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, 1997
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 No X
----- -----
The aggregate market value of voting stock held by nonaffiliates
of the registrant as of August 31, 1997 was $58,000.
The number of shares of common stock outstanding as of August 31,
1997 was 3,150,073.
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 47% of the Company's sales are
made to five franchised distributors. The remainder of the Company's
sales are to original equipment manufacturers ("OEM"). OEM sales are
made by Company employees and two independent sales representative
organizations. In the past fiscal year, the Company sold
semiconductors to 91 customers at 117 locations. During that period
Zeus Electronics, ACI Electronics Corp. and Micro Device Electronics
accounted for 20%, 15% and 14% of sales, respectively. Approximately
69% of fiscal 1997 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.
offers a significantly broader range of semiconductor products than the
Company. The Company is the only alternative source to Microsemi for
nine series of military devices. Semtech Corporation and BKC
Semiconductors Incorporated also compete with the Company on several
series of military 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, domestic and 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
$1,450,000 and $1,755,000 as of August 31, 1997 and 1996, respectively.
Substantially all of the 1997 amount could be expected to be shipped
within a year. 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, 1997, 1996 and 1995 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 69% 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.
Environmental Regulation: Operations of the Company are subject
to federal, state and local laws relating to the environment.
See Item 7 and Note C 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, 1997, the Company had 73 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 1998).
Item 3. Legal Proceedings
None.
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.
3
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 range of the closing high
bid and low ask 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 1996 Fiscal 1997
------------- ------------
High Bid Low Ask High Bid Low Ask
First Quarter $.01 to $.01 $.05 to $ .05 $.01 to $.01 $.05 to $.05
Second Quarter .01 to .01 .05 to .05 .01 to .01 .05 to .05
Third Quarter .01 to .01 .05 to .05 .001 to .01 .05 to .05
Fourth Quarter .01 to .01 .05 to .05 .001 to .001 .05 to .05
The approximate number of stockholders of record at August 31,
1997, was 454.
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 industrial revenue bonds payable to
BankBoston contain limitations on the payment of cash dividends. At
August 31, 1997, 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,
1997, see Part IV of this Report, page 30, 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 continues to operate because management believes an
operating company offers more potential value for creditors and
stockholders than bankruptcy and bankruptcy liquidation. Management's
focus is on restructuring debt, stabilizing operating results and
providing positive cash flow. Management's efforts to date have been
unsuccessful as evidenced by the continued deterioration of the
4
Company's financial condition and liquidity.
The Company continues to generate operating losses and its cash
flow is negative. If this continues, the Company will seek protection
from its creditors under the United States Bankruptcy Code.
The Company faces various environment issues as described in Note
C to the consolidated financial statements. Enforced remedial action
on any of these issues could force the Company to liquidate under
Chapter 7 of the United States Bankruptcy code.
The Company operates at the forebearance of its creditors. It
continues to be in default of debt obligations aggregating $4,500,000
for principal and interest at June 30, 1997. The defaults exist
because of nonpayment of principal and accrued interest for periods
extending back to July 1990.
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
$2,668,000 at June 30, 1997. 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, 1997,
$4,500,000.
June 30, June 30, 1997
1990 Principal and
Principal Principal Accrued Interest
--------------------------------------------
BankBoston $ 795,000 $ 695,000 $ 789,000
Deferred Compensation
and Other 820,000 180,000 180,000
NationsBank 430,000 0 0
13% Convertible
Subordinated Debentures 4,125,000 1,793,000 3,531,000
----------- ---------- ----------
$6,170,000 $2,668,000 $4,500,000
=========== ========== ==========
Settlements to June 30, 1997, have included: purchases of
$2,332,000 face amount of debentures for $158,000; settlement of
$468,000 of NationsBank debt obligations for $100,000 and settlement of
$716,000 of deferred compensation and other obligations for $186,000.
5
Despite these settlements, the Company's overall efforts since June 30,
1990, to complete a consensual non-bankruptcy debt restructuring have
been unsuccessful.
