<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1998
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________ to__________
Commission file number 0-23042
<TABLE>
<CAPTION>
MK GOLD COMPANY
---------------
(Exact name of registrant as specified in its charter)
<S> <C>
Delaware 82-0487047
- --------------------- -------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
60 East South Temple, Suite 2100, Salt Lake City, Utah 84111
- -----------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(801) 297-6900
- -----------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
N/A
- -----------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last report)
</TABLE>
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 ___
---
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. On August 7, 1998, there were
19,464,466 outstanding shares of the Registrant's Common Stock, par value $.01
per share.
<PAGE>
PART I. FINANCIAL INFORMATION
------------------------------
ITEM 1. FINANCIAL STATEMENTS
- -----------------------------
As more fully described in the accompanying notes, the unaudited interim
consolidated financial statements contained in this report should be read in
conjunction with the Company's Annual Report on Form 10-K for the year ended
December 31, 1997 (the "1997 10-K"). The 1997 10-K contains information relevant
to an analysis of the financial information contained in this report and for
purposes of comparing the Company's results of operations for the three and six
month periods ended June 30, 1998 with the same periods in the prior year.
2
<PAGE>
MK GOLD COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(THOUSANDS OF DOLLARS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
<S> <C>
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
(UNAUDITED) (UNAUDITED)
1998 1997 1998 1997
------------------------- ------------------------
<S> <C> <C> <C> <C>
Revenue
Product sales $ 2,943 $ 3,163 $ 4,899 $ 8,813
Mining services 2,962 2,905 5,640 6,139
----------- ----------- ----------- -----------
Total revenue 5,905 6,068 10,539 14,952
Costs and operating expenses
Product sales 3,173 3,036 5,312 8,326
Mining services 2,061 2,467 4,326 5,071
----------- ----------- ----------- -----------
Total costs and operating expenses 5,234 5,503 9,638 13,397
Gross profit 671 565 901 1,555
Exploration and project investigation costs (726) (481) (1,280) (826)
General and administrative expenses (407) (428) (873) (935)
----------- ----------- ----------- -----------
Loss from operations (462) (344) (1,252) (206)
Investment income 285 302 561 479
Interest expense (19) (47) (42) (70)
Gain (loss) on sale of assets (1) - 61 -
----------- ----------- ----------- -----------
Income (loss) before income taxes (197) (89) (672) 203
Income tax benefit (expense) (5) 36 (5) (81)
----------- ----------- ----------- -----------
Net income (loss) $ (202) $ (53) $ (677) $ 122
=========== =========== =========== ===========
Basic and diluted income (loss) per share $(0.01) $(0.00) $(0.03) $0.01
Basic and diluted weighted average shares
used to compute income (loss) per share 19,464,466 19,464,466 19,464,466 19,464,466
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
3
<PAGE>
MK GOLD COMPANY
CONSOLIDATED BALANCE SHEETS
(THOUSANDS OF DOLLARS EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
June 30, Decmeber 31,
ASSETS 1998 1997
(Unaudited) (AUDITED)
------------- -------------
<S> <C> <C>
Current assets
Cash and cash equivalents $19,250 $18,189
Gold bullion held for sale 1,472 2,031
Receivables 1,569 1,637
Other Receivables - 918
Refundable income taxes - 594
Inventories
Ore and in process 541 395
Materials and supplies 478 674
Deferred income taxes 175 175
Other 155 191
------- -------
Total current assets 23,640 24,804
------- -------
Property, plant and mine development, net 1,520 1,971
Deferred income taxes 412 412
Restricted cash 1,525 1,430
------- -------
</TABLE>
TOTAL ASSETS $27,097 $28,617
======= =======
(continued)
4
<PAGE>
MK GOLD COMPANY
CONSOLIDATED BALANCE SHEETS
(THOUSANDS OF DOLLARS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
<S> <C>
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
LIABILITIES AND STOCKHOLDERS' EQUITY 1998 1997
(UNAUDITED) (AUDITED)
----------- ---------
<S> <C> <C>
Current liabilities
Accounts payable $ 1,325 $ 1,358
Current portion of mine closure liabilities 2,000 1,934
Other accrued liabilities 820 1,149
-------- --------
Total current liabilities 4,145 4,441
-------- --------
Reclamation liabilities 617 569
Deferred revenue 3,460 4,055
-------- --------
Total liabilities 8,222 9,065
-------- --------
STOCKHOLDERS' EQUITY
Common stock, par value $.01, authorized 40,000,000 shares,
issued 19,464,466 shares at June 30, 1998 and December 31, 1997 195 195
Capital in excess of par value 67,272 67,272
Accumulated deficit (48,564) (47,887)
Deferred compensation (28) (28)
-------- --------
Total stockholders' equity 18,875 19,552
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 27,097 $ 28,617
======== ========
The accompanying notes are an integral part of the consolidated financial
statements.
