271,433
Furniture and fixtures 136,898 130,950
----------- -----------
34,494,982 30,518,117
Less accumulated depreciation and amortization 14,641,549 12,970,895
19,853,433 17,547,222
Investment in sales type lease, less current portion 3,397,590 3,766,408
Product development rights, net of accumulated amortization of $623,331 in 1999
and $586,665 in 1998 476,669 513,335
----------- -----------
$31,240,071 $28,774,249
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable 13,636,872 11,166,374
Current installments of long-term debt -0- 192,302
Accounts payable 1,720,182 1,479,831
Accounts payable - related party 106,003 215,734
Accrued expenses 784,630 1,111,416
Income taxes payable 11,117 248,458
----------- -----------
Total current liabilities 16,258,804 14,414,115
Notes payable, - related parties 286,698 286,698
Deferred tax liability 12,665 121,900
----------- -----------
Total liabilities 16,558,167 14,822,713
Series A preferred stock, $.01 par value, 20,000,000 shares
authorized, 1,335,000 shares issued and outstanding at
June 30, 1999 and December 31, 1998 1,335,000 1,335,000
Stockholders' equity:
Common stock, $.01 par value; 20,000,000 shares authorized, 3,210,000
shares issued and outstanding at June 30, 1999 and December 31, 1998 32,100 32,100
Additional paid-in capital 10,376,017 10,376,017
Retained earnings 2,938,787 2,208,419
----------- -----------
Total stockholders' equity 13,346,904 12,616,536
----------- -----------
$31,240,071 $28,774,249
=========== ===========
</TABLE>
See accompanying notes to condensed financial statements.
3
<PAGE> 4
INTERLOTT TECHNOLOGIES, INC.
CONDENSED STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1999 AND 1998
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
Revenues: 1999 1998 1999 1998
----------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
Machine and parts sales $ 324,724 $ 3,244,267 $ 694,406 $ 5,307,996
Machine leases 4,281,174 3,534,666 8,350,031 6,913,049
Other 533,460 507,829 1,055,038 929,858
----------- ------------ ------------ -----------
5,139,358 7,286,762 $10,099,475 13,150,903
Cost of revenues 3,452,019 4,830,188 6,651,128 8,996,227
----------- ------------ ------------ -----------
Gross profit 1,687,339 2,456,574 3,448,347 4,154,676
Operating expenses:
Selling, general, and administrative
expenses 1,112,033 1,076,201 2,087,134 2,009,100
Research and development costs 185,689 91,313 310,385 170,196
----------- ------------ ------------ -----------
Total operating expenses 1,297,722 1,167,514 2,397,519 2,179,296
----------- ------------ ------------ -----------
Operating income 389,617 1,289,060 1,050,828 1,975,379
Other income (expense):
Interest expense (254,659) (273,052) (484,899) (495,695)
Other (13,253) 35,796 611,747 55,987
----------- ------------ ------------ -----------
(267,912) (237,256) 126,848 (439,708)
----------- ------------ ------------ -----------
Income before income taxes 121,705 1,051,803 1,177,676 1,535,671
Income taxes 45,700 422,300 447,310 615,300
----------- ------------ ------------ -----------
Net income $ 76,005 $ 629,504 $ 730,366 $ 920,371
=========== ============= ============ ============
Basic and diluted net income
per share $ .02 $ .19 $ .23 $ .29
=========== ============= ============ ============
</TABLE>
See accompanying notes to condensed financial statements.
4
<PAGE> 5
INTERLOTT TECHNOLOGIES, INC.
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
SIX MONTHS ENDED JUNE 30, 1999 AND 1998
<TABLE>
<CAPTION>
Six Months Ended June 30,
1999 1998
---- ----
Cash flows from operating activities:
<S> <C> <C>
Net income $ 730,366 $ 920,371
Adjustments to reconcile net income to net cash
provided by operating activities:
Deferred income taxes (109,235) 319,475
Depreciation and amortization 2,687,474 2,208,584
Principal portion of sales type leases received 444,908 234,504
Gain on sale of equipment under sales type leases (22,659) (847,004)
Decrease (Increase) in accounts receivable 664,152 (1,163,057)
Increase in inventories (881,125) (365,165)
Decrease (Increase) in prepaid expenses (95,904) 26,131
Increase in accounts payable 240,351 719,908
(Decrease) Increase in accounts payable - related party (109,731) 151,766
Increase (Decrease) in accrued expenses (326,786) 14,396
Decrease in income taxes payable (237,341) (13,600)
----------- -----------
Net cash provided by operating activities 2,984,470 2,206,309
----------- -----------
Cash flows from investing activities:
Cost of leased machines (5,232,929) (4,692,869)
Purchases of property and equipment (12,527) (38,909)
----------- -----------
Net cash used in investing activities (5,245,456) (4,731,778)
----------- -----------
Cash flows from financing activities:
Net proceeds from notes payable 2,470,498 2,415,988
Repayment of long-term debt (192,302) (968)
----------- -----------
Net cash provided by financing activities 2,278,196 2,415,020
----------- -----------
Increase (decrease) in cash 17,210 (110,449)
Cash at beginning of year 30,004 143,071
Cash at end of period $ 47,214 $ 32,622
=========== ===========
Supplemental disclosure of cash flow information:
Interest paid $ 658,591 $ 454,622
=========== ===========
Income taxes paid $ 847,199 $ 309,425
=========== ===========
</TABLE>
See accompanying notes to condensed financial statements.
