SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For Quarter Ended March 3, 1995 Commission File Number: 0-45
SHELDAHL, INC.
(exact name of registrant as specified in its charter)
Minnesota 41-0758073
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
Northfield, Minnesota 55057
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (507) 663-8000
As of April 5, 1995, 6,691,257 shares of the Registrant's common stock were
outstanding.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES X NO
<PAGE>
PART I: FINANCIAL INFORMATION
SHELDAHL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
Six Months Ended
March 3, February 25,
(in thousands, except per share data) 1995 1994
Net sales $43,048 $41,908
Cost of sales 34,611 33,130
______ ______
Gross profit 8,437 8,778
______ ______
Expenses:
Sales and marketing 4,556 3,754
General and administrative 1,737 2,083
Research and development 1,109 1,351
Interest 146 460
______ ______
Total expenses 7,548 7,648
______ ______
Income before provision for income taxes
and cumulative effect of changes in
methods of accounting 889 1,130
Provision for income taxes 235 289
______ ______
Income before cumulative effect of
changes in methods of accounting 654 841
Cumulative effect of change in method of
accounting for income taxes - 1,422
Cumulative effect of change in method of
accounting for postretirement benefits - (875)
______ ______
Net income $ 654 $ 1,388
====== ======
Per share amounts:
Income before accounting changes $ 0.10 $ 0.16
Accounting change - income taxes - 0.28
Accounting change - postretirement benefits - (0.17)
______ ______
Net income per share $ 0.10 $ 0.27
====== ======
Weighted average common shares and
common share equivalents outstanding 6,879 5,096
====== ======
The accompanying notes are an integral part of these statements.
<PAGE>
SHELDAHL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
Three Months Ended
March 3, February 25,
(in thousands, except per share data) 1995 1994
Net sales $21,960 $21,739
Cost of sales 17,922 17,035
______ ______
Gross profit 4,038 4,704
______ ______
Expenses:
Sales and marketing 2,281 1,903
General and administrative 873 1,103
Research and development 578 568
Interest 128 234
______ ______
Total expenses 3,860 3,808
______ ______
Income before provision for income taxes 178 896
Provision for income taxes 43 224
______ ______
Net income $ 135 $ 672
====== ======
Net income per share $ 0.02 $ 0.13
====== ======
Weighted average common shares and
common share equivalents outstanding 6,919 5,116
====== ======
The accompanying notes are an integral part of these statements.
<PAGE>
SHELDAHL, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
ASSETS
(in thousands) March 3, September 2,
1995 1994
(Unaudited)
Current assets:
Cash $ 653 $ 2,008
Accounts receivable, net 15,396 14,463
Inventories 12,322 10,568
Prepaid expenses and other current assets 1,000 478
Deferred tax benefits 1,523 1,429
______ ______
Total current assets 30,894 28,946
______ ______
Plant and equipment, at cost 84,181 68,101
Less: accumulated depreciation 39,942 37,832
______ ______
Net plant and equipment 44,239 30,269
______ ______
Other assets 1,549 924
Deferred tax benefits - 181
______ ______
$76,682 $60,320
====== ======
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current liabilities:
Current maturities of long-term debt $ 951 $ 2,021
Accounts payable 10,812 6,589
Accrued salaries and commissions 1,279 1,324
Other accrued liabilities 1,553 2,431
Reserve for discontinued operation 425 489
Income taxes payable 92 150
______ ______
Total current liabilities 15,112 13,004
______ ______
Long-term debt 20,917 7,963
______ ______
Other non-current liabilities 2,856 2,871
______ ______
Shareholders' investment:
Common stock 1,672 1,648
Additional paid-in capital 21,672 21,035
Retained earnings 14,453 13,799
______ ______
Total shareholders' investment 37,797 36,482
______ ______
$76,682 $60,320
====== ======
The accompanying notes are an integral part of these statements.
<PAGE>
SHELDAHL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
Six Months Ended
(in thousands) March 3, February 25,
1995 1994
Operating activities:
Net income $ 654 $ 1,388
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 2,340 2,080
Deferred income tax provision 110 158
Cumulative effect of accounting changes - (547)
Net change in other operating activities:
Accounts receivable (933) (1,477)
Inventories (1,754) (660)
Prepaid expenses and other current assets (522) (254)
Other assets (625) (426)
Accounts payable and accrued liabilities 222 (1,590)
Income taxes-payable (58) -
Other non-current liabilities (38) (52)
______ ______
Net cash used in operating activities (604) (1,380)
______ ______
Investing activities:
Capital expenditures, net (13,232) (4,877)
Net cash flows used in discontinued operation (64) (402)
______ ______
Net cash used in investing activities (13,296) (5,279)
______ ______
Financing activities:
Borrowings (repayments) under revolving credit
facilities, net 12,020 (638)
Proceeds from issuance of long-term debt - 10,465
Repayments of long-term debt (136) (3,475)
Issuance of common stock 661 163
______ ______
Net cash provided by financing activities 12,545 6,515
______ ______
Decrease in cash (1,355) (144)
Cash at beginning of period 2,008 442
______ ______
Cash at end of period $ 653 $ 298
====== ======
Supplemental cash flow information:
Income taxes paid $ 105 $ 18
====== ======
Interest paid $ 179 $ 549
====== ======
The accompanying notes are an integral part of these statements.
<PAGE>
SHELDAHL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Unaudited
These condensed and unaudited financial statements have been prepared by the
Company pursuant to the rules and regulations of the Securities and Exchange
Commission. In the opinion of management, these condensed financial statements
reflect all adjustments, of a normal and recurring nature, necessary for a fair
statement of the interim periods, on a basis consistent with the annual audited
statements. Certain information, accounting policies and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to such
rules and regulations. Although these disclosures should be considered
adequate, the Company suggests that these condensed financial statements be
read in conjunction with the financial statements and summary of significant
accounting policies and notes thereto included in the Company's latest annual
report on Form 10-K.
1) Inventories
Inventories, which are valued at the lower of last-in first-out cost or
market, consists of (in thousands):
March 3, 1995 September 2, 1994
Raw materials $ 5,512 $ 4,403
Work-in-process 6,031 5,245
Finished goods 1,694 1,835
LIFO reserve (915) (915)
______ ______
$12,322 $10,568
====== ======
2) Post Retirement Benefits
In December 1990, the Financial Accounting Standard Board issued Statement
of Financial Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other than Pensions" (SFAS No. 106). SFAS No. 106
requires that the expected cost of these benefits be charged to expense
during the years that the employees render service. The Company adopted
SFAS No. 106 on August 28, 1993, and recorded a one-time charge of $875,000,
net of income tax benefits of $525,000, in the accompanying 1994 financial
statement of operations.
3) Income Taxes
Effective August 28, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS No. 109),
under which deferred income tax assets and liabilities are recognized for
the differences between financial and income tax reporting basis of assets
and liabilities based on enacted tax rates and laws. The Company recorded
a $1,422,000 increase to net income in 1994 to reflect the adoption of SFAS
No. 109.
4) Restated Credit and Security Agreement
During the second quarter of fiscal 1995, the Company amended its credit
agreement with three banks. The agreement consists of a $15 million
revolving note based on, and secured by, the Company's inventories and
accounts receivable, and a $20 million term note collateralized by
equipment. As of March 3, 1995, $7,883,000 was borrowed under the revolving
note agreement and an additional $7,117,000 was available for the Company's
use. The Company had an outstanding balance of $12,301,000 at March 3,
1995, under the term note. The Company may borrow an additional $6,200,000
to fund future capital expenditures under this term note. The term note
calls for quarterly payments commencing January 1, 1996. The amount of the
payment will be based on the balance outstanding at that time. The credit
agreement expires December 31, 1997, but also contains an option to extend
the agreement to December 31, 1999. Interest accrues at prime plus up to
2.5%, based on the Company's net worth, as defined. Commitment fees are
charged at 0.5% on the revolver's unused portion. The interest rate as of
March 3, 1995, was 9.5% for the revolving note and 10.0% for the term note.
5) Consortium for the Development of Multi-Chip Module Laminates (MCM-L)
On January 10, 1994, the Company entered into a Consortium Agreement
sponsored by the Advanced Projects Research Agency (ARPA), a United States
Government Agency. The purpose of the Consortium is to accelerate the
development and commercialization of the multi-chip module laminate (MCM-L).
As a Consortium member, the Company expects to receive approximately $9
million in funding through January 1996 from ARPA to further test, design
and develop the manufacturing processes for the Company's NOVACLAD and
Z-LINK products which are to be used in constructing MCM-L. During the
three and six months ended March 3, 1995, the Company incurred $1,465,000
and $3,066,000, respectively, in manufacturing, selling, research and
development and administrative costs that were refunded by ARPA. To date,
the Company has received a total of $6,146,000 of funding through the
Consortium. As of March 3, 1995, the Company has recorded a $330,000
receivable from ARPA. The remaining expenses to be reimbursed by the ARPA
Consortium will be $2,520,000 through 1997.
<PAGE>
SHELDAHL, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
CONSOLIDATED OPERATING RESULTS AND FINANCIAL CONDITION
Six Months Ended February 25, 1994 and March 3, 1995
Net sales increased $1,140,000 or 2.7% from $41,908,000 for the six months ended
February 25, 1994, to $43,048,000 for the six months ended March 3, 1995.