(concluded)
</TABLE>
5
<PAGE>
MK GOLD COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(THOUSANDS OF DOLLARS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30
1998 1997
(UNAUDITED) (UNAUDITED)
----------- -----------
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ (677) $ 122
------- -------
Adjustments to reconcile net income (loss) to net cash
provided (used) by operating activities:
Depreciation, depletion and amortization 551 1,172
Receivable from sale of assets - (918)
Deferred taxes - 30
Gain on sale of assets (61) -
Changes in operating assets and liabilities:
Gold bullion held for sale 559 2,169
Receivables 68 (82)
Refundable income taxes 594 2,346
Inventories 50 1,176
Other current assets 36 (86)
Restricted cash (95) (40)
Deferred revenue (595) (615)
Mine closure and reclamation liabilities (362) (879)
Accounts payable and other accrued liabilities 114 526
------- -------
Total adjustments 859 4,799
------- -------
Net cash provided (used) by operating activities 182 4,921
------- -------
INVESTING ACTIVITIES:
Additions to property, plant and equipment (106) (1,149)
Proceeds from disposition of property, plant and mine development 985 306
------- -------
Net cash provided (used) by investing activities 879 (843)
------- -------
INCREASE IN CASH AND CASH EQUIVALENTS 1,061 4,078
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 18,189 13,925
------- -------
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD $19,250 $18,003
======= =======
Supplemental disclosures of cash flow information
Interest paid $ 19 $ 23
Income taxes paid (refund), net (594) (2,055)
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
6
<PAGE>
MK GOLD COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(ALL DOLLAR AMOUNTS IN THOUSANDS)
1. UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
The financial information included herein is unaudited; however, the
information reflects all adjustments (consisting of normal recurring
adjustments) that are, in the opinion of management, necessary to the fair
presentation of the consolidated financial position, results of operations,
and cash flows for the interim periods. The consolidated financial
statements should be read in conjunction with the Notes to Consolidated
Financial Statements for the year ended December 31, 1997, which are
included in the Company's Annual Report on Form 10-K for such year (the
"1997 10-K"). The results of operations for the six months ended June 30,
1998, are not necessarily indicative of the results to be expected for the
full year. The consolidated balance sheet at December 31, 1997, was
extracted from the audited consolidated financial statements contained in
the 1997 10-K and does not include all disclosures required by generally
accepted accounting principles for annual consolidated financial
statements.
2. RECLASSIFICATION
Certain prior year amounts have been reclassified to conform with the
current year's presentation.
3. MINING JOINT VENTURES
The Company owns a 25% undivided interest in the Castle Mountain Venture
(the "CMV"), which operates a gold mine in San Bernardino County,
California. The results for the CMV have been proportionally reflected in
the accompanying consolidated financial statements. Any differences
between the Company's share of reported sales and income and the amounts
shown on these schedules are due to differences in the timing of revenue
and expense recognition. The amounts below reflect the balances on the
joint venture books and do not reflect the impairment previously recorded
by the Company.
