-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, P4wm6f95mfMbJzlkPMHiGMuYXhfveffK+oK74/bk2siTI4IgVPcC9IsTQL1fANT+ e35dP0rQMM68aGP+1O6mKg== 0000028630-96-000016.txt : 19961118 0000028630-96-000016.hdr.sgml : 19961118 ACCESSION NUMBER: 0000028630-96-000016 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: DIAGNOSTIC RETRIEVAL SYSTEMS INC CENTRAL INDEX KEY: 0000028630 STANDARD INDUSTRIAL CLASSIFICATION: SEARCH, DETECTION, NAVIGATION, GUIDANCE, AERONAUTICAL SYS [3812] IRS NUMBER: 132632319 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08533 FILM NUMBER: 96666369 BUSINESS ADDRESS: STREET 1: 3RD FLOOR STREET 2: 5 SYLVAN WAY CITY: PARSIPPANY STATE: NJ ZIP: 07054 BUSINESS PHONE: 201-898-1500 MAIL ADDRESS: STREET 1: 16 THORNTON RD CITY: OAKLAND STATE: NJ ZIP: 07436 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly September 30, 1996 period ended OR TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition to period from Commission file 1-8533 number DIAGNOSTIC/RETRIEVAL SYSTEMS, INC. (Exact name of registrant as specified in its charter) Delaware 13-2632319 (State or other (I.R.S. jurisdiction of Employer incorporation or Identifica organization) tion No.) 5 Sylvan Way, Parsippany, 07054 New Jersey (Address of principal (Zip Code) executive offices) 201-898-1500 (Registrant's telephone number, including area code) None (Former name, former address and former fiscal year, if changed since last report.) 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 ___ As of November 4, 1996, 5,512,424 shares of the registrant's Common Stock, $.01 par value, were outstanding (exclusive of 463,942 shares held in treasury). DIAGNOSTIC/RETRIEVAL SYSTEMS, INC. AND SUBSIDIARIES INDEX 2 PART 1. FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Balance Sheets - September 30, 1996 and 3 March 31, 1996 Condensed Consolidated Statements of Earnings - Three and Six Months Ended September 30, 4 1996 and 1995 Condensed Consolidated Statements of Cash Flows - Six Months Ended September 30, 1996 5 and 1995 Notes to Condensed Consolidated Financial 6-7 Statements Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8-11 PART 2. OTHER INFORMATION Item 1. Not Applicable Item 2. Not Applicable Item 3. Not Applicable Item 4. Submission of Matters to a Vote of Security 12 Holders Item 5. Not Applicable Item 6. Exhibits and Reports on Form 8-K 12 SIGNATURES 13 DIAGNOSTIC/RETRIEVAL SYSTEMS, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (Unaudited) September 30, 1996 March 31, 1996 Assets Current Assets: Cash and cash equivalents $ 8,496,000 $ 22,785,000 Accounts receivable 28,660,000 22,942,000 Inventories, net of progress payments 19,752,000 19,449,000 Other current assets 1,941,000 1,464,000 Total current assets 58,849,000 66,640,000 Property, plant and equipment, less accumulated depreciation and amortization of $26,707,000 and $25,744,000 at September 30, 1996 and March 31, 1996, respectively 17,770,000 16,191,000 Intangible assets, less accumulated amortization of $4,379,000 and $4,027,000 at September 30, 1996 and March 31, 1996, respectively 10,537,000 8,498,000 Other assets 5,666,000 5,922,000 $ 92,822,000 $ 97,251,000 Liabilities and Stockholders' Equity Current liabilities $ 25,771,000 $ 32,650,000 Long-term debt, excluding current installments 32,524,000 32,608,000 Deferred income taxes 2,607,000 2,607,000 Other liabilities 2,717,000 2,820,000 Total liabilities 63,619,000 70,685,000 Stockholders' equity: Common Stock, $.01 par value per share Authorized 20,000,000 shares; issued 5,976,366 shares at September 30, 1996 60,000 - Class A Common Stock, $.01 par value per share Authorized 10,000,000 shares; issued 3,739,963 shares at March 31, 1996 - 37,000 Class B Common Stock, $.01 par value per share Authorized 20,000,000 shares; issued 2,223,603 shares at March 31, 1996 - 22,000 Additional paid-in capital 13,825,000 13,639,000 Retained earnings 17,538,000 15,022,000 31,423,000 28,720,000 Treasury Stock, at cost; 463,942 shares of Common Stock at September 30, 1996; 432,639 shares of Class A Common Stock and 65,795 shares of Class B Common Stock (1,786,000) (1,918,000) Unamortized restricted stock compensation (434,000) (236,000) Net stockholders' equity 29,203,000 26,566,000 $ 92,822,000 $ 97,251,000 See accompanying notes to condensed consolidated financial statements. 