<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended Commission File
December 31, 1997 Number 1-3552
SCOPE INDUSTRIES
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
California 95-1240976
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
233 Wilshire Blvd., Ste.310, Santa Monica, CA 90401
- --------------------------------------------- ----------
(Address of principal executive office) (ZIP Code)
Registrant's telephone number, including area code (310) 458-1574
--------------
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 preceeding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at January 23, 1998
- -------------------------- -------------------------------
Common Stock, no par value 1,132,952
<PAGE> 2
SCOPE INDUSTRIES AND SUBSIDIARIES
INDEX
PAGE
Part I. Financial Information:
Consolidated Balance Sheets -
December 31, 1997 and June 30, 1997 3
Consolidated Statements of Income -
Three Months Ended
December 31, 1997 and 1996 4
Consolidated Statements of Income -
Six Months Ended
December 31, 1997 and 1996 5
Consolidated Statements of Cash Flows -
Six Months Ended
December 31, 1997 and 1996 6
Notes to Consolidated Financial Statements 7
Management's Discussion and Analysis of
Results of Operations and
Financial Condition 10
Part II. Other Information:
Item 2. Increases and Decreases in
Outstanding Securities and
Indebtedness 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 13
-2-
<PAGE> 3
PART I. FINANCIAL INFORMATION
SCOPE INDUSTRIES AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31 JUNE 30
1997 1997
------------ ------------
(UNAUDITED) (AUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 2,129,615 $ 5,946,050
Treasury bills (par value $28,500,000 at
December 31, 1997 and $24,000,000 at
June 30, 1997) 27,663,359 23,540,939
Accounts and notes receivable, less allowance
for doubtful accounts of $158,769 at December
31, 1997 and $159,167 at June 30, 1997 1,711,618 1,637,066
Inventories 417,989 584,401
Deferred income taxes 795,000 675,000
Prepaid expenses and other current assets 598,596 379,654
------------ ------------
TOTAL CURRENT ASSETS 33,316,177 32,763,110
------------ ------------
NOTES RECEIVABLE 1,089,017 232,276
------------ ------------
PROPERTY AND EQUIPMENT:
Machinery and equipment 22,732,937 22,551,992
Land, buildings and improvements 9,741,622 9,652,554
------------ ------------
32,474,559 32,204,546
Less accumulated depreciation and amortization 22,762,126 22,016,611
------------ ------------
9,712,433 10,187,935
------------ ------------
OTHER ASSETS:
Deferred charges and other assets 76,583 256,006
Investments available for sale-at fair value 37,974,427 15,539,706
Other equity investments-at cost 1,006,000 2,505,000
------------ ------------
39,057,010 18,300,712
------------ ------------
$ 83,174,637 $ 61,484,033
============ ============
LIABILITIES AND SHAREOWNERS' EQUITY
CURRENT LIABILITIES:
Bank overdraft $ 66,896 $
Accounts payable 937,432 1,104,205
Other accrued liabilities 2,382,488 1,255,321
Accrued payroll and related employee benefits 738,403 940,631
Income taxes payable 498,268 534,231
------------ ------------
TOTAL CURRENT LIABILITIES 4,623,487 3,834,388
------------ ------------
DEFERRED INCOME TAXES 7,620,000
------------ ------------
12,243,487 3,834,388
------------ ------------
SHAREOWNERS' EQUITY:
Common stock, no par value, 5,000,000 shares
authorized; shares issued and outstanding
December 31, 1997 1,133,352
June 30, 1997 1,168,665 4,138,462 4,138,462
Retained earnings 46,139,380 45,513,699
Net unrealized gain on investments 20,653,308 7,997,484
------------ ------------
70,931,150 57,649,645
------------ ------------
$ 83,174,637 $ 61,484,033
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
-3-
<PAGE> 4
SCOPE INDUSTRIES AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
DECEMBER 31
---------------------------
1997 1996
---------- ----------
<S> <C> <C>
REVENUES:
Sales $5,708,983 $5,854,334
Vocational school revenues 1,155,933 1,192,327
---------- ----------
6,864,916 7,046,661
---------- ----------
OPERATING COSTS AND EXPENSES:
Cost of sales 3,976,905 3,854,176
Vocational school expenses 884,509 830,813
Depreciation and amortization 516,119 526,811
General and administrative 979,808 947,082
---------- ----------
6,357,341 6,158,882
---------- ----------
507,575 887,779
Investment and other income 4,584,245 6,565,307
---------- ----------
Income before income taxes 5,091,820 7,453,086
Provision for income taxes 1,890,000 2,525,000
---------- ----------
NET INCOME $3,201,820 $4,928,086
========== ==========
NET INCOME PER SHARE - BASIC $ 2.82 $ 4.14
NET INCOME PER SHARE - DILUTED $ 2.80 $ 4.11
Average shares outstanding - Basic 1,134,102 1,191,515
Dilutive effect of stock options 9,508 7,474
---------- ----------
Average shares outstanding - Diluted 1,143,610 1,198,989
Cash dividends declared per share $ 1.00 $ 1.00
</TABLE>
The accompanying notes are an integral part of these statements.
