FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended JUNE 30, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to
Commission file number 0-3286
SEMICON, INC.
(Exact name of registrant as specified in its charter)
Massachusetts 04-2242662
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10 North Avenue
Burlington, Massachusetts 01803
(Address of principal executive (Zip Codes)
offices)
Registrant's telephone number, including area code:
(617) 272-9015
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.25 par value
(Title of Class)
Indicate by checkmark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained to the best of the registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III
of the Form 10-K or any amendment to this Form 10-K.
Yes X NO
----- -----
Indicate by checkmark 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 the filing requirements for at least the
past 90 days. Yes X No
----- -----
The aggregate market value of voting stock held by nonaffiliates of
the registrant as of August 31, 1995 was $133,000.
The number of shares of common stock outstanding as of August 31,
1995 was 3,304,873.
DOCUMENTS INCORPORATED BY REFERENCE
None.
PART I
Item 1. Business
General: Semicon, Inc. (the "Company") was founded in 1958.
Through its subsidiary, Semicon Components, Inc., the Company is
engaged in the manufacture and sale of discrete semiconductors.
Discrete semiconductors are used in electronic products to convert
alternating to direct current, to control the direction of electrical
current flow, to regulate voltages and to protect sensitive circuitry
from line surges and transient voltage spikes.
Products: The Company's products include a broad line of
rectifiers, zener diodes, transient voltage suppressors and unique
assemblies used primarily in high reliability military-aerospace,
telecommunications and commercial applications. Most of the Company's
products are catalog items made to United States government and
industry specifications. The Company also sells unique assemblies
designed and assembled for specific circuitry needs of particular
customers.
Sales and Marketing: Approximately 51% of the Company's sales are
made to seven franchised distributors. The remainder of the Company's
sales are to original equipment manufacturers ("OEM"). OEM sales are
made by Company employees and five independent sales representative
organizations. In the past fiscal year, the Company sold
semiconductors to 82 customers at 114 locations. During that period
Zeus Electronics and ACI Electronics Corp. accounted for 18% and 13% of
sales, respectively. Approximately 70% of fiscal 1995 sales were
military/defense products and the remainder were industrial/commercial
products. Changes in United States defense appropriations and
procurement policies, and changes in the Department of Defense
Qualified Product List and product specifications could adversely
affect the Company's sale of military/defense products.
Competition: Microsemi Corp. is the dominant competitor in the
military-aerospace market served by the Company. Microsemi Corp., the
largest single owner of Semicon, Inc. Common Stock, offers a
significantly broader range of semiconductor products than the Company.
The Company is the only alternative source to Microsemi for ten series
of military devices. Semtech Corporation and BKC Semiconductors
Incorporated also compete with the Company on several series of
military devices, while General Instrument Corp. competes with the
Company's industrial/commercial devices. All of the Company's
competitors are larger and have greater resources than the company.
Competition in discrete semiconductor sales is a function of
price, quality, breadth of product offerings and service (primarily
delivery). Due to technological innovation, off-shore competition and
decreased demand for military products, discrete semiconductors have
been subject to decreasing prices for many years.
2
Backlog: Backlog, believed to be firm, totaled approximately
$2,160,000 and $1,455,000 as of August 31, 1995 and 1994, respectively.
Substantially all of the 1995 amount could be expected to be shipped
within a year. Customer orders were strong for July and August 1995,
as evidenced by the Company's increased backlog. Backlog has no
seasonal aspects and is subject to cancellation and rescheduling, in
most cases without penalty.
Research and Development: Research and development costs are not
separately accounted for but management estimates that during each of
the fiscal years ended June 30, 1995, 1994 and 1993 less than $200,000
was spent on Company-sponsored activities relating to the improvement
of existing products and development of new products.
Raw Materials: Historically, raw materials essential to satisfy the
precise requirements of the military specifications for products which
represented approximately 70% of the Company's sales have been
available in adequate quantities at competitive prices. However,
changes in government specification, raw material availability or
increased cost of raw materials could have an adverse impact on Company
operations. The Company experienced increased pricing in the cost of
silicon wafers (a basic raw material) and lengthened vendor delivery
lead times in the five months ended August 31, 1995. In September 1995
the Company was informed by its primary silicon wafer vendor that it
would no longer supply silicon to the Company. The Company is
searching for alternate sources.
Environmental Regulation: Operations of the Company are subject to
federal, state and local laws relating to the environment.
See Item 7 and Notes C and D of Notes to Financial Statements regarding
certain environmental matters.
Patents and Technology: The Company holds a number of patents relating
to semiconductor devices but does not currently consider them to be
significant to its business. Although the Company is not aware of any
infringement, it is possible that one or more of the products of the
Company may infringe existing patents of others.
The Company is not aware of any technological development that may
render its products obsolete but, like all companies in high technology
businesses, it is subject to that risk.
Employees: As of August 31, 1995, the Company had 77 employees.
Item 2. Properties
The Company conducts its operations in approximately 30,000 square
feet in a leased building located in Burlington, Massachusetts (with a
lease expiring in June 1997).
Item 3. Legal Proceedings
None.
3
Item 4. Submission of Matters to a Vote of Security Holders
During the fourth quarter of the fiscal year covered by this
report, no matters were submitted to a vote of security holders.
4
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters
The Company's common stock is traded in the over-the-counter
market. The following table sets forth the high and low bid prices
of the Company's Common Stock in the over-the-counter market, as
reported daily by the National Quotation Bureau, Inc. Such over-the-
counter market quotations reflect inter-dealer prices, without retail
markup, markdown or commission, and may not necessarily represent
actual transactions.
Fiscal 1995 Fiscal 1994
------------- -------------
High Low High Low
<TABLE>
<S> <C> <C> <C> <C>
First Quarter $ .01 $ .001 $ .01 $ .001
Second Quarter .01 .001 .01 .001
Third Quarter .01 .001 .01 .01
Fourth Quarter .01 .001 .01 .01
</TABLE>
The approximate number of stockholders of record at August 31,
1995, was 477.
The Company has paid no cash dividends to date. The Company's
indenture relating to its 13% Convertible Subordinated Debentures and a
guarantee agreement relating to certain industrial revenue bonds of
Microfab, Inc., a former subsidiary, contain limitations on the payment
of cash dividends. At August 31, 1995, under these limitations, the
Company was prohibited from paying any dividends.
Item 6. Selected Financial Data
For selected financial data for the five years ended June 30,
1995, see Part IV of this Report, page 33, incorporated herein by
reference.
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
The following discussion and analysis should be read in connection
with the consolidated financial statements, the notes to the
consolidated financial statements and the five-year summary of selected
financial data.