<TABLE>
<CAPTION>
CASTLE MOUNTAIN VENTURE
Total Venture MK GOLD'S SHARE
------------------- ------------------
<S> <C> <C> <C> <C>
Results of Operations
Six Months Ended June 30 1998 1997 1998 1997
------------------------ ---- ---- ---- ----
Product sales $14,297 $21,404 $ 3,574 $ 5,351
Income (loss) before taxes $(7,850) $(4,310) $(1,963) $(1,078)
</TABLE>
The Company owns a 53% interest in the American Girl Mining Joint Venture
(the "AGMJV") which, prior to September 1996, operated a gold mine in
Imperial County, California. After an extensive review of the operations
at the AGMJV, the Company determined that continued operation at the AGMJV
could not be economically justified. On September 5, 1996, the Company
announced the suspension of operations at the AGMJV and subsequently began
mine closure and reclamation operations. Mine closure and reclamation
activities continued during the six months ended June 30, 1998.
7
<PAGE>
4. ACCOUNTING STANDARDS
Reporting Comprehensive Income - In June 1997, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No.
130, "Reporting Comprehensive Income" ("SFAS No. 130"). SFAS No. 130
establishes standards for reporting and display of comprehensive income
and its components (revenues, expenses, gains and losses) in a full set
of general-purpose financial statements. SFAS No. 130 requires that an
enterprise (a) classify items of other comprehensive income by their
nature in a financial statement and (b) display the accumulated balance
of other comprehensive income separately from retained earnings and
additional paid-in-capital in the equity section of a statement of
financial position.
Effective January 1, 1998, the Company adopted the provisions of SFAS
No. 130. Accordingly, the Company determined that no transactions were
considered to be an additional component of comprehensive income.
Therefore, comprehensive income (loss) equaled net income (loss) for the
three and six month periods ended June 30, 1998 and 1997.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
- ------ -----------------------------------------------------------------------
OF OPERATIONS
-------------
The purpose of this section is to discuss and analyze the Company's consolidated
financial condition, liquidity and capital resources and results of operations.
This analysis should be read in conjunction with the Management's Discussion and
Analysis of Financial Condition and Results of Operations contained in the
Company's Annual Report on Form 10-K for the year ended December 31, 1997 (the
"1997 10-K").
GENERAL
During 1997, gold prices suffered a dramatic decline. This decline has had a
significant impact throughout the industry, causing mine closures, reduction of
operations at other mines and a reduction of exploration efforts. During 1997,
the Company reviewed its operations in light of the gold market conditions and
determined that it would not be able to recover its investment in the Castle
Mountain Venture (the "CMV"). As reported in the 1997 10-K, the Company recorded
an asset impairment of $1.8 million during the fourth quarter of 1997 relating
to its investment in the CMV.
The Company owns a 53% interest in the American Girl Mining Joint Venture (the
"AGMJV"). Prior to September 1996, the AGMJV operated a gold mine in Imperial
County, California. In September 1996, the Company suspended operations at the
AGMJV and reclamation activities of the surface and underground operations were
initiated. The project is under budget and ahead of schedule. Closure and
reclamation activities at the AGMJV continued during the first and second
quarters of 1998. Physical completion of the project is expected by late 1998.
RESULTS OF OPERATIONS
Gold Production: The Company's attributable share of gold production for the
three and six month periods ended June 30, 1998, was 6,801 ounces and 14,133
ounces, respectively, compared to 8,986 ounces and 18,039 ounces for the three
and six month periods ended June 30, 1997. This represents a decrease in
production of 24% for the three month period and 22% for the six month period,
compared to the same periods in 1997.