5
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INTERLOTT TECHNOLOGIES, INC.
Notes to Condensed Financial Statements
1. Basis of Presentation
The accounting and reporting policies of Interlott Technologies, Inc.
conform to generally accepted accounting principles. The financial statements
for the six months ended June 30, 1999 and 1998 are unaudited and do not include
all information or footnotes necessary for a complete presentation of financial
condition, results of operations and cash flows. The interim financial
statements include all adjustments, consisting only of normal recurring
accruals, which in the opinion of management are necessary to make the financial
statements not misleading. The financial statements should be read in
conjunction with the summary of significant accounting policies which appears in
the Company's 1998 Annual Report filed with the Securities and Exchange
Commission as an exhibit to the Company's 1998 Annual Report on Form 10-K. The
results of operations for the six months ended June 30, 1999 are not necessarily
indicative of the results to be expected for the entire year ending December 31,
1999.
2. Segment and Related Information
Effective January 1, 1998, the Company adopted SFAS No. 131,
Disclosures about Segments of an Enterprise and Related Information, which
changes the way the Company reports information about its two operating segments
instant ticket vending machines (ITVMs) and prepaid phone card dispensing
machines (PCDMs). The ITVM segment is the larger of the Company's two segments.
The Company designs, manufactures, sells, leases and services ITVMs that are
used by public lotteries operated by states and foreign public entities to
dispense instant winner lottery tickets primarily in retail locations such as
supermarkets and convenience stores. Within the PCDM segment, the Company
designs, manufactures, sells, leases and services PCDMs that are used by
providers of long distance telephone service to dispense prepaid telephone
calling cards in retail locations.
The accounting policies of the segments are the same as those described
in the summary of significant accounting policies which appears in the Company's
1998 Annual Report. The Company evaluates performance based on segment operating
profits.
<TABLE>
<CAPTION>
Six Months Ended June 30, 1998 ITVMs PCDMs Total
----- ----- -----
<S> <C> <C> <C>
Revenues 12,901,025 249,878 13,150,903
Segment gross margin 4,142,901 11,775 4,154,676
Total Assets 27,514,958 773,757 28,288,715
Six Months Ended June 30, 1999
Revenues 10,006,295 93,180 10,099,475
Segment gross margin 3,438,005 10,342 3,448,347
Total Assets 29,981,508 671,008 30,652,516
</TABLE>
6
<PAGE> 7
Total Assets for the segment excludes cash, prepaid expenses, net property and
equipment other than leased machines and deferred tax assets, as such assets are
not specifically identifiable to a particular segment.
3. Notes Payable
In October 1997, the Company entered into a revolving credit facility
with a financial institution that permits the Company to borrow through October
2000, up to $15,000,000 at the prime interest rate (7.75% at June 30, 1999). In
conjunction with the facility the Company maintains a lockbox and controlled
disbursement account with the bank parent of the financial institution. All
lockbox receipts are recorded as payments against the facility and presented
checks are recorded as draws on the facility. Borrowings under this credit
facility are collateralized by all of the assets of the Company and assignment
of proceeds from lease agreements. At June 30, 1999, the Company had borrowings
of $13,636,872 outstanding with additional borrowings of $1,363,128 available
under the facility.
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
GENERAL
This report contains "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended and Section 21E of the
Securities Exchange Act of 1934, as amended. These statements relate to future
economic performance, plans and objectives of management for future operations
and projections of revenue and other financial items that are based on the
beliefs of the Company's management, as well as assumptions made by and
information currently available to the Company's management. The words "expect,"
"estimate," "anticipate," "believe," "intend," and similar expressions are
intended to identify forward-looking risks such as those discussed in this and
our other filings with the Securities and Exchange Commission. If one or more of
these risks or uncertainties materialize or underlying assumptions prove
incorrect, actual outcomes may vary materially from those indicated.