Financial Condition
Liquidity and Sources of Capital
The Company operates at the forebearance of its creditors. It
continues to be in default of debt obligations aggregating $4,562,000
for principal and interest at June 30, 1995. The defaults exist
because of non-payment of principal and accrued interest for periods
extending back to July 1990.
5
The Company faces various environmental issues. The Company had a
compliance deadline of August 2, 1995, to remediate environmental
problems at its Burlington, Massachusetts operating site, currently
estimated to cost $350,000 to $600,000. The Company filed a "Financial
Inability" notice as required by the Code of Massachusetts Regulations
before the August 1995 compliance deadline. If the Commonwealth of
Massachusetts requires remediation in spite of the Company's financial
inability to comply, the Company will be forced to liquidate under
Chapter 7 of the United States Bankruptcy Code. The Company was
designated a potentially responsible party ("PRP") by the United States
Environmental Protection Agency at a superfund landfill site in Lowell,
Massachusetts. The settling PRP group has demanded that the Company
pay 10.8% of the $20,000,000 to $25,000,000 estimated cost of landfill
cleanup. The Company intends to defend itself against this claim. In
November 1989, the Commonwealth of Massachusetts notified the Company
that the Massachusetts Department of Environmental Protection believed
that the Company has liability for hazardous material cleanup at the
former subsidiary, Microfab, Inc. site in Amesbury, Massachusetts. The
Company denies responsibility and liability in the matter.
The Company has no outside source of financing and does not expect
to be able to obtain any such financing.
Customer insecurity about the Company's financial condition
continues. The foregoing factors and the Company's operating losses
make the Company's financial condition precarious.
The Company continues to attempt to settle debt obligations at
less than face amount and has succeeded in reducing the principal
amount of its debt in default from $6,170,000 at June 30, 1990, to
$3,134,000 at June 30, 1995. However, during that period of time,
interest has accrued on the unsettled portion of debt obligations in
default to make the aggregate amount in default at June 30, 1995,
$4,562,000.
June 30, June 30, 1995
1990 ----------------------------
Principal and
Principal Principal Accrued Interest
--------- --------- ----------------
<TABLE>
<S> <C> <C> <C>
BayBank $ 795,000 $ 696,000 $ 707,000
Deferred Compensation
and Other 820,000 441,000 441,000
NationsBank 430,000 0 0
13% Convertible
Subordinated Debentures 4,125,000 1,997,000 3,414,000
--------- --------- ---------
$6,170,000 $3,134,000 $4,562,000
========== ========== ==========
</TABLE>
6
Settlements to June 30, 1995, have included: purchases of
$2,128,000 face amount of debentures for $145,000; settlement of
$468,000 of NationsBank debt obligations for $100,000 and settlement of
$438,000 of deferred compensation and other obligations for $74,000.
Despite fiscal 1995 settlements of $1,759,000 of debt obligations for
$161,000 cash and extraordinary gains of $1,599,000, the Company's
overall efforts since June 30, 1990, to complete a consensual non-
bankruptcy debt restructuring have been unsuccessful.
The Company recorded an operating profit in the fourth quarter of
fiscal 1995. Prior to that the Company recorded an operating loss in
every quarter except one since June 30, 1989. If the Company is unable
to return to continuously profitable operations, to make satisfactory
arrangements with its creditors and to satisfy its environmental
obligations, the Company might be required to seek protection from its
creditors under the United States Bankruptcy Code.
The Company has suffered from the effects of a decrease in the
demand for discrete semiconductor products used in military
applications. The decrease in demand has resulted in fierce price
competition and a shift in sales mix to commercial products where the
Company must compete with large, highly automated domestic and foreign
manufacturers.
The decrease in inventories at June 30, 1995, as compared to June
30, 1994, reflected the Company's efforts to reduce inventory
investment and improve inventory turnover. The decrease in accrued
interest and indebtedness in default reflected the settlement of
$1,759,000 of debt obligations during the period.
At June 30, 1995, the Company had a deficit in stockholders'
equity aggregating $4,188,000 and its current liabilities exceeded its
current assets by $3,813,000.
The Company did not retain independent accountants to audit its
1993, 1994 and 1995 financial statements because management did not
believe the Company could afford the cost of an audit.
Results Of Operations
Net sales of $6,158,000 for fiscal 1995 were down 8% or $545,000
from $6,703,000 for fiscal 1994 which were up 13% or $776,000 from
$5,927,000 for fiscal 1993. Substantially all of the higher fiscal
1994 net sales was attributable to several one-time sales of products
in the first six months of fiscal 1994. Management believes the
industry-wide decrease in the demand for discrete semiconductor
products used in military applications has leveled off. Bookings were
105% of sales for fiscal 1995 as compared to 98% of sales for fiscal
1994 and 102% of sales for fiscal 1993. Backlog at June 30, 1995, was
$1,868,000 as compared to $1,601,000 at June 30, 1994, and $1,799,000
at June 30, 1993.
Gross profit on sales was $1,245,000 (20% of sales) for fiscal
1995 as compared to $1,402,000 (21% of sales) for fiscal 1994 and
$340,000 (6% of sales) for fiscal 1993. The increase in gross profit
7
from 1993 to 1994 primarily reflected the results of the increase in
sales while manufacturing costs decreased. The decrease in gross
profit from 1994 to 1995 primarily reflected the results of the
decrease in sales.
Selling, general and administrative expenses fluctuated between
16% and 17% of sales for the three years ended June 30, 1995.
Interest expense decreased from fiscal 1993 through fiscal 1995 as
a result of reductions in outstanding debt.
Other income for fiscal 1995 represented an $18,000 gain on the
sale of property located in North Carolina. Other income for fiscal
1994 represented a $72,000 gain from settlements of certain deferred
compensation obligations.
The $1,230,000 extraordinary gain on purchases of debentures in
fiscal 1995 ($276,000 in 1994 and $505,000 in 1993) resulted from the
purchase of $786,000 ($187,000 in 1994 and $388,000 in 1993) face
amount of 13% convertible Subordinated Debentures at a discount.
The $368,000 extraordinary gain on debt settlement in fiscal 1995
resulted from the settlement of $468,000 of obligations due NationsBank
for $100,000.
The $130,000 extraordinary gain from bankruptcy distribution in
fiscal 1993 resulted from chapter 7 final liquidation distributions of
a former subsidiary, Microfab, Inc.
Item 8. Financial Statements and Supplementary Data
See Consolidated Financial Statements, part IV of this Report,
pages 16 to 32, incorporated herein by reference.
Item 9. Disagreements on Accounting and Financial Disclosure
The Company believed it could not afford the cost of an
independent audit for 1995, 1994 and 1993. Accordingly, management and
the Board of Directors determined not to retain auditors to examine and
report on the Company's 1995, 1994 and 1993 financial statements.
