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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) December 4, 1997
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BOWMAR INSTRUMENT CORPORATION
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(Exact Name of Registrant as Specified in Charter)
Indiana 1-4817 35-0905052
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
5080 N. 40th Street, Suite 475, Phoenix, AZ 85018
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (602) 957-0271
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(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other
Acting upon the recommendations of management, on December 4, 1997, the Board
of Directors of Bowmar Instrument Corporation (the "Company") determined to
implement a series of actions designed to strategically reposition the Company,
reduce corporate overhead and realign management. The Board of Directors has
concluded that these steps are in the best interest of the Company and its
shareholders.
The Board of Directors has determined to seek a buyer for the Company's
Technologies division based in Fort Wayne, Indiana. Although the Company has
received several unsolicited inquiries from third parties interested in
acquiring the division, it is not yet in serious discussions with any particular
potential buyer. The Technologies division designs, manufactures, and sells a
variety of electromechanical components, electromechanical display devices and
keyboard assemblies for military and commercial applications. Customers for
these products include original equipment manufacturers primarily in the
aerospace industry and agencies of the U.S. Government. Changes over the past
few years in U.S. defense spending have had a negative impact on the
Technologies division. The Company has sought to minimize that negative impact
by pursuing commercial business for the Technologies division. Although in
fiscal 1997 the Technologies division made progress by substantially increasing
its new business bookings in the third and fourth quarters of the year, the
rapid growth in business during that time strained the division's capacities.
New personnel hired to handle the increased demand drove up costs. As a result,
the division experienced a $405,000 pre-tax loss for the year.
Meanwhile, the Company's microelectronics division has continued to grow. The
microelectronics division designs, manufactures and sells high density, solid
state memory products and microprocessor circuits in both monolithic and
modular form (multichip modules) for use in commercial, industrial and military
markets in the United States and worldwide. The division's sales for fiscal
1997 were almost 18% over sales for fiscal 1996. Gross margin as a percentage
of sales in the microelectronic division for fiscal 1997 also represented an
increase over fiscal 1996 (38.5% in 1997 from 37.6% in 1996). Pre-tax income at
this division in 1997 was $2,608,000, an increase of over $400,000 from 1996.
Changes in U.S. defense spending have not had the same adverse effect on the
microelectronics division because of the nature of its products and its
competitive advantages in the military niche market that it services.
The Company has been advised by its independent public accountants, Coopers &
Lybrand, that the
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decision to seek a buyer for the Technologies division requires the Company to
account for the Technologies division as a "discontinued operation."
Accordingly, a $1.3 million reserve for anticipated losses and the cost of
disposition was recorded in the fourth quarter of fiscal 1997.
The Company has retained an investment advisor, Needham and Company, to assist
it in its efforts to sell the Technologies division. There can be no assurance
that the Board of Directors will be able to identify a suitable buyer, or any
buyer at all, or that if a sale is concluded it will be on terms and conditions
advantageous to the Company.
In light of this decision to sell the Technologies division, the Board of
Directors concluded that the Company could realize additional overhead savings
by closing the Company's corporate headquarters in Phoenix, Arizona as soon as
reasonably possible, but in any event by the end of January 1998. The Company
will operate exclusively out of the new microelectronics division facility also
located in Phoenix, Arizona. As previously reported, the Company recently moved
the division into a modern, 53,000 square foot facility leased by the Company
and built out according to Company specifications. The move was completed
shortly after the close of the 1997 fiscal year.
The Board of Directors believes that these steps will result in a strategic
repositioning of the Company as a pure microelectronics company, focused
exclusively on that segment of the business which has demonstrated the greatest
probability of long-term success. The Company's President and Chief Executive
Officer, Tom Lanin, has submitted his resignation effective January 2, 1998. The
Board has determined to appoint Hamid Shokrgozar, the microelectronic division's
current president, as President and CEO of the Company. Mr. Lanin will remain
with the Company in his capacity as a Director, serving on the Board of
Directors through his current term. Management expects to nominate Mr. Lanin for
reelection to the Board in fiscal 1998. Mr. Lanin also will remain available to
the Company to facilitate the transition and to assist Mr. Shokrgozar as he
assumes his duties.
The Company estimates that the changes associated with the closing of the
corporate office and related severance payments will result in a net charge to
earnings during the first quarter of fiscal 1998 of approximately $340,000.
Except for the historical information contained herein, the matters discussed in
this document contain forward-looking statements. Such statements involve
certain risks and uncertainties that could cause actual results to differ
materially from those in the forward-looking statements. Potential risk and
uncertainties include such factors as the ability of the Company to identify a
potential buyer for the Technologies division and to conclude a beneficial
agreement in a timely fashion, the ability of the Company to conclude such a
sale without substantial disruption to the business of the Technologies
division, demand for the products of the microelectronics division, demand for
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microelectronic products generally, industry competitiveness, reductions in
price and other risks of doing business generally.
Item 7. Exhibits
C.
EX-99. Press release issued by the Company on December 18, 1997.
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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.
BOWMAR INSTRUMENT CORPORATION
By: /s/ Thomas K. Lanin
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Thomas K. Lanin
Its: President and Chief Executive Officer
Date: December 18, 1997