The Company has suffered from the effect of a post cold war
decrease in the demand for discrete semiconductor products used in
military applications. The decrease in demand has resulted in 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 Company's epoxy encapsulated semiconductor products are no
longer able to compete with foreign manufacturers, and, accordingly,
the Company will phase out its epoxy product lines during calendar year
1997. Epoxy sales amounted to $348,000 in fiscal 1997 and $911,000 in
fiscal 1996. The physical assets will be sold, salvaged and scrapped.
The Company's overall liquidity decreased significantly during
the year ended June 30, 1997. The decrease in accounts receivable and
inventories at June 30, 1997, as compared to June 30, 1996, reflected
the Company's collection of accounts receivable at a rate faster than
product was shipped and the use of inventories to generate shipments.
The cash generated from these activities was used to fund operating
losses.
At June 30, 1997, the Company had a deficit in stockholders'
equity aggregating $4,957,000 and its current liabilities exceeded its
current assets by $5,044,000.
Results Of Operations
Net sales of $5,138,000 for fiscal 1997 were down 22% or
$1,489,000 from $6,627,000 for fiscal 1996 which was up 8% or $469,000
from $6,158,000 for fiscal 1995. Net sales for the first half of
fiscal 1996 reflected a positive trend in the demand for the Company's
commercial semiconductor products. The trend reversed in the second
half of fiscal 1996. Bookings were 90% of sales for fiscal 1997 as
compared to 123% of sales for fiscal 1996 and 105% of sales for fiscal
1995. Backlog at June 30, 1997 was $1,366,000 as compared to
$1,885,000 at June 30, 1996 and $1,868,000 at June 30, 1995.
Gross profit on sales was $262,000 (5% of sales) for fiscal 1997
as compared to $879,000 (13% of sales) for fiscal 1996 and $1,245,000
(20% of sales) for fiscal 1995. Gross profit has decreased over the
past three years as a result of lower sales, poorer fixed costs
coverage and increased silicon costs.
Selling, general and administrative expenses decreased $82,000
from 1995 to 1996 and $126,000 from 1996 to 1997. The decreases
resulted from decreases in sales and sales commissions and from
decreases in sales and administrative personnel.
6
Interest expense decreased from fiscal 1995 through fiscal 1997 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.
The $117,000 extraordinary gain on purchases of debentures in
fiscal 1997 ($242,000 in 1996 and $1,230,000 in 1995) resulted from the
purchase of $62,000 ($142,000 in 1996 and $786,000 in 1995) face amount
of 13% convertible Subordinated Debentures at a discount.
Extraordinary gains on debt settlement in fiscal 1996 and 1995
resulted from settlements of deferred compensation obligations and
NationsBank debt obligations at discounted amounts.
Item 8. Financial Statements and Supplementary Data
See Consolidated Financial Statements, part IV of this Report,
pages 15 to 29, 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 1997, 1996 and 1995. Accordingly, management and
the Board of Directors determined not to retain auditors to examine and
report on the Company's financial statements for those periods.
7
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 54 1988
Executive Officer
since January 1988
and Director of the
Company since April
1988.
Richard C. Allard Executive Vice President 52 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 DIRECTORS:
None
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
a director.
8
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.
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.
Mr. Bruce W. Everitt resigned as a director May 22, 1997.
The Board of Directors held 11 meetings during the past fiscal
year. All directors attended each meeting.
There were no Board of Directors committee meetings 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 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. The duty of the Equity Incentive Plan Committee is to
administer the Company's Equity Incentive Plan. 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, directors received no
compensation for serving on the Board.
9
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, 1997, 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., 1997 $121,000
President and Chief 1996 $125,000
Executive Officer 1995 $125,000
Effective May 5, 1997 Mr. Mahar's annual salary was reduced to
$100,000. The Company paid no bonuses or other compensation to its
chief executive officer during the three years ended June 30, 1997.
Further, the Company made no long term compensation awards or payouts
to its chief executive officer during the three years ended June 30,
1997.