8
PART III
Item 10. Directors and Executive Officers of the Registrant
The directors of the Company are as follows:
Principal Occupation Director
Name for the past five years Age Since
CLASS I DIRECTORS:
Harold W. Mahar, Jr. President and Chief 52 1988
Executive Officer
since January 1988
and Director of the
Company since April
1988.
Richard C. Allard Executive Vice President 50 1990*
and Chief Financial
Officer and Director of
the Company since
September 1990; Vice
President Finance and
Treasurer of the
Company since June 1981.
CLASS II DIRECTOR:
Bruce W. Everitt Senior Vice President, 67 1983
Standard Asset Group,
since 1992; Senior Vice
President, Applied
Telecommunications
Technologies, Inc.,
November 1991 to
June 1995; Principal,
Everitt Associates,
technology investment
consultants, since 1988.
CLASS III DIRECTORS:
None
*Mr. Allard was elected Director by the Board of Directors on
September 19, 1990, to fill the vacancy created by the retirement of
Charles T. Russell, Jr.
9
Under Massachusetts law, the Board of Directors of the Company is
classified into three classes with the term of office of one class
expiring each year. The terms of the Class I, II and III directors
expired in 1990, 1991 and 1992, respectively. Each of the Directors
holds office until the annual meeting of shareholders in the year in
which such director's term expires and until such director's successor
is elected and qualified. Because no annual meetings have been held
since 1989, Mr. Mahar and Mr. Allard are continuing as Class I
directors and Mr. Everitt is continuing as a Class II director.
Mr. Mahar and Mr. Allard are the only executive officers of the
Company. Each of the executive officers of the Company holds office
until the first meeting of directors following the annual meeting of
shareholders and until his successor is elected and qualified.
The Board of Directors held 4 meetings during the past fiscal
year. Mr. Douglas P. Smith, who resigned as a director June 27, 1995,
attended no meetings.
The Audit Committee, the members of which were Mr. Everitt and Ms.
Weber, who resigned as a director July 18, 1995, held one meeting
during the past fiscal year. The duties of the Audit Committee are
generally to review the Company's accounting policies and practices,
the audit and the services provided by the independent auditors and to
advise the Board of Directors with respect to the engagement of
independent auditors. The decision not to engage independent auditors
for fiscal 1993, 1994 and 1995 was made by the entire Board of
Directors.
The Compensation Committee, the members of which were Mr. Everitt
and Ms. Weber, held one meeting during the last fiscal year. The
duties of the Compensation Committee are generally to establish the
compensation of the chief executive officer of the Company and to
review incentive compensation plans and related programs of the
Company. Compensation matters were considered by the entire Board of
Directors.
The Equity Incentive Plan Committee, the members of which were
Mr. House, who retired as a director September 19, 1995, and Mr.
Smith, held no meetings during the last fiscal year. The duty of the
Equity Incentive Plan Committee is to administer the Company's Equity
Incentive Plan.
The Employee Stock Purchase Plan Committee, the members of which
were Mr. Everitt and Mr. House, held no meetings during the last fiscal
year. The duty of the Employee Stock Purchase Plan Committee is to
administer the Company's Employee Stock Purchase Plan.
The Board of Directors does not have a standing nominating
committee.
At their suggestion, since 1990, the directors have not received
any compensation for serving on the Board.
10
Item 11. Executive Compensation
Set forth below is information as to the cash compensation paid by
the Company for each of the three fiscal years ended June 30, 1995, to
its chief executive officer who was the only executive officer to be
paid more than $100,000 in any of the last three fiscal years:
Summary Compensation Table:
Name and Principal Annual Compensation
Position Year Salary
---------------------- ----------------------
Harold W. Mahar, Jr., 1995 $125,000
President and Chief 1994 $125,000
Executive Officer 1993 $125,000
The Company paid no bonuses or other compensation to its chief
executive officer during the three years ended June 30, 1995. Further,
the Company made no long term compensation awards or payouts to its
chief executive officer during the three years ended June 30, 1995.
Option/SAR Grants in Last Fiscal Year:
None.
Aggregate Option/SAR Exercises in Last Fiscal Year
and Fiscal Year-End Option/SAR Values:
None.
Long-Term Incentive Plans-Awards in Last Fiscal Year:
None.
The Company has a deferred compensation agreement with Mr. Allard
under which the Company has agreed to pay him, upon his retirement at
age 65, $24,000 annually until the later of ten years or his death,
subject to certain conditions. If Mr. Allard becomes disabled prior to
his retirement, the Company has agreed to pay him $12,000 annually for
life. The agreement further provides that if Mr. Allard dies while
employed by the Company, the Company will pay Mr. Allard's spouse or
other beneficiary $28,000 annually for ten years.
The Company has severance agreements with its executive officers
under which the Company agrees to pay severance benefits to each such
executive, consisting of a percentage of his annual base salary (175%
in the case of Mr. Mahar and 150% in the case of Mr. Allard) at the
rate in effect immediately prior to the termination of employment or
the change of control, whichever is higher. In addition, the executive
will be entitled to certain other benefits including the acceleration
of the exercisability of outstanding stock options, continued
participation for up to one year in group health and medical insurance
plans, the payment by the Company of legal fees and expenses incurred
as a result of termination of employment, and under certain
circumstances, the executive shall have the option to decrease payments
11
or benefits payable under the agreement to avoid any excise taxes
payable by the executive as a result of the severance benefits. The
benefits are payable to the executive only if his employment is
terminated for any reason other than for cause (as defined in the
agreement), or if the executive terminates his employment as the result
of specified justification, in all cases during a period of two years
following a "change of control" of the Company. A change of control is
defined to include the acquisition of 30% or more of the combined
voting power of the Company's then outstanding securities, other
changes of control required to be reported as determined by certain
regulatory authorities, and certain changes in membership of the Board
of Directors. Such severance payments would not be reduced for
compensation received by the executive from any new employment. At the
option of the Company, the agreement shall not apply to a change of
control which takes place five years after the date of execution of the
agreement. Under these agreements, based upon the annual base salary
to be paid by the Company to the executive for fiscal 1995, change of
control cash severance payments would be approximately $218,000 and
$149,000, respectively, for Messrs. Mahar and Allard.
12
Item 12. Security Ownership of Certain Beneficial Owners and
Management
Principal Owners of Common Stock: The following table sets forth,
as of August 31, 1995, the beneficial ownership (as defined in the
rules of the Securities and Exchange Commission) of persons known to
the Company to be such owner of more than five percent of the
outstanding Common Stock of the Company, based on information on file
with the Securities and Exchange Commission:
Common Stock Percent
Name and Address Owned Beneficially (1) of Class
-------------------- ---------------------- --------
Microsemi Corp. 581,987 17.6%
2830 Fairview Street
P.O. Box 26890
Santa Ana, CA 92799-6890
Mary Jean Robison 390,188 (2) 11.8%
Robert E. House 210,562 (3) 6.4%
(1) Each identified stockholder has sole voting and dispositive power
except that Mrs. Robison is a co-trustee with respect to 50,014
shares held in a trust. The address of each stockholder except
Microsemi Corp. is c/o Semicon, Inc., 10 North Avenue,
Burlington, Massachusetts 01803.