The Company manufactures instant ticket vending machines or ITVMs, and
telephone card dispensing machines or PCDMs, that dispense instant lottery
tickets and prepaid telephone calling cards without the assistance of an
employee of the lottery or the telephone card vendor. The Company derives its
revenues from (1) the lease of ITVMs and PCDMs, (2) the sale of ITVMs and PCDMs,
(3) and to a lesser extent, the service agreements and the sale of parts for
ITVMs and PCDMs.
As of June 30, 1999, the Company had sold or leased over 15,000 ITVMs
and PCDMs under agreements with both domestic and international lotteries, their
licensees or contractors, as well as to both domestic and international vendors
of prepaid telephone calling cards. The Company continues to test both ITVMs and
PCDMs in both domestic and international markets.
On April 9, 1999, a tornado destroyed the corporate office building
located at 10830 Millington Court, Cincinnati, Ohio and the Company warehouse
located nearby. Additionally, the manufacturing facility located at 6665 Creek
Road, Cincinnati, Ohio received minor roof damage. Substantially all losses
incurred will be covered by insurance.
RESULTS OF OPERATIONS
The Company's net revenues decreased 29% to $5,139,358 from $7,286,762
for the three months, and 23% to $10,099,475 from $13,150,903 for the six months
ended June 30, 1999 and 1998, respectively. Revenues from sales of ITVMs and
PCDMs decreased 90% to $324,724 from $3,244,267 for the three months ended June
30, 1999 and 1998, respectively, and decreased 87% to $694,406 from $5,307,996
for the six months ended June 30, 1999 and 1998 respectively. The decrease in
revenues from sales resulted from the lower number of ITVMs leased to the New
York Lottery which are categorized as sales type leases. (See Note 2 of Notes to
Financial Statements in the Company's 1998 Annual Report.) Revenues from
operating leases increased 21% to $4,281,174 from $3,534,666 for the three
months, and increased
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<PAGE> 9
21% to $8,350,031 from $6,913,049 for the six months ended June 30, 1999 and
1998, respectively. Lease revenues increased as the result of additional ITVMs
deployed under new or existing contracts. Lease revenues represented 83% and 49%
of total revenues for the three months, and 83% and 53% of total revenues for
the six months ended June 30, 1999 and 1998, respectively.
Cost of revenues decreased 29% to $3,452,019 from $4,830,188 for the
three months and decreased 26% to $6,651,128 from $8,996,227 for the six months
ended June 30, 1999 and 1998, respectively. Depreciation charged to cost of
revenues increased 22% to $1,327,428 from $1,086,611 for the three months, and
increased 24% to $2,559,651 from $2,072,424 for the six months, ended June 30,
1999 and 1998, respectively. Service and installation costs increased 19% to
$1,687,697 from $1,412,693 for the three months, and increased 16% to $3,469,414
from $2,996,445 for the six months, ended June 30, 1999 and 1998, respectively,
primarily due to the increase in the number of ITVMs and PCDMs deployed rather
than an incremental cost per machine. Gross profit percentage decreased 1% from
34% to 33% for the three months due in part to extra expenses incurred as a
result of the tornado. Gross profit percentage increased 2% to 34% from 32% for
the six months ended June 30, 1999 and 1998, respectively, primarily as the
result of higher utilization of manufacturing capacity.
Selling, general, and administrative expenses increased 3% to
$1,112,032 from $1,076,201 for the three months, and 4% to $2,087,134 from
$2,009,100 for the six months, ended June 30, 1999 and 1998, respectively. An
increase in personnel and sales activities were the primary factors related to
the increase in cost for both the three months and six months ended June 30,
1999 as compared to the same periods in 1998.
Interest expense decreased 7% to $254,659 from $273,052 for the three
months, and decreased 2% to $484,899 from $495,695 for the six months, ended
June 30, 1999 and 1998, respectively. The decrease reflects the difference in
the average amounts outstanding rather than a change in interest rate. Interest
rates charged to the Company remained stable throughout the periods.
Other income (expense) was ($13,253) and $35,796 for the three months
and $611,747 and $55,987 for the six months ended June 30, 1999 and 1998,
respectively. The income for the six month period in 1999 includes a one time
non-recurring item from settlement of litigation as reported in the Company's
Quarterly Report on Form 10Q for the quarter ended March 31, 1999.
As a result of the changes discussed above, income before income taxes
decreased 88% to $121,705 from $1,051,803 for the three months, and decreased
23% to $1,177,676 from $1,535,671 for the six months, ended June 30, 1999 and
1998, respectively.
