1
F O R M 1 0 - Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For Quarter ended June 30, 1996
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 1-3931
SALEM CORPORATION
-----------------------------------------------------
(Exact name of Registrant as specified in its charter)
COMMONWEALTH OF PENNSYLVANIA 25-0923435
---------------------------- --------------------------------------
(State or other jurisdiction (I.R.S. employer identification number)
of incorporation or organization)
P.O. Box 2222, Pittsburgh, Pennsylvania 15230
----------------------------------------------
(Address of principal executive offices)
(Zip Code)
412-276-5700
--------------------------------------------------
Registrant's telephone number, including area code
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 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 _____
1,864,871 Shares of Common Stock were outstanding at July 25, 1996.
Page 1 of 15
2
SALEM CORPORATION AND SUBSIDIARIES
I N D E X
PAGE NUMBER
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Income
And Retained Earnings for the
three months and six months ended
June 30, 1996 and 1995 (Unaudited) 3
Consolidated Balance Sheets as of
June 30, 1996 (Unaudited) and
December 31, 1995 4
Consolidated Statements of Cash Flows
for the six months ended June 30,
1996 and 1995 (Unaudited) 5
Notes to Consolidated Financial
Statements for the six months
ended June 30, 1996 (Unaudited) 6-7
Review by Independent Public Accountants 8
Review Report of Independent
Public Accountants 9
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 10-12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 4. Submission of Matters to a Vote
of Security Holders 14
Item 6. Exhibits and Reports on Form 8-K 15
Page 2 of 15
3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SALEM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND
RETAINED EARNINGS (NOTE 1)
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------- ------------------------
1996 1995 1996 1995
-------- -------- -------- --------
(In Thousands Except Per Share Amounts)
Gross revenues $31,211 $36,276 $60,707 $68,132
Cost of revenues 25,469 29,516 49,221 55,848
------- ------- ------- -------
Gross income 5,742 6,760 11,486 12,284
Selling, general and
administrative expenses 4,875 5,476 9,488 9,843
Nonrecurring charges 259 504 303 1,312
------- ------- ------- -------
Operating income 608 780 1,695 1,129
------- ------- ------- -------
Other income (expense):
Interest income 315 268 626 614
Interest expense (75) (72) (151) (138)
Equity in earnings of affiliates 117 176 174 152
Other, net 135 51 15 215
------- ------- ------- -------
Total other income 492 423 664 843
------- ------- ------- -------
Income from continuing operations
before minority interest
and income taxes 1,100 1,203 2,359 1,972
Minority interest 19 25 58 27
Provision for income taxes (461) (580) (1,011) (882)
------- ------- ------- -------
Income from continuing operations 658 648 1,406 1,117
Gain (loss) from discontinued
operations 289 (83) 242 (224)
Extraordinary credit 20 - 20 -
------- ------- ------- -------
Net income 967 565 1,668 893
Retained earnings,
beginning of period 32,454 29,818 31,753 29,677
Cash dividends (559) (187) (559) (374)
------- ------- ------- -------
Retained earnings,
end of period $32,862 $30,196 $32,862 $30,196
======= ======= ======= =======
Net income per common share:
Income from continuing
operations $.36 $.34 $.75 $.60
Gain (loss) from
discontinued operations .15 (.04) .13 (.12)
Extraordinary credit .01 - .01 -
---- ---- ---- ----
Net income $.52 $.30 $.89 $.48
==== ==== ==== ====
See accompanying notes to consolidated financial statements.