-4-
<PAGE> 5
SCOPE INDUSTRIES AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31
-----------------------------
1997 1996
----------- -----------
<S> <C> <C>
REVENUES:
Sales $11,066,547 $14,546,834
Vocational school revenues 2,293,174 2,281,575
----------- -----------
13,359,721 16,828,409
----------- -----------
OPERATING COSTS AND EXPENSES:
Cost of sales 7,664,550 8,265,340
Vocational school expenses 1,785,669 1,711,875
Depreciation and amortization 1,035,696 1,048,835
General and administrative 2,066,283 1,997,722
----------- -----------
12,552,198 13,023,772
----------- -----------
807,523 3,804,637
Investment and other income 5,014,112 16,471,217
----------- -----------
Income before income taxes 5,821,635 20,275,854
Provision for income taxes 2,205,000 6,090,000
----------- -----------
NET INCOME $ 3,616,635 $14,185,854
=========== ===========
NET INCOME PER SHARE - BASIC $ 3.15 $ 11.89
NET INCOME PER SHARE - DILUTED $ 3.12 $ 11.83
Average shares outstanding - Basic 1,148,915 1,192,851
Dilutive effect of stock options 8,973 6,258
----------- -----------
Average shares outstanding - Diluted 1,157,888 1,199,109
Cash dividends declared per share $ 1.00 $ 1.25
</TABLE>
The accompanying notes are an integral part of these statements.
-5-
<PAGE> 6
SCOPE INDUSTRIES AND SUBSDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31
--------------------------------
1997 1996
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 3,616,635 $ 14,185,854
Adjustments to reconcile net income to net
cash flows from operating activities:
Depreciation and amortization 1,035,696 1,048,835
Gains on investments available for sale (4,128,161) (15,418,655)
Losses (gains) on sale of equipment 18,435 (10,655)
Deferred income taxes (120,000) (235,000)
Changes in operating assets and liabilities:
Accounts and notes receivable (272,493) 1,225,298
Inventories 166,412 (458)
Prepaid expenses and other current assets (218,942) (37,701)
Accounts payable and accrued liabilities 758,166 425,600
Income taxes payable (35,963) 2,368,246
Other assets 4,423 27,261
------------ ------------
Net cash flows from operating activities 824,208 3,578,625
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of U.S. Treasury bills (22,872,420) (24,955,064)
Maturities of U.S. Treasury bills 18,750,000 5,535,000
Purchase of property and equipment (632,038) (868,541)
Disposition of property and equipment 53,409 22,846
Purchase of long-term notes receivable (658,800)
Purchase of investments available for sale (335,703) (3,153,342)
Purchase of other equity investments (1,001,000)
Proceeds from sale of investments available for sale 4,979,967 21,650,617
------------ ------------
Net cash flows used in investing activities (1,716,585) (1,768,484)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends to shareowners (1,133,352) (1,491,132)
Repurchases of common stock (1,857,602) (488,387)
Proceeds from stock options exercised 119,000
Change in bank overdraft 66,896 (250,686)
------------ ------------
Net cash used in financing activities (2,924,058) (2,111,205)
------------ ------------
Net change in cash and cash equivalents (3,816,435) (301,064)
Cash and cash equivalents at beginning
of period 5,946,050 1,721,939
------------ ------------
Cash and cash equivalents at end of period $ 2,129,615 $ 1,420,875
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
-6-
<PAGE> 7
SCOPE INDUSTRIES AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
DECEMBER 31, 1997
1. In the opinion of the Registrant, the accompanying unaudited consolidated
financial statements contain all adjustments (consisting of only normal
recurring accruals) necessary to present fairly Scope Industries'
financial position as of December 31, 1997 and June 30, 1997, and the
results of its operations for the three and six months ended December 31,
1997 and 1996. The accounting policies followed by the Company are set
forth in Note 1 of its financial statements in its 1997 Annual Report
which is incorporated by reference on Form 10-K.