As a result of the foregoing factors, net income decreased 88% to
$76,005 from $629,504 for the three months, and decreased 21% to $730,366 from
$920,371 for the six months, ended June 30, 1999 and 1998, respectively.
9
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LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity and capital resources are significantly
impacted by the Company's decision to use leasing as a means to market its ITVMs
and PCDMs. However, leasing inherently requires significantly more capital and
longer-term payout than sales. At June 30, 1999 the Company had a total of 8,122
ITVMs and PCDMs deployed under leases as compared to 7,353 at June 30, 1998.
The Company finances its operations primarily through cash flow from
operations and a three year revolving credit facility from Mercantile Business
Credit, Inc. or MBCI, entered into as of October 29,1997. The credit facility
with MBCI is a $15,000,000 three-year credit line, secured by a lien on all of
the assets of the Company. The rate of interest on this loan is prime or LIBOR
plus two percent.
Net cash provided by operations for the six months ended June 30, 1999 and 1998
was $2,984,470 and $2,206,309, respectively. The increase for the first six
months of 1999 as compared to the same period in 1998 results primarily from the
decrease in accounts receivable and an increase in depreciation. The increase in
depreciation is the result of the greater number of ITVMs and PCDMs deployed
under leases as compared to the number deployed in the first six months of 1998.
Net cash used in investing activities was $5,245,456 and $4,731,778 for
the six months ended June 30, 1999 and 1998, respectively. This increase
reflects the increase of larger and higher value ITVMs and PCDMs deployed under
lease in the first six months of 1999 as compared to units deployed under lease
in the first six months of 1998.
Net cash provided by financing activities was $2,278,196 for the six
months ended June 30, 1999 as compared to $2,415,020 net cash used in financing
activities for the six months ended June 30,1998. The change is the result of
borrowing to fund the increase in leased ITVMs and PCDMs, offset by repayment of
long-term debt.
The Company's working capital deficit increased by $2,947,644 to
$8,746,245 at June 30, 1999, as compared to a deficit of $5,798,601 at December
31, 1998. The deficits at both dates reflect the classification of the Company's
revolving credit facility as a current debt. The deficit as of June 30, 1999
reflects the Company's use of cash generated from operations in addition to
draws on the credit facility to finance the increased number of leased ITVMs and
PCDMs.
At June 30, 1999, the Company was indebted to MBCI in the aggregate
principal amount of $13,636,872 and had $1,363,128 available under the credit
facility.
THE YEAR 2000 ISSUE
The Company relies on computer-based technology and utilizes a variety
of
10
<PAGE> 11
third-party hardware and proprietary and third party software. The Company's
dispensing equipment generally uses proprietary software, with third-party
software being used more extensively for administrative functions, such as
accounting and human resource management. In addition to such information
technology or IT systems, the Company's operations rely on various non-IT
equipment and systems that contain embedded computer technology. Third parties
with whom the Company has commercial relationships, including vendors of
materials and components incorporated into the Company's products and of
products and services used by the Company in its operations (such as banking and
financial services, data processing services, telecommunications services and
utilities), also rely heavily on computer based technology.
The Company has assessed the potential effects of the Year 2000 issue
on the Company's business, financial condition and results of operations. In
conjunction with this assessment, the Company developed and commenced the
implementation of the compliance program described below.
The Company has undertaken a review of its proprietary IT systems
relating to its dispensing equipment. No systems were identified as relating to
the critical functions of the Company's ITVMs or PCDMs. As such, the Company
believes that no remediation with regard to those proprietary IT systems is
necessary.
The Company has contacted its third party providers of critical
hardware and software and has obtained appropriate representations to the effect
that such hardware or software is or will be Year 2000 compliant.
The Company has undertaken a review of its non-IT systems and is
implementing a remediation program with respect to those systems that are within
the control of the Company. Selected non-IT suppliers and vendors have been
contacted to identify any significant exposures that may exist and identify
alternate sources or strategies necessary.