Page 3 of 15
4
SALEM CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (NOTE 1)
(IN THOUSANDS)
JUNE 30, DECEMBER 31,
1996 1995
-------- ---------
(Unaudited)
A S S E T S
-----------
CURRENT ASSETS:
Cash and cash equivalents (including
restricted cash of $5,497 and $5,998) $18,363 $18,048
Restricted short-term investments 4,118 4,687
Receivables 23,674 23,890
Indebtedness of related parties, current 97 97
Contracts-in-progress 5,374 8,756
Inventories 6,910 6,018
Income tax benefit 3,613 3,078
Prepaid expenses 2,220 2,270
Investments in and advances to discontinued operations - 904
------- -------
Total current assets 64,369 67,748
------- -------
PROPERTY, PLANT AND EQUIPMENT, at cost 27,004 25,445
Less- Accumulated depreciation 16,653 16,036
------- -------
Net property, plant and equipment 10,351 9,409
OTHER ASSETS:
Investments in affiliated companies (at equity) 2,110 2,098
Income tax benefit 3,261 2,817
Other assets 3,656 3,749
------- -------
Total assets $83,747 $85,821
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Dividends payable $ 280 $ 280
Current maturities of long-term debt 642 680
Accounts payable (including outstanding
checks of $1,552 and $1,703) 13,994 18,288
Advance billings on contracts 11,394 8,720
Accrued income taxes 693 1,389
Accrued payroll and employee benefits 4,451 4,811
Accrued loss reserve 2,373 2,347
Other accrued liabilities 1,144 1,162
Reserves for warranty expense 3,487 3,689
Net current liabilities of discontinued operations 423 -
------- -------
Total current liabilities 38,881 41,366
LONG-TERM DEBT 1,197 1,683
OTHER NONCURRENT LIABILITIES 3,269 3,285
MINORITY INTEREST 473 531
SHAREHOLDERS' EQUITY
Preferred stock, par $25.00, authorized 112,485
shares, issued 0 shares - -
Common stock, par $.50, authorized 15,000,000
shares, issued 2,690,313 shares 1,345 1,345
Paid-in surplus 9,301 9,301
Pension adjustment (1) (1)
Retained earnings 32,862 31,753
Cumulative translation adjustment (383) (245)
Treasury stock, at cost (825,442 shares) (3,197) (3,197)
------- -------
Total shareholders' equity 39,927 38,956
------- -------
Total liabilities and shareholders'
equity $83,747 $85,821
======= =======
See accompanying notes to consolidated financial statements.
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5
SALEM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DECREASE) IN CASH AND CASH EQUIVALENTS
(IN THOUSANDS)
FOR THE SIX MONTHS
ENDED JUNE 30,
------------------------
1996 1995
-------- --------
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Income from continuing operations $ 1,406 $ 1,117
Extraordinary credit 20 -
------- -------
Income from continuing operations 1,426 1,117
Adjustments for noncash items-
Depreciation and amortization 813 786
Deferred income taxes (979) (86)
Other noncurrent liabilities (16) 86
Allowance for doubtful accounts (12) (25)
Equity of affiliates, net (174) (152)
Reserves for warranty expense (202) 270
Cumulative translation adjustments 114 (415)
Gain/(loss) from discontinued operations 242 (224)
Changes in certain assets and liabilities-
Receivables 219 69
Contracts-in-progress, net 6,055 (1,519)
Inventories (892) 231
Prepaid expenses 50 376
Accounts payable (4,272) (371)
Accrued income taxes (726) (996)
Accrued liabilities (352) 944
Minority interest (58) (27)
Net liabilities of discontinued operations 1,327 (1,024)
------- -------
Net cash flows provided by (used for)
from operating activities $ 2,563 $ (960)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Short-term investments $ 569 $ 554
Restricted investments - 100
Purchases of property, plant, & equipment, net (1,626) (614)
Dividends received from equity affiliates 48 245
Investment in affiliated companies - (738)
------- -------
Net cash flows (used for)
investing activities $(1,009) $ (453)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid $ (559) $ (374)
Principal payments under financing arrangements - (69)
Proceeds from debt 91 296
Payments on debt (706) (6)
------- -------
Net cash flows (used for)
financing activities $(1,174) $ (153)
------- -------
EFFECT OF EXCHANGE RATE CHANGES ON CASH $ (65) $ 439
------- -------
NET (DECREASE) IN CASH AND CASH EQUIVALENTS $ 315 $(1,127)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 18,048 20,524
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $18,363 $19,397
======= =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid $ 168 $ 166
Income taxes paid, net 2,709 1,594
See accompanying notes to consolidated financial statements.
Page 5 of 15
6
SALEM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 1996
(UNAUDITED)
1. BASIS OF PRESENTATION
The financial information included herein has been prepared by Salem
Corporation (the "Company"), without audit, for filing with the Securities and
Exchange Commission pursuant to the rules and regulations of said Commission.
The financial information presented herein, while not necessarily indicative of
results to be expected for the year, reflects all adjustments, consisting of
normal recurring adjustments, which in the opinion of the Company are necessary
for a fair statement of the results for the periods indicated. This financial
information should be read in conjunction with the financial statements and
notes thereto included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1995.
2. NONRECURRING CHARGES
In the second quarter of 1996, the Company recorded $259,000 of
additional nonrecurring charges primarily the result of legal and consulting
fees resulting from efforts related to the sale of the Company. For the six
months ended June 30, 1996 these nonrecurring charges amounted to $303,000 as
compared to $1.3 million for the six months ended June 30, 1995 of which
$1,150,000 related to the possible sale of the Company and $150,000 related to
an SEC investigation.
