-----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, Ly5OIA2iCeP3UHWqVASHvcL/paxuIXNzNNfbioNSMFqxj+8mJ3NDRCGHtTHCfirB si476gJemiamf7Y2BaEhpw== 0000950152-97-002317.txt : 19970329 0000950152-97-002317.hdr.sgml : 19970329 ACCESSION NUMBER: 0000950152-97-002317 CONFORMED SUBMISSION TYPE: 10KSB40 PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970328 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: SERVOTRONICS INC /DE/ CENTRAL INDEX KEY: 0000089140 STANDARD INDUSTRIAL CLASSIFICATION: CUTLERY, HANDTOOLS & GENERAL HARDWARE [3420] IRS NUMBER: 160837866 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10KSB40 SEC ACT: 1934 Act SEC FILE NUMBER: 001-07109 FILM NUMBER: 97566379 BUSINESS ADDRESS: STREET 1: 1110 MAPLE ST CITY: ELMA STATE: NY ZIP: 14059 BUSINESS PHONE: 7166335990 MAIL ADDRESS: STREET 1: P O BOX 300 STREET 2: ELMA STATE: NY ZIP: 14059-0300 10KSB40 1 SERVOTRONICS, INC. 10-KSB 405 1 U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-KSB X ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1996 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . ---------------- -------------- Commission File No. 1-7109 SERVOTRONICS, INC. ---------------------------------------------- (Name of small business issuer as specified in its charter) Delaware 16-0837866 - ------------------------------- ------------------- (State or other jurisdiction of (I. R. S. Employer incorporation or organization) Identification No.) 1110 Maple Street, Elma, New York 14059 - ------------------------------- ---------- (Address of principal executive offices) (Zip Code) Issuer's telephone number: 716-655-5990 -------------- Securities registered pursuant to Section 12(b) of the Act: Name of each exchange on Title of each class which registered ------------------- ---------------- Common Stock, $.20 par value American Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 . --- --- Check if disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [X] Issuer's revenues for its most recent fiscal year: $15,600,000. As of February 28, 1997 the aggregate market value of the voting common stock held by non-affiliates of the registrant was $7,957,123 based on the average of sales prices reported by the American Stock Exchange on that day. As of February 28, 1997 the number of $.20 par value common shares outstanding was 2,355,478. DOCUMENTS INCORPORATED BY REFERENCE Document Part of Form 10-KSB -------- ------------------- 1997 Proxy Statement Part III Transitional Small Business Disclosure Format. Yes . No x . --- --- 2 PART I Item 1. Description of Business - ------- ----------------------- General - ------- Servotronics, Inc. and its subsidiaries (collectively the "Registrant" or the "Company") design, manufacture and market advanced technology products consisting primarily of control components and consumer products consisting of knives, various types of cutlery and small household tools. The Registrant was incorporated in New York in 1959. In 1972, the Registrant was merged into a wholly-owned subsidiary organized under the laws of the State of Delaware, thereby changing the Registrant's state of incorporation from New York to Delaware. Products - -------- Advanced Technology Products ---------------------------- The Registrant designs, manufactures and markets a variety of servo-control components which convert an electrical current into a mechanical force or movement and other related products. The principal servo-control components produced include torque motors, electromagnetic actuators, proportional solenoids, hydraulic valves, pneumatic valves and similar devices, all of which perform the same general function. These are sold principally to the commercial, aerospace, missile, aircraft and government related industries. To fill most of its orders for components, the Registrant must either modify a catalog model or design a new item in order to satisfy the customer's particular requirements. The Registrant also produces unique products based on specifications provided by its' customers. The Registrant produces under long-term contracts and otherwise. The Registrant also produces metallic seals of various cross-sectional configurations. These seals fit between two surfaces, usually metal, to produce a more secure and leak-proof joint. They are generally designed for use under circumstances in which more conventional seals and gaskets do not perform adequately, such as exposure to extremes of temperature, high pressures, vacuums, radiation or corrosive atmospheres. The Registrant manufactures these seals to close tolerances from standard and special alloy steels. Ductile coatings are often applied to the seals in order to increase their effectiveness. -2- 3 From time to time, the Registrant has also produced other