-----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, B9GOUH+Y0kK2H+KQhzuHqPirrVBtYDH6gp49lCXM3CBWUUJYDWD3XPj50sEsoib3 AROCMFteW9ky5FUl7qrxjA== 0000950135-96-004418.txt : 19961023 0000950135-96-004418.hdr.sgml : 19961022 ACCESSION NUMBER: 0000950135-96-004418 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19960806 ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19961021 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: GALILEO ELECTRO OPTICS CORP CENTRAL INDEX KEY: 0000711425 STANDARD INDUSTRIAL CLASSIFICATION: OPTICAL INSTRUMENTS & LENSES [3827] IRS NUMBER: 042526583 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-11309 FILM NUMBER: 96645722 BUSINESS ADDRESS: STREET 1: GALILEO PARK STREET 2: PO BOX 550 CITY: STURBRIDGE STATE: MA ZIP: 01566 BUSINESS PHONE: 5083479191 MAIL ADDRESS: STREET 1: GALILEO PARK STREET 2: PO BOX 550 CITY: STURBRIDGE STATE: MA ZIP: 01566 8-K/A 1 GALILEO CORPORATION 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K/A CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) AUGUST 6, 1996 GALILEO CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 0-11309 04-2526583 (State or other jurisdiction (Commission File Number) (I.R.S. Employer of incorporation) Identification No.) GALILEO PARK, P.O. BOX 550 01566-0550 STURBRIDGE, MASSACHUSETTS (Zip Code) (Address of principal executive offices) Registrant's telephone number, including area code (508) 347-9191 GALILEO ELECTRO-OPTICS CORPORATION GALILEO PARK, P.O. BOX 550 STURBRIDGE, MA 01566 (Former name or former address, if changed since last report.) 2 Item 7. Financial Statements, Pro Forma Financial Information and Exhibits a) Financial Statements of Business Acquired. Financial statements of the business acquired are filed as Exhibit 99.1 hereto. b) Pro Forma Financial Information. Pro forma financial information is filed as Exhibit 99.2 hereto. c) Exhibits 2.1 Agreement and Plan of Merger, dated July 17, 1996, by and among Galileo Electro-Optics Corporation, LMI Acquisition Corporation, Leisegang Medical, Inc. and the principal stockholders of Leisegang Medical, Inc. (previously filed). 20.1 Press Release, dated August 8, 1996, issued by Galileo Electro-Optics Corporation (previously filed). 23.1 Consent of Independent Auditors (filed herewith). 99.1 Financial Statements of Business Acquired (filed herewith). 99.2 Pro Forma Financial Information (filed herewith). 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 hereunto duly authorized this 17th day of October, 1996. GALILEO CORPORATION By /s/ Josef W. Rokus ------------------- Josef W. Rokus Vice President, Finance and Chief Financial Officer 3 EXHIBIT INDEX Exhibit No. Exhibit Description - ------- ------------------- 2.1 Agreement and Plan of Merger, dated July 17, 1996, by and among Galileo Electro-Optics Corporation, LMI Acquisition Corporation, Leisegang Medical, Inc. and the principal stockholders of Leisegang Medical, Inc. (previously filed). 20.1 Press Release, dated August 8, 1996, issued by Galileo Electro-Optics Corporation (previously filed). 23.1 Consent of Independent Auditors (filed herewith). 99.1 Financial Statements of Business Acquired (filed herewith). 99.2 Pro Forma Financial Information (filed herewith). EX-23.1 2 CONSENT OF ERNST & YOUNG LLP 1 Exhibit 23.1 Consent of Independent Auditors We consent to the incorporation by reference in the Registration Statements (Form S-8, Nos. 2-92671, 33-5142, 33-47589 and 33-47588) pertaining to the Stock Option and Purchase Plans of Galileo Corporation of our report dated September 13, 1996, with respect to the financial statements of Leisegang Medical, Inc. included in the Current Report on Form 8-K/A of Galileo Corporation dated October 17, 1996. Ernst & Young LLP Providence, Rhode Island October 16, 1996 EX-99.1 3 FINANCIAL STATEMENTS OF BUSINESS ACQUIRED 1 Exhibit 99.1 Financial Statements Leisegang Medical, Inc. Year Ended September 30, 1995 (Audited) and For the Nine Months Ended June 30, 1996 and June 30, 1995 (Unaudited) 2 REPORT OF INDEPENDENT AUDITORS The Board of Directors Leisegang Medical, Inc. We have audited the accompanying balance sheet of Leisegang Medical, Inc. as of September 30, 1995 and the related statements of income and retained earnings and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Leisegang Medical, Inc. at September 30, 1995 and the results of its operations and its cash flows for the year then ended, in conformity with generally accepted accounting principles. Ernst & Young LLP West Palm Beach, Florida September 13, 1996 3 Leisegang Medical, Inc. Balance Sheets