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
10
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
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 1998, change of
control cash severance payments would be approximately $174,000 and
$126,000, respectively, for Messrs. Mahar and Allard.
11
Item 12. Security Ownership of Certain Beneficial Owners and
Management
Principal Owners of Common Stock: The following table sets forth,
as of August 31, 1997, 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 18.5%
2830 Fairview Street
P.O. Box 26890
Santa Ana, CA 92799-6890
Mary Jean Robison 390,188 (2) 12.4%
Robert E. House 210,562 (3) 6.7%
(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, 1997, 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) 4.1%
Richard C. Allard 37,366 (2) 1.2%
All Directors and
officers 166,484 5.3%
(1) Does not include 103,300 owned by Mrs. Mahar, two adult sons and
an adult daughter as to which he disclaims beneficial ownership.
(2) Does not include 400 shares owned by adult children of Mr.
Allard as to which he disclaims beneficial ownership.
12
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 Consolidated
Financial Statements appearing on page 15 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 31 and 32, incorporated herein by
reference.
(b) Reports on Form 8-K in the fourth quarter of fiscal 1997:
None.
13
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 , 1997 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 , 1997.
By:
-----------------------------------------
Richard C. Allard
Executive Vice President,
Chief Financial Officer and Director
(principal financial and accounting officer)
By:
-----------------------------------------
Harold W. Mahar, Jr.
President, Chief Executive Officer
and Director
(principal executive officer)
14
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 16
June 30, 1997 and 1996
For the years ended June 30, 1997,
1996 and 1995:
Consolidated statements of operations 18
Consolidated statements of cash flows 19
Notes to financial statements 20
The following consolidated financial statement
schedules are included in Item 14(d):
III- Property, Plant and Equipment 26
IV - Accumulated Depreciation, Depletion
and Amortization of Property, Plant
and Equipment 27
V - Valuation and Qualifying Accounts 28
VI - Supplementary Income Statement Information 29
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.
15
SEMICON, INC.
CONSOLIDATED BALANCE SHEETS
June 30, 1997 and 1996
ASSETS
<TABLE>
1997 1996
--------- ---------
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 227,000 $ 240,000
Accounts receivable, less allowances of
$10,000 ($10,000 at June 30, 1996) 440,000 781,000
Inventories:
Work-in-process and finished products 507,000 655,000
Raw materials and supplies 242,000 274,000
--------- ---------
749,000 929,000
Other current assets 29,000 56,000
--------- ---------
Total current assets 1,445,000 2,006,000
Property, plant and equipment:
Machinery and equipment 3,994,000 4,051,000
Leasehold improvements 130,000 130,000
--------- ---------
4,124,000 4,181,000
Less accumulated depreciation and amortization 4,038,000 4,048,000
--------- ---------
86,000 133,000
Other assets 1,000 1,000
--------- ---------
$ 1,532,000 $ 2,140,000
========= =========
See notes to finanical statements.
SEMICON, INC.
CONSOLIDATED BALANCE SHEETS (CONTINUED)
June 30, 1997 and 1996
LIABILITIES AND STOCKHOLDERS' DEFICIT
1997 1996
--------- ---------
Current liabilities:
Accounts payable and other accrued liabilites $ 495,000 $ 423,000
Accrued compensation 119,000 185,000
Accrued interest 1,832,000 1,610,000
Federal and state income taxes 80,000 88,000
Indebtedness in default 2,668,000 2,731,000
Reserves for restructuring and environmental costs 1,295,000 1,300,000
--------- ---------
Total current liabilites 6,489,000 6,337,000
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 (5,829,000) (5,069,000)
---------- ----------
Total stockholders' deficit (4,957,000) (4,197,000)
---------- ----------
$ 1,532,000 $ 2,140,000
========= =========
</TABLE>
See notes to financial statements.