The Company has incurred minimal costs to date in assessing the
potential effects of the Year 2000 issue on the Company and does not expect or
anticipate any material expenditures in the future in connection with the Year
2000 issue. Nevertheless, the issues presented by the Year 2000 issue and the
proposed solutions therefrom are very complex and the Company's Year 2000
compliance depends heavily on the technical skills of employees and independent
contractors and the representations and preparedness of third parties. Moreover,
Year 2000 issues present a number of risks that are beyond the Company's
reasonable control, such as the failure of telecommunications companies to
provide voice and data services, the failure of financial institutions to
process transactions and transfer funds, the failure of vendors to deliver
materials or perform services required by the Company and the collateral effects
on the Company of the effects of Year 2000 issues on the economy in general or
on the Company's business partners and customers in particular. Although the
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<PAGE> 12
Company believes that its Year 2000 compliance program will appropriately
identify and address those Year 2000 issues that are most subject to the
Company's reasonable control, there can be no assurance that the Company's
efforts in this regard will be fully effective or that the Year 2000 issues will
not have a material adverse effect on the Company's business, financial
condition or results of operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable
12
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PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The 1999 Annual Meeting of Shareholders was held on May 6, 1999.
(b) Matters voted upon at Annual Meeting
(1) The shareholders voted 2,775,058 shares in the affirmative,
with 4,050 shares abstaining, for the re-election of Mr. David F. Nichols and
Mr. John Wingfield to three-year terms as a directors of the Company.
(2) The shareholders voted 2,738,048 shares in the affirmative,
with 40,800 shares against and 260 shares abstaining, for the ratification of
the appointment of KPMG LLP as independent accountants of the Company for the
fiscal year ending December 31, 1999.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
Exhibit 11 - Computation of earnings per share
Exhibit 27 - Financial Data Schedule for the Six Months Ended
June 30, 1999
(b) Reports on Form 8-K.
The following reports on Form 8K were filed during the quarter for
which the report is filed:
Date of report
(Date filed) Items Reported
5/17/99 Item 5 - Announcing the transfer of
Chief Executive Officer duties.
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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.
INTERLOTT TECHNOLOGIES, INC.
(Registrant)
Date: August 13,1999 /s/ David F. Nichols
-------------------------------------------
President and
Chief Executive Officer
(Duly Authorized Officer)
/s/ Dennis W. Blazer
-------------------------------------------
Dennis W. Blazer
Chief Financial and Accounting Officer
14
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION PAGE NUMBER
- -------------- ----------- -----------
<S> <C> <C>
11 Computation of earnings per share 15
27 Financial Data Schedule for the Six Months Ended
June 30, 1999 (for SEC use only) 16
</TABLE>
15
<PAGE> 1
INTERLOTT TECHNOLOGIES, INC
Computation of Earnings per share
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Weighted average common shares
outstanding during the period 3,210,000 3,210,000 3,210,000 3,210,000
Net income $ 76,005 $ 629,504 $ 730,366 $ 920,371
Net income per share $ 0.02 $ 0.19 $ 0.23 $ 0.29
Assuming full dilution:
Shares
Weighted average number of
common shares outstanding
during the period 3,210,000 3,210,000 3,210,000 3,210,000
Assuming exercise of options -0- 31,719 -0- 13,311
Weighted average number of
common shares outstanding ---------- ---------- ---------- ----------
as adjusted 3,210,000 3,241,719 3,210,000 3,223,311
========== ========== ========== ==========
Net income $ 76,005 $ 629,504 $ 730,366 $ 920,371
Earnings per common share
assuming full dilution $ 0.02 $ 0.19 $ 0.23 $ 0.29
</TABLE>
16
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR THE PERIOD ENDED JUNE 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 47
<SECURITIES> 0
<RECEIVABLES> 2,152<F1>
<ALLOWANCES> 0<F1>
<INVENTORY> 4,235
<CURRENT-ASSETS> 7,512
<PP&E> 34,495
<DEPRECIATION> 14,642
<TOTAL-ASSETS> 31,240
<CURRENT-LIABILITIES> 16,259
<BONDS> 287
1,335
0
<COMMON> 32
<OTHER-SE> 10,376
<TOTAL-LIABILITY-AND-EQUITY> 31,240
<SALES> 694
<TOTAL-REVENUES> 10,100
<CGS> 482
<TOTAL-COSTS> 6,651
<OTHER-EXPENSES> 2,398<F2>
<LOSS-PROVISION> 0<F1>
<INTEREST-EXPENSE> 485
<INCOME-PRETAX> 1,178
<INCOME-TAX> 449
<INCOME-CONTINUING> 730
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 730
<EPS-BASIC> 0.23
<EPS-DILUTED> 0.23
<FN>
<F1>NOTES AND ACCOUNTS RECEIVABLE - TRADE ARE REPORTED NET OF ALLOWANCES FOR
DOUBTFUL ACCOUNTS IN THE CONDENSED BALANCE SHEETS.
<F2>OTHER COSTS AND EXPENSES INCLUDE THE PROVISION FOR DOUBTFUL ACCOUNTS AND
NOTES </FN>
</TABLE>