3 DIAGNOSTIC/RETRIEVAL SYSTEMS, INC. AND SUBSIDIARIES Condensed ConsolIdated Statements of Earnings (Unaudited) Three Months Six Months Ended September 30 Ended September 30 1996 1995 1996 1995 Revenues 33,440,000 22,786,000 60,863,000 40,065,000 Costs and expenses 30,408,000 20,942,000 55,363,000 36,907,000 Operating income 3,032,000 1,844,000 5,500,000 3,158,000 Interest and related expenses (903,000) (372,000) (1,735,000) (697,000) Other income, net 160,000 27,000 360,000 114,0000 Earnings before income taxes 2,289,000 1,499,000 4,125,000 2,575,000 Income taxes 893,000 584,000 1,609,000 1,004,000 Net earnings $1,396,000 $ 915,000 $2,516,000 $1,571,000 Earnings per share: Primary $ 0.24 $ 0.16 $ 0.44 $ 0.28 Fully Diluted $ 0.21 $ 0.16 $ 0.38 $ 0.28 Weighted average number of shares outstanding: Primary 5,743,000 5,658,000 5,712,000 5,632,000 Fully Diluted 8,907,000 5,721,000 8,892,000 5,672,000 See accompanying notes to condensed consolidated financial statements. 4
DIAGNOSTIC/RETRIEVAL SYSTEMS, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (Unaudited) Six Months Ended September 30, 1996 1995 Cash flows from operating activities Net earnings $ 2,516,000 $ 1,571,000 Adjustments to reconcile net earnings to cash flows from operating activities: Depreciation and amortization 2,235,000 1,289,000 Other, net (188,000) 171,000 Changes in assets and liabilities, net of effects from business combinations: (Increase) in accounts receivable (5,219,000) (1,184,000) (Increase) in inventories (751,000) (992,000) (Increase) decrease in other current assets 74,000 (17,000) (Decrease) in accounts payable and other (7,901,000) (4,356,000) Other, net 85,000 268,000 Net cash used in operating activities (9,149,000) (3,250,000) Cash flows from investing activities Capital expenditures (1,619,000) (1,959,000) Sales of fixed assets 122,000 2,380,000 Payments pursuant to business combinations, net of cash acquired (3,892,000) (4,095,000) Net cash used in investing activities (5,389,000) (3,674,000) Cash flows from financing activities Net proceeds from short-term debt 667,000 123,000 Payments on long-term debt (465,000) (114,000) Repurchases of convertible subordinated debentur - (2,225,000) Net proceeds from issuance of senior subordinated convertible debentures - 18,900,000 Other, net 47,000 40,000 Net cash provided by financing activities 249,000 16,724,000 Net increase (decrease) in cash and cash equivalents (14,289,000) 9,800,000 Cash and cash equivalents, beginning of period 22,785,000 11,197,000 Cash and cash equivalents, end of period $ 8,496,000 $ 20,997,000 See accompanying notes to condensed consolidated financial statements. 5 1)In the opinion of Management, the accompanying unaudited condensed consolidated financial statements of Diagnostic/Retrieval Systems, Inc. and subsidiaries (the "Company") contain all adjustments (consisting of only normal and recurring adjustments) necessary for the fair presentation of the Company's consolidated financial position as of September 30, 1996, the results of operations for the three and six months ended September 30, 1996 and 1995 and cash flows for the six months ended September 30, 1996 and 1995. The results of operations for the six months ended September 30, 1996 are not necessarily indicative of the results to be expected for the full year. 2)The Company's industrial revenue bonds, due 1998, are supported by an irrevocable, direct-pay letter of credit in an amount equal to the principal balance plus interest thereon for 45 days. At September 30, 1996, the contingent liability of the Company as guarantor under the letter of credit was approximately $1,726,000. The Company has collateralized the letter of credit with accounts receivable and has also agreed to certain financial covenants, including the maintenance of: (i) a certain minimum ratio of consolidated tangible net worth to total debt (the "Debt Ratio"), (ii) a certain minimum quarterly ratio of earnings before interest and taxes to interest, and (iii) a certain minimum balance of billed and unbilled accounts receivable. As a result of the issuance of the Company's 9% Senior Subordinated Convertible Debentures, the Debt Ratio at September 30, 1996 was below the required minimum ratio. The Company has obtained a waiver from the issuing bank, expiring as of October 1, 1997, of the required debt ratio and, accordingly, is in compliance with all covenants under the letter of credit. 