(2) Includes 50,014 shares held by a trust for which Mrs. Robison is
a co-trustee.
(3) Does not include 8,800 shares owned by Mrs. House, as to which
Mr. House disclaims beneficial ownership.
Equity Ownership of Management: The following table sets forth,
as of August 31, 1995, the beneficial ownership (as defined in the
rules of the Securities and Exchange Commission) of the Company's
Common Stock by each Director and all Directors and officers of the
Company as a group, from information provided by such persons:
Common Stock Percent
Name Owned Beneficially of Class
-------------------- ------------------ --------
Harold W. Mahar, Jr. 129,118 (1) 3.9%
Richard C. Allard 37,366 (2) 1.1%
Bruce W. Everitt 10,000 0.3%
All Directors and
officers 176,484 5.3%
13
(1) Does not include 37,200 shares held in custodial accounts of Mr.
Mahar's dependent children and 66,100 shares owned by Mrs. Mahar
and a non-dependent child as to which he disclaims beneficial
ownership.
(2) Does not include 300 shares owned by dependent children of Mr.
Allard as to which he disclaims beneficial ownership.
Except as otherwise indicated, all Directors and officers have
sole voting and dispositive power.
For the sole purpose of calculating the aggregate market value of
voting stock held by nonaffiliates of the Company as set forth on the
cover page, it was assumed that only directors, executive officers and
greater than five percent stockholders as of the calculation date
(other than Microsemi Corp.), together with the spouses and dependent
children of such persons, constituted affiliates; no acknowledgment by
such persons of affiliate status is implied.
Item 13. Certain Relationships and Related Transactions
None.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form
8-K
(a) The following documents are filed as a part of this report:
(1) The financial statements listed in the Index to Financial
Statements appearing on page 16 of this report, which index
is incorporated herein by reference.
(2) The financial statement schedules as set forth in the
above-mentioned Index to Financial Statements.
(3) See Exhibit Index, pages 34 and 35, incorporated herein by
reference.
(b) Reports on Form 8-K in the fourth quarter of fiscal 1995:
None.
14
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
SEMICON, INC.
September , 1995 By:
----------------------------------
Harold W. Mahar, Jr., President
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the Registrant and in the capacities indicated as of
September , 1995.
By:
-----------------------------------------
Richard C. Allard
Executive Vice President,
Chief Financial Officer and Director
(principal financial and accounting officer)
By:
-----------------------------------------
Bruce W. Everitt
Director
By:
-----------------------------------------
Harold W. Mahar, Jr.
President, Chief Executive Officer
and Director
(principal executive officer)
15
SEMICON, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Item 14(a)
The following consolidated financial statements of Semicon, Inc.
are included in item 8: Reference
Consolidated balance sheets at 17
June 30, 1995 and 1994
For the years ended June 30, 1995,
1994 and 1993:
Consolidated statements of operations 19
Consolidated statements of stockholders'
deficit 20
Consolidated statements of cash flows 21
Notes to financial statements 22
The following consolidated financial statement
schedules are included in Item 14(d):
III- Property, Plant and Equipment 29
IV - Accumulated Depreciation, Depletion
and Amortization of Property, Plant
and Equipment 30
V - Valuation and Qualifying Accounts 31
VI - Supplementary Income Statement Information 32
All other schedules have been omitted since the required
information is not present or not present in amounts sufficient to
require submission of the schedule, or because the information required
is included in the consolidated financial statements or the notes
thereto.
16
SEMICON, INC.
CONSOLIDATED BALANCE SHEETS
June 30, 1995 and 1994
ASSETS
<TABLE>
1995 1994
--------- ---------
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 552,000 $ 452,000
Accounts receivable, less allowances of
$10,000 ($10,000 at June 30, 1994) 966,000 909,000
Inventories:
Work-in-process and finished products 506,000 595,000
Raw materials and supplies 186,000 258,000
--------- ---------
692,000 853,000
Other current assets 54,000 59,000
--------- ---------
Total current assets 2,264,000 2,273,000
Property, plant and equipment:
Machinery and equipment 3,965,000 3,965,000
Leasehold improvements 123,000 75,000
--------- ---------
4,088,000 4,040,000
Less accumulated depreciation and amortization 4,023,000 4,010,000
--------- ---------
65,000 30,000
Other assets 1,000 1,000
--------- ---------
$ 2,330,000 $ 2,304,000
========= =========
</TABLE>
See notes to finanical statements.
17
SEMICON, INC.
CONSOLIDATED BALANCE SHEETS (CONTINUED)
June 30, 1995 and 1994
LIABILITIES AND STOCKHOLDERS' DEFICIT
<TABLE>
1995 1994
--------- ---------
Current liabilities:
<S> <C> <C>
Accounts payable and other accrued liabilites $ 360,000 $ 311,000
Accrued compensation 197,000 189,000
Accrued interest 1,427,000 1,677,000
Federal and state income taxes 100,000 104,000
Indebtedness in default 1,997,000 3,213,000
Reserves for restructuring and environmental costs 1,100,000 1,104,000
Liabilites relating to discontinued operations 896,000 896,000
--------- ---------
Total current liabilites 6,077,000 7,494,000
Retiree deferred compensation 441,000 423,000
Stockholders' deficit:
Preferred stock, $1.00 par value,
1,000,000 shares authorized, none issued 0 0
Common stock, $.25 par value,
10,000,000 shares authorized, 3,304,873
shares issued 826,000 826,000
Additional paid-in capital 46,000 46,000
Accumulated deficit (5,060,000) (6,485,000)
---------- ----------
Total stockholders' deficit (4,188,000) (5,613,000)
---------- ----------
$ 2,330,000 $ 2,304,000
========= =========
</TABLE>
See notes to financial statements.