Automotive market product sales increased $1,845,000 or 8.2% from $22,495,000
for the six months ended February 25, 1994, to $24,340,000 for the six months
ended March 3, 1995. Sales of automotive interconnect systems increased
$819,000 or 4.2% from $19,704,000 for the six months ended February 25, 1994,
to $20,523,000 for the six months ended March 3, 1995, as a result of the
Company's successful design and sales efforts to major automotive customers.
Sales of flexible materials for automotive products increased $1,026,000 or
36.8% to $3,817,000 compared with $2,791,000 for the same period in fiscal
1994, primarily reflecting the Company's continued expansion into the rapidly
growing automotive airbag market.
Datacommunication market sales declined $3,476,000 or 33.4% from $10,417,000 for
the six months ended February 25, 1994, to $6,941,000 for the six months ended
March 3, 1995. This decline related principally to reduced sales of the
Company's interconnect systems serving the laptop computer and cellular phone
segments of the datacommunication market.
Aerospace/defense market sales increased $249,000 or 5.0% from $4,959,000
for the six months ended February 25, 1994, to $5,208,000 for the six months
ended March 3, 1995. Consumer market sales increased $1,173,000 or 77.3%
totaling $2,690,000 for the six months ended March 3, 1995, compared with
$1,517,000 for the same period in fiscal 1994, due to an increase in customer
demand for the Company's interconnect products. Industrial market sales
increased $1,349,000 or 53.5% from $2,520,000 for the six months ended
February 25, 1994, to $3,869,000 for the six months ended March 3, 1995.
Increased customer demand contributed to the rise in industrial sales.
Gross profit decreased $341,000 or 3.9% from $8,778,000 for the six months ended
February 25, 1994, to $8,437,000 for the six months ended March 3, 1995. Gross
profit as a percentage of sales decreased to 19.6% compared with 20.9% for the
same period in fiscal 1994. Increased material and labor costs, as well as
start up costs associated with a record number of new products in the second
quarter, resulted in lower gross profit in the first half of 1995.
Sales and marketing expense increased $802,000 or 21.4% from $3,754,000 for the
six months ended February 25, 1994, to $4,556,000 for the six months ended March
3, 1995. Sales and marketing expense as a percentage of sales increased to
10.6% for the six months ended March 3, 1995, compared with 9.0% for the same
period in fiscal 1994. This was influenced by increased spending on proposal
material, product advertising and shows and exhibit expense to promote new
business and products.
Net general and administrative expenses decreased $346,000 or 16.6% from
$2,083,000 for the six months ended February 25, 1994, to $1,737,000 for the six
months ended March 3, 1995. Gross general and administrative expenses increased
$56,000 or 2.6% from $2,135,000 for the six months ended February 25, 1994, to
$2,191,000 for the six months ended March 3, 1995. Slightly higher labor costs
contributed to this increase. During the first six months of fiscal 1995,
$454,0000 of ARPA credits were applied to general and administrative costs,
decreasing gross expenses. See Note 5 of the accompanying financial statements
for additional information regarding ARPA.
Net research and development expenses decreased $242,000 or 17.9% from
$1,351,000 for the six months ended February 25, 1994, to $1,109,000 for the
six months ended March 3, 1995. Gross research and development costs
decreased $183,000 or 12.0% from $1,529,000 for the six months ended
February 25, 1994, to $1,346,000 for the six months ended March 3, 1995. The
decrease was influenced by reduced research and development material costs
as the Novaflex process development is nearing completion. During the first
six months of fiscal 1995, $237,000 of ARPA credits were applied to research
and development costs, thus decreasing expenses. See Note 5 of the
accompanying financial statements for additional information regarding ARPA.
Net interest expense decreased $314,000 or 68.3% from $460,000 for the six
months ended February 25, 1994, to $146,000 for the six months ended
March 3, 1995. Interest costs capitalized to projects contributed to this
decrease. Capitalized interest increased $313,000 or 192% from $163,000 for
the six months ended February 25, 1994, to $476,000 for the six months ended
March 3, 1995. This was due to the $16,000,000 increase in construction
projects in process.
Operating profit declined $241,000 or 21.3% from $1,130,000 for the six months
ended February 25, 1994, to $889,000 for the six months ended March 3, 1995.
Lower margins and higher marketing expenses contributed to the decrease.
Provision for income taxes for the six months ended March 3, 1995, was
$235,000. The effective tax rate for fiscal 1995 is estimated to be 26%.
Income from continuing operations for the six months ended March 3, 1995,
was $654,000, a decrease of $187,000 or 22.2% as compared to $841,000 for
the six months ended February 25, 1994. Earnings per share from continuing
operations before accounting changes for the six months ended March 3, 1995,
were $0.10 per share compared with $0.16 per share for the six months ended
February 25, 1994. Average shares outstanding increased from approximately
5,130,000 in fiscal 1994 to 6,900,000 in fiscal 1995.
<PAGE>
SHELDAHL, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
CONSOLIDATED OPERATING RESULTS AND FINANCIAL CONDITION
Three Months Ended February 25, 1994 and March 3, 1995
Net sales increased $221,000 or 1.0% from $21,739,000 for the three months ended
February 25, 1994, to $21,960,000 for the three months ended March 3, 1995.
Sales to the automotive market increased $1,315,000 or 11.8% from $11,174,000
for the three months ended February 25, 1994, to $12,489,000 for the three
months ended March 3, 1995. Increased design applications of interconnect
systems for anti-lock brakes, sensors and instrumentation, plus flexible
materials for airbags contributed to this sales growth. Sales to the
datacommunication market decreased $2,401,000 or 41.0% from $5,857,000 for
the three months ended February 25, 1994, to $3,456,000 for the three months
ended March 3, 1995. This decline related principally to reduced sales of
the Company's interconnect systems serving the laptop computer and cellular
phone segments of the datacommunication market. Aerospace/defense market
sales increased $315,000 or 13.7% from $2,304,000 for the three months ended
February 25, 1994, to $2,619,000 for the three months ended March 3, 1995.
Consumer market sales increased $498,000 or 64.2% from $776,000 for the
three months ended February 25, 1994, to $1,274,000 for the three months
ended March 3, 1995. Industrial market sales increased $868,000 or 69.2%
from $1,254,000 for the three months ended February 25, 1994, to $2,122,000
for the three months ended March 3, 1995. Increased customer demand
contributed to the rise in consumer and industrial sales.
Gross profit decreased $666,000 or 14.2% from $4,704,000 for the three months
ended February 25, 1994, to $4,038,000 for the three months ended
March 3, 1995. Gross profit, as a percentage of net sales, decreased to
18.4% from 21.6% for the same period of fiscal year 1994. Start-up costs,
associated with a record level of new automotive products, along with
increased material and labor costs, contributed to the decrease.
Total operating expenses increased $52,000 or 1.4% from $3,808,000 for the three
months ended February 25, 1994, to $3,860,000 for the three months ended March
3, 1995. As a percentage of net sales, expenses were 17.5% for both periods.
Sales and marketing expense increased $378,000 or 19.9% from $1,903,000 for the
three months ended February 25, 1994, to $2,281,000 for the three months ended
March 3, 1995. Higher labor costs, product advertising, shows and exhibits and
travel costs contributed to the increase.
Net general and administrative expenses decreased $230,000 or 20.9% from
$1,103,000 for the three months ended February 25, 1994, to $873,000 for the
three months ended March 3, 1995. Gross general and administrative expenses
decreased $57,000 or 5.0% from $1,152,000 for the three months ended
February 25, 1994, to $1,095,000 for the three months ended March 3, 1995.
Lower consulting and professional fees contributed to the decline. For the
three months ended March 3, 1995, $222,000 of ARPA credits were applied to
general and administrative costs. See Note 5 of the accompanying financial
statements for additional information regarding ARPA.
Net research and development expense increased $10,000 or 1.8% from $568,000 for
the three months ended February 25, 1994, to $578,000 for the three months March
3, 1995. Gross research and development costs decreased to $86,000 or 11.5%
from $746,000 for the three months ended February 25, 1994, to $660,000 for
the six months ended March 3, 1995. The decrease in research and development
costs relating to the Novaflex process development contributed to the
decline in research and development expenses. For the three months ended
March 3, 1995, $82,000 of ARPA credits were applied to research and development
costs. See Note 5 of the accompanying financial statements for additional
information regarding ARPA.
Net interest expense decreased $106,000 or 45.3% from $234,000 for the three
months ended February 25, 1994, to $128,000 for the three months ended March 3,
1995, while interest on borrowings increased $79,000 or 24.8% from $319,000 for
the three months ended February 25, 1994 to $398,000 for the three months ended
March 3, 1995. Capitalized interest increased $185,000 or 217.6% from $85,000
for the three months ended February 25, 1994, to $270,000 for the three
months ended March 3, 1995, because of the $16,000,000 increase in capital
projects in progress.
Income before taxes decreased $718,000 or 80.1% from $896,000 for the three
months ended February 25, 1994, to $178,000 for the three months ended March 3,
1995.