SEMICON, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended June 30, 1997, 1996 and 1995
<TABLE>
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
Net Sales $ 5,138,000 $ 6,627,000 $ 6,158,000
Costs and expenses:
Cost of products sold 4,876,000 5,748,000 4,913,000
Selling, general and administrative 863,000 989,000 1,071,000
Interest 279,000 299,000 365,000
Other (income) expense (1,000) 0 (18,000)
---------- ---------- ----------
6,017,000 7,036,000 6,331,000
---------- ---------- ----------
Income (loss) before income taxes
and extraordinary items (879,000) (409,000) (173,000)
Income tax provision 0 0 0
---------- ---------- ----------
Income (loss) before extraordinary items (879,000) (409,000) (173,000)
Extraordinary items:
Gain on purchase of debentures 117,000 242,000 1,230,000
Gain on debt settlement 0 158,000 368,000
---------- ---------- ----------
117,000 400,000 1,598,000
---------- ---------- ----------
Net income (loss) $ (762,000) $ (9,000) $ 1,425,000
========== ========== ==========
Income (loss) per share:
Before extraordinary items ($0.27) ($0.12) ($0.05)
From extraordinary items 0.04 0.12 0.48
----- ----- -----
Net income (loss) ($0.23) $0.00 $0.43
===== ===== =====
Weighted average number of
shares outstanding 3,305,000 3,305,000 3,305,000
========== ========== ==========
See notes to financial statements
</TABLE>
SEMICON, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended June 30, 1997, 1996 and 1995
<TABLE>
1997 1996 1995
---------- ---------- ----------
Operating activities:
<S> <C> <C> <C>
Net income(loss) $ (762,000) $ (9,000) $ 1,425,000
Adjustments to reconcile net
income(loss) to net cash
provided by operating activites:
Depreciation and amortization 47,000 25,000 13,000
Provision for accounts and note
receivable 0 0 0
Extraordinary gains (117,000) (400,000) (1,598,000)
Change in assets and liabilities:
Accounts receivable 341,000 185,000 (57,000)
Inventory 180,000 (237,000) 161,000
Other current assets 27,000 (2,000) 5,000
Accounts payable and
accrued expenses 286,000 231,000 348,000
Income taxes payable (8,000) (12,000) (4,000)
Other 0 8,000 18,000
---------- ---------- ----------
Total Adjustments 756,000 (202,000) (1,114,000)
---------- ---------- ----------
Net cash provided by (used in)
operating activities (6,000) (211,000) 311,000
Investing activities:
Capital expenditures 0 (93,000) (48,000)
Collection of investment income 0 0 0
---------- ---------- ----------
Net cash provided by (used in)
investing activities 0 (93,000) (48,000)
Financing activities:
Purchase of debentures (4,000) (8,000) (61,000)
Other (3,000) 0 (102,000)
---------- ---------- ----------
Net cash provided by (used in)
financing activities (7,000) (8,000) (163,000)
---------- ---------- ----------
Net increase(decrease) in
cash and cash equivalents (13,000) (312,000) 100,000
Cash and cash equivalents
at beginning of year 240,000 552,000 452,000
---------- ---------- ----------
Cash and cash equivalents at
end of year $ 227,000 $ 240,000 $ 552,000
========== ========== ==========
Supplemental cash flow information:
Interest paid $ 0 $ 0 $ 42,000
Income taxes paid (refunded), net 8,000 12,000 7,000
</TABLE>
See notes to financial statements
SEMICON, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 1997, 1996 and 1995
NOTE A-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Financial Statement Presentation
The Company has not had its financial statements audited in
accordance with Securities and Exchange Commission Regulations and
accordingly it has indicated on the cover page of its Securities and
Exchange Commission filings that it has not filed all reports required.
The Company cannot afford the cost of an audit of its financial
statements. In the opinion of management, any available cash should be
applied to debt settlement.
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 losses, negative working capital, and a
stockholders' deficit with various debt defaults. The Company's plans
at this time are focused on restructuring its debt, stabilizing
operating results and providing cash flow. Management believes there
is more potential value for creditors and stockholders in continuing to
operate the Company and attempting to restructure debt than there is in
bankruptcy and bankruptcy liquidation.