18
SEMICON, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended June 30, 1995, 1994 and 1993
<TABLE>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Net Sales $ 6,158,000 $ 6,703,000 $ 5,927,000
Costs and expenses:
Cost of products sold 4,913,000 5,301,000 5,587,000
Selling, general and administrative 1,071,000 1,073,000 1,036,000
Interest 365,000 449,000 527,000
Other (income) expense (18,000) (71,000) 0
---------- ---------- ----------
6,331,000 6,752,000 7,150,000
---------- ---------- ----------
Income (loss) before income taxes
and extraordinary items (173,000) (49,000) (1,223,000)
Income tax provision 0 0 0
---------- ---------- ----------
Income (loss) before extraordinary items (173,000) (49,000) (1,223,000)
Extraordinary items:
Gain on purchase of debentures 1,230,000 276,000 505,000
Gain on debt settlement 368,000 0 0
Gain from bankruptcy distribution 0 0 130,000
---------- ---------- ----------
1,598,000 276,000 635,000
---------- ---------- ----------
Net income (loss) $ 1,425,000 $ 227,000 $ (588,000)
========== ========== ==========
Income (loss) per share:
Before extraordinary items ($0.05) ($0.01) ($0.37)
From extraordinary items 0.48 0.08 0.19
----- ----- -----
Net income (loss) $0.43 $0.07 ($0.18)
===== ===== =====
Weighted average number of
shares outstanding 3,305,000 3,305,000 3,305,000
========== ========== ==========
</TABLE>
See notes to financial statements
19
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S DEFICIT
SEMICON, INC.
Years Ended June 30, 1995, 1994 and 1993
<TABLE>
Additional Retained
Common Paid-in Earnings Treasury
Stock Capital (Deficit) Stock Total
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Balance at June 30, 1992 $ 826,000 $ 45,000 $(6,124,000)$ 0 $(5,253,000)
Conversion of debentures 0 1,000 0 0 1,000
Net loss 0 0 (588,000) 0 (588,000)
---------- ---------- ---------- ---------- ----------
Balance at June 30, 1993 826,000 46,000 (6,712,000) 0 (5,840,000)
Net income 0 0 227,000 0 227,000
---------- ---------- ---------- ---------- ----------
Balance at June 30, 1994 826,000 46,000 (6,485,000) 0 (5,613,000)
Net income 0 0 1,425,000 0 1,425,000
---------- ---------- ---------- ---------- ----------
Balance at June 30, 1995 $ 826,000 $ 46,000 $(5,060,000)$ 0 $(4,188,000)
========== ========== ========== ========== ==========
Shares of Shares of Net
Common Treasury Shares
Stock Stock Outstanding
---------- ---------- ----------
Balance at June 30, 1992 3,304,765 0 3,304,765
Conversion of debentures 108 0 108
---------- ---------- ----------
Balance at June 30, 1993,
1994 and 1995 3,304,873 0 3,304,873
========== ========== ==========
</TABLE>
See notes to financial statements.
20
SEMICON, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended June 30, 1995, 1994 and 1993
<TABLE>
1995 1994 1993
---------- ---------- ----------
Operating activities:
<S> <C> <C> <C>
Net income(loss) $ 1,425,000 $ 227,000 $ (588,000)
Adjustments to reconcile net
income(loss) to net cash
provided by operating activites:
Depreciation and amortization 13,000 52,000 106,000
Provision for accounts and note
receivable 0 (40,000) 0
Extraordinary gains (1,598,000) (276,000) (505,000)
Change in assets and liabilities:
Accounts receivable (57,000) (139,000) 18,000
Inventory 161,000 6,000 284,000
Other current assets 5,000 (9,000) 13,000
Other assets 0 0 (1,000)
Accounts payable and
accrued expenses 348,000 446,000 221,000
Income taxes payable (4,000) (5,000) 22,000
Other noncurrent obligations 18,000 (102,000) 32,000
---------- ---------- ----------
Total Adjustments (1,114,000) (67,000) 190,000
---------- ---------- ----------
Net cash provided by (used in)
operating activities 311,000 160,000 (398,000)
Investing activities:
Capital expenditures (48,000) 0 (34,000)
Collection of investment income 0 11,000 0
Discontinued operations--other 0 0 51,000
---------- ---------- ----------
Net cash provided by (used in)
investing activities (48,000) 11,000 17,000
Financing activities:
Purchase of debentures (61,000) (13,000) (24,000)
Other (102,000) 4,000 (3,000)
---------- ---------- ----------
Net cash provided by (used in)
financing activities (163,000) (9,000) (27,000)
---------- ---------- ----------
Net increase(decrease) in
cash and cash equivalents 100,000 162,000 (408,000)
Cash and cash equivalents
at beginning of year 452,000 290,000 698,000
---------- ---------- ----------
Cash and cash equivalents at
end of year $ 552,000 $ 452,000 $ 290,000
========== ========== ==========
Supplemental cash flow information:
Interest paid $ 42,000 $ 42,000 $ 41,000
Income taxes paid (refunded), net 7,000 4,000 (22,000)
</TABLE>
See notes to financial statements
21
SEMICON, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 1995, 1994 and 1993
NOTE A-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Financial Statement Presentation
The financial statements of the Company have been presented on the
basis of a going concern, which contemplates the realization of assets
and the satisfaction of liabilities in the normal course of business.
However, the Company may not be able to continue its operations because
it is experiencing operating losses, negative working capital, and a
stockholders' deficit with various debt defaults. In order to continue
as a going concern, the Company's plans at this time are focused on
reducing and restructuring its debt, and providing cash flow and
stabilized operating results.
Principles of Consolidation
The consolidated financial statements include the accounts of
Semicon, Inc. (the "Company") and its wholly-owned subsidiaries. All
significant intercompany accounts and transactions have been eliminated
in consolidation.
Inventories
Inventories are carried at the lower of cost (first-in, first-out
method) or market.
Property, Plant and Equipment
The Company's property, plant and equipment is stated at cost.
Depreciation and amortization of property, plant and equipment have
been provided principally using the straight-line method over the
estimated useful lives of the related assets.
Income Taxes
The Company provides for income taxes currently payable and, in
addition, for deferred income taxes that generally represent the future
income tax effect of existing temporary differences between the book
and tax bases of a company's assets and liabilities, assuming they will
be realized and settled, respectively, at the amounts reported in the
company's financial statements. Classification is based on when the
temporary differences are expected to result in a taxable or deductible
amount.
Income Per Share
Net income per share is computed by dividing net income (loss),
adjusted by the after-tax effect of interest on the 13% Convertible
22
SEMICON, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 1995, 1994 and 1993
NOTE A-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Subordinated Debentures, by the weighted average number of common
shares outstanding plus share equivalents which result from the
dilutive effect of the assumed conversion of the debentures and the
assumed exercise of stock options. Because of the required treatment
of the debentures in calculating quarterly income per share amounts,
the total of quarterly income per share amounts does not necessarily
equal annual income per share. In a net loss period, the conversion of
the debentures and the exercise of stock options are not assumed
because they would be antidilutive.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash in banks and short-term
investments with original maturities of three months or less.
Significant Customers
The Company's principal business is the manufacture of discrete
semiconductors. Sales are primarily to customers in the United States.