3)Until March 31, 1996, the Company had three authorized classes of stock: a class consisting of 10,000,000 shares of Class A Common Stock, a class consisting of 20,000,000 shares of Class B Common Stock, and a class consisting of 2,000,000 shares of Preferred Stock (none of which has been issued). The holders of the Class A and Class B Common Stock were entitled to one vote per share and one-tenth vote per share, respectively. On February 7, 1996, the Board of Directors of the Company approved and recommended for submission to the stockholders of the Company by a majority vote the consideration and approval of an Amended and Restated Certificate of Incorporation (the "Restated Certificate"), which amended and restated the Company's certificate to (i) effect a reclassification of each share of Class A Common Stock and each share of Class B Common Stock into one share of Common Stock of the Company, (ii) provide that action by the stockholders may be taken only at a duly called annual or special meeting and not by written consent and (iii) provide that the stockholders of the Company would have the right to make, adopt, alter, amend or repeal the by-laws of the Company only upon the affirmative vote of not less than 66 2/3% of the outstanding capital stock entitled to vote thereon. On March 26, 1996, the stockholders approved the Restated Certificate. The Restated Certificate was filed with the Secretary of State of the State of Delaware and became effective April 1, 1996. Accordingly, the Condensed Consolidated Balance Sheet as of March 31, 1996 presents Class A and Class B Common Stock; the Condensed Consolidated Balance Sheet as of September 30, 1996 presents the new, single class of Common Stock. 4) On June 18, 1996, a second-tier subsidiary of Precision Echo, Inc., a wholly-owned subsidiary of the Company, acquired substantially all the assets of Vikron, Inc. ("Vikron") for approximately $3.7 million. Vikron, located in St. Croix Falls, Wisconsin, manufactures data and recording heads. The acquisition has been accounted for using the purchase method of accounting. Accordingly, related results of operations have been included in the Company's reported operating results since April 1, 1996, the effective date of the acquisition. The excess of cost over the estimated fair value of net assets acquired was approximately $2.0 million and will be amortized on a straight-line basis over 15 years. 5) On October 24, 1996, a second-tier subsidiary of Precision Echo, Inc., a wholly-owned subsidiary of the Company, acquired substantially all the assets of Nortronics Company, Inc. ("Nortronics"), a Minnesota corporation, for approximately $2.4 million. Nortronics manufactures magnetic data recording head products. Effective October 31, 1996, Pacific Technologies, Inc. ("PTI"), a California corporation, merged with and into a subsidiary of the Company, for stock and cash valued at approximately $0.5 million. Based in San Diego, California, PTI provides systems and software engineering support to the U.S. Navy for the testing of shipboard combat systems. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations The following table sets forth items in the Condensed Consolidated Statements of Earnings as a percent of revenues and presents the percentage increase or decrease of those items as compared to the prior period. Percent of Revenues Percent of Revenues Three Months Ended Percent Six Months Ended Percent September 30, Changes September 30, Changes 1996 1995 1996 vs. 1995 1996 1995 1996 vs.1995 Revenues 100.0 % 100.0 % 46.8% 100.0 % 100.0 % 51.9% Cost and expenses 90.9 91.9 45.2% 91.0 92.1 50.0% Operating income 9.1 8.1 64.4% 9.0 7.9 74.2% Interest and related expenses (2.7) (1.6) 142.7% (2.9) (1.7) 148.9% Other income, net 0.5 0.1 492.6% 0.6 0.3 215.8% Earnings before income taxes 6.9 6.6 52.7% 6.7 6.5 60.2% Income taxes 2.7 2.6 52.9% 2.6 2.5 60.3% Net earnings 4.2 % 4.0 % 52.6% 4.1 % 4.0 % 60.2%