For the current quarter, income taxes have been provided at an estimated annual
rate of 27%. Net income from continuing operations for the three months ended
March 3, 1995, was $135,000, a decrease of $537,000 or 80% as compared to
$672,000 for the three months ended February 25, 1994. Earnings per share for
the three months ended March 3, 1995, was $0.02 per share and $0.13 per share
for the three months ended February 25, 1994. The decline in EPS was a
result of lower quarterly earnings and increased shares outstanding.
FINANCIAL CONDITION
The Company's amended credit agreement with Norwest, Harris and NBD banks, as
described in Note 4 to the accompanying financial statements, increased the
Company's borrowing capability to $35,000,000. The funds will be used to
support the Company's $50 million capital investment program that begun in
June of 1994. As of March 31, 1995, the Company, as part of its investment
plan, obtained a $5,000,000 construction loan for the construction of the
Longmont, Colorado, facility. The capital investment program includes the
purchase of land and construction of the Novaclad manufacturing facility
in Longmont, Colorado, as well as significant upgrades at the circuit and
material fabrication facilities in Northfield, Minnesota.
At March 3, 1995, working capital decreased, reflecting a 2.0 to 1 current ratio
compared to 2.2 to 1 at September 2, 1994.
For the six months ended March 3, 1995, the Company has invested $13,232,000 in
capital expenditures and expects to continue capital investment at a similar
rate during the last half of fiscal 1995. Capital expenditures will
principally be funded from cash flows from operations plus existing debt
capacity.
<PAGE>
PART II - OTHER INFORMATION
SHELDAHL, INC. AND SUBSIDIARY
FORM 10-Q
Item 4. Submission of Matters to a Vote of Security Holders
On January 11, 1995, Sheldahl, Inc. Held its Annual Meeting of
Shareholders. Of the 6,623,854 shares of common stock eligible to
vote, 5,287,165 shares were represented at the meeting and votes were
taken on the following matters.
1. The votes cast for the eight (8) directors to serve until the next
annual meeting of shareholders were:
Votes Votes Votes Broker
For Against Abstained Non-Votes
5,171,285 302,589 0 0
2. The votes cast to approve an amendment to the Company's Articles
of Incorporation to increase the total number of authorized shares
of common stock, par value $0.25 per share, by 12,500,000 shares
to a total of 20,000,000 shares were:
Votes Votes Votes Broker
For Against Abstained Non-Votes
4,838,571 559,214 25,924 50,166
3. The votes cast to approve the 1994 Stock Option Plan were:
Votes Votes Votes Broker
For Against Abstained Non-Votes
3,594,802 300,875 55,502 1,522,695
4. The votes cast to approve the appointment of Arthur Andersen & Co.
LLP as independent auditors for the current fiscal year were:
Votes Votes Votes Broker
For Against Abstained Non-Votes
5,433,508 11,397 28,468 500
Item 6. Exhibits and Reports on Form 8-K
A) Exhibits
10.1 Second Amendment to Amended and Restated Credit and
Security Agreement dated May 12, 1994 among Norwest and
Harris Banks and Sheldahl, Inc.
10.2 Third Amendment to Amended and Restated Credit and Security
Agreement dated May 12, 1994 among Norwest, Harris and NBD
Banks and Sheldahl, Inc.
10.3 Construction Loan Agreement dated March 31, 1995 between
Mountain Parks Bank East and Sheldahl, Inc.
11 Statement Regarding Computation of Earnings Per Share.
27 Financial Data Schedule.
B) Reports on Form 8-K
No reports on Form 8-K were filed by the Registrant during the
quarter ended March 3, 1995.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SHELDAHL, INC.
(Registrant)
Dated: April 10, 1995 By: /S/James E. Donaghy
Its: President and
Chief Executive Officer
Dated: April 10, 1995 By: /S/John V. McManus
Its: Vice President, Finance
<PAGE>
Exhibit 10.1
SECOND AMENDMENT
TO AMENDED AND RESTATED
CREDIT AND SECURITY AGREEMENT
This Second Amendment is made as of the 12th day of May, 1994, by and
among SHELDAHL, INC., a Minnesota Corporation (the "Borrower"), NORWEST BANK
MINNESOTA, NATIONAL ASSOCIATION, a national banking association ("Norwest")
and HARRIS TRUST AND SAVINGS BANK, an Illinois banking corporation ("Harris").
RECITALS
A. The Borrower, Norwest and Harris have entered into an Amended and
Restated Credit and Security Agreement by and among amended by a First
Amendment dated December 2, 1993 (the "Credit Agreement"), pursuant to which
Norwest and Harris agree to make certain advances to the Borrower pursuant to
the terms and conditions thereof.
B. The Borrower has requested that certain amendments be made to the
Credit Agreement, and Norwest and Harris are willing to agree to such
amendments, pursuant to the terms and conditions set forth below.
ACCORDINGLY, in consideration o the premises and the mutual covenants
and agreements herein contained, it is hereby agreed as follows:
1. Section 8.1(r) of the Credit Agreement is hereby deleted in its
entirety and Norwest and Harris hereby waive any Default or Event of Default
which has occurred as a result of the Borrower's not consummating its purchase
of the issued and outstanding common stock of Data Key, Inc.
2. Section 6.14 of the Credit Agreement is hereby amended by changing
the required ratio for the Borrower's maximum debt to tangible net worth for
the period 2/26/94 - 9/2/94 as it appears in the table therein contained to
read as follows:
"2/26/94 - 9/2/94 1.80 to 1.00".
3. Except as explicitly amended by this Second Amendment, all of the
terms and conditions of the Credit Agreement shall remain in full force and
effect.
4. The execution of this Second Amendment shall not constitute a
waiver of any Default or Event of Default under the Credit Agreement, except
as expressly provided in paragraph 1 hereof, whether or not known to Norwest
or Harris and whether or not existing on the dat of this Second Amendment.
5. This Second Amendment may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original and all of which counterparts, taken together, shall constitute one
in the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Second
Amendment as of the day and year first above written.
SHELDAHL, INC.
By /S/JOHN V. MCMANUS
Its Vice President, Finance
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
By /S/RONALD E. GOCKOWSKI
Its Vice President
HARRIS TRUST AND SAVINGS BANK
By /S/CATHERINE C. CIOLEK
Its Vice President
THIRD AMENDMENT
TO
AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT
This Third Amendment is made as of the 24th day of
January, 1995, by and among SHELDAHL, INC., a Minnesota
corporation (the "Borrower") and NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, a national banking association ("Norwest"), HARRIS
TRUST AND SAVINGS BANK, a bank organized and existing under the
laws of the State of Illinois ("Harris"; and, together with
Norwest, the "Assigning Lenders") and NBD Bank, a Michigan
banking corporation ("NBD"; together with Norwest and Harris, the
"Lenders" and each a "Lender"), and Norwest as agent for and on
behalf of the Lenders (in such capacity, the "Agent").
Recitals
A. The Borrower, Norwest and Harris have entered into
an Amended and Restated Credit and Security Agreement dated as of
November 24, 1993, as amended by a First Amendment to Amended and
Restated Credit Agreement dated as of December 2, 1993 and a
Second Amendment dated May 12, 1994 (as amended, the "Credit
Agreement") under which Norwest and Harris have agreed to make
certain revolving credit and term loans available to the
Borrower.
B. Norwest and Harris each wishes to sell a portion
of its respective revolving credit and term loans to NBD and NBD
will become an additional Lender under the Credit Agreement.
C. In addition to making NBD an additional Lender,
the Borrower and the Lenders have agreed to amend the Credit
Agreement, among other things, to (i) increase and extend the
aggregate revolving credit commitment of the Lenders to the
Borrower, (ii) revise the financial covenants and reporting
requirements, (iii) increase and extend the term loan commitment
of the Lenders to the Borrower, and (iv) clarify certain
definitions and make certain other technical corrections and
amendments.
NOW, THEREFORE, in consideration of the premises and of
the mutual covenants and agreements herein contained, it is
agreed as follows:
1. Defined Terms. Capitalized terms used in this
Third Amendment which are defined in the Credit Agreement shall
have the same meanings as defined therein, unless otherwise
defined herein.
2. Credit Agreement. The Credit Agreement is hereby
amended as follows:
(a) Section 1.1 of the Credit Agreement is hereby
amended to substitute or add, as the case may be, the
following definitions:
" Capital Expenditure' means an expenditure by the
Borrower for the lease, purchase or other acquisition
of any capital asset; provided that with respect to the
lease of any capital asset (whether pursuant to a
capitalized lease or an operating lease), the principal
amount thereof shall be the fair market value of the
capital asset so leased."
"'Capital Expenditure Annual Limit' means
$20,000,000 for the fiscal year ending September 2,
1994, $41,000,000 for the fiscal year ending September
1, 1995, $19,000,000 for the fiscal year ending
August 30, 1996, $20,000,000 for the fiscal year ending
August 29, 1997 and $10,000,000 for each fiscal year
thereafter."
"'Capital Expenditure Cumulative Limit' means,
during the period commencing on August 28, 1993 and
ending on the date of determination, the Borrower's
cumulative (A) Net Income (or loss), plus (B) Non-Cash
Charges, plus (C) Term Debt Proceeds, plus (D) Net
Equity Proceeds, less (E) scheduled principal payments
on Funded Debt, less (F) non-scheduled prepayments on
Funded Debt."