The following customers each accounted for more than 10% of sales:
1995 1994 1993
------ ------ ------
Zeus Electronics, An Arrow Co. 18% 24% 26%
ACI Electronics Corp. 13 12 11
Accounts Payable and Accrued Liabilities
Accounts payable and accrued liabilities at June 30, 1995 and 1994
included the following:
1995 1994
---------- ----------
Trade accounts payable $ 331,000 $ 284,000
Commissions payable 20,000 18,000
Other 9,000 9,000
---------- ----------
$ 360,000 $ 311,000
========== ==========
Retiree Deferred Compensation
Retiree deferred compensation represents obligations under
agreements with certain retired employees to provide them deferred
compensation. The obligations are stated at their present value, bear
interest at the imputed rate of 9% and are payable in monthly
installments. During fiscal 1991 the Company suspended its deferred
compensation payments.
23
SEMICON, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 1995, 1994 and 1993
NOTE A-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
During fiscal 1994, as a result of a court order, the Company settled
deferred compensation obligations aggregating $127,000 for $55,000 cash
and realized gains aggregating $72,000 which were included in other
income. At June 30, 1995, aggregate annual maturities of deferred
compensation payments were $251,000 in arrears, $53,000 in 1996,
$38,000 in 1997, $24,000 in 1998, $24,000 in 1999, $24,000 in 2000 and
$102,000 thereafter.
NOTE B-INDEBTEDNESS IN DEFAULT
Indebtedness in default at June 30, 1995 and 1994 was as follows:
1995 1994
13% Convertible Subordinated ---------- ----------
Debentures due
January 15, 2001 $1,997,000 $2,783,000
Industrial Revenue Bond 0 430,000
---------- ----------
$1,997,000 $3,213,000
========== ==========
The 13 % Convertible Subordinated Debentures are convertible
(unless previously called for redemption by the Company) into shares
of common stock at any time prior to maturity at $9.22 per share.
Interest is payable semiannually on July 15 and January 15.
On July 15, 1990, the Company suspended payment of interest on
its 13% Convertible Subordinated Debentures. On August 15, 1990, the
Company was declared in default of its debenture obligations by the
debenture Trustee. The debenture default also created a default
under terms of the Company's Industrial Revenue Bond obligations.
Accordingly, the Company classified both of these debt obligations as
current liabilities.
During fiscal 1995, the Company purchased $786,000 ($187,000 in
1994 and $388,000 in 1993) face amount of its 13% Convertible
Subordinated Debentures at a discount. The purchases reduced
indebtedness and accrued interest by $1,292,000 ($289,000 in 1994 and
$530,000 in 1993) and resulted in a $1,231,000 ($276,000 in 1994 and
$505,000 in 1993) extraordinary gain.
On August 8, 1994, the Company settled its industrial revenue
bond obligations to NationsBank for $100,000 cash which resulted in a
$368,000 extraordinary gain. The Company subsequently sold related
North Carolina real estate for $18,000 which is reflected as other
income.
24
SEMICON, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 1995, 1994 and 1993
NOTE C-RESERVES FOR RESTRUCTURING AND ENVIRONMENTAL COSTS
The balance sheet reserves for restructuring and environmental
costs included the following at June 30, 1995 and 1994:
1995 1994
---------- ----------
Environmental matters $ 648,000 $ 652,000
Debt restructuring
and related matters 452,000 452,000
---------- ----------
$1,100,000 $1,104,000
========== ==========
Reserves for environmental matters were originally established in
1990 to cover the estimated cost of remediation of an environmental
matter at the Company's Burlington, Massachusetts facility and a
$200,000 potentially responsible party group settlement contingent
liability associated with the Company's Burlington, Massachusetts
facility to be paid when the Company's net worth exceeds $1,000,000.
The Company had a compliance deadline of August 2, 1995, to remediate
environmental problems at its Burlington, Massachusetts operating site,
currently estimated to cost 350,000 to 600,000. The Company filed a
"Financial Inability" notice as required by the Code of Massachusetts
Regulations before the August 1995 compliance deadline. If the
Commonwealth of Massachusetts requires remediation in spite of the
Company's financial inability to comply, the Company will be forced to
liquidate under Chapter 7 of the United States Bankruptcy Code. The
Company was designated a potentially responsible party ("PRP") by the
United States Environmental Protection Agency at a superfund landfill
site in Lowell, Massachusetts. The settling PRP group has demanded
that the Company pay 10.8% of the $20,000,000 to 25,000,000 estimated
cost of landfill cleanup. The Company intends to defend itself against
this claim. Comprehensive remediation could exceed the Company's cash
resources and force reorganization or liquidation of the Company under
the United States Bankruptcy Code.
Reserves for debt restructuring and related matters were
established in 1990 to cover the estimated cost of consensual non-
bankruptcy restructuring and bankruptcy restructuring.
25
SEMICON, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 1995, 1994 and 1993
NOTE D-LIABILITIES RELATING TO DISCONTINUED OPERATIONS
Liabilities relating to discontinued operations included the
following at June 30, 1995 and 1994.
1995 1994
Obligations under debt ---------- ----------
guarantee $ 696,000 $ 696,000
Environmental matter 200,000 200,000
---------- ----------
$ 896,000 $ 896,000
========== ==========
The obligations under debt guarantee relate to the Company's
guarantee of mortgage debt of a former subsidiary, Microfab, Inc.,
which filed for Chapter 7 bankruptcy liquidation in 1987. During 1993
the Chapter 7 Trustee made final cash distributions under the Chapter 7
liquidation which resulted in an $80,000 pay-down of the guarantee
obligation and a $130,000 extraordinary gain.
In November 1989, the Commonwealth of Massachusetts notified the
Company that the Massachusetts Department of Environmental Protection
believes that the Company is liable for hazardous material cleanup at
the former Microfab, Inc. site in Amesbury, Massachusetts. The Company
denies responsibility and liability in the matter. The reserve for
environmental matters was established in 1990 to cover the estimated
cost of litigating the matter. There has been no significant action on
this matter for three years.
NOTE E-INCOME TAXES
Income tax provisions consisted of the following:
1995 1994 1993
Total provisions ---------- ---------- ----------
Current:
Federal $ 0 $ 0 $ 0
State 0 0 0
---------- ---------- ----------
$ 0 $ 0 $ 0
========== ========== ==========
26
SEMICON, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 1995, 1994 and 1993
NOTE E-INCOME TAXES (continued)
A reconciliation of income tax (benefit) for continuing
operations computed at the statutory federal income tax rate to the
income tax provision (benefit) follows:
1995 1994 1993
Income tax provision
(benefit) at statutory
federal income tax rate $( 59,000) $( 17,000) $( 416,000)
Net operating loss
not utilized 59,000 17,000 416,000
---------- ---------- ----------
$ 0 $ 0 $ 0
========== ========== ==========
At June 30, 1995, the Company had tax loss carryforwards of
approximately $6,700,000 and tax credit carryforwards of approximately
$500,000 available to offset future federal taxable income and
operating loss carryforwards of approximately $8,500,000 and credit
carryforwards of approximately $500,000 to offset future book income.