2. The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards (SFAS) No. 128, "Earnings Per Share." SFAS 128
requires the disclosure of basic earnings per share which replaces primary
earnings per share, and diluted earnings per share, which replaces fully
diluted earnings per share. Primary earnings per share is based on the
weighted average number of shares of common stock outstanding and the
dilutive effect of options and other common stock equivalents. Basic
earnings per share does not consider any dilution. Diluted earnings per
share is similar to fully diluted earnings per share, which considers all
potentially dilutive securities.
SFAS 128 becomes effective for the Registrant with its December 31, 1997
financial statements. All earnings per share data presented for prior
periods must be restated to conform to the new standard.
Diluted earnings per share is less than basic earnings per share because
the assumed increase in the average number of common shares outstanding
resulting from the assumed exercise of outstanding options in periods in
which the average market price of the Registrant's common shares exceeded
the related option exercise prices.
3. Quarterly results of operations are not necessarily indicative of the
results to be expected for the full year.
4. Treasury bills consisted of the following: (at adjusted cost which
approximates fair value)
<TABLE>
<CAPTION>
December 31 June 30
1997 1997
----------- -----------
<S> <C> <C>
Held to maturity $ 4,227,604 $22,591,800
Available for sale 23,435,755 949,139
----------- -----------
$27,663,359 $23,540,939
=========== ===========
</TABLE>
5. Inventories consisted of the following:
<TABLE>
<CAPTION>
December 31 June 30
1997 1997
----------- -----------
<S> <C> <C>
Finished products $ 153,432 $ 255,850
Raw materials 64,486 134,968
Operating supplies 200,071 193,583
----------- -----------
$ 417,989 $ 584,401
=========== ===========
</TABLE>
-7-
<PAGE> 8
SCOPE INDUSTRIES AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
DECEMBER 31, 1997
(CONTINUED)
6. Investments consisted of the following:
Net Unrealized
Gains Before
Provision For
Cost Income Taxes Fair Value
---------- -------------- ---------------
At December 31, 1997:
Investments available
for sale $7,401,119 $30,573,308 $37,974,427 (a)
Other equity
investments 1,006,000 1,006,000 (b)
At June 30, 1997:
Investments available
for sale $5,417,222 $10,122,484 $15,539,706
Other equity
investments 2,505,000 2,505,000 (a)(b)
(a) At June 30, 1997 the Registrant held 1,875,000 shares of OSI
Systems, Inc. (OSI) common stock. At June 30, 1997 the shares of OSI
were not publicly traded. The Registrant's June 30, 1997 holdings of
OSI were classified as "other equity investments" and valued at
their cost of $2,500,000.
In October 1997, an initial public offering of OSI common stock
occurred. Included in the public offering were 227,097 shares sold
by the Registrant. Proceeds of $2,821,173 were received from the
sale of those shares and a pre-tax gain of $2,518,378 resulted from
the October 1997 transaction. The Registrant, as a condition of
participating in the initial public offering, has agreed to refrain
from disposing of any of its remaining 1,647,903 shares for a six
month period following the public offering.
In accordance with Financial Accounting Standards Board (FASB)
guidelines, the Registrant's December 31, 1997 financial statements
classify the OSI holdings as "available for sale" investments whose
fair value of $20,186,812 was determined by the December 31, 1997
closing trade price for OSI as reported by NASDAQ.
(b) No quoted prices are available for these securities.
-8-
<PAGE> 9
SCOPE INDUSTRIES AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
DECEMBER 31, 1997
(CONTINUED)
7. During the six month period ended December 31, 1997, investment gains of
$4,128,161 were recognized in the determination of income. Unrealized
investment holding gains (excluded from income but reported, net of income
taxes, as a separate component of shareowners' equity) increased by
$12,655,824 to $20,653,308 at December 31, 1997 from $7,997,484 at June
30, 1997.
During the six months ended December 31, 1996, investment gains of
$15,418,655 were recognized and included as income. Unrealized investment
holding gains, (excluded from income but reported, net of income taxes, as
a separate component of shareowners' equity) decreased by $7,909,228 to
$6,458,779 at December 31, 1996 from $14,368,007 at June 30, 1996.
8. The provision for income taxes for the six months ended December 31, 1997
represents an effective rate of 37.9% for federal and state income taxes.
For the six month period ended December 31, 1996 the effective rate for
income taxes was 30.0%. In the 1996 period, deferred tax benefits were
recognized, which reduced the provision for income taxes to an effective
rate that was lower than statutory federal income tax rate.