3. INCOME TAXES
The Company's effective income tax rates for the three and six months
ended June 30, 1996 were 41.9% and 42.9%, respectively. These rates exceed a
combined federal and state rate of 40% due to losses at Essex Insurance Co.,
the Company's 65% owned Bermuda insurance company which are not tax effected.
The extraordinary credit of $20,000 recorded in the current quarter represents
utilization of a net operating loss carryforward in Mexico. The Company's
effective income tax rate for the three and six months ended June 30, 1995 were
48.2% and 44.7%, respectively. Tax benefits for losses incurred by the
Company's United Kingdom subsidiaries were recorded at a rate below a combined
federal and state rate and resulted in the above effective income tax rates.
4. DISCONTINUED OPERATIONS
In April 1996, Enviroplant International Group Limited, a wholly owned
subsidiary of Salem Automation Limited which is a United Kingdom subsidiary of
the Company, ceased trading and began voluntary liquidation proceedings. As a
result of Enviroplant's liquidation, the Company has deconsolidated
Enviroplant's
Page 6 of 15
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operations in the accompanying financial statements reflecting such operations
as discontinued operations. The estimated amount required to satisfy
liabilities related to Enviroplant and to complete the liquidation process is
reflected as a net liability of discontinued operations in the accompanying
balance sheets.
5. POSSIBLE CHANGE IN CONTROL
On June 28, 1996, the Company announced that Salem Group, Inc., a
Delaware corporation (the "Parent"), and SC Acquisition Corporation, a
Pennsylvania corporation and wholly-owned subsidiary of the Parent (the
"Subsidiary"), entered into a definitive Agreement and Plan of Merger (the
"Merger Agreement") providing for the merger of the Subsidiary with and into
the Company, with the Company as the surviving corporation. Following the
approval and adoption of the Merger Agreement by the affirmative vote of a
majority of the votes cast by all holders of the Company's outstanding shares
of Common Stock, and satisfaction or waiver of all other conditions precedent,
the Subsidiary will merge with the Company and each share of Common Stock
(other than common stock held by shareholders who have exercised and perfected
their rights as dissenting shareholders under Pennsylvania law) will be
converted automatically into the right to receive $25.00 in cash per share.
As previously reported, the 917,633 shares owned by Victor Posner,
which constitute 49.2% of the outstanding Common Stock, have been deposited in
a voting trust pursuant to court order. The court has further ordered that
such Common Stock is to be voted by the trustee on any merger proposal in
proportion to the votes cast by all of the Company's other shareholders.
6. INCOME PER SHARE
Per share amounts have been computed using the weighted average number
of common shares outstanding during the period (1,864,871 in 1996 and 1995).
Page 7 of 15
8
REVIEW BY INDEPENDENT PUBLIC ACCOUNTANTS
The consolidated financial statements for the six month period ended
June 30, 1996 has been reviewed prior to filing, by the Company's independent
public accountants, Arthur Andersen LLP, whose report covering their review of
the financial statements is presented on Page 9.
Page 8 of 15
9
ARTHUR ANDERSEN LLP
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and
Shareholders of Salem Corporation:
We have reviewed the accompanying consolidated balance sheet of Salem
Corporation (a Pennsylvania corporation) as of June 30, 1996, and the related
consolidated statement of income and retained earnings for the three-month and
six-month period ended June 30, 1996, and the consolidated statement of cash
flows for the six-month period ended June 30, 1996. These financial statements
are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the financial statements referred to above for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Salem Corporation as of December
31, 1995, and, in our report dated March 5, 1996, we expressed an unqualified
opinion on that statement. In our opinion, the information set forth in the
accompanying consolidated balance sheet as of December 31, 1995, is fairly
stated, in all material respects, in relation to the balance sheet from which
it has been derived.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania,
July 19, 1996
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
OVERVIEW
The Company's net income for the three and six months ended June 30,
1996 was significantly greater than the prior periods primarily due to a
decrease in nonrecurring charges and a reduction in reserves for discontinued
operations.
The Company's nonrecurring charges were $259,000 and $303,000 for the
three and six months ended June 30, 1996, respectively as compared to $504,000
and $1.3 million for the comparable period in 1995, respectively. These
nonrecurring charges were comprised principally of investment banking, legal
and other consulting fees incurred in connection with the possible sale of the
Company.