These carryforwards expire principally in the years 2001-2007. These
carryforwards may be subject to limitations on annual utilization under
current Internal Revenue Service regulations. Book loss carryforwards
exceed those available for income tax purposes due primarily to various
accruals and reserves not currently deductible.
NOTE F-COMMITMENTS AND CONTINGENCIES
The Company leases a 30,000 square foot facility in Burlington,
Massachusetts under a lease agreement which expires in June 1997. The
lease provides for monthly payments aggregating $100,000 per year plus
real estate taxes, utilities and insurance. Rent expense aggregated
$125,000 in 1993 and $100,000 in 1994 and 1995.
NOTE G-STOCKHOLDER'S DEFICIT
Equity Incentive Plan
On November 16, 1988, the Company's Board of Directors adopted the
Semicon, Inc. Equity Incentive Plan ( the "Plan"). The Plan permits
the Company to grant a variety of stock and stock-based awards and
related benefits to officers and other key employees of the Company and
its subsidiaries. The awards and benefits available under the Plan
include incentive and nonincentive stock options; restricted and
unrestricted shares; rights to receive cash or shares on a deferred
basis or based on performance; rights to receive cash or shares with
respect to increases in the value of the common stock; rights to
receive or purchase convertible securities including a maximum of
50,000 shares of the Company's preferred stock; cash payments
27
SEMICON, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 1995, 1994 and 1993
NOTE G-STOCKHOLDER'S DEFICIT (continued)
sufficient to offset the federal, state and local ordinary income taxes
of participants resulting from transactions under the Plan; loans to
participants in connection with awards; and other common stock-based
awards that meet the requirements of the Plan.
Subject to adjustment for stock splits and similar events, the
total number of shares of common stock originally reserved for issuance
under the Plan was 200,000. Awards may be granted under the Plan
through November 16, 1998. During the three fiscal years ended June
30, 1995, no shares were issued to employees in connection with the
Plan.
Employee Stock Purchase Plan
On September 21, 1988, the Company's Board of Directors adopted
the Semicon, Inc. Employee Stock Purchase Plan. The Employee Stock
Purchase Plan is designed to encourage eligible employees of the
Company to acquire, through payroll withholdings, an equity interest in
the Company through the purchase of common stock at 85% of fair market
value. Up to 100,000 shares of common stock of the Company may be
purchased under the Employee Stock Purchase Plan. The Plan may be
terminated at the discretion of the Board of Directors.
The Company suspended the Plan beginning the first quarter of
1991.
Common Stock Reserved
The following shares of common stock were reserved for issuance at
June 30, 1995:
13% Convertible Subordinated Debentures 216,594
Equity Incentive Plan 187,000
Employee Stock Purchase Plan 55,298
-------
458,892
=======
28
SCHEDULE III--PROPERTY, PLANT AND EQUIPMENT
SEMICON, INC.
<TABLE>
Balance at Other Balance at
Beginning Additions Retirements Changes End
of Period to Cost (Deduct) Add(Deduct) of Period
---------- ---------- ---------- ---------- ----------
Year ended June 30, 1995:
<S> <C> <C> <C> <C> <C>
Machinery and equipment $ 3,965,000 $ 0 $ 0 $ 0 $ 3,965,000
Leasehold Improvements 75,000 48,000 0 0 123,000
---------- ---------- ---------- ---------- ----------
$ 4,040,000 $ 48,000 $ 0 $ 0 $ 4,088,000
========== ========== ========== ========== ==========
Year ended June 30, 1994:
Machinery and equipment $ 3,965,000 $ 0 $ 0 $ 0 $ 3,965,000
Leasehold Improvements 75,000 0 0 0 75,000
---------- ---------- ---------- ---------- ----------
$ 4,040,000 $ 0 $ 0 $ 0 $ 4,040,000
========== ========== ========== ========== ==========
Year ended June 30, 1993:
Machinery and equipment $ 3,931,000 $ 34,000 $ 0 $ 0 $ 3,965,000
Leasehold Improvements 75,000 0 0 0 75,000
---------- ---------- ---------- ---------- ----------
$ 4,006,000 $ 34,000 $ 0 $ 0 $ 4,040,000
========== ========== ========== ========== ==========
</TABLE>
29
SCHEDULE IV--ACCUMULATED DEPRECIATION, DEPLETION AND AMORITIZATION OF
PROPERTY, PLANT AND EQUIPMENT
SEMICON, INC.
<TABLE>
Additions
Balance at Charged to Other Balance at
Beginning Costs and Changes End
of Period Expenses (A)Retirements Add(Deduct) of Period
---------- ---------- ---------- ---------- ----------
Year ended June 30, 1995:
<S> <C> <C> <C> <C> <C>
Machinery and equipment $ 3,935,000 $ 13,000 $ 0 $ 0 $ 3,948,000
Leasehold Improvements 75,000 0 0 0 75,000
---------- ---------- ---------- ---------- ----------
$ 4,010,000 $ 13,000 $ 0 $ 0 $ 4,023,000
========== ========== ========== ========== ==========
Year ended June 30, 1994:
Machinery and equipment $ 3,883,000 $ 52,000 $ 0 $ 0 $ 3,935,000
Leasehold Improvements 75,000 0 0 0 75,000
---------- ---------- ---------- ---------- ----------
$ 3,958,000 $ 52,000 $ 0 $ 0 $ 4,010,000
========== ========== ========== ========== ==========
Year ended June 30, 1993:
Machinery and equipment $ 3,777,000 $ 106,000 $ 0 $ 0 $ 3,883,000
Leasehold Improvements 75,000 0 0 0 75,000
---------- ---------- ---------- ---------- ----------
$ 3,852,000 $ 106,000 $ 0 $ 0 $ 3,958,000
========== ========== ========== ========== ==========
</TABLE>
A= The annual provisions for depreciation have been
computed using the following estimated ranges
of useful lives:
Machinery and equipment 5 years
Leasehold improvements Term of lease
30
SCHEDULE V--VALUATION AND QUALIFYING ACCOUNTS
SEMICON, INC.