"Cash Flow Available for Fixed Charges' means,
with respect to the applicable period of computation,
the Borrower's (i) Net Income, plus (ii) Interest
Expense, plus (iii) Non-Cash Charges, plus (iv) Term
Debt Proceeds, plus (v) Net Equity Proceeds, less
(vi) cash expenditures by the Borrower for the purchase
of capital assets and less (vii) cash expenditures by
the Borrower with respect to the principal portion of
any capitalized lease obligation ."
"`Cash Flow Available for Rent and Interest' of
any Person means, with respect to the applicable period
of computation, such Person's Pre-Tax Earnings, plus
Interest Expense, plus Rent Expense."
"`Debt Service' means, with respect to the
applicable period of computation, the aggregate of (i)
all scheduled payments of principal on Funded Debt of
the Borrower, (ii) Interest Expense, and (iii) all
scheduled payments of rent under capitalized lease
obligations of the Borrower (determined in accordance
with GAAP)."
"`Interest and Rent Coverage Ratio' means, with
respect to the applicable period of computation, the
ratio of the Borrower's Cash Flow Available for
Interest and Rent to the sum of the Borrower's Interest
Expense and the Borrower's Rent Expense."
"`Maturity Date' means December 31, 1997, unless
extended by the Lenders in their sole discretion upon
request of the Borrower, in no event, however, to be
extended beyond December 31, 1999. The Borrower may
request a one-year extension in writing to the Agent on
or before the first and the second anniversary of the
execution date of the Third Amendment."
"`Net Equity Proceeds' means the net cash proceeds
actually received by the Borrower from the sale of
additional common or preferred stock of the Borrower on
or after August 28, 1993, including cash received from
the exercise of stock options."
"`Rent Expense' means, with respect to the
applicable period of computation, all scheduled
payments of rent under operating leases of the
Borrower."
"`Required Lenders' means any two of the three
Lenders."
"`Term Debt Proceeds' means all proceeds obtained
by the Borrower from (i) Term Advances or (ii) other
term indebtedness permitted pursuant to Section 7.2."
"`Termination Date' means the Maturity Date, or
the earlier date of termination in whole of the
Commitment pursuant to Sections 2.11(a) or 8.2 hereof;
but in the case of Term Advances, the Termination Date
means December 31, 1995."
"`Third Amendment' means that certain Third
Amendment to Amended and Restated Credit and Security
Agreement by and among the Lenders, the Agent and the
Borrower, dated January 24, 1995."
(b) Section 2.7 of the Credit Agreement is hereby
amended by deleting it in its entirety and substituting in
its place the following:
`Section 2.7 Amortization of Term Advances. The
principal of all Term Advances made by each Lender to
the Borrower will be payable in substantially equal
quarterly installments in amounts, and on the dates, as
set forth in each Term Note.'
(c) Section 2.10(a) of the Credit Agreement is hereby
amended by deleting it in its entirety and substituting in
its place the following:
"(a) Basic Increments. The Revolving Basic
Increment and the Term Basic Increment shall be
adjusted as of the first day of each of the Borrower's
fiscal quarters on the basis of the ratio of the
Borrower's Debt to Tangible Net Worth as at the end of
the previous fiscal quarter, as set forth below:
Debt to Revolving Term
Tangible Basic Basic
Net Worth Increment Increment
__________ __________ _________
1.50:1 and above 1.50% 2.00%
1.00:1 - 1.49:1 1.00% 1.50%
0.50:1 - 0.99:1 0.50% 1.00%
below 0.50:1 0.00% 0.50%"
(d) Section 2.11(b)(3) of the Credit Agreement is
hereby amended by deleting it in its entirety and
substituting in its place the following:
"(3) If such reduction occurs at any time other
than the Maturity Date, the Borrower shall pay to the
Lenders a premium in an amount equal to a percentage of
the reduction as follows:
(i) two percent (2.0%), if the reduction
occurs on or before the first anniversary of the
Third Amendment;
(ii) one percent (1.0%), if the reduction
occurs after the first anniversary of the Third
Amendment and on or before the second anniversary
of the Third Amendment; and
(iii) one half of one percent (1/2%), if the
reduction occurs after the second anniversary of
the Third Amendment.
(e) Section 2.11(c)(3) of the Credit Agreement is
hereby amended by deleting it in its entirety and
substituting in its place the following:
"If such prepayment occurs at any time other than
the Maturity Date, the Borrower shall pay to the
Lenders a premium in an amount equal to a percentage of
such prepayment as follows:
(i) two percent (2.0%), if the prepayment
occurs on or before the first anniversary of the
Third Amendment;
(ii) one percent (1.0%), if the prepayment
occurs after the first anniversary of the Third
Amendment and on or before the second anniversary
of the Third Amendment; and
(iii) one half of one percent (1/2%), if the
prepayment occurs after the second anniversary of
the Third Amendment.
(f) Section 2.11(d) of the Credit Agreement is hereby
amended by deleting it in its entirety and substituting in
its place the following:
"(d) Waiver of Reduction and Prepayment Fees. The
Borrower will not be required to pay the reduction
or prepayment fees otherwise due under Sections
2.11(b) or 2.11(c) if such reduction is requested
or such prepayment is made (i) solely and
exclusively from funds obtained by the Borrower
from (1) a refinancing provided by the Agent, (2)
the Borrower's cash flow generated from operations
or (3) the sale of capital stock of the Borrower,
or (ii) as a result of a Lender imposing
additional charges on the Borrower pursuant to
Section 2.17 hereof."
(g) Section 2.16(f) of the Credit Agreement is hereby
amended by deleting it in its entirety and substituting in
its place the following:
"(f) Audit Fees. The Borrower hereby agrees to
pay the Agent, on demand, audit fees in connection with
any audits or inspections conducted by the Agent of any
Collateral or the operations or business of the
Borrower at the standard rate or rates established from
time to time by the Agent as its audit fees (which fees
are currently $400 per day per auditor), together with
all actual out-of-pocket costs and expenses incurred in
conducting any such audit or inspection. So long as
Net Availability exceeds $2,500,000, the Agent will be
entitled to conduct such audits no more often than
twice in any calendar year. If Net Availability at any
time during a calendar year is less than $2,500,000,
the Agent will be entitled to conduct such audits
quarterly for the next four calendar quarters. After
an Event of Default occurs and so long as it continues,
the Agent may conduct such audits at such times and
from time to time as the Agent may determine in its
sole discretion."
(h) Section 6.1(g) of the Credit Agreement is hereby
amended by deleting it in its entirety and substituting in
its place the following:
"(g) to the Agent, weekly, a Weekly Report, or
such other forms as the Agent may from time to time
reasonably request, duly completed and certified on
behalf of the Borrower by the chief financial officer
of the Borrower; provided that no such Weekly Report
shall be required during such weeks that the Borrower's
Net Availability is greater than $2,500,000 and no
Default or Event of Default has occurred and is
continuing hereunder;"
(i) Section 6.11(b) of the Credit Agreement is hereby
amended by deleting it in its entirety and substituting in
its place the following:
"(b) All payments received in the Lockbox shall be
processed to the Collateral Account and held therein
pursuant to the terms and conditions of the Collateral
Account Agreement; provided, however, that so long as
the Borrower's Net Availability exceeds $2,500,000 and
no Event of Default has occurred and is continuing
hereunder, the Agent, upon request of the Borrower,
will transfer all proceeds received in the Lockbox to
the Borrower's operating account for the Borrower's
general use."
(j) Section 6.13 of the Credit Agreement is hereby
amended by deleting it in its entirety and substituting in
its place the following:
"Section 6.13 Minimum Tangible Net Worth. The
Borrower and its Subsidiaries will maintain during each
period designated below their consolidated Tangible Net
Worth, calculated as at the end of each fiscal month of
the Borrower, at or above the level set forth opposite
each such period:
Minimum
Tangible
Fiscal Year Net Worth
___________ _________
1995 35,500,000
1996 39,500,000
1997 44,500,000
1998 and thereafter 50,500,000;
provided, however, that each amount specified in the
"Minimum Tangible Net Worth" column above shall be
increased by the aggregate of all increases in the
Borrower's Tangible Net Worth resulting from receipt by
the Borrower from time to time of Net Equity Proceeds."
(k) Section 6.14 of the Credit Agreement is hereby
amended by deleting it in its entirety and substituting in
its place the following:
"Section 6.14 Maximum Debt to Tangible Net Worth
Ratio. The Borrower and its Subsidiaries will maintain
during each period designated below their consolidated
Debt to Tangible Net Worth, calculated as at the end of
each fiscal month of the Borrower, at not more than the
ratio set forth opposite each such period:
Maximum Debt
to Tangible
Fiscal Year Net Worth
____________ ____________
1995 1.75 to 1.00
1996 1.70 to 1.00
1997 1.50 to 1.00
1998 and thereafter 1.25 to 1.00"
(l) Section 6.15 of the Credit Agreement is hereby
amended by deleting it in its entirety and substituting in
its place the following:
"Section 6.15 Minimum Interest and Rent Coverage
Ratio. The Borrower and its Subsidiaries will maintain
at all times their consolidated Interest and Rent
Coverage Ratio, calculated as at the end of each fiscal
quarter of the Borrower and based upon the previous
four fiscal quarters (including such fiscal quarter),
at not less than 1.50 to 1.00 in fiscal year 1995 and
2.00 to 1.00 in each fiscal year thereafter."