-9-
<PAGE> 10
SCOPE INDUSTRIES AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
Net income for the second quarter ended December 31, 1997 was down 35% from the
second quarter last year. Net income was $3,201,820 in the 1997 quarter and was
$4,928,086 in the second quarter of 1996. Net income per share-diluted was $2.80
compared to $4.11 for the comparative quarter last year. Total operating
revenues for the second quarter were 2.6% below the revenues for the same
quarter last year. Waste Material Recycling segment revenues in the current
quarter fell 2.7% from last year's second quarter revenues. The segment's total
tonnage shipped was 9.1% above last year's second quarter but the 10.8% drop in
unit selling prices from the year earlier average price level resulted in the
reduced net revenue. Vocational School group revenues for the quarter were down
by 3.1% compared to the same quarter last year. Operating costs for the Waste
Material Recycling segment increased 3.2% compared to the same quarter last
year. Vocational School Group operating costs were 6.5% higher in the current
quarter than in the comparable quarter last year. The lower sales revenues and
higher costs in both business segments resulted in smaller operating margins in
the current quarter compared to the comparable quarter last year. However
operations for the quarter were profitable in both the Waste Material Recycling
segment and the Vocational School Group segment.
Investment and other income for the quarter ended December 31, 1997 was
$4,584,245 compared to $6,565,307 for the same three months last year.
Investment income included gains of $4,128,161 from sales of investments during
the current period and $5,983,020 from investment sales gains in the prior
year's second quarter. In October 1997, a portion of the shares held by the
Company in OSI Systems, Inc. were sold in the Initial Public Offering of OSI
common stock, which resulted in recognized pre-tax gain of $2,518,378.
Investment gains in the prior year's second quarter were recognized from sales
of long term equity investment holdings.
For the six months ended December 31, 1997, net income was $3,616,635. It was
$14,185,854 for the six months ended December 31, 1996. Net income per
share-diluted was $3.12 compared to $11.83 for the comparable six months.
Revenues for the six months ended December 31, 1997 were 20.6% less than
revenues for the comparable six months last year. The reduced revenue in the
current six month period is a result of lower product prices realized in the
Waste Material Recycling segment in this year's six month period compared to
prices that prevailed for the six month period last year. Corn prices had been
sharply higher during the first half of the prior year and the Company's Dried
Bakery Product sold at higher prices last year as a direct result. Corn prices
have been lower this year and as a consequence the Company's Dried Bakery
Product has sold at lower prices in the current period compared to the
comparable six months last year. Although the volume of Dried Bakery Product
shipped in the current six month period exceeds the tonnage shipped in the
comparable six months last year, the lower unit prices caused revenues to
decline. The Waste Material Recycling segment and the Vocational School Group
segment operated profitably during the current and the previous year's six
months periods ending December 31.
-10-
<PAGE> 11
SCOPE INDUSTRIES AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
(CONTINUED)
Investment and other income for the six months ended December 31, 1997 was
$5,014,112. It was $16,471,217 for the comparable six months last year. Gains on
investments sold were $4,128,161 for the current six months and were $15,418,655
in the comparable period last year. The unusually large gains last year stemmed
from the disposition of long term equity investment holdings.
EARNINGS PER SHARE
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards (SFAS) No. 128, "Earnings Per Share." SFAS 128 requires the
disclosure of basic earnings per share which replaces primary earnings per
share, and diluted earnings per share, which replaces fully diluted earnings per
share. Primary earnings per share is based on the weighted average number of
shares of common stock outstanding and the dilutive effect of options and other
common stock equivalents. Basic earnings per share does not consider any
dilution. Diluted earnings per share is similar to fully diluted earnings per
share, which considers all potentially dilutive securities.
SFAS 128 becomes effective for the Company with the December 31, 1997 financial
statements. All earnings per share data presented for prior periods has been
restated to conform to the new standard.
Diluted earnings per share is less than basic earnings per share because the
assumed increase in the average number of common shares outstanding resulting
from the assumed exercise of outstanding options in periods in which the average
market price of the Company's common shares exceeded the related option exercise
prices.
FINANCIAL POSITION
Working Capital was $28,692,690 at December 31, 1997. It was $28,928,722 at June
30, 1997. The working capital ratio at December 31, 1997 was 7.2 and at June 30,
1997 was 8.5.
At December 31, 1997, investments include $30,573,308 in unrealized gains based
on fair values that exceed adjusted costs for certain securities. Shareowners'
equity reflects $20,653,308 net unrealized gain on investments after a provision
for deferred taxes. The unrealized gains are excluded from earnings.