<TABLE>
Charged Charged
Balance at (Credited) (Credited) Balance at
Beginning to Costs and to Other End of
of Period Expenses Accounts Deductions Period
---------- ---------- ---------- ---------- ----------
Year ended June 30, 1995:
Allowance for doubtful
<S> <C> <C> <C> <C> <C>
accounts $ 10,000 $ (4,000)$ 4,000 $ 0 $ 10,000
Allowance for losses
on discontinued
operations 896,000 0 0 0 896,000
Reserve for restructuring
and environmental costs 1,104,000 0 (4,000) 0 1,100,000
---------- ---------- ---------- ---------- ----------
$ 2,010,000 $ (4,000)$ 0 $ 0 $ 2,006,000
========== ========== ========== ========== ==========
Year ended June 30, 1994:
Allowance for doubtful
accounts $ 50,000 $ (44,000)$ 4,000 $ 0 $ 10,000
Allowance for losses
on discontinued
operations 896,000 0 0 0 896,000
Reserve for restructuring
and environmental costs 1,100,000 0 4,000 0 1,104,000
---------- ---------- ---------- ---------- ----------
$ 2,046,000 $ (44,000)$ 8,000 $ 0 $ 2,010,000
========== ========== ========== ========== ==========
Year ended June 30, 1993:
Allowance for doubtful
accounts $ 50,000 $ 0 $ 0 $ 0 $ 50,000
Allowance for notes
receivable 525,000 0 0 525,000 0
Allowance for losses
on discontinued
operations 976,000 0 0 80,000 896,000
Reserve for restructuring
and environmental costs 1,114,000 0 0 14,000 1,100,000
---------- ---------- ---------- ---------- ----------
$ 2,665,000 $ 0 $ 0 $ 619,000 $ 2,046,000
========== ========== ========== ========== ==========
</TABLE>
31
SCHEDULE VI-SUPPLEMENTARY INCOME STATEMENT INFORMATION
SEMICON, INC.
<TABLE>
Charged to Costs and Expenses
Year Ended June 30,
-------------------------------------
Item 1995 1994 1993
---------------------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
Maintenance and repairs $ 557,000 $ 562,000 $ 589,000
Depreciation and amortization of
intangible assets, preoperating
cost and similar deferrals * * *
Taxes, other than payroll and income taxes * * *
Royalties None None None
Advertising costs * * *
</TABLE>
*Less than 1% of toal sales and revenues.
32
ITEM 6-SELECTED FINANCIAL DATA
SEMICON, INC.
<TABLE>
Year Ended June 30,
----------------------------------------------------------
1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net Sales $ 6,158,000 $ 6,703,000 $ 5,927,000 $ 5,963,000 $ 6,930,000
Income (loss) from continuing
operations before
extraordinary item (173,000) (49,000) (1,223,000) (888,000) (2,013,000)
Net income (loss) 1,425,000 227,000 (588,000) 49,000 (2,013,000)
Total assets 2,330,000 2,304,000 2,023,000 2,817,000 3,665,000
Long-term debt, including
current maturities 1,997,000 3,213,000 3,400,000 3,788,000 4,555,000
Total debt obligations in default:
Principal 3,135,000 4,332,000 4,623,000 5,059,000 6,094,000
Accrued interest 1,427,000 1,660,000 1,362,000 1,075,000 792,000
--------- --------- --------- --------- ---------
4,562,000 5,992,000 5,985,000 6,134,000 6,886,000
Income (loss) per share:
From continuing operations (.05) (.01) (.37) (.27) (.61)
Net income (loss) .43 .07 (.18) .01 (.61)
</TABLE>
33
EXHIBIT INDEX
One of the following exhibits is filed herewith. The remainder of
the exhibits have heretofore been filed with the Commission and are
incorporated herein by reference. The exhibit marked with an asterisk
is filed herewith.
3.1 Restated Articles of Organization of the Company, as amended
(Exhibit 3.1 to Form 10-K for year ended June 30, 1988).
3.2 By-Laws of the Company, as amended (Exhibit 3.2 to Form 10-K
for year ended June 30, 1991).
4.1 Indenture dated as January 15, 1981, between the Company and
Industrial National Bank of Rhode Island (now known as Fleet Bank, NA),
relating to 13% Convertible Subordinated Debentures due 2001 (Exhibit
4.1 to Amendment No. 1 of Registration Statement No. 2-70364).
4.2 Mortgage and Indenture and Agreement Among the Town of
Amesbury, Microfab, Inc. and BayBank Middlesex as Trustee dated as of
January 15, 1981, (Exhibit 4.2 to Amendment No. 1 of Registration
Statement No. 2-70364).
4.3 Bond Purchase Agreement dated as of January 15, 1981, among
BayBank Boston N.A., the town of Amesbury, Microfab, Inc. and the
Company (Exhibit 4.3 to Form 10-K for the year ended June 1987).
4.4 Agreement dated March 11, 1988, between BayBank Middlesex and
the Company (Exhibit 4.4 to Form 10-K for year ended June 30, 1988).
10.1 Deferred Compensation Agreement between the Company and Mr.
House (Exhibit 10.4 to Form 10-K for year ended June 30, 1988).
10.2 Deferred Compensation Agreement between the Company and Mr.
Allard (Exhibit 10.5 to Form 10-K for year ended June 30, 1983).
10.3 Lease, dated March 31, 1983, between Trustees of N.W.
Building 28 Trust and the Company (Exhibit 10.7 to Form 10-K for the
year ended June 30, 1983).
10.4 Lease Extension Agreement dated May 31, 1994, to Lease,
dated March 31, 1983, between Trustees of N.W. Building 28 Trust and
the Company.
10.5 Severance Agreement dated September 21, 1988, between the
Company and Mr. Mahar (Exhibit 10.13 to Form 10-K for the year ended
June 30, 1988).
10.6 Severance Agreement dated September 21, 1988, between the
Company and Mr. Allard (Exhibit 10.15 to Form 10-K for the year ended
June 30, 1988).
10.7 Semicon, Inc. Equity Incentive Plan (Exhibit 10.16 to Form
10-K for year ended June 30, 1989).
34
10.8 Semicon, Inc. Employee Stock Purchase Plan (Exhibit 10.11 to
Form 10-K for the year ended June 30, 1991).
22.1 List of subsidiaries (Exhibit 22.1 to Form 10-K for the year
ended June 30, 1994.)
* 27.1 Financial Data Schedule (EDGAR filing with Securities and
Exchange Commission only).
35
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> JUN-30-1995
<CASH> 552000
<SECURITIES> 0
<RECEIVABLES> 966000
<ALLOWANCES> 10000
<INVENTORY> 692000
<CURRENT-ASSETS> 2264000
<PP&E> 4088000
<DEPRECIATION> 4023000
<TOTAL-ASSETS> 2330000
<CURRENT-LIABILITIES> 6077000
<BONDS> 1997000
<COMMON> 826000
0
0
<OTHER-SE> (5014000)
<TOTAL-LIABILITY-AND-EQUITY> 2330000
<SALES> 6158000
<TOTAL-REVENUES> 6168000
<CGS> 4913000
<TOTAL-COSTS> 6331000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 365000
<INCOME-PRETAX> (173000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (173000)
<DISCONTINUED> 0
<EXTRAORDINARY> 1598000
<CHANGES> 0
<NET-INCOME> 1425000
<EPS-PRIMARY> 0.43
<EPS-DILUTED> 0.43
</TABLE>