SECOND QUARTER OF 1996 COMPARED TO SECOND QUARTER OF 1995
Gross revenues of $31.2 million in the current quarter decreased $5.1
million or 14.0% from the gross revenues of $36.3 million during the comparable
quarter of 1995. This decrease is primarily attributable to a decline in
operating levels of the Company's domestic furnaces and strip processing
subsidiaries resulting from a lower level of backlog entering 1996. Gross
income as a percentage of gross revenues was 18.4% for the second quarter of
1996 as compared to 18.6% for the same period of 1995.
In the second quarter of 1996, the Company recorded nonrecurring
charges of $259,000 for legal and consulting fees resulting from efforts
related to the sale the Company. This compares to $504,000 for similar costs
in the second quarter of 1995.
Selling, general and administrative expenses of $4.9 million for the
second quarter of 1996 were approximately $600,000 less than those in the
comparable quarter of 1995. This decrease reflects an adjustment of
approximately $400,000 in incentive compensation for unpaid amounts returned to
income.
The provision for income taxes was approximately $461,000 in the
second quarter of 1996 as compared to $580,000 in the second quarter of 1995.
This decrease in income taxes is primarily due the fact that tax benefits for
losses incurred by the Company's United Kingdom subsidiaries were recorded at a
rate below the combined federal and state rate.
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A gain from discontinued operations amounting to $289,000 was recorded
in the second quarter of 1996 as compared to a loss of $83,000 for the same
period last year. This gain reflects the reversal in 1996 of amounts reserved
in 1995 for the discontinued operations.
SIX MONTHS 1996 COMPARED TO SIX MONTHS 1995
Gross revenues of $60.7 million for the first six months of 1996 were
$7.4 million or 10.9% less than the $68.1 million for the same period of 1995.
This decrease is primarily attributable to decreased operating levels in the
Company's domestic operations as a result of a lower backlog entering 1996 as
compared to 1995. Gross income as a percentage of gross revenues increased to
18.9% for the first six months of 1996 as compared to 18.0% for the same period
of a year ago. This 5% increase in profitability can be attributed to improved
performance on contracts and a favorable product mix in 1996 as compared to the
prior period.
During the first six months of 1996, the Company recorded nonrecurring
legal and consulting fees totaling $303,000 resulting from efforts to sell the
Company as compared to $1.3 million in the prior period.
Other income of $664,000 for the first six months of 1996 declined
from the $843,000 for the same period last year. This decrease is primarily
the result of a loss on foreign exchange at the Company's United Kingdom
subsidiaries.
The provision for income taxes was approximately $1.0 million for the
first six months of 1996 as compared to $882,000 last year. This is a result
of the increase in pre-tax income.
A gain from discontinued operations amounting to $242,000 was recorded
in the first six months of 1996 as compared to a loss of $224,000 for the same
period last year. This gain reflects the reversal in 1996 of amounts reserved
in 1995 for discontinued operations.
The Company's backlog at June 30, 1996 was $92.8 million compared to
$85.9 million at June 30, 1995 and $75.9 million at December 31, 1995.
Page 11 of 15
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FINANCIAL CONDITION AND LIQUIDITY
Cash and cash equivalents of approximately $18.4 million at June 30,
1996 increased slightly from the $18.0 million at December 31, 1995. This
increase was primarily the result of $2.4 million cash provided by operations,
offset in part by cash used for investing and financing activities.
The Company has two separate facilities, each for the issuance of up
to $10 million of surety bonds. These facilities are collateralized with $2.5
million of standby letters of credit of which $500,000 is collateralized with a
certificate of deposit. At June 30, 1996, approximately $11.7 million of such
surety facilities were utilized.
In April 1996, the Company entered into an agreement with a bank that
provides the Company's domestic operations with a $10.0 million line of credit,
a $5.0 million term loan and a $3.0 million lease line. At July 31, 1996, $2.3
million of the line of credit and none of the term loan or lease line were
utilized.
The Company's United Kingdom subsidiaries have two separate credit
facilities with a major bank: a facility for the issuance of bank guarantees
up to $2.3 million and an overdraft and loan facility of up to $2.0 million.
At July 31, 1996, $1.3 million of the bank guarantee facility and $1.4 million
of the overdraft and loan facility were utilized.
The Company believes that cash flows from operations and existing cash
assets will be sufficient to enable it to meet near-term cash requirements.