Gold production at the CMV decreased 1,760 ounces to 5,952 ounces for the three
months ended June 30, 1998 and decreased 3,089 ounces to 11,817 ounces for the
six months ended June 30, 1998. The decrease in production for the six months
ended June 30, 1998 is attributable to the lower grade ore experienced in the
Oro Belle, Hart Tunnel and Jumbo pits and lower ore crushing rates resulting
from weather related and mechanical problems. In addition, during the first half
of 1997, the CMV processed stockpiled high grade material which increased the
average grade of the material processed.
8
<PAGE>
Gold production at the AGMJV has significantly declined since the cessation of
mining operations at the AGMJV in 1996. The Company is conducting closure and
reclamation operations at the AGMJV. Gold production for the first half of 1998
resulted from the continued leaching and rinsing of existing leach pads.
Product sales revenue for the three and six month periods ended June 30, 1998
decreased $.2 million and $3.9 million, respectively, compared to the
corresponding periods in 1997. During the six months ended June 30, 1998, 9,000
ounces were sold under forward sales contracts at an average price of $324 per
ounce. An additional 7,220 ounces were sold on the spot market. Declining gold
prices have had a negative impact on gold revenues. Spot gold prices have
declined approximately 14% compared to the first six months of 1997. Product
sales revenue for the three and six month periods ended June 30, 1998 also
includes deferred revenue of $.3 million and $.6 million, respectively,
associated with the settlement of a dispute in 1995 relating to the Company's
mining contract at the CMV.
Revenue from mining services for the three and six month periods ended June 30,
1998 totaled $3 million and $5.6 million, respectively. Revenues for the three
month period ended June 30, 1998 were comparable to the same period in 1997.
Revenues for the six months ended June 30, 1998 decreased compared to the same
period in 1997 as a result of lower levels of road and leach pad construction
work.
HEDGING ACTIVITY: For the six month period ended June 30, 1998, the average
gold price realized was $317 per ounce, compared to $368 per ounce for the six
months ended June 30, 1997. The average spot price for the six month period
ended June 30, 1998 was $298 per ounce.
GROSS PROFIT: The Company experienced a loss from product sales of $.2 million
and $.4 million for the three and six month periods ended June 30, 1998,
respectively, compared to a loss of $.1 million and $.5 million for the same
periods in 1997.
Gross profit from contract mining operations increased $.5 million and $.2
million for the three and six month periods ended June 30, 1998, respectively,
compared to the same periods in 1997. Reductions in operating costs have
resulted in improved earnings.
EXPLORATION COSTS: The Company's objective is to grow through the discovery and
acquisition of profitable mining properties and ventures. Pursuant to this
objective, the Company has increased exploration expenditures and established
various exploration programs over the past several months. Exploration and
project investigation costs were $726,000 and $1,280,000 for the three and six
month periods ended June 30, 1998, respectively, compared to $481,000 and
$826,000 for the three and six month periods ended June 30, 1997.
Exploration activities for the first half of 1998 included drilling programs on
two of the Company's five Nevada properties, as well as sampling and other
reconnaissance work on the other three Nevada properties. Initial drilling
programs have been completed on two of the properties with results justifying
additional work. A third property is currently being drilled and has encountered
favorable geology. Assays on the third property are pending. In addition, the
Company established an exploration program in Mexico during the first quarter of
1998. This program has resulted in the acquisition of purchase options on six
properties. The Company is currently evaluating all six properties. The Company
has also acquired a base metal property in Brazil. A sampling program has been
completed on this property, and the Company expects to commence a drilling
program in August 1998.
GENERAL AND ADMINISTRATIVE EXPENSES: General and administrative expenses
decreased to $.4 million and $.9 million for the three and six month periods
ended June 30, 1998, respectively. This represents a decrease of 5% and 7%
compared to the same periods in 1997.
9
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal sources of funds are its available resources of cash and
cash equivalents and cash generated from mining operations and contract mining
services. In addition, the Company maintains a $20 million credit facility with
Leucadia National Corporation, which was renewed effective March 1, 1998 for a
period of three years. At June 30, 1998, the Company had cash and cash
equivalents of $19.2 million and gold bullion of $1.5 million representing an
increase in cash and cash equivalents and gold bullion of $.5 million from
December 31, 1997.