products of its own and/or of a given design to meet customers' requirements. The Registrant also designs and/or manufactures for its own use custom precision metal stampings. These stampings are produced from precision single stage and/or progressive dies which are also designed and manufactured by the Registrant. The progressive die performs, in a series of stages in one die, the stamping of a metal piece which could otherwise require stamping by a number of separate dies. Consumer Products ----------------- The Registrant designs, manufactures and sells a variety of cutlery products. These products include a wide range of knives such as steak, carving, bread, butcher and paring knives for household use and for use in restaurants, government installations, institutions and private industry and pocket and other types of knives for hunting, fishing and camping. The Registrant also produces and markets other cutlery items such as carving forks, sharpeners and various specialty tools such as putty knives, linoleum sheet cutters and field knives. The Registrant manufactures its cutlery products from stainless or high carbon steel in numerous styles, designs, models and sizes. Substantially all of the Registrant's cutlery and cutlery related products are intended for the medium to premium priced markets. The Registrant sells many of its cutlery products under its own brand names including "Old Hickory" and "Queen." Sales, Marketing and Distribution - --------------------------------- Advanced Technology Products ---------------------------- The Registrant's advanced technology products are marketed throughout the United States and are essentially nonseasonal in nature. These products are sold to the United States Government, government prime contractors and commercial manufacturers and end users. Sales are made primarily by the Registrant's professional staff. During the Registrant's last fiscal year, sales of advanced technology products pursuant to subcontracts with prime or subcontractors for various branches of the United States Government or pursuant to prime contracts directly with the government accounted for approximately 18% of the -3- 4 Registrant's total sales. If the Registrant were deemed to be unqualified by the United States Government as a contractor or subcontractor, it would lose approximately 34% of its sales of advanced technology products. In 1996 and 1995 sales of advanced technology products to the AlliedSignal Corporation and United Technologies, through several of their subsidiaries and/or divisions, respectively, exceeded 10% of Registrant's total sales. No other single customer represented more than 10% of the Company's sales in any of these years. The Registrant's prime contracts and subcontracts with the Government are subject to termination for the convenience of the Government. In the event of such termination, the Registrant is ordinarily entitled to receive payment for its costs and profits on work done prior to termination. Since the inception of the Registrant's business, less than 1% of its government contracts have been terminated for convenience. Consumer Products ----------------- The Registrant's consumer products are marketed throughout the United States. Consumer sales are moderately seasonal. Sales are to hardware, supermarket, variety, department, discount, gift and drug stores. The Registrant also sells its cutlery products (principally machetes, survival knives and kitchen knives) to various branches of the United States Government. The Registrant sells its products through its own sales personnel and through independent manufacturers' representatives. Business Segments - ----------------- Business segment information is presented in Note 12 of the accompanying consolidated financial statements. Patents - ------- In the view of management, the Registrant's competitive position is not dependent on patent protection. The Registrant has rights under a number of patents. -4- 5 Research Activities - ------------------- The amount spent by the Registrant in research and development activities during its 1996 and 1995 fiscal years was not significant. Environmental Compliance - ------------------------ The Registrant does not anticipate that the cost of compliance with current environmental laws will be material. Manufacturing - ------------- The Registrant manufactures its consumer products in Franklinville, New York and Titusville, Pennsylvania and its advanced technology products in Elma, New York. Raw Materials and Other Supplies - -------------------------------- The Registrant purchases raw materials and certain components for its products from outside vendors. The Registrant is not generally dependent upon a single source of supply for any raw material or component used in