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 the Company's assets and liabilities, assuming they
will be realized and settled, respectively, at the amounts reported in
20
SEMICON, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 1997, 1996 and 1995
NOTE A-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
the Company's financial statements. Classification is based on when
the temporary differences are expected to result in a taxable or
deductible amount.
Income (Loss) Per Share
Net income per share is computed by dividing net income by
weighted average number of common and common equivalent shares
outstanding. Common equivalent shares result from the assumed
exercise of outstanding stock options and the assumed conversion of
13% Convertible Subordinated Debentures when their effect is dilutive.
If the effect of the assumed conversion of 13% Convertible Subordinated
Debentures is dilutive, net income used to calculate earnings per share
is increased to include the after tax effect of debenture interest
assumed to be forgone.
Net loss per share is computed by dividing net loss by the
weighted average number of common shares outstanding, excluding common
equivalent shares which 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:
1997 1996 1995
------ ------ ------
Zeus Electronics, An Arrow Co. 20% 19% 18%
ACI Electronics Corp. 15% 13% 13%
Micro Device Electronics 14% 5% 6%
Accounts Payable and Accrued Liabilities
Accounts payable and accrued liabilities at June 30, 1997 and 1996
included the following:
1997 1996
---------- ----------
Trade accounts payable $ 384,000 $ 353,000
Commissions payable 13,000 16,000
Other 98,000 54,000
---------- ----------
$ 495,000 $ 423,000
========== ==========
21
SEMICON, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 1997, 1996 and 1995
NOTE B-INDEBTEDNESS IN DEFAULT
Indebtedness in default at June 30, 1997 and 1996 was as follows:
1997 1996
13% Convertible Subordinated ---------- ----------
Debentures due
January 15, 2001 $1,793,000 $1,855,000
Industrial Revenue Bond 695,000 696,000
Retiree Deferred Compensation 180,000 180,000
---------- ----------
$2,668,000 $2,731,000
========== ==========
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. The
Company continues to accrue interest on its 13% Convertible
Subordinated Debentures.
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 these debt obligations as current
liabilities.
During fiscal 1997, the Company purchased $62,000 ($142,000 in
1996 and $786,000 in 1995) face amount of its 13% Convertible
Subordinated Debentures at a discount. The purchases reduced
indebtedness and accrued interest by $121,000 ($252,000 in 1996 and
$1,292,000 in 1995) and resulted in a $117,000 ($242,000 in 1996 and
$1,231,000 in 1995) extraordinary gain.
The Company's industrial revenue bond liability is a guaranty
obligation from the 1987 liquidation of a farmer subsidiary. The last
principle reductions of the debt occurred in 1993. The last interest
payments were made in 1995. The Company continues to accrue 6%
interest on the obligation.
Retiree deferred compensation represents an obligation to the
widow of a retired employee for deferred compensation. During fiscal
1991 the Company suspended its deferred compensation payments.
During fiscal 1996, the Company settled deferred compensation
obligations at discounted amounts which resulted in a $158,000
extraordinary gain.
22
SEMICON, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 1997, 1996 and 1995
NOTE C-RESERVES FOR RESTRUCTURING AND ENVIRONMENTAL COSTS
The balance sheet reserves for restructuring and environmental
costs included the following at June 30, 1997 and 1996:
1997 1996
---------- ----------
Environmental matters $ 848,000 $ 848,000
Debt restructuring
and related matters 447,000 452,000
---------- ----------
$1,295,000 $1,300,000
========== ==========
Reserves for environmental matters were originally established
in 1990 to cover (1) the estimated cost of remediation of an
environmental matter at the Company's Burlington, Massachusetts
facility, (2) 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 and (3) a potential liability associated with an
environmental matter at a former subsidiary operation. The Company has
agreed to remediate environmental problems at its Burlington,
Massachusetts operating site, currently estimated to cost $350,000 to
$600,000, by November 1999. In September 1996, the Company filed its
most recent "financial inability" notice with the commonwealth of
Massachusetts indicating that it cannot afford to pay the cost of
remediation. 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 would
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.