(m) Section 6.16 of the Credit Agreement is hereby
amended by deleting it in its entirety and substituting in
its place the following:
"Section 6.16 Minimum Fixed Charge Coverage Ratio.
The Borrower and its Subsidiaries will maintain at all
times their consolidated Fixed Charge Coverage Ratio,
calculated as at the end of each fiscal quarter of the
Borrower and based upon the cumulative Cash Flow
Available for Fixed Charges and cumulative Debt Service
(including such fiscal quarter) from and after August
28, 1993, at not less than 1.00 to 1.00."
(n) Section 7.1 of the Credit Agreement is hereby
amended by adding a new subsection "(f)" thereto which reads
as follows:
"(f) mortgages, deeds of trust and related security
interests and assignments securing indebtedness
incurred by the Borrower in connection with its
Longmont, Colorado manufacturing facility, and its
Britton, South Dakota facility, as set forth and
described in Schedule I to the Third Amendment."
(o) Section 7.2 of the Credit Agreement is hereby
amended by adding a new subsection "(d)" thereto which reads
as follows:
"(d) indebtedness incurred by the Borrower for the
purchase of capital assets in the amounts, and subject
to the terms and conditions, described in Schedule II
to the Third Amendment."
(p) Section 8.2 of the Credit Agreement is hereby
amended by deleting the preamble in its entirety and
substituting in its place the following:
"Section 8.2 Rights and Remedies. Upon the
occurrence of an Event of Default or at any time
thereafter until such Event of Default is cured to the
written satisfaction of the Required Lenders, the
Agent, with the concurrence of the Required Lenders,
may (and upon written request of the Required Lenders
shall) exercise any or all of the following rights and
remedies:"
(q) Section 9.3(b) of the Credit Agreement is hereby
amended by deleting it in its entirety and substituting in
its place the following:
"(b) The Agent may, in its sole discretion, elect to
apply payments received from the Borrower and proceeds
of Collateral, and to fund Advances requested by the
Borrower, for Norwest's account only, and the other
Lenders shall not participate therein, provided that
not less often than weekly the Agent shall determine
the net amount either due from the other Lenders to
Norwest or from Norwest to the other Lenders, as the
case may be, or shall adjust the application of
subsequent payments and/or collections or the making of
Advances, so as to reconcile each Lender's actual
outstanding Advances with such Lender's Percentage as
of such settlement date."
(r) Section 10.2 of the Credit Agreement is hereby
amended by deleting it its entirety and substituting in its
place the following:
"Section 10.2 Consent of Required Lenders;
Amendments, Requested Waivers, Etc.
(a) Except as provided in Section 10.2(b)
below, the Lenders' consent as required by any
provision of this Agreement shall be deemed given
by the consent of the Required Lenders.
(b) No amendment, modification, termination
or waiver of any provision of any Loan Document or
consent to any departure by the Borrower therefrom
or any release of a Security Interest shall be
effective unless the same shall be in writing and
signed by the Required Lenders and, if the rights
or duties of the Agent is affected thereby, by the
Agent; provided, however, that unless in writing
and signed by each Lender affected thereby, no
amendment, modification, termination, waiver or
consent shall, do any of the following: (i)
increase the amount of any Lender's Commitment
(all Lenders shall be deemed affected by any
change to a Lender's Commitment), (ii) reduce the
amount of any payment of principal of or interest
on a Lender's Advances or the fees payable to such
Lender hereunder, (iii) postpone any date fixed
for any payment of principal of or interest on
such Lenders' Advances or the fees payable to such
Lender hereunder, (iv) change the definitions of
"Borrowing Base" or "Required Lenders," or any
other definitions referred to therein or necessary
to the understanding thereof, or (v) amend this
Section 10.2 or any other provision of this
Agreement requiring the consent or other action of
all of the Lenders. Any waiver or consent given
hereunder shall be effective only in the specific
instance and for the specific purpose for which
given. No notice to or demand on the Borrower in
any case shall entitle the Borrower to any other
or further notice or demand in similar or other
circumstances."
(s) The Commitments of the Lenders and their
respective Percentages as set forth on the signature page of
the Credit Agreement are hereby amended in their entirety to
read as follows:
Norwest:
Revolving Commitment Amount: $5,000,000
Percentage of Revolving Commitment Amount: 33 1/3%
Term Commitment Amount: $6,666,666.67
Percentage of Term Commitment Amount: 33 1/3%
Harris:
Revolving Commitment Amount: $5,000,000
Percentage of Revolving Commitment Amount: 33 1/3%
Term Commitment Amount: $6,666,666.67
Percentage of Term Commitment Amount: 33 1/3%
NBD:
Revolving Commitment Amount: $5,000,000
Percentage of Revolving Commitment Amount: 33 1/3%
Term Commitment Amount: $6,666,666.66
Percentage of Term Commitment Amount: 33 1/3%
(t) Each and every reference in the Credit Agreement
to "both Lenders" shall be deleted and replaced with "all
Lenders" or "each Lender", as the context may require.
3. Addition of NBD as Lender.
(a) The Borrower, Norwest and Harris hereby consent to
NBD becoming an additional Lender under the Credit Agreement
as of the date hereof. Commencing as of the date hereof,
NBD is hereby accorded all rights, privileges and benefits
of a Lender under and pursuant to the Credit Agreement and
NBD hereby assumes all liabilities and obligations of a
Lender under the Credit Agreement. NBD shall be deemed a
party to the Credit Agreement and a Lender thereunder and
(i) shall be entitled to all rights, benefits and privileges
accorded to a Lender in the Credit Agreement (including
obtaining the benefit of all collateral securing payment of
the Notes), (ii) shall be subject to all obligations of a
Lender thereunder and (iii) shall be deemed to have
specifically ratified and confirmed, and by executing this
Third Amendment NBD hereby specifically ratifies and
confirms, all of the provisions of the Credit Agreement.
From and after the date hereof, Norwest and Harris are
hereby relieved of all obligations under the Credit
Agreement to the extent of the reduction of their respective
Percentages as contemplated hereby.
(b) NBD acknowledges and confirms that it has received
a copy of the Credit Agreement and this Third Amendment,
together with the exhibits related thereto, and of all Loan
Documents (as defined in the Credit Agreement), and has
reviewed and approved each and every such document. NBD
further confirms and agrees that in becoming a Lender and in
making its Commitments and Advances under the Credit
Agreement, such actions have and will be made without
recourse to, or representation or warranty by, the Assigning
Lenders, Agent or any other Lender and that the Assigning
Lenders, Agent and other Lenders have made no
representations or warranties, express or implied, with
respect to any aspect of the Loan Documents, including,
without limitation (i) the existing or future solvency or
financial condition or responsibility of the Borrower, its
partners or any guarantors, (ii) the payment or
collectibility of the Advances, (iii) the validity,
enforceability or legal effect of the Loan Documents, or any
other instrument or document furnished by the Borrower under
the Credit Agreement, or (d) the validity or effectiveness
of the lien created by any of the Loan Documents. NBD has
made or caused to be made such independent investigation of
the Borrower and its creditworthiness and all the matters
affecting NBD's judgment in becoming an additional Lender as
NBD has deemed necessary. NBD has not relied in any manner
upon any judgment, determination, or statement of the
Assigning Lenders, the Agent or any other Lender, whether
contained in any materials delivered by any such Lender or
Agent to NBD, or otherwise, in becoming an additional Lender
hereunder.
(c) NBD acknowledges and confirms that its notice
address for purposes of Section 10.3 of the Credit Agreement
shall be, unless and until it shall designate in accordance
with such Section 10.3 another address for such purposes,
the following:
NBD Bank
611 Woodward Avenue
Second Floor
Detroit, MI 48226
Attn: Thomas Gordy
(d) As of the date hereof, each Assigning Lender will
assign to NBD a portion of such Assigning Lender's
outstanding Advances and liability for the L/C Amount in an
amount equal to the product of (i) NBD's Percentage and (ii)
the outstanding balance of each such Advance and the L/C
Amount, and NBD shall purchase such Advances and L/C Amount
from each such Assigning Lender. All such purchases by NBD
shall be deemed without recourse or warranty of any kind.
The Agent shall collect and apply all accrued interest and
fees under the Credit Agreement for all periods prior to the
date of this Third Amendment for the sole benefit of and to
the sole account of the Assigning Lenders. NBD shall be
entitled to receive interest and fees with respect to its
Commitments from and after the date of funding of its
purchase of outstanding Advances as contemplated in this
Section 3(d).
4. Issuance of New Promissory Notes. To evidence the new
Commitments of the Lenders and in replacement for (but not in
payment of) the Revolving Notes and Term Notes held by Norwest
and Harris, respectively, the Borrower agrees to issue and
deliver to the Lenders the following Notes (the "New Notes"):
(a) A Revolving Note of the Borrower payable to the
order of Norwest in an amount corresponding to the Revolving
Commitment Amount of Norwest, in substantially the form of
Exhibit A attached hereto.
(b) A Term Note of the Borrower payable to the order
of Norwest in an amount corresponding to the Term Commitment
Amount of Norwest, in substantially the form of Exhibit B
attached hereto.
(c) A Revolving Note of the Borrower payable to the
order of Harris in an amount corresponding to the Revolving
Commitment Amount of Harris, in substantially the form of
Exhibit C attached hereto.