June 30 September 30 1996 1995 --------------------------- (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 231,379 $ 305,851 Trade accounts receivable, net 716,946 624,116 Deferred taxes 235,362 265,134 Inventories 1,535,618 1,692,237 ---------- ---------- Total current assets 2,719,305 2,887,338 Property and equipment, net 236,280 255,925 Other assets 39,550 5,291 ---------- ---------- Total assets $2,995,135 $3,148,554 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 361,082 $ 631,399 Accrued expenses 326,109 345,665 Deferred revenue 84,124 84,124 Customer deposits 48,141 50,613 Note payable to related party 72,813 69,100 ---------- ---------- Total current liabilities 892,269 1,180,901 Deferred taxes 147,770 127,450 Note payable to related party, less current portion 487,100 542,183 Commitments Shareholders' equity: Common stock, Class A 10,000 10,000 Common stock, Class B 492 492 Treasury stock (2,500) (2,500) Additional paid-in capital 39,508 39,508 Retained earnings 1,420,496 1,250,520 ---------- ---------- Total shareholders' equity 1,467,996 1,298,020 ---------- ---------- Total liabilities and shareholders' equity $2,995,135 $3,148,554 ========== ==========
See accompanying notes. 4 Leisegang Medical, Inc. Statements of Income and Retained Earnings
Nine months ended Year ended June 30 September 30 1996 1995 1995 --------------------------------------- (Unaudited) (Unaudited) Revenue: Net sales $4,487,097 $4,830,678 $6,584,662 Other income 117,411 96,598 125,718 ---------- ---------- ---------- 4,604,508 4,927,276 6,710,380 Cost and expenses: Cost of sales 2,230,393 2,634,705 3,597,707 Selling, general and administrative 2,029,301 2,028,591 2,704,091 Research and development 65,161 51,007 68,007 Interest, net 14,675 21,325 50,971 ---------- ---------- ---------- 4,339,530 4,735,628 6,420,776 ---------- ---------- ---------- Income before provision for income taxes 264,978 191,648 289,604 Provision for income taxes 95,002 95,705 132,566 ---------- ---------- ---------- Net income 169,976 95,943 157,038 Retained earnings at beginning of period 1,250,520 1,093,482 1,093,482 ---------- ---------- ---------- Retained earnings at end of period $1,420,496 $1,189,425 $1,250,520 ========== ========== ==========
See accompanying notes. 5 Leisegang Medical, Inc. Statements of Cash Flows
Nine months ended Year ended June 30 September 30 1996 1995 1995 ---------------------------------------- (Unaudited) (Unaudited) OPERATING ACTIVITIES Net income $ 169,976 $ 95,943 $ 157,038 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 52,170 45,039 57,385 Gain on sale of marketable securities -- (29,284) (29,284) CHANGES IN OPERATING ASSETS AND LIABILITIES Trade accounts receivable (92,830) 179,905 (37,782) Deferred taxes 50,092 95,706 132,566 Inventories 156,619 106,501 (151,983) Other assets (34,259) -- (230) Accounts payable (270,317) (301,435) (96,639) Accrued expenses (19,556) (70,924) 11,280 Deferred revenue -- 104,124 84,124 Customer deposits (2,472) (51,034) (51,507) --------- --------- --------- CASH PROVIDED BY OPERATING ACTIVITIES 9,423 174,541 74,968 INVESTING ACTIVITIES Sale of marketable securities -- 126,159 126,159 Purchases of property and equipment (32,525) (130,123) (251,033) --------- --------- --------- CASH USED IN INVESTING ACTIVITIES (32,525) (3,964) (124,874) FINANCING ACTIVITIES Proceeds from notes payable to related party -- -- 27,394 Payments on note payable -- (259) (60,311) Payments on notes payable to related party (51,370) (48,390) (92,319) --------- --------- --------- CASH USED IN FINANCING ACTIVITIES (51,370) (48,649) (125,236) --------- --------- --------- Net increase (decrease) in cash and cash equivalents (74,472) 121,928 (175,142) Cash and cash equivalents at beginning of period 305,851 480,993 480,993 --------- --------- --------- Cash and cash equivalents at end of period $ 231,379 $ 602,921 $ 305,851 ========= ========= =========
See accompanying notes. 6 Leisegang Medical, Inc. Notes to Financial Statements September 30, 1995 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION AND NATURE OF BUSINESS Leisegang Medical, Inc. (the Company), founded in 1988, is engaged primarily in designing, manufacturing and marketing precision medical instrumentation for use in surgical procedures performed by physicians in hospitals domestically and internationally. Additionally, the Company is the exclusive supplier in North America of Pie Medical BV ultrasound equipment and offers minimally invasive surgical instruments for appendectomy, hysterectomy, colon resection, and numerous other surgical procedures. CASH AND CASH EQUIVALENTS The Company considers