its operations. Competition - ----------- Although no reliable industry statistics are available to enable the Registrant to determine accurately its relative competitive position with respect to any of its products, the Registrant believes that it is a significant factor with respect to certain of its servo-control components. The Registrant's share of the overall cutlery market is not significant. The Registrant encounters active competition with respect to its products from numerous companies, many of which are larger than it in terms of manufacturing capacity, financial resources and marketing organization. Its principal competitors vary depending upon the customer and/or the products involved. The Registrant believes that it competes primarily with more than 20 companies with respect to its consumer products, in addition to foreign imports. To the Registrant's knowledge, its principal competitors with regard to cutlery include ECKO Housewares, Inc., Russell Harrington Cutlery, Inc., W. R. Case & Sons Cutlery Company, Imperial Schrade Corporation and Camillus Cutlery Company. -5- 6 The Registrant has many different competitors with respect to servo-control components because of the nature of that business and the fact that these products also face competition from other types of control components which, at times, can accomplish the desired result. The Registrant markets most of its products throughout the United States. The Registrant believes that it competes in marketing its consumer products primarily on the basis of price, quality and delivery, and its control products primarily on the basis of operating performance, adherence to rigid specifications, quality, price and delivery. Employees - --------- The Registrant at December 31, 1996 had approximately 238 employees of which approximately 219 are full time. In excess of 83% of its employees are engaged in production, inspection, packaging or shipping activities. The balance are engaged in executive, engineering, administrative, clerical or sales capacities. The Registrant considers its relationship with its employees to be good and the Registrant has never experienced a significant labor work stoppage. Item 2. Description of Properties - ------- ------------------------- The Registrant's executive offices are located on premises leased by the Registrant at 1110 Maple Street, Elma, a suburb of Buffalo, New York. The Registrant owns and/or leases real property as set forth in the following table:
Number of Principal buildings and Approx. Approx. product type of floor area Location acreage manufactured construction (sq. feet) - ---------------------------------------------------------------------------------------------------------------- Elma, New York 38.4 Advanced 1-concrete block 82,000 technology and steel products Franklinville, 7.7 Cutlery products 1-tile and New York wood 85,000 Titusville, Pennsylvania .4 Cutlery products 2-brick 25,000
-6- 7 The Registrant leases approximately 38.4 acres of land and a facility from a local industrial development agency. The lease is accounted for as a capital lease and entitles the Registrant to purchase the property at a nominal amount at the end of the lease term. See the consolidated financial statements, including Note 8 thereto, for further information with respect to the Registrant's lease commitments. The Registrant possesses modern precision manufacturing and testing equipment suitable for the development, manufacture, assembly and testing of its high technology products. The Registrant designs and makes substantially all of the tools, dies, jigs and specialized testing equipment necessary for the production of the high technology products. The Registrant also possesses automatic and semi-automatic grinders, tumblers, presses and miscellaneous metal and wood finishing machinery and equipment for use in the manufacture of consumer products. Item 3. Legal Proceedings - ------- ----------------- There are no legal proceedings which are material to the Company currently pending by or against the Company other than ordinary routine litigation incidental to the business which is not expected to materially adversely affect the business or earnings of the Company. Item 4. Submission of Matters to a Vote of Security Holders - ------- --------------------------------------------------- Not applicable. -7- 8 PART II Item 5. Market for Common Equity and Related Stockholder Matters - ------- -------------------------------------------------------- (a) Price range of common stock --------------------------- The following table shows the range of high and low prices for the Registrant's common stock as reported by the American Stock Exchange for 1996 and 1995, adjusted to reflect the 8% stock dividend declared in 1996.