(d) A Term Note of the Borrower payable to the order
of Harris in an amount corresponding to the Term Commitment
Amount of Harris, in substantially the form of Exhibit D
attached hereto.
(e) A Revolving Note of the Borrower payable to the
order of NBD in an amount corresponding to the Revolving
Commitment Amount by NBD, in substantially the form of
Exhibit E attached hereto.
(f) A Term Note of the Borrower payable to the order
of NBD in an amount corresponding to the Term Commitment
Amount of NBD, in substantially the form of Exhibit F
attached hereto.
The New Notes shall be issued in replacement for the Revolving
Credit Notes and Term Notes previously held by Norwest and
Harris, respectively, and all references in the Credit Agreement
and each other Loan Document to the Notes, the Revolving Notes
and/or the Term Notes shall be deemed references to the New Notes
issued in accordance with this Third Amendment.
5. Representations and Warranties. To induce the
Lenders to enter into this Third Amendment, the Borrower hereby
represents and warrants to the Lenders as follows:
(a) The Loan Documents constitute the legal, valid and
binding agreements of the Borrower, are subject to no
defenses, counterclaims, rights of offset or recoupment and
are enforceable in accordance with their respective terms.
(b) The respective outstanding principal balances of
the Revolving Notes and the Term Notes as of _____________,
1995 are set forth below:
Norwest Revolving Note: $______________
Norwest Term Note: $______________
Harris Revolving Note: $______________
Harris Term Note: $______________
(c) The Notes constitute the legal, valid and binding
obligations of the Borrower, are subject to no defenses,
counterclaims, rights of offset or recoupment and are
enforceable in accordance with their respective terms.
(d) Subject to the modifications set forth in Schedule
III hereto, the representations and warranties contained in
Article V of the Credit Agreement are true and correct as of
the date hereof as though made on and as of this date,
except to the extent that such representations and
warranties relate solely to an earlier date.
6. Fees. The Borrower hereby agrees to pay to the
Lenders a non-refundable fee to induce the Lenders to enter into
this Third Amendment, payable upon execution and delivery hereof,
in an amount equal to $56,600, of which $18,666.67 shall be paid
to Harris, $18,666.67 shall be paid to Norwest and $18,666.66
shall be paid to NBD. The Borrower hereby agrees to pay to the
Agent a non-refundable fee in consideration of the Agent's
arrangement of the increased credit facilities contemplated
hereby in an amount equal to $29,166.67.
7. Conditions Precedent to Effectiveness of this
Third Amendment. This Third Amendment shall become effective on
the business day on which the Agent shall have received the
following, each in form and substance satisfactory to the Agent,
but in no event shall the Agent receive the same later than the
close of business on February 1, 1995:
(a) This Third Amendment, duly executed on behalf of
the Borrower and each Lender.
(b) The New Notes, duly executed on behalf of the
Borrower.
(c) A Third Amendment to Mortgage, Assignment of Rents
and Indemnity (the "Mortgage Amendment"), duly executed on
behalf of the Borrower and each Lender, together with a
title insurance update endorsement, in form and content
acceptable to the Agent.
(d) A UCC-1 financing statement to be filed with the
Colorado Secretary of State, duly executed by the Borrower
as debtor, in favor of the Agent, covering the Collateral,
together with amendments to all outstanding UCC-1 financing
statements naming the Assigning Lenders as second parties.
(e) A certified copy of the resolutions adopted by the
Board of Directors of the Borrower approving the execution
and delivery of this Third Amendment, the New Notes, the
Mortgage Amendment and such other documents as are
contemplated hereby.
(f) An opinion of the Borrower's counsel as to such
matters as the Agent may reasonably request.
(g) Evidence satisfactory to the Agent of payment by
the Borrower of the fees described in paragraph 6 above,
together with the costs and expenses incurred by the Agent,
including attorneys' fees and expenses, in connection with
the preparation or negotiation of this Third Amendment and
other matters as contemplated hereby.
8. Miscellaneous.
(a) The Borrower hereby releases and forever
discharges the Lenders and each of their respective former
and present directors, officers, employees, agents and
representatives of and from every and all claims, demands,
causes of action (at law or inequity) and liabilities, of
any kind or nature, whether known or unknown, liquidated or
unliquidated, absolute or contingent, which the Borrower
ever had, presently has or claims to have against a Lender
or any of its respective directors, officers, employees,
agents or representatives of or relating to events,
occurrences, actions, inactions or any other matters
occurring prior to the date of this Third Amendment.
(b) The Borrower hereby reaffirms its agreement under
Section 10.7 of the Credit Agreement to pay or reimburse the
Agent, among other costs and expenses, all expenses incurred
by the Agent in connection with the amendment, performance
or enforcement of the Loan Documents, including without
limitation, all reasonable fees and disbursements of legal
counsel to the Agent.
(c) Except as expressly amended hereby, all provisions
of the Loan Documents shall remain in full force and effect.
After the effective date hereof, each reference in any Loan
Document or any other document executed in connection with
the Credit Agreement to the "Credit Agreement" or to "this
Agreement", "hereunder" or "hereof" or words of like import
referring to the Credit Agreement shall be deemed to refer
to the Credit Agreement as amended hereby. In addition,
from and after the effective date hereof, each reference in
any Loan Document to the Notes, the Revolving Notes or the
Term Notes, shall be deemed references to New Notes in the
form attached hereto.
(d) This Third Amendment may be executed in any number
of counterparts, each of which when so executed and
delivered shall be deemed to be an original and all of which
counterparts, taken together, shall constitute but one in
the same instrument.
(e) The execution of this Third Amendment and
acceptance of any documents related hereto shall not be
deemed a waiver of any Default or Event of Default under any
Loan Document, whether or not existing on the date of this
Third Amendment.
(f) This Third Amendment shall be governed by, and
construed in accordance with, the internal laws of the State
of Minnesota.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have caused this
Third Amendment to be executed by their respective officers
thereunto duly authorized, as of the date first above written.
SHELDAHL, INC.
By /S/JOHN V. MCMANUS
Its Vice President, Finance
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Lender and Agent
By /S/RONALD E. GOCKOWSKI
Ronald E. Gockowski
Its Vice President
HARRIS TRUST AND SAVINGS BANK
By /S/STEVEN S. GRAY
Its Vice President
NBD BANK
By /S/ARTHUR S. LITTLEFIELD
Its First Vice President
CONSTRUCTION LOAN AGREEMENT
This Construction Loan Agreement ("Agreement") is dated March 31, 1995,
and is between MOUNTAIN PARKS BANK - EAST, a Colorado state bank, whose
mailing address is Post Office Box 3779, Evergreen, Colorado 80439 ("Lender"),
and SHELDAHL, INC., a Minnesota corporation, whose principal place of
business is 1150 Sheldahl Road, Post Office Box 170, Northfield, Minnesota
55057 (the "Borrower").
RECITALS:
A. Borrower owns certain Land upon which borrower is constructing a
Project, all as hereinafter described in this Agreement.
B. Lender has agreed to finance the construction of the Projects on
the terms and conditions provided in this Agreement, including the Standard
Terms and Conditions of Loan attached hereto as Exhibit A and incorporated
herein by this reference (the "Standard Terms and Conditions").
NOW THEREFORE, in consideration of the mutual covenants and agreements
herein contained, Borrower and Lender hereby agree as follows:
1. Parties:
The following terms as used in this Agreement identify the following
parties who are or may be referred to in this Agreement:
(a) Architect: The Neenan Company, a Colorado corporation, with its
principal place of business at 2290 East Prospect, Fort Collins, Colorado
80525.
(b) Contractor: The Neenan Company, a Colorado corporation, with its
principal place of business at 2290 East Prospect, Fort Collins, Colorado
80525.
(c) Engineer: Park Engineering, Inc., a Colorado corporation, with its
principal place of business at 1240 Main Street, Longmont, Colorado 80501.
(d) Lender's Inspector: Klebold Consulting Group, Inc., a Colorado
corporation with its principal place of business as 26 Garden Center, Suite
3B, Broomfield, Colorado 80020.
(e) Title Company: Lane Title Guarantee Company, 3033 East 1st Avenue,
Suite 600, Denver, Colorado 80206.
2. Representations and Warranties.
In order to induce Lender to execute this Agreement and to make the Loan
(as hereinafter defined) Borrower represents and warrants as follows:
2.1 Title to Development Site. Borrower owns good and marketable fee
simple title to Lot 1, Block 1, Clover Creek Industrial, First Filing, County
of boulder, State of Colorado (collectively, the "Land"). The Land is owned
free and clear of all liens, claims and encumbrances, except those listed on
Exhibit B attached hereto and made a part hereof (collectively, the "Permitted
Exceptions").
2.2 Description of Project. Subject to the provisions of this
Agreement, Borrower has begun to (a) improve the Land with the construction of
a production facility/office building (the "Building") and (b) construct
certain on-site and off-site improvements (the "Improvements") on the Land.
The Land, the Building and the Improvements are herein collectively referred
to as the "Project". All work to be performed and materials to be supplied in
connection with the Building and the Improvements (collectively, the "Work")
shall be in accordance with this Agreement and the detailed budget (the
"Budget") attached hereto as Exhibit C.