The Company's ability to meet its long-term cash requirements is dependent upon
its credit line and its ability to attain and sustain sufficient cash flows
from operations.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On or about April 9, 1996, a derivative action was filed in the
Circuit Court of the 11th Judicial Circuit in, and for, Dade County, Florida by
Harry Lewis, individually and on behalf of others similarly situated, against
Victor Posner. The Company is named as a nominal defendant in this action.
The complaint alleges, among other things, that Mr. Posner has breached his
fiduciary duties by failing to offer an adequate price for the Company's stock
and by causing the Company to waste its corporate assets. The complaint seeks
an injunction against the consummation of Mr. Posner's offer, damages and
attorneys' and experts' fees.
On or about May 3, 1996, a class action was filed in the Court of
Common Pleas of Allegheny County, Pennsylvania by Crandon Capital Partners
against the Company's directors. The plaintiff seeks an injunction against the
consummation of Victor Posner's offer to acquire the Company's outstanding
stock for $20.00 per share plus damages and attorneys' fees. The complaint
alleges that the Company's directors have engaged in, or aided and abetted, a
fraudulent plan or scheme to assure that Victor Posner can wrongfully acquire
the Company for inadequate consideration. The complaint further alleges that
the Company's directors have breached their fiduciary duties in not exercising
independent business judgment and acting to the detriment of the plaintiff and
others similarly situated in order to benefit themselves and/or their
colleagues. It is also alleged that the Company's directors failed to comply
with their fiduciary duty of candor by omitting material information from the
Company's proxy statement issued in connection with the Annual Meeting of
Shareholders held May 9, 1996 concerning Mr. Posner's offer and other offers
to acquire the Company.
Both of the above-described actions were filed prior to Mr. Posner's
submission on May 16, 1996 of an offer to acquire the Company's stock for
$22.00 per share and the subsequent withdrawal by Mr. Posner of that offer on
May 23, 1996. On June 28, 1996, the Company announced its entry into a
definitive Agreement and Plan of Merger with Salem Group, Inc. and SC
Acquisition Corporation, affiliates of Three Cities Research, Inc., pursuant to
which all of the Company's outstanding stock will be acquired for $25.00 per
share if the merger contemplated therein becomes effective. Although the
Company's counsel believes both of the legal actions are now moot, neither has
been dismissed.
The Company is also engaged in other ordinary litigation incidental to
its business. The Company does not believe that this litigation will have a
material adverse effect upon its financial condition.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
An Annual Meeting of Shareholders of the Company was held on May 9,
1996. At such meeting, the shareholders of the Company elected four directors
to serve until the annual meeting of shareholders in 1999. The directors
elected and the results of voting were as follows:
BROKER
DIRECTOR FOR WITHHELD NON VOTES
-------- --- -------- ---------
A. A. Fornataro 1,661,437 133,407 91,499
Donald L. Hoylman 1,559,361 141,533 91,499
Robert D. McBride 1,665,778 133,097 91,499
Alexander Stuart 1,665,778 133,097 91,499
Continuing directors with terms to expire as indicated are:
Melvin R. Colvin 1997
Milton Deaner 1997
Bernard I. Posner 1997
Martin J. Posner 1997
Brenda N. Castellano 1998
Marco B. Loffredo, Jr. 1998
Vincent J. Schafmeister, Jr. 1998
Leo L. Wallberg, Jr. 1998
Shareholders also approved an amendment to the Company's Management
Incentive Plan permitting the return to income of any amounts remaining in the
bonus pool following the award of bonuses under the Plan. The voting results
with respect to this amendment were as follows:
BROKER
FOR AGAINST ABSTENTIONS NON VOTES
------- ------- ----------- ---------
1,581,141 167,556 24,675 91,499
The shareholders also ratified the selection of Arthur Andersen LLP as
independent auditors to examine the financial statements of the Company. The
results of such vote were as follows:
BROKER
FOR AGAINST ABSTENTIONS NON VOTES
------- ------- ----------- ---------
1,656,122 111,017 6,233 91,499
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: None
(b) No reports on Form 8-K have been filed
by the Registrant during the quarter for
which this report is filed.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
Date: August 13, 1996
SALEM CORPORATION
---------------------------
(Registrant)
BY: /S/ A.A. FORNATARO
---------------------------
A. A. Fornataro
President and Chief
Operating Officer
BY: /S/ GEORGE A. DOUGLAS
---------------------------
George A. Douglas
Treasurer and Corporate
Controller
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