High Low ---- --- 1996 Fourth Quarter $ 5-7/8 $ 4 Third Quarter 4-3/4 4-1/8 Second Quarter 5-1/2 3-13/16 First Quarter 4-7/8 4 1995 Fourth Quarter $ 4-5/8 $ 3-3/4 Third Quarter 5-3/8 3-7/8 Second Quarter 4-1/4 3-1/2 First Quarter 4-3/8 3-1/4 (b) Approximate number of holders of common stock --------------------------------------------- Title Approximate number of of record holders (as of class December 31, 1996) ----- ---------------------- Common Stock, $.20 par value 725
(c) Dividends on common stock ------------------------- No cash dividends were paid in 1996 or 1995. -8- 9 Item 6. Management's Discussion and Analysis or Plan of Operation - ------- --------------------------------------------------------- Summary - ------- The following table sets forth for the periods indicated the percentage relationship of certain items in the consolidated statement of income to net sales and the percentage increase or decrease of such items as compared to the indicated prior period:
Period to Relationship to period net sales year increase ended (decrease) December 31, year ended 1996 1995 1996-95 ---- ---- ------- Net sales: Advanced technology products 52.5% 51.2% -2.2% Consumer products 47.5 48.8 -7.2 ----- ----- ----- 100.0 100.0 -4.6 Cost of goods sold 69.2 73.0 -9.6 ----- ----- ----- Gross profit 30.8 27.0 8.6 ----- ----- ----- Selling, general and administrative 19.3 18.5 -0.5 Interest 2.1 2.3 -11.4 Depreciation 4.1 4.2 -7.8 Gain on sale of assets -7.2 -- -- Charges related to sale of assets 3.1 -- -- ----- ----- ----- 21.4 25.0 -19.7 ----- ----- ----- Income before income taxes 9.4 2.0 345.4 Income tax provision 3.8 0.8 362.2 ----- ----- ----- Net income 5.6% 1.2% 334.8% ===== ===== =====
-9- 10 Management Discussion - --------------------- During the year ended December 31, 1996 and for the comparable period ended December 31, 1995, approximately 22% of the Company's revenues were derived from contracts with agencies of the U.S. Government or their prime contractors. The Company's business is performed under fixed price contracts. It is noted that the many uncertainties in today's global economy, the growth of the national deficit and difficulty in predicting defense appropriations (both actual and proposed) preclude any guarantees or even assurances that current programs will be continued or that programs in the prototype stages will ultimately result in production applications. It is because of such volatile uncertainties and because such adverse occurrences may not be counterbalanced with new programs or otherwise that cyclical downturns in operational performances are realistic expectations. See also Note 12 to the consolidated financial statements for information concerning business segment operating results. Results of Operations - Year 1996 as Compared to 1995 - ----------------------------------------------------- The Company's consolidated results of operations for the year ended December 31, 1996 showed an approximate 4.6% decrease in net sales with an increase in operating income as a percentage of net sales from approximately 8.5% to 11.5% when compared to the same year ended December 31, 1995. The decrease in sales is primarily attributable to a decrease in sales at the Consumer Products Group's operations due to a decrease in customer demands while the increase in operating profit as a percentage of net sales is a result of differences in product mix. The respective amounts of the funded and unfunded sales backlog at December 31, 1996 and 1995 for the Advanced Technology Group (ATG) were approximately $46,462,000 and $31,628,000 of which $38,075,000 and $25,809,000 was unfunded in the respective comparable periods. Approximately $30,000,000 of the December 31, 1996 unfunded backlog is for product deliveries beyond 1999. The unfunded portion of the backlog is based on the Company's customers' estimated quantities for multi-year agreements for which the Company has not received firm orders. Income before income taxes exclusive of $639,000 gain on sale of assets net of related charges for the year ended December 31, 1996 increased 150.7% when compared to the same year ended December 31, 1995. The gain of sale of assets was for the previously reported sale of the former headquarters which was located at 3901 Union Road, Buffalo, New York. This sale was completed in the third quarter of 1996 and is reflected in the accompanying financial -10- 11 statements as a gain on