all highly liquid investments with a maturity of three months or less at the date of acquisition to be cash equivalents. INVENTORIES Inventories consist of finished goods and component parts and are valued at the lower of cost (first-in, first-out) or market. PROPERTY AND EQUIPMENT Property and equipment is stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which range from five to seven years. The cost of maintenance and repairs is charged to operations as incurred. REVENUE RECOGNITION Revenue is recognized when goods are shipped. Returns are estimated and reflected as adjustments to current period sales and cost of sales. WARRANTY COSTS AND SERVICE CONTRACTS The Company provides a one year warranty on all products sold. The Company has estimated an amount to cover future costs related to these warranties. Sales are recorded net of a provision for warranties. Upon expiration of the warranty period, the Company offers service contracts for repairs and maintenance. Revenue on these contracts is recognized on a straight line basis over the life of the contract. 7 Leisegang Medical, Inc. Notes to Financial Statements (continued) 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) RESEARCH AND DEVELOPMENT Research and development is expensed as incurred. ADVERTISING COSTS Advertising costs are expensed as incurred. During the year ended September 30, 1995, the Company expensed advertising costs of approximately $238,000. INCOME TAXES The Company accounts for income taxes under Financial Accounting Standards Board (FASB) Statement No. 109, Accounting for Income Taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities, and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. INTERIM FINANCIAL STATEMENTS The unaudited consolidated financial statements for the nine months ended June 30, 1995 and June 30, 1996 contained herein have been prepared on the same basis as audited statements and contain all adjustments (consisting of only normal recurring adjustments) necessary for a fair statement of the Company's performance. 2. INVENTORY Inventory consists of the following:
As of ----------------------------------------- June 30, 1996 September 30, 1995 ------------- ------------------ Component parts $ 405,528 $ 349,969 Finished goods 1,130,090 1,342,268 ---------- ---------- $1,535,618 $1,692,237 ========== ==========
8 Leisegang Medical, Inc. Notes to Financial Statements (continued) 3. PROPERTY AND EQUIPMENT At September 30, 1995 property and equipment consists of the following: Furniture and equipment, 7 year useful life $141,286 Manufacturing equipment, 5 year useful life 253,317 -------- 394,603 Less accumulated depreciation (138,678) -------- $255,925 ========
4. NOTE PAYABLE AND NOTES PAYABLE TO RELATED PARTY During the year, the Company paid-off a note payable to a bank bearing interest at 8.25% in the amount of $60,311. Note payable to related party at September 30, 1995 consists of an unsecured note payable, bearing interest at 7%, payable through October 1, 2002 in equal monthly payments of $9,142 including interest. Maturities of notes payable to related party for each of the five years subsequent to September 30, 1995 and in the aggregate are as follows:
Year ended September 30 1996 $ 69,100 1997 74,095 1998 79,452 1999 85,195 2000 91,354 Thereafter 212,087 -------- $611,283 ========
9 Leisegang Medical, Inc. Notes to Financial Statements (continued) 5. RELATED PARTY TRANSACTIONS During the year ended September 30, 1995, the Company purchased approximately $1,416,000 of inventory from an affiliate of a 40% stockholder. Approximately $401,000 of the September 30, 1995 accounts payable balance is due to this affiliate (see Note 8). Consulting fees of approximately $145,000 were paid to related parties and fees of approximately $19,000 were paid to directors of the Company. 6. INCOME TAXES The components of the provision for income taxes at September 30, 1995 are as follows: Current $ -- Deferred 132,566 -------- Total $132,566 ========
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's net deferred income taxes are as follows:
Deferred tax assets: Reserves $ 69,600 Accrued expenses 100,027 Accumulated amortization 28,735 Deferred revenue 31,656 Net operating loss carryforward 35,116 -------- Deferred tax assets 265,134 Deferred tax liabilities: Accumulated depreciation (127,450) -------- Total net deferred taxes $137,684 ========