2.3 Development Contracts. Borrower, as owner, has executed or caused
to be executed the following contracts (the "Contracts") for the performance
of the Work:
(a) Agreement with the Contractor for the construction of the
Project (the "Construction Contract").
(b) Agreement with the Architect for architectural and design
services for the Project.
(c) Agreement with the Engineer for engineering services.
(d) Disbursement Agreement with the Title Company.
Borrower has delivered to Lender a true, complete and correct copy of
each of the Contracts; each Contract is full force and effect, unamended; and
no default exists thereunder by either party thereto.
All representations and warranties contained in this Agreement and in
the Standard Terms and conditions which have been made by Borrower shall be
true at the time of each disbursement of the Loan and in the event of any
material breach, misrepresentation or omission, Lender shall have the absolute
right to terminate its obligations under this Agreement (without any
obligation to refund any commitment fees previously paid), and, upon demand by
Lender, Borrower shall reimburse Lender for the Loan Expensed (as defined in
the Standard Terms and Conditions), and Lender shall be entitled to recover
from Borrower all losses and damages resulting therefrom.
3. Agreement for Construction Loan.
Lender agrees to lend to Borrower, and Borrower agrees to borrow from
Lender an amount not to exceed Five Million U.S. dollars ($5,000,000), (the
"Loan") for the purposes and upon the terms and subject to the conditions
contained in this Agreement and the Standard Terms and Conditions. Borrower
acknowledges that whether or not all or any portion of the Loan shall be
disbursed, any commitment fee to be paid by Borrower to Lender concurrently
with the first disbursement shall be fully earned.
4. Interest Rate and Terms of Repayment.
4.1 Loan Rate. The principal balance of the Loan from time to time
outstanding shall bear interest (the "Loan Rate") during each calendar month
(whether full or partial) prior to the Maturity Date (as hereinafter defined),
at an annual rate equal to one percent (1%) over the Prime Rate. The Prime
Rate shall mean the "base rate on corporate loans at large U.S. money center
commercial banks," as published in the "Money Rates" section of the Wall Street
Journal on each day prior to the Maturity Date. In the event The Wall Street
Journal publishes a range of "base rates", the Prime Rate shall be the average
of the highest and lowest "base rates". In the event The Wall Street Journal
discontinues publication of the aforesaid "base rate", the Prime Rate shall
mean the "corporate base rate" announced by Norwest Bank of Colorado, N.A., to
be in effect each day prior to the Maturity Date. The Loan Rate shall: (a) be
computed on the basis of a year consisting of 360 days; (b) change each day
the Prime Rate changes prior to the Maturity Date, Lender not being required
to give Borrower notice of such changes; and (c) be charged for the actual
number of days within the period for which interest is being charged.
4.2 Default Rate. At any time after the Maturity Date or otherwise
when the Loan is in default and until such default is cured, the principal
amount of the Loan shall bear interest at an annual rate (the "Default Rate")
equal to four percent (4%) plus the Loan Rate then in effect under the Note.
4.3 Usury. Notwithstanding anything to the contrary contained herein
or in the Note, the total amount of interest and other charges payable by
Borrower on the Loan shall not exceed the maximum rate of interest which may
be charged by Lender under the laws of Colorado.
4.4 Payments. Commencing on the first day of the month following the
month in which the initial disbursement of the Loan shall occur, and
continuing on the first day of each month thereafter through and including the
month in which the Maturity Date occurs, interest only at the Loan Rate on the
principal balance of the Loan from time to time outstanding shall be payable
monthly in arrears. Borrower hereby unconditionally and irrevocably
authorizes Lender, at Lender's option, to disburse the amounts of such monthly
interest payments from the undisbursed proceeds of the loan and to apply such
amounts to said interest payments. Any amounts disbursed from the loan amount
to pay interest shall become part of the outstanding principal balance and
interest thereon shall accrue and be payable as provided herein. The unpaid
principal balance of the Loan and all accrued and unpaid interest thereon, if
not sooner declared to be due in accordance with the terms hereof, shall be
due and payable on March 31, 1996, or, if applicable, on any extension of said
date pursuant to Paragraph 4.5 of this Agreement "the "Maturity Date"). All
payment on account of the Loan shall be applied first against any accrued and
unpaid interest then outstanding, with he balance applied against the unpaid
principal balance thereof.
4.5 Extension Right. Notwithstanding anything to the contrary
contained in this Agreement, Borrower shall have the right (the "Extension
Right") to extend the term of the Loan for an additional seven (7) year period
with a final payment of the unpaid principal balance of the Loan and all
accrued and unpaid interest thereon, if not sooner declared to be due in
accordance with the terms hereof, due and payable on March 31, 2003, upon the
following terms and conditions (the "New Loan"):
(a) Borrower gives Lender written notice of its election to
exercise the Extension Right on or before May 15, 1995;
(b) No default or event which with the passage of time, the
giving of notice, or both, would constitute a default, exists under the
Note or any of the Loan Documents, either on the date Borrower delivers the
notice described in (a) above or on the original Maturity Date: and
(c) Except as expressly provided to the contrary in this
Paragraph 4.5, all of the other terms and provisions of the Note, this
Agreement and the other Loan Documents shall remain in full force and
effect in accordance with their terms, including the obligation to make
monthly payments of interest at the then applicable Loan Rate.
(d) The New Loan shall have the following terms and conditions:
(i) The total principal amount of the New Loan shall not
exceed Five Million U.S. dollars ($5,000,000);
(ii) The principal owed under the New Loan shall bear
interest during each calendar month (whether full or partial) prior to the
Maturity Date (as hereinafter defined), at an annual fixed rate equal to
two percent (2%) over the then current seven (7) year U.S. Treasury Note
rate;
(iii) Principal and interest shall be payable monthly based
on a twenty (20) year amortization schedule.
(e) To document the New Loan, Borrower shall enter into a new
promissory note and amendments to the other Loan Documents as necessary to
document the revised loan terms as expressed above. In addition, Borrower
shall provide Lender with an updated Lender's title insurance policy on the
Property confirming that Borrower's lien on the Property maintains its
first priority position.
4.6 Prepayment. The Loan may be prepaid in full or in part without
cost or penalty upon fourteen (14) days' prior written notice to Lender from
Borrower. All prepayments of the indebtedness evidenced by the Note shall be
applied first against any accrued and unpaid interest then outstanding, with
the balance applied against the unpaid principal balance of the Loan.
5. Construction: Application of Loan Proceeds.
5.1 Commencement and Completion Dates. Borrower shall not cause or
permit the continuance of construction of the Building (including without
limitation any grading or excavation) or any Improvements unless the
conditions described in Article 7 of this Agreement with respect to such
Building or the Improvements, respectively, have been satisfied. Borrower
shall cause the construction of the Improvements and the Building to be
diligently and expeditiously carried out, in a good and workmanlike manner, in
accordance with the Building and Engineering Plans and Specifications (as
defined in the Standard Terms and Conditions). Without limiting the
generality of the foregoing, Borrower shall cause construction of the
Improvements and the Building to continue without interruption until
completion, weather conditions permitting, and to be completed in accordance
with the Building and Engineering Plans and Specifications (as defined in the
Standard Terms and Conditions) within twelve (12) months from the date of
initial disbursement of the Loan. Construction of the Building shall not be
deemed to be complete until Lender's Inspector is prepared to certify that all
space located within such Building can be used and occupied in accordance with
all applicable laws, ordinances and regulations and that such Building will
qualify for a final, unconditional certificate of occupancy.
5.2 Improvement Loan, Soft Costs Loan, and Building Loan. The
proceeds of the Loan disbursed to Borrower shall be used by Borrower for the
purpose of paying Project Cost actually incurred by Borrower. For purposes of
this Agreement, "Project Cost" shall mean:
(a) The cost of Work required to complete construction of the
Improvements and the Building in accordance with the Engineering and
Building Plans and Specifications;
(b) Taxes, insurance premiums, professional fees and other
expenses to be approved by Lender which are incurred by Borrower in
connection with the operation of the Project prior to repayment of the
Loan;
(c) Interest on the Loan;
(d) The cost of fixtures, furnishings, furniture, equipment and
personal property owned or to be acquired by Borrower and to be used in
the construction of the Building and the operation of the Project; and
(e) All Loan Expenses.
6. Loan Documents.
Prior to the first disbursement of the Loan, Borrower shall cause to be
executed and delivered to Lender a promissory note (the "Note") executed by
each Borrower, jointly and severally, and payable to the order of Lender in
the principal amount of Five Million U.S. dollars ($5,000,000) bearing
interest and repayable on the terms set forth in Article 4 of this Agreement,
together with a Deed of Trust on the Project and the other loan documents
described in Article 3 of the Standard Terms and Conditions, all of which
documents shall contain such provisions as shall be required to conform to
this Agreement and otherwise shall be satisfactory in form and substance to
Lender. All such documents are hereinafter collectively referred to as the
"Loan Documents".
7. Cash Equity and Restrictions on Loan Disbursements.
Subject to the restrictions and limitations contained in this Article,
Lender shall make disbursements of the Loan in accordance with Article 4 of
the Standard Terms and Conditions; provided, however, that notwithstanding
anything contained in this Agreement or in the Standard Terms and Conditions,
(i) prior to and as a condition of any disbursement of the proceeds of the
Loan, Borrower shall have a minimum of $2,000,000 of cash equity invested in
the Project; and (ii) Lender shall not be required to make disbursements of
any proceeds of the Loan allocable to the "hard costs" of constructing the
Building after January 31, 1996.