The Company, as a result of its investment in OSI Systems, Inc. in 1990, was
OSI's largest single shareholder in October 1997, although not a controlling
shareholder. In October 1997, OSI Systems, Inc. completed an initial public
offering of its common stock. The Company sold 227,097 shares of OSI as a
participant in the public offering. A pre-tax gain of $2,518,378 was recognized
on the transaction. The Company still holds 1,647,903 OSI shares. As a condition
of participating in the public offering, the Company has agreed to refrain from
disposing any of its remaining shares for a period that will expire on April 1,
1998. Upon the establishment of public stock trading of OSI in October
-11-
<PAGE> 12
SCOPE INDUSTRIES AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
(CONTINUED)
1997, the Company changed the classification of the investment holdings in OSI
in accordance with Financial Accounting Standards Board (FASB) guidelines. The
holding is now classified as an "available-for-sale" investment and is valued at
fair value. Fair value of the OSI holdings at December 31, 1997 was $20,186,812
which was determined by the December 31, 1997 closing trade price for OSI as
reported by NASDAQ.
TAXES
The provision for income taxes for the six month period ended December 31, 1997
is $2,205,000 and represents an effective rate of 37.9% for federal and state
income taxes. For the first six months of the prior fiscal year, the income tax
provision was $6,090,000 and the effective tax rate was 30.0% in the 1996
period. Deferred tax benefits were recognized, which reduced the provision for
income taxes to an effective tax rate that was lower than the statutory federal
income tax rate.
FORWARD LOOKING STATEMENTS
Forward looking statements included in the Management's Discussion and Analysis
of Results of Operations and Financial Condition and elsewhere in this quarterly
report are subject to risks and uncertainties that could affect actual future
results. Potential risks and uncertainties include, but are not limited to,
general business conditions, unusual volatility in equity and interest rate
markets, disruptions in the availability or pricing of raw materials,
transportation difficulties, changing government educational aid policies, or
disruption of operations from acts of God.
-12-
<PAGE> 13
SCOPE INDUSTRIES AND SUBSIDIARIES
PART II. OTHER INFORMATION
Item 2. Increases and Decreases in Outstanding Securities and Indebtedness.
Increases and decreases in outstanding equity securities in the six months
ending December 31, 1997 were as follows:
<TABLE>
<CAPTION>
Common Stock
No Par Value
------------
<S> <C>
Shares outstanding June 30, 1997 1,168,665
Shares purchased and retired
during the six months (35,313)
---------
Shares outstanding December 31, 1997 1,133,352
=========
</TABLE>
A corporate resolution requires the retirement of all reacquisitions of common
stock. During the six months ended December 31, 1997, the Registrant purchased
and retired 35,313 shares of common stock at a cost of $1,857,602.
Item 5. Other Information.
On October 28, 1997 the Registrant's board of directors declared a regular
annual dividend of $1.00 per share payable on January 5, 1998 to shareowners of
record at December 1, 1997.
Item 6. Exhibits and Reports on Form 8-K.
(A) Exhibits - None
(B) No Form 8-K was filed for the quarter ended December 31, 1997.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized and accepting responsibility as the
signatory.
SCOPE INDUSTRIES
(Registrant)
DATE: February 11, 1998 /s/ John J. Crowley
------------------------ -----------------------------------------
John J. Crowley, Vice President
and Chief Financial Officer
-13-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AT DECEMBER 31, 1997 AND THE CONSOLIDATED STATEMENT
OF INCOME FOR THE SIX MONTHS ENDED DECEMBER 31, 1997 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 2,129,615
<SECURITIES> 38,980,427
<RECEIVABLES> 1,870,387
<ALLOWANCES> 158,769
<INVENTORY> 417,989
<CURRENT-ASSETS> 33,316,177
<PP&E> 32,474,559
<DEPRECIATION> 22,762,126
<TOTAL-ASSETS> 83,174,637
<CURRENT-LIABILITIES> 4,623,487
<BONDS> 0
0
0
<COMMON> 4,138,462
<OTHER-SE> 66,792,688
<TOTAL-LIABILITY-AND-EQUITY> 83,174,637
<SALES> 11,066,547
<TOTAL-REVENUES> 13,359,721
<CGS> 7,664,550
<TOTAL-COSTS> 12,552,198
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 5,821,635
<INCOME-TAX> 2,205,000
<INCOME-CONTINUING> 3,616,635
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,616,635
<EPS-PRIMARY> 3.15
<EPS-DILUTED> 3.12
</TABLE>