During the year ended September 30, 1995, the Company utilized $408,000 in net operating loss carryforwards. At September 30, 1995, the Company has available net operating loss carryforwards of $93,000, which expire in the year 2010. 10 Leisegang Medical, Inc. Notes to Financial Statements (continued) 7. SIGNIFICANT VENDORS The Company purchased approximately $2,600,000 of inventory from two vendors, one of which is an affiliate of a 40% stockholder (see Note 5). 8. COMMITMENTS The Company leases its operating facilities and certain equipment under operating lease agreements with nonrelated parties through 1997. Rent expense for the year ended September 30, 1995 was approximately $98,000. At September 30, 1995, future minimum rentals, subject to cost-of-living adjustments, are approximately as follows: 1996 $ 91,000 1997 87,000 ========= $178,000 =========
During the year, the Company committed to purchase approximately $659,000 of inventory from an affiliate of a 40% stockholder through March 1996. At September 30, 1995, approximately $330,000 of this commitment was outstanding (see Note 5). 9. PROFIT SHARING PLAN AND EMPLOYEE BENEFIT PLANS The Company had a discretionary noncontributory profit sharing plan (the Plan) available to all employees who worked at least 1,000 hours in each 12 month period from the first day of employment. The plan year was April 1 to March 31. Plan expense for the year ended September 30, 1995 was $60,000 and is included in selling, general and administrative expenses. In August 1996, the Plan was terminated and distributions were made to employees according to each employee's vested percentage. On August 6, 1996, all participants in the Plan became eligible to participate in the Galileo Electro-Optics Corporation 401(k) Plan (see Note 11). 10. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS The carrying value of cash and cash equivalents, trade accounts receivable and borrowings reflected in the financial statements approximate their fair value as no events have occurred subsequent to their inception that would affect their market value. 11 Leisegang Medical, Inc. Notes to Financial Statements (continued) 11. SUBSEQUENT EVENT On August 6, 1996, the Company was acquired by Galileo Electro-Optics Corporation in a stock-for-stock transaction. EX-99.2 4 PRO FORMA FINANCIAL INFORMATION 1 Exhibit 99.2 Galileo Corporation Pro Forma Combined Condensed Balance Sheet and Statements of Operations (Unaudited) BACKGROUND INFORMATION On August 6, 1996 Galileo Electro-Optics Corporation, a Delaware corporation (the "Company" or "Galileo") merged with privately held Leisegang Medical, Inc., a Florida corporation, (LMI). The Company acquired LMI in a stock for stock transaction issuing 269,923 shares of Galileo stock. The acquisition was accounted for as a pooling of interest. LMI is a distributor and manufacturer of OB/GYN diagnostic and surgical equipment. BASIS OF ACCOMPANYING PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS The unaudited Pro Forma Combined Condensed Balance Sheet assumes that the merger of Galileo and LMI occurred on June 30, 1996. The Pro Forma Combined Condensed Statements of Operations combine the historical results of operations of Galileo and LMI for the year ended September 30, 1995 and the nine months ended June 30, 1996, assuming the merger occurred on October 1, 1994 and October 1, 1995, respectively. The Pro Forma Combined Condensed Statements of Operations do not reflect the estimated expenses associated with the merger or other non-recurring items. Pro Forma Combined Condensed Statements of Operations for fiscal years 1994 and 1993 have not been presented because it is impracticable to do so because audited financial statements of LMI for such periods are not available. Management expects to present restated financial statements reflecting the pooling of interest business combination when the Company files its Annual Report on form 10-K for the year ended September 30, 1996. Management believes that the assumptions used in preparing the Pro Forma Combined Condensed Financial Statements provide a reasonable basis for presenting all of the significant effects of the merger. These Pro Forma Combined Condensed Financial Statements do not purport to be indicative of the results which actually would have been obtained if the merger had been effected on the date indicated or of those results which may be achieved in the future. The Pro Forma Combined Condensed Financial Statements should be read in conjunction with the historical financial statements of Galileo and LMI which have been included elsewhere herein or incorporated by reference in this Form 8-K/A. 2 Galileo Corporation Pro Forma Combined Condensed Balance Sheet and Statements of Operations (Unaudited) PRO FORMA ADJUSTMENTS A summary of the Pro Forma Adjustments is set forth as follows: (a) Reflects the cost incurred prior to June 30, 1996, associated with the merger. (b) The amounts of $2,699 and $44,801 reflect the additional shares and related additional paid in capital from the acquisition of Leisegang Medical, Inc. The $7,992 and $39,508 are the elimination due to consolidation of Leisegang Medical's common stock and additional paid in capital. (c) Reflects estimated additional expenses related to the LMI merger. (d) Adjustment to valuation allowance for deferred tax assets. 3 GALILEO CORPORATION PRO FORMA COMBINED CONDENSED BALANCE SHEETS (UNAUDITED)