8. Borrower's Covenants. Borrower covenants and agrees as follows:
Borrower will not, without the prior written consent of Lender, (i) amend or
modify its articles of incorporation or by-laws which consent shall not be
unreasonably withheld, or (ii) permit itself to be dissolved or its existence
terminated, cause or permit its corporate resolutions relating to this
transaction to be amended in any respect.
9. Recordation of Documents: Partial Releases. Borrower hereby covenants
and agrees that it will not record any document pertaining to, affecting, or
running with all or any portion of the Project or execute any other document
affecting the ownership of the Project, unless concurrently or prior thereto:
(a) lender has approved the form and substance of all such documents
which consent will not be unreasonably withheld; and
(b) no default beyond any applicable cure period or event which with
the giving of notice or the passage of time, or both, would constitute a
default then exists under the Note, the Deed of Trust, this Agreement or any
of the other Loan Documents.
10. Miscellaneous.
10.1 Notices. Any notice which any party hereto gives to any other
party hereunder shall be in writing and shall be deemed given when delivered
in person to a representative of the party, or two (2) business days after
deposited in the United States certified or registered mail, return receipt
requested, addressed to the party, at the address of such party set forth
below, or at such other address as the party to whom notice is to be given has
specified by notice hereunder to the party seeking to give such notice:
Borrower: Sheldahl, Inc.
1150 Sheldahl Road
Post Office Box 170
Northfield, Minnesota 55057
Attn: John V. McManus, Vice President - Finance
Copy to: Lindquist & Vennum P.L.L.P.
4200 IDS Center
Minneapolis, Minnesota 55402
Attn: Debra Page, Esq.
Lender: Mountain Parks Bank - East
Post Office Box 3779
Evergreen, Colorado 80439
Attn: James M. Mason, President
Copy to: Freeborn and Peters
950 17th Street, Suite 2600
Denver, Colorado 80202
Attn: Marc J. Musyl, Esq.
10.2 Successors and Assigns. The rights, powers and remedies of Lender
under this Agreement shall inure to the benefit of Lender, its successors and
assigns. The rights and obligations of Borrower under this Agreement may not
be assigned and any purported assignment by Borrower shall be null and void.
10.3 Indemnification of Lender. Borrower agrees to indemnify, defend
and hold Lender harmless from and against any and all liabilities,
obligations, losses, damages, claims, costs and expenses (including attorneys'
fees and court costs) of whatever kind or nature which may be imposed on,
incurred by or asserted against Lender at any time which relate to or arise
from the performance of the Work and/or the ownership, use, operation or
maintenance of the Project, including without limitation, any brokerage
commissions or finder's fees asserted against Lender with respect to the
making of the Loan and any damages incurred by Lender by reason of the
construction of the Project, or any claims that Borrower and Lender have a
relationship of joint ventures or partners or Borrower or Lender being deemed
to have acted as agent for the other except for any of the foregoing which
result from the negligent or international acts of Lender.
10.4 Joint and Several Obligations. The covenants, warranties,
agreements, obligations, liabilities and responsibilities of the Borrower
under this Agreement shall be binding upon and enforceable against its agents,
legal representatives, administrators, successors and permitted assigns.
10.5 Counterparts. This Agreement may be executed in counterparts, and
all said counterparts when taken together shall constitute one and the same
Agreement.
10.6 Materiality. For purposes of this Agreement an event or happening
will be deemed "material" if: (a) it has an adverse financial effect upon the
business, operations, properties, prospects, assets or condition (financial or
otherwise) of the Borrower taken as a whole; (b) it impairs the ability of the
Borrower to fulfill and satisfy its obligations under this Agreement or any
Loan Document to which it is a party; or (c) it impairs the ability of the
Lender to enforce its rights under this Agreement or any Loan Document.
11. Schedule of Exhibits.
The following Exhibits are attached hereto and incorporated herein:
A. Standard Terms and Conditions
B. Permitted Exceptions
C. Budget
12. Mutual Waiver of Right to Trial by Jury: Choice of Law and Forum.
THIS AGREEMENT SHALL BE INTERPRETED, AND THE RIGHTS AND
LIABILITIES OF BORROWER AND LENDER DETERMINED, IN ACCORDANCE WITH THE
INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAW PROVISIONS) OF THE STATE OF
COLORADO. AS PART OF THE CONSIDERATION FOR NEW VALUE THIS DAY RECEIVED,
BORROWER HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR
FEDERAL COURT WITH JURISDICTION OVER THE COUNTY OF JEFFERSON, STATE OF
COLORADO. BORROWER AND LENDER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE
TRIAL BY JURY IN ANY SUIT OR PROCEEDING ARISING OUT OF OR RELATED TO THIS
AGREEMENT, THE NOTE OR THE OTHER LOAN DOCUMENTS. BORROWER WAIVES ANY
OBJECTION WHICH BORROWER MAY HAVE BASED ON LACK OF JURISDICTION OR IMPROPER
VENUE OR FORUM NON CONVENIENS TO ANY SUIT OR PROCEEDINGS INSTITUTED BY LENDER
UNDER THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS IN ANY STATE OR FEDERAL
COURT WITH JURISDICTION OVER THE COUNTY OF JEFFERSON, STATE OF COLORADO AND
CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY THE COURT. THIS PROVISION IS A MATERIAL INDUCEMENT FOR LENDER
TO INTER INTO THE AGREEMENT AND THE OTHER LOAN DOCUMENTS, MAKE THE LOANS AND
EXTEND THE OTHER FINANCIAL ACCOMMODATIONS CONTEMPLATED HEREUNDER AND THEREUNDER.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of the date first above written.
BORROWER: LENDER:
By /S/JOHN V. MCMANUS By _______________________
Its Vice President, Finance Its _______________________
Attest:
_________________________
Secretary
By /S/SHARI L. MAYER
Its Notary Public - Minnesota - Rice County
Exhibit 11
SHELDAHL, INC. AND SUBSIDIARY
STATEMENT REGARDING COMPUTATION OF EARNINGS PER SHARE
(in thousands, except per share data)
For The Six Months Ended
March 3, February 25,
1995 1994
_____________________________
Primary Earnings Per Share
Weighted average number of issued
shares outstanding 6,626 4,838
Effect of exercise of stock options
under the treasury stock method 253 258
______ ______
Weighted average shares outstanding used
to compute primary earnings per share 6,879 5,096
==== ====
Net income $ 654 $ 1,388
==== ====
Net income per share $ 0.10 $ 0.27
==== ====
Fully diluted earnings per share
Weighted average number of issued
shares outstanding 6,626 4,838
Effect of exercise of stock options
under the treasury stock method 274 292
____ ____
Weighted average shares outstanding used
to compute fully diluted earnings per share 6,900 5,130
==== ====
Net income $ 654 $ 1,388
==== ====
Net income per share $ 0.10 $ 0.27
==== ====
<PAGE>
SHELDAHL, INC. AND SUBSIDIARY
STATEMENT REGARDING COMPUTATION OF EARNINGS PER SHARE
(in thousands, except per share data)
For The Three Months Ended
March 3, February 25,
1995 1994
_____________________________
Primary Earnings Per Share
Weighted average number of issued
shares outstanding 6,650 4,838
Effect of exercise of stock options
under the treasury stock method 269 278
______ ______
Weighted average shares outstanding used
to compute primary earnings per share 6,919 5,116
==== ====
Net income $ 135 $ 672
==== ====
Net income per share $ 0.02 $ 0.13
==== ====
Fully diluted earnings per share
Weighted average number of issued
shares outstanding 6,650 4,838
Effect of exercise of stock options
under the treasury stock method 274 292
______ ______
Weighted average shares outstanding used
to compute fully diluted earnings per share 6,924 5,130
==== ====
Net income $ 135 $ 672
==== ====
Net income per share $ 0.02 $ 0.13
==== ====
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE MARCH 3, 1995 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 3-MOS
<FISCAL-YEAR-END> SEP-02-1995 SEP-02-1995
<PERIOD-END> MAR-03-1995 MAR-03-1995
<CASH> 653 653
<SECURITIES> 0 0
<RECEIVABLES> 15396 15396
<ALLOWANCES> 0 0
<INVENTORY> 12322 12322
<CURRENT-ASSETS> 30894 30894
<PP&E> 84181 84181
<DEPRECIATION> 39942 39942
<TOTAL-ASSETS> 76682 76682
<CURRENT-LIABILITIES> 15112 15112
<BONDS> 0 0
<COMMON> 1672 1672
0 0
0 0
<OTHER-SE> 21672 21672
<TOTAL-LIABILITY-AND-EQUITY> 76682 76682
<SALES> 43048 21960
<TOTAL-REVENUES> 43048 21960
<CGS> 34611 17922
<TOTAL-COSTS> 7402 3732
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 146 128
<INCOME-PRETAX> 889 178
<INCOME-TAX> 235 43
<INCOME-CONTINUING> 654 135
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 654 135
<EPS-PRIMARY> 0.10 0.02
<EPS-DILUTED> 0.10 0.02
</TABLE>