Revenues for the three-month period ended September 30, 1996 increased 46.8% to $33.4 million from $22.8 million for the same three-month period in fiscal 1996. On a year-to-date basis, revenues increased 51.9% to $60.9 million from $40.1 million for the same six-month period in fiscal 1996. The revenue growth was due primarily to increased shipments associated with the Company's display workstations and electro-optical system product lines, as well as to increases in commercial product sales, which include revenues from businesses acquired within the last nine months. Operating income for the three-month period ended September 30, 1996 increased 64.4% to $3.0 million from $1.8 million for the same three-month period in fiscal 1996. On a year-to-date basis, operating income increased 74.2% to $5.5 million from $3.2 million for the same six-month period in fiscal 1996. Operating income as a percentage of revenue was 9.1% and 9.0% for the three-month and six-month periods ended September 30, 1996, respectively, as compared with 8.1% and 7.9%, respectively, for the comparable prior year periods. The increase in operating income was due primarily to the overall increase in revenues, together with higher margins on the Company's commercial products. Interest and related expenses were $0.9 million and $1.7 million for the three-month and six-month periods ended September 30, 1996, as compared to $0.4 million and $0.7 million in the prior year. The increase was primarily due to the increase in long-term debt associated with the private placement on September 29, 1995, and November 3, 1995, of $25.0 million aggregate principal amount of 9% Senior Subordinated Convertible Debentures due 2003, offset in part by a reduction in interest resulting from repurchases of the Company's 8% Convertible Subordinated Debentures, mainly in the second and fourth quarters of fiscal 1996. Other income, net was $0.2 million and $0.4 million for the three-month and six-month periods ended September 30, 1996, respectively, as compared to $27,000 and $0.1 million in the comparable periods of fiscal 1996. The increase was primarily due to interest earned on higher average cash balances, in addition to a gain of approximately $0.1 million on the sale of certain fixed assets in the second quarter of fiscal 1997. The Company's effective tax rate for the three-month and six-month periods ended September 30, 1996 and 1995 was 39%. The Company records income tax expense based on an estimated effective income tax rate for the full fiscal year. The effective income tax rate and the components of income tax expense for the fiscal quarter ended September 30, 1996 did not significantly change from those of the fiscal year ended March 31, 1996. The provision for income taxes includes all estimated income taxes payable to federal and state governments, as applicable. Financial Condition and Liquidity Cash and Cash Flow: Cash and cash equivalents at September 30, 1996 and March 31, 1996 represented approximately 9% and 23%, respectively, of total assets. During the six-month period ended September 30, 1996, cash decreased by approximately $14.3 million. This decrease resulted from the use of approximately $3.9 million in the Vikron acquisition and approximately $1.6 million for capital expenditures. Additionally, approximately $9.1 million was used in support of operations, primarily in settlement of accounts payable balances associated with material procurement in the fourth quarter of fiscal 1996. This material was purchased in anticipation of production activity, primarily for display workstations, scheduled for fiscal 1997. Capital expenditures, excluding assets acquired as a result of business combinations are expected to approximate $3 million for the fiscal year ending March 31, 1997. The majority of these expenditures will be for computer and production-related equipment. Working capital as of September 30, 1996 was $33.1 million, as compared to $34.0 million at March 31, 1996. The decrease was primarily due to lower cash and accounts payable balances, partially offset by higher accounts receivable balances. On May 31, 1996, the Company entered into a revolving line of credit loan agreement with Mellon Bank, N.A. for a three-year $15 million unsecured revolving line of credit (the "Line of Credit"). The Line of Credit was used to refinance approximately $1.3 million of existing debt obligations of the Company at more favorable interest rates; the remaining unused credit line