Net cash provided by operating activities was $.2 million for the six months
ended June 30, 1998, compared to net cash provided by operating activities of
$4.9 million for the same period in 1997.
During the quarter ended March 31, 1998, the Company received $.6 million of
income tax refunds relating to the tax loss reported for the year ended December
31, 1997. The Company also received $.7 million of proceeds from the disposal of
plant and equipment.
Additions to property, plant and mine development totaled $.1 million for the
six months ended June 30, 1998, compared to $1.1 million for the same period in
1997. For all periods presented, additions to property, plant and mine
development equipment consisted of (i) mine development expenditures; (ii)
construction expenditures for buildings, machinery, plant and equipment; and
(iii) expenditures for mobile mining service equipment.
Upon completion of production at a mine, the Company must make expenditures for
reclamation and closure of the mine. The Company provides for future
reclamation and mine closure liabilities on a units-of-production basis. At
June 30, 1998, $2.6 million were accrued for such costs. In addition to the
accruals, the Company and its joint venture partner are depositing cash in a
separate fund to cover future reclamation costs at the CMV properties.
The Company reviews the adequacy of its reclamation and mine closure liabilities
in light of current laws and regulations and adjusts it liabilities as
necessary.
THE YEAR 2000 ISSUE
The Company is converting its financial systems to year 2000 compliant systems.
The Company does not anticipate a significant cost to modify its systems to
accommodate the impact of the upcoming change in the century.
CAUTIONARY STATEMENT FOR FORWARD-LOOKING INFORMATION
Certain information set forth in this report contains "forward-looking
statements" within the meaning of federal securities laws. Such statements are
based upon the Company's current expectations and may include information with
respect to future revenues, income or loss and capital expenditures; exploration
efforts; plans for growth and future operations; financing needs; as well as
assumptions relating to the foregoing. There are a number of risks and
uncertainties that could cause actual results to differ materially from those
set forth in, contemplated by or underlying the forward-looking statements
contained in this report. These risks include, but are not limited to, economic
recessions, fluctuations in gold prices, risks associated with closure and
reclamation of mines, risks associated with exploration activities in foreign
countries and the United States, the ability of the Company to acquire and fund
new mining projects and other factors identified from time to time in the
Company's press releases and periodic reports filed with the Securities and
Exchange Commission. When used in this report, the words "estimates", "expects",
"anticipates", "forecasts", "plans", "intends", and variations of such words or
similar expressions are intended to identify forward-looking statements that
involve risks and uncertainties. Future events and actual results could differ
materially from those set forth in, contemplated by or underlying the forward-
looking statements. The Company's forward-looking statements apply only as of
the date made. The Company undertakes no obligation to publicly release the
results of any revisions to forward-looking statements which may be made to
reflect events or circumstances after the date made or to reflect the occurrence
of unanticipated events.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------ ---------------------------------------------------