sale of assets and related charges, which include certain environmental and compensation costs. Selling, general and administrative costs remained relatively consistent for the year ended December 31, 1996 when compared to the same year ended December 31, 1995. Interest expense decreased because of lower long-term debt and lower interest rates. Depreciation expense for the period decreased primarily as a result of the sale of the former headquarters. Income taxes for the year ended December 31, 1996, as a percentage of income before taxes, remained consistent when compared to the year ended December 31, 1995. Results of Operations - Year 1995 as Compared to 1994 - ----------------------------------------------------- The Company's consolidated results of operations for the year ended December 31, 1995 showed an approximate 3.5% increase in net sales and a decrease in net income of approximately 55.8% when compared to the year ended December 31, 1994. The overall increase in sales is due to increased shipments at the Advanced Technology operations partially offset by a decrease in sales at the Consumer Products operations because of a decrease in customer demands. The decrease in profit is primarily attributable to lower margins, due to expensing of certain start-up costs, and product mix. The respective amounts of funded and unfunded sales backlog at December 31, 1995 and 1994 for the Advanced Technology Group (ATG) were approximately $31,628,000 and $23,126,000 of which $25,809,000 and $16,487,000 were unfunded in the respective comparable periods. Approximately $13,100,000 of the December 31, 1995 unfunded backlog is for product deliveries beyond 1999. The unfunded portion of the backlog is based on the Company's customers' estimated quantities for multi-year agreements for which the Company has not received firm orders. Operating profit as a percentage of net sales for the year ended December 31, 1995 decreased to 8.5% from 9.9% as reported for the year ended December 31, 1994. The decrease in operating profit as a percentage of net sales is as described above. During the fourth quarter of 1994, the Company suffered damages caused by a fire at one of its subsidiaries. The Company maintained property and business interruption insurance and during 1995 has recognized approximately $130,000 as miscellaneous income and $150,000 as reduction of expenses incurred for losses due to business interruption. -11- 12 Selling, general and administrative costs decreased for the year ended December 31, 1995 primarily because of moving costs incurred and expensed in 1994 which were not applicable in 1995. Interest expense decreased because of obtaining long-term financing at lower interest rates. Depreciation expense for the period primarily increased as a result of the move to the Company's new corporate headquarters/Advanced Technology facility (see discussion under Liquidity and Capital Resources.) Income taxes in the year ended December 31, 1995 decreased as a percentage of income before taxes when compared to the year ended December 31, 1994 due primarily to variable state income tax rates and changes made by the Omnibus Budget Reconciliation Act of 1994. Liquidity and Capital Resources - ------------------------------- Certain contracts of the Advanced Technology Group require development and engineering costs in addition to hardware and the maintenance of inventory for replacement and/or overhaul. The replacement and/or overhaul units are billed at the time of shipment. The inventories at December 31, 1996, include costs associated with the initiation and maintenance of certain programs and costs in anticipation of increased demands upon the Company to support new programs and the request of customers' for shorter production lead time. During the year ended December 31, 1996, the Company expended $422,000 on capital expenditures. During the year ended December 31, 1995, the Company expended $126,000. The Company also has a $1,000,000 line of credit at December 31, 1996 on which no amount is outstanding at December 31, 1996. There are no material commitments for capital expenditures at December 31, 1996. In 1991, the Company's Board of Directors authorized the purchase by the Company of up to 250,000 additional shares of its common stock in open and privately negotiated transactions for a total authorized purchase of up to 350,000 shares, of which 254,424 shares have been purchased. Item 