is available for working capital and for letters of credit. Interest on borrowings under the Line of Credit is charged at the prime rate or at the London Interbank Offered Rate plus 175 basis points. The Company believes that its current working capital position and available financing are sufficient to support its current operational needs. Accounts Receivable and Inventories: Accounts receivable increased by approximately $5.2 million in the six-month period ended September 30, 1996, net of the effect of assets acquired pursuant to business combinations. The increase was primarily the result of a cumulative adjustment to the progress payment percentage associated with one of the Company's display workstation contracts, billed at the end of the second quarter. Generally, there are no contract provisions for retainage, and all accounts receivable are expected to be collected within one year. Inventories increased by approximately $0.8 million from March 31, 1996, net of the effect of assets acquired pursuant to business combinations. The increase was due primarily to increased material procurement and production activity on certain electro-optical, data recording and commercial products. September 30, March 31, 1996 1996 Quick ratio 1.5 1.4 Current ratio 2.3 2.0 Liabilities-to-equity 2.2 2.7 ratio Long-term debt, excluding current 52.7% 55.1% installments, to capitalization
Backlog: At September 30, 1996, the Company's backlog of orders was approximately $130.2 million as compared to $145.6 million at March 31, 1996. The decrease in backlog was due to the net effect of revenues, partially offset by bookings. New contract awards of approximately $44 million were booked during the six-month period ended September 30, 1996. Acquisitions and Related Activities On June 18, 1996, a second-tier subsidiary of Precision Echo, Inc., a wholly-owned subsidiary of the Company, acquired substantially all the assets of Vikron, Inc. ("Vikron") for approximately $3.7 million. Vikron, located in St. Croix Falls, Wisconsin, manufactures data and recording heads. The acquisition has been accounted for using the purchase method of accounting. Accordingly, related results of operations have been included in the Company's reported operating results since April 1, 1996, the effective date of the acquisition. The excess of cost over the estimated fair value of net assets acquired was approximately $2.0 million and will be amortized on a straight-line basis over 15 years. On October 24, 1996, a second-tier subsidiary of Precision Echo, Inc., a wholly-owned subsidiary of the Company, acquired certain assets of Nortronics Company, Inc. ("Nortronics"), a Minnesota corporation, for approximately $2.4 million. Nortronics manufactures magnetic data recording head products. Effective October 31, 1996, Pacific Technologies, Inc. ("PTI"), a California corporation, merged with and into a subsidiary of the Company, for stock and cash valued at approximately $0.5 million. Based in San Diego, California, PTI provides systems and software engineering support to the U.S. Navy for the testing of shipboard combat systems. Letter of Credit The Company's industrial revenue bonds, due 1998, are supported by an irrevocable, direct-pay letter of credit in an amount equal to the principal balance plus interest thereon for 45 days. At September 30, 1996, the contingent liability of the Company as guarantor under the letter of credit was approximately $1,726,000. The Company has collateralized the letter of credit with accounts receivable and has also agreed to certain financial covenants, including the maintenance of: (i) a certain minimum ratio of consolidated tangible net worth to total debt (the "Debt Ratio"), (ii) a certain minimum quarterly ratio of earnings before interest and taxes to interest, and (iii) a certain minimum balance of billed and unbilled accounts receivable. As a result of the issuance of the Company's 9% Senior Subordinated Convertible Debentures, the Debt Ratio at September 30, 1996 was below the required minimum ratio. The Company has obtained a waiver from the issuing bank, expiring as of October 1, 1997, of the required debt ratio and accordingly is in compliance with all covenants under the letter of credit. PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders On August 7, 1996, the Company held its Annual Meeting of Stockholders at the offices of Skadden, Arps, Slate, Meagher & Flom, 919 Third Avenue, New York, New York. The following matters were submitted for a vote of stockholders: (i) to elect three Class I directors, each to hold office for a term of three years; (ii) to consider and act upon a proposal to adopt the 1996 Omnibus Plan; and (iii) to ratify the grant of options to non-employee directors of the Company pursuant to the 1991 Stock option plan. With respect to the aforementioned matters, votes were tabulated and all three proposals were approved by the stockholders of the Company as follows: For Against Withheld Proposal (i): Mark S. Newman 4,952,929 0 17,450 Theodore Cohn 4,932,279 0 38,100 Donald C. Fraser 4,950,135 0 20,244 Proposal (ii) 3,641,565 294,066 279,780 Proposal (iii) 4,558,525 113,098 284,786 Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 10.95 Modification No. PZ0020, dated as of September 19, 1996, to Contract No. N00024-92-C-6308 [P] 11. Schedule of Computations of Per Share Earnings 27. Financial Data Schedule (b) Reports on Form 8-K None. DIAGNOSTIC/RETRIEVAL SYSTEMS, INC. AND SUBSIDIARIES 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. DIAGNOSTIC/RETRIEVAL SYSTEMS, INC. Registrant Date: November 14, 1996 /s/ Nancy R. Pitek Nancy R. Pitek Vice President, Finance Treasurer and Secretary EX-11 2 DIAGNOSTIC/RETRIEVAL SYSTEMS, INC. EXHIBIT 11 SCHEDULE OF COMPUTATIONS OF PER SHARE EARNINGS Three Months Ended Six Months Ended September 30, September 30, 1996 1995 1996 1995 PRIMARY Net earnings for primary earnings per share $ 1,396,000 $ 915,000 $2,516,000 $1,571,000 Weighted average number of shares outstanding (1) 5,510,000 5,488,000 5,492,000 5,461,000 Add - common equivalent shares (determined using the "treasury stock" method) representing shares issuable upon exercise of employee stock options 233,000 170,000 220,000 171,000 Weighted average number of shares used in calculation of primary earnings per share 5,743,000 5,658,000 5,712,000 5,632,000 Primary earnings per share $ 0.24 $ 0.16 $ 0.44 $ 0.28 FULLY DILUTED Net earnings $ 1,396,000 $ 915,000 $2,516,000 $1,571,000 Add - interest on 8.5% Convertible Subordinated Debentures, net of applicable income taxes (2) 65,000 - 130,000 - Add - interest on 9% Senior Subordinated Convertible Debentures, net of applicable income taxes 351,000 - 698,000 - Add - amortization of deferred issuance costs relating to 9% Senior Subordinated Convertible Debentures, net of applicable income taxes 36,000 - 72,000 - Net earnings for fully diluted earnings per share $ 1,848,000 $ 915,000 $3,416,000 $1,571,000 Weighted average number of shares used in calculation of primary earnings per share 5,743,000 5,658,000 5,712,000 5,632,000 Add (deduct) incremental shares representing: Shares issuable upon exercise of stock options included in primary earnings per share calculation (233,000) (170,000) (220,000) (171,000) Shares issuable upon exercise of stock options based on period-end market prices 239,000 233,000 242,000 211,000 Shares issuable upon conversion of 8.5% Convertible Subordinated Debentures (2) 333,000 - 333,000 - Shares issuable upon conversion of 9% Senior Subordinated Convertible Debentures 2,825,000 - 2,825,000 - Weighted average number of shares used in calculation of fully diluted earnings 8,907,000 5,721,000 8,892,000 5,672,000 Fully diluted earnings per share $ 0.21 $ 0.16 $ 0.38 $ 0.28 (1) Effective April 1, 1996, Class A and Class B Common Stock were reclassified into a new single class of Common Stock. See Note 3 to Condensed Consolidated Financial Statements. (2) No adjustment made for all prior year periods, as the effect on reported per share earnings was antidilutive. EX-27 3
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM DIAGNOSTIC/RETRIEVAL SYSTEMS, INC. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000028630 DIAGNOSTIC/RETRIEVAL SYSTEMS, INC. U.S. DOLLARS 3-MOS MAR-31-1997 JUL-01-1996 SEP-30-1996 1 8,496,000 0 28,660,000 0 19,752,000 58,849,000 44,477,000 26,707,000 92,822,000 25,771,000 32,524,000 0 0 60,000 29,143,000 92,822,000 33,440,000 33,440,000 30,408,000 30,408,000 0 0 903,000 2,289,000 893,000 0 0 0 0 1,396,000 0.24 0.21
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