On May 22, 1998, the Company held its annual meeting of stockholders in Salt
Lake City, Utah. The only item of consideration was the election of three
directors with the votes tabulated as follows: Ian M. Cumming received
14,829,503 shares voting in
10
<PAGE>
favor and 23,650 shares were withheld; Joseph S. Steinberg received 14,829,503
shares voting in favor and 23,650 shares were withheld; and G. Frank Joklik
received 14,829,503 shares voting in favor and 23,650 shares were withheld. Four
directors who were not up for re-election continue to serve as directors of the
Company: Gordon J. Humphrey, James P. Miscoll, Robert V. Hansberger and Robert
S. Shriver.
ITEM 5. OTHER INFORMATION
- ------ -----------------
On June 30, 1998, the Board of Directors of the Company announced the
resignation of Robert V. Hansberger as Chairman of the Company, and the
appointment of G. Frank Joklik as the Company's new Chairman. Mr. Hansberger
will continue to be a member of the Board of Directors. Concurrent with his
appointment as Chairman of the Company, Mr. Joklik is taking a leave of absence
from his position as President and Chief Executive Officer of the Company. The
leave of absence will allow Mr. Joklik to fulfill his responsibilities as
President and Chief Executive Officer of the Salt Lake Organizing Committee for
the 2002 Olympic Winter Games while remaining involved in the strategic
decisions of the Company. Donald L. Babinchak has been appointed by the Board of
Directors as interim President and Chief Executive Officer of the Company. Mr.
Babinchak has been the Director of Human Resources of the Company since 1996. In
addition, John C. Farmer, the Controller, Treasurer and Secretary of the
Company, has been appointed to the position of Chief Financial Officer of the
Company.
In July 1998, the Company was informed it was not maintaining the minimum bid
price requirements for continued quotation on the Nasdaq National Market System
("Nasdaq NMS"), and that its common stock could be subject to delisting from
Nasdaq NMS. Nasdaq has provided the Company until October 14, 1998 to regain
compliance with the minimum bid price criteria. The Company is evaluating
various alternatives in order to regain compliance with the Nasdaq maintenance
standards, and the Company is discussing these alternatives with Nasdaq. If,
however, the Company is unable to regain compliance, the Company's Common Stock
may be delisted. If the Company's Common Stock is delisted from Nasdaq NMS and
does not qualify for listing on the Nasdaq SmallCap Market, trading, if any, in
the Company's Common Stock may thereafter be conducted in the over-the-counter
market on an electronic bulletin board established for securities that do not
meet the Nasdaq listing requirements, or in what are commonly referred to as the
"pink sheets". As a result, an investor would find it more difficult to dispose
of, or to obtain accurate quotations as to the price of, the Company's Common
Stock. In addition, if the Company's Common Stock were delisted from Nasdaq NMS,
trading of the Common Stock would be subject to "penny stock" rules that impose
additional sales practice requirements on broker-dealers who sell such
securities. Consequently, delisting of the Company's Common Stock from Nasdaq
NMS, if it were to occur, and if the Common Stock was not eligible for trading
on the Nasdaq SmallCap Market, could affect the ability or willingness of
broker-dealers to sell the Company's Common Stock and the ability of purchasers
of the Company's Common Stock to sell their securities in the secondary market.
11
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- ------ --------------------------------
(a) The following exhibits are filed with this report.
27 Financial Data Schedule
(b) No report on Form 8-K was filed during the quarter for which
this report is filed.
12
<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.
MK GOLD COMPANY
/s/ John C. Farmer
-------------------------------------------
JOHN C. FARMER
Chief Financial Officer
(Authorized Signatory and
Principal Financial and Accounting Officer)
Date: August 11, 1998
13
<PAGE>
INDEX TO EXHIBITS
Exhibits
27 Financial Data Schedule.
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS CONTAINED IN THE BODY OF THE ACCOMPANYING FORM 10-Q AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER>1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1998
<CASH> 19,250
<SECURITIES> 0
<RECEIVABLES> 1,569
<ALLOWANCES> 0
<INVENTORY> 2,491
<CURRENT-ASSETS> 23,640
<PP&E> 30,634
<DEPRECIATION> 29,114
<TOTAL-ASSETS> 27,097
<CURRENT-LIABILITIES> 4,145
<BONDS> 0
0
0
<COMMON> 195
<OTHER-SE> 18,680
<TOTAL-LIABILITY-AND-EQUITY> 27,097
<SALES> 2,943
<TOTAL-REVENUES> 5,905
<CGS> 3,173
<TOTAL-COSTS> 5,234
<OTHER-EXPENSES> 1,133
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (19)
<INCOME-PRETAX> (197)
<INCOME-TAX> (5)
<INCOME-CONTINUING> (202)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (202)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