7. Financial Statements - ------- -------------------- The financial statements of the Registrant which are included in this Form 10-KSB Annual Report are described in the accompanying Index to Consolidated Financial Statements on Page F1. -12- 13 Item 8. Changes in and Disagreements with Accountants on Accounting - ------- ----------------------------------------------------------- and Financial Disclosure ------------------------ None. -13- 14 PART III -------- Item 9. Directors, Executive Officers, Promoters and Control Persons; - ------- ------------------------------------------------------------- Compliance with Section 16(a) of the Exchange Act ------------------------------------------------- Information regarding directors and executive officers of the Registrant is incorporated herein by reference to the information included in the Registrant's definitive proxy statement if it is filed with the Commission within 120 days after the end of the Registrant's 1996 fiscal year or such information will be included by amendment. Item 10. Executive Compensation - -------- ---------------------- Information regarding executive compensation is incorporated herein by reference to the information included in the Registrant's definitive proxy statement if it is filed with the Commission within 120 days after the end of the Registrant's 1996 fiscal year or such information will be included by amendment. Item 11. Security Ownership of Certain Beneficial Owners and Management - -------- -------------------------------------------------------------- Information regarding security ownership of certain beneficial owners and management is incorporated herein by reference to the information included in the Registrant's definitive proxy statement if it is filed with the Commission within 120 days after the end of the Registrant's 1996 fiscal year or such information will be included by amendment. Item 12. Certain Relationships and Related Transactions - -------- ---------------------------------------------- Information regarding certain relationships and related transactions is incorporated herein by reference to the information included in the Registrant's definitive proxy statement if it is filed with the Commission within 120 days after the end of the Registrant's 1996 fiscal year or such information will be included by amendment. -14- 15 Item 13. Exhibits and Reports on Form 8-K - -------- -------------------------------- (a) Exhibits --------
Exhibit number Presentation Reference ------ ------------ --------- 3(A)(1) Certificate of Incorporation Filed herewith 3(A)(2) Amendments to Certificate Filed herewith of Incorporation dated August 27, 1984 3(A)(3) Certificate of designation Exhibit 4(A) to 1987 regarding Series I Form 10-K* preferred stock 3(B) By-laws Exhibit 3(B) to 1986 Form 10-K* 4(A) First amended and restated Exhibit 4(A) to 1993 term loan agreement with Form 10-KSB* Fleet Bank of New York dated October 4, 1993 4(B)(1) Letter of Credit Reimbursement Exhibit 4(B)(1) to Agreement with Fleet Bank 1994 10-KSB* dated as of December 1, 1994 4(B)(2) Agency Mortgage and Security Exhibit 4(B)(2) to Agreement dated as of 1994 10-KSB* December 1, 1994 from the Registrant and its subsidiaries 4(B)(3) Guaranty Agreement dated as Exhibit 4(B)(3) to of December 1, 1994 from the 1994 10-KSB* Registrant and its subsidiaries to the Erie County Industrial Development Agency ("ECIDA"), Norwest Bank Minnesota, N.A., as Trustee, and Fleet Bank 4(C) Shareholder Rights Plan Attachment B to Form dated as of August 13, 8-K filed August 17, 1992 1992* -------------------------------------------------------------- *Incorporated herein by reference (File No. 1-7109) **Indicates management contract or compensatory plan or arrangement
-15- 16
Exhibit number Presentation Reference ------ ------------ --------- 10(A)(1) Employment contract** Exhibit 10(A) to 1986 Form 10-K* 10(A)(2) Amendment to employment Filed herewith contract** 10(A)(3) Amendment to employment Filed herewith contract** 10(B) Form of Indemnification Exhibit 10(E) to 1986 Agreement between the Form 10-K* Registrant and each of its Directors and Officers** 10(C)(1) Loan agreement between Exhibit 10(C)(1) the Company and its to 1991 Form 10-K* employee stock ownership trust, as amended 10(C)(2) Stock purchase agreement Exhibit 10(D)(2) to between the Company 1988 Form 10-K* and its employee stock ownership trust 10(D)(1)(a) 1989 Employees Stock Exhibit A to Form Option Plan** 8: Amendment No. 1 to 1988 Form 10-K* 10(D)(1)(b) Amendment to 1989 Exhibit 10(D)(1)(b) Employees Stock Option to 1990 Form 10-K* Plan** 10(D)(1)(c) Amendment No. 2 to Exhibit 10(D)(1)(d) to 1989 Employees Stock 1991 Form 10-K* Option Plan** 10(D)(2) Stock Option Agreement Exhibit B to Form for Donald W. Hedges 8: Amendment dated April 28, 1989** No. 1 to 1988 Form 10-K* -------------------------------------------------------------- *Incorporated herein by reference (File No. 1-7109) **Indicates management contract or compensatory plan or arrangement