23
SEMICON, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 1997, 1996 and 1995
NOTE D-INCOME TAXES
Income tax provisions consisted of the following:
1997 1996 1995
Total provisions ---------- ---------- ----------
Current:
Federal $ 0 $ 0 $ 0
State 0 0 0
---------- ---------- ----------
$ 0 $ 0 $ 0
========== ========== ==========
A reconciliation of income tax (benefit) for continuing
operations computed at the statutory federal income tax rate to the
income tax provision (benefit) follows:
1997 1996 1995
Income tax provision
(benefit) at statutory
federal income tax rate $( 299,000) $( 139,000) $( 59,000)
Net operating loss
not utilized 299,000 139,000 59,000
---------- ---------- ----------
$ 0 $ 0 $ 0
========== ========== ==========
At June 30, 1997, the Company had tax loss carryforwards of
approximately $7,700,000 and tax credit carryforwards of approximately
$500,000 available to offset future federal taxable income and
operating loss carryforwards of approximately $9,600,000 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 E-COMMITMENTS AND CONTINGENCIES
The Company leases a 30,000 square foot facility in Burlington,
Massachusetts under a lease agreement which expires in June 1998. The
lease provides for monthly payments aggregating $100,000 per year plus
real estate taxes, utilities and insurance. Rent expense aggregated
$100,000 in 1997, 1996 and 1995.
24
SEMICON, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 1997, 1996 and 1995
NOTE F-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
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, 1997, 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, 1997:
13% Convertible Subordinated Debentures 194,469
Equity Incentive Plan 187,000
Employee Stock Purchase Plan 55,298
-------
436,767
25 =======
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, 1997:
<S> <C> <C> <C> <C> <C>
Machinery and equipment $ 4,051,000 $ 0 $ (57,000)$ 0 $ 3,994,000
Leasehold Improvements 130,000 0 0 0 130,000
---------- ---------- ---------- ---------- ----------
$ 4,181,000 $ 0 $ (57,000)$ 0 $ 4,124,000
========== ========== ========== ========== ==========
Year ended June 30, 1996:
Machinery and equipment $ 3,965,000 $ 86,000 $ 0 $ 0 $ 4,051,000
Leasehold Improvements 123,000 7,000 0 0 130,000
---------- ---------- ---------- ---------- ----------
$ 4,088,000 $ 93,000 $ 0 $ 0 $ 4,181,000
========== ========== ========== ========== ==========
Year ended June 30, 1995:
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
========== ========== ========== ========== ==========
</TABLE>
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, 1997:
<S> <C> <C> <C> <C> <C>
Machinery and equipment $ 3,963,000 $ 24,000 $ (57,000)$ 0 $ 3,930,000
Leasehold Improvements 85,000 23,000 0 0 108,000
---------- ---------- ---------- ---------- ----------
$ 4,048,000 $ 47,000 $ (57,000)$ 0 $ 4,038,000
========== ========== ========== ========== ==========
Year ended June 30, 1996:
Machinery and equipment $ 3,948,000 $ 15,000 $ 0 $ 0 $ 3,963,000
Leasehold Improvements 75,000 10,000 0 0 85,000
---------- ---------- ---------- ---------- ----------
$ 4,023,000 $ 25,000 $ 0 $ 0 $ 4,048,000
========== ========== ========== ========== ==========
Year ended June 30, 1995:
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
========== ========== ========== ========== ==========
</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 5 Years
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, 1997:
<S> <C> <C> <C> <C> <C>
Allowance for doubtful
accounts $ 10,000 $ 0 $ 0 $ 0 $ 10,000
Reserve for restructuring
and environmental costs 1,300,000 0 0 5,000 1,295,000
---------- ---------- ---------- ---------- ----------
$ 1,310,000 $ 0 $ 0 $ 5,000 $ 1,305,000
========== ========== ========== ========== ==========
Year ended June 30, 1996:
Allowance for doubtful
accounts $ 10,000 $ (5,000)$ 5,000 $ 0 $ 10,000
Allowance for losses
on discontinued
operations 896,000 0 (896,000) 0 0
Reserve for restructuring
and environmental costs 1,100,000 0 200,000 0 1,300,000
---------- ---------- ---------- ---------- ----------
$ 2,006,000 $ (5,000)$ (691,000)$ 0 $ 1,310,000
========== ========== ========== ========== ==========
Year ended June 30, 1995:
Allowance for doubtful
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
========== ========== ========== ========== ==========
</TABLE>
SCHEDULE VI-SUPPLEMENTARY INCOME STATEMENT INFORMATION
SEMICON, INC.