Galileo Leisegang Historical Historical Pro Forma Pro Forma June 30, 1996 June 30, 1996 Adjustments Combined ------------------------------------------------------------------- ASSETS Current assets Cash and cash equivalents $15,929,000 $ 231,379 $16,160,379 Accounts receivable, net 5,514,000 716,946 6,230,946 Inventories 4,476,000 1,535,618 6,011,618 Deferred income taxes 308,000 235,362 $ (86,592)(d) 456,770 Other current assets 314,000 -- (53,000)(a) 261,000 ----------- ---------- --------- ----------- Total current assets 26,541,000 2,719,305 (139,592) 29,120,713 Property and equipment, net 19,442,000 236,280 19,678,280 Other assets 2,700,000 39,550 2,739,550 ----------- ---------- --------- ----------- Total assets $48,683,000 $2,995,135 $(139,592) $51,538,543 =========== ========== ========= =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable, trade $ 1,051,000 $ 361,082 $ 1,412,082 Notes payable -- 72,813 72,813 Accrued liabilities 2,388,000 458,374 $ 547,000 (c) 3,393,374 ----------- ---------- --------- ----------- Total current liabilities 3,439,000 892,269 547,000 4,878,269 Deferred taxes 469,000 147,770 616,770 Long-term obligations - Capital lease 174,000 -- 174,000 Long-term notes payable -- 487,100 487,100 Post-retirement benefits 671,000 -- 671,000 ----------- ---------- --------- ----------- Total liabilities 4,753,000 1,527,139 547,000 6,827,139 Shareholders' Equity Common stock 65,000 7,992 2,699 (b) 67,699 (7,992)(b) Additional paid-in capital 42,552,000 39,508 44,801 (b) 42,596,801 (39,508)(b) Retained earnings 1,313,000 1,420,496 (53,000)(a) 2,046,904 (547,000)(c) (86,592)(d) ----------- ---------- --------- ----------- Shareholders' equity 43,930,000 1,467,996 (686,592) 44,711,404 ----------- ---------- --------- ----------- Total liabilities and shareholders' equity $48,683,000 $2,995,135 $(139,592) $51,538,543 =========== ========== ========= ===========
4 GALILEO CORPORATION PRO FORMA COMBINED CONDENSED STATEMENTS OF OPERATIONS
Galileo Leisegang Historical Historical Year Ended Year Ended September 30 September 30 Pro Forma Pro Forma 1995 1995 Adjustments Combined -------------------------------------------------------------- Net sales $34,043,000 $6,710,380 $40,753,380 Cost of sales 24,646,000 3,597,707 28,243,707 ----------- ---------- ----------- Gross profit 9,397,000 3,112,673 12,509,673 Operating expenses 8,561,000 2,772,098 11,333,098 ----------- ---------- ----------- Operating profit 836,000 340,575 1,176,575 Other income, net 356,000 (50,971) 305,029 ----------- ---------- ----------- Income before taxes 1,192,000 289,604 1,481,604 Income tax expense 82,000 132,566 $ (132,566) 82,000 ----------- ---------- ---------- ----------- Net income $ 1,110,000 $ 157,038 $ 132,566 $ 1,399,604 Earnings per share $ 0.164 $ 0.023 $ 0.020 $ 0.207 Primary shares utilized in calculation of earnings per share 6,777,516 6,777,516 6,777,516 6,777,516
5 GALILEO CORPORATION PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS (UNAUDITED)
Galileo Leisegang Historical Historical Nine Months Nine Months Ended Ended Pro Forma Pro Forma June 30, 1996 June 30, 1996 Adjustments Combined ----------------------------------------------------------------------- Net sales $27,187,000 $4,604,508 $31,791,508 Cost of sales 16,389,000 2,230,393 18,619,393 ----------- ---------- ----------- Gross profit 10,798,000 2,374,115 13,172,115 Operating expenses 7,673,000 2,094,462 9,767,462 ----------- ---------- ----------- Operating profit 3,125,000 279,653 3,404,653 Other income, net 513,000 (14,675) 498,325 ----------- ---------- ----------- Income before taxes 3,638,000 264,978 3,902,978 Income tax expense (benefit) (49,000) 95,002 46,002 ----------- ---------- ----------- Income before extraordinary item $ 3,687,000 $ 169,976 $ 3,856,976 Earnings per share before extraordinary item $ 0.532 $ 0.025 $ 0.557 Primary shares utilized in calculation of earnings per share 6,933,877 6,933,877 6,933,877
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