<TABLE>
Charged to Costs and Expenses
Year Ended June 30,
-------------------------------------
<S> <C> <C> <C>
Item 1997 1996 1995
---------------------------------------- ---------- ---------- ----------
Maintenance and repairs $ 475,000 $ 633,000 $ 557,000
Depreciation and amortization of
intangible assets, preoperating
cost and similar deferrals * * *
Taxes, other than payroll and income taxes * * *
Royalties None None None
Advertising costs * * *
*Less than 1% of toal sales and revenues.
</TABLE>
ITEM 6-SELECTED FINANCIAL DATA
SEMICON, INC.
<TABLE>
Year Ended June 30,
----------------------------------------------------------
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net Sales $ 5,138,000 $ 6,627,000 $ 6,158,000 $ 6,703,000 $ 5,927,000
Income (loss) from continuing
operations before
extraordinary item (879,000) (409,000) (173,000) (49,000) (1,223,000)
Net income (loss) (762,000) (9,000) 1,425,000 227,000 (588,000)
Total assets 1,532,000 2,140,000 2,330,000 2,304,000 2,023,000
Long-term debt, including
current maturities 1,793,000 1,855,000 1,997,000 3,213,000 3,400,000
Total debt obligations in default:
Principal 2,668,000 2,731,000 3,135,000 4,332,000 4,623,000
Accrued interest 1,832,000 1,610,000 1,427,000 1,660,000 1,362,000
--------- --------- --------- --------- ---------
4,500,000 4,341,000 4,562,000 5,992,000 5,985,000
Income (loss) per share:
From continuing operations (.27) (.12) (.05) (.01) (.37)
Net income (loss) (.23) (.00) .43 .07 (.18)
</TABLE>
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 exhibits marked with an asterisk
are 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 (now known as
BankBoston) 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. (now known as BankBoston) , 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
(now known as BankBoston) 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.
Allard (Exhibit 10.5 to Form 10-K for year ended June 30, 1983).
10.2 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).
*10.3 Lease Extension Agreement dated July 1997, to Lease, dated
March 31, 1983, between Trustees of N.W. Building 28 Trust and the
Company.
10.4 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).
10.5 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).
10.6 Semicon, Inc. Equity Incentive Plan (Exhibit 10.16 to Form
10-K for year ended June 30, 1989).
31
10.7 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).
32
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
EXHIBIT 27.1
This schedule contains summary financial information extracted from the
Company's consolidated statements of operations and balance sheets and is
qualified in it's entirety by reference to such financial statements.
SEMICON, INC.
<S> <C>
Period type 12 Mos
Fiscal year end Jun 30 1997
Period end Jun 30 1997
Cash 227,000
Securities 0
Receivables 440,000
Allowances 10,000
Inventory 749,000
Current assets 1,445,000
PP&E, gross 4,124,000
Depreciation 4,038,000
Total assets 1,532,000
Current liabilities 6,489,000
Bonds 1,793,000
Common 826,000
Preferred mandatory 0
Preferred 0
Other SE (5,783,000)
Total liability and equity 1,532,000
Sales 5,138,000
Total revenues 5,138,000
CGS 4,876,000
Total costs 6,017,000
Other expenses (1,000)
Loss provision 0
Interest expense 279,000
Income, pretax (879,000)
Income tax 0
Income, continuing (879,000)
Discontinued 0
Extraordinary 117,000
Changes 0
Net income (762,000)
EPS, primary (0.23)
EPS, diluted (0.23)
</TABLE>