-16- 17
Exhibit number Presentation Reference ------ ------------ --------- 10(D)(3) Stock Option Agreement Exhibit D to Form for Nicholas D. 8: Amendment Trbovich, Sr. dated No. 1 to 1988 March 29, 1989** Form 10-K* 10(D)(4) Stock Option Agreement Exhibit 10(D)(4) to 1990 for William H. Duerig Form 10-K* dated December 21, 1990** 10(D)(5) Stock Option Agreement Exhibit 10(D)(5) to 1990 for Nicholas D. Form 10-K* Trbovich, Jr. dated December 21, 1990** 10(D)(6) Stock Option Agreement for Nicholas D. Trbovich, Jr. dated Exhibit 10(D)(6) to 1991 October 17, 1991** Form 10-K* 10(D)(7) Stock Option Agreement Exhibit 10(D)(7) to 1991 for Lee D. Burns dated Form 10-K* October 17, 1991** 10(D)(8) Stock Option Agreement Exhibit 10(D)(8) to 1991 for Raymond C. Zielinski Form 10-K* dated October 17, 1991** 10(D)(9) Land Lease Agreement between Exhibit 10(D)(9) to 1992 TSV, Inc. (wholly-owned Form 10-KSB* subsidiary of the Registrant) and the ECIDA dated as of May 1, 1992, and Corporate Guaranty of the Registrant dated as of May 1, 1992 10(D)(10) Amendment to Land Lease Exhibit 10(D) (11) to 1993 Agreement and Interim Form 10-KSB* Lease Agreement dated November 19, 1992 -------------------------------------------------------------- *Incorporated herein by reference (File No. 1-7109) **Indicates management contract or compensatory plan or arrangement
-17- 18
Exhibit number Presentation Reference ------ ------------ --------- 10(D)(11) Lease Agreement dated as of Exhibit 10(D)(11) to December 1, 1994 between 1994 10-KSB* the Erie County Industrial Development Agency ("ECIDA") and TSV, Inc. 10(D)(12) Sublease Agreement dated as Exhibit 10(D)(12) to of December 1, 1994 between 1994 10-KSB* TSV, Inc. and the Registrant 21 Subsidiaries of the Exhibit 22 to 1992 Registrant Form 10-KSB* 27 Financial Data Schedule Filed Herewith
The Registrant hereby agrees that it will furnish to the Securities and Exchange Commission upon request a copy of any instrument defining the rights of holders of long-term debt not filed herewith. (b) Reports on Form 8-K ------------------- No reports on Form 8-K were filed during the fourth quarter of the year ended December 31, 1996. FORWARD-LOOKING STATEMENTS In addition to historical information, certain sections of this Form 10-KSB contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21 E of the Securities Exchange Act of 1934, such as those pertaining to the Company's capital resources and profitability. Forward-looking statements involve numerous risks and uncertainties. The Company derives approximately 22% of its revenues from contracts with agencies of the U.S. Government or their prime contractors. The Company's business is performed under fixed price contracts and the following factors, among others discussed herein, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements: uncertainties in today's global economy, the growth of the national deficit and difficulty in predicting defense appropriations, the discontinuance of current defense programs, the vitality of the commercial aviation industry and its ability to purchase new aircraft, the willingness and ability of the Company's customers to fund and issue substantial follow-on orders to the Company for long-term programs, competitive products and pricing, difficulties in the development or commercialization of products, product demand and market acceptance, both for the company's products and its customers' products which incorporate components supplied by the Company, enforceability of intellectual property rights, capacity and supply, the effects of foreign competition, and the Company's future accounting policies. The success of the Company also depends upon the trends of the economy, including interest rates, -------------------------------------------------------------- *Incorporated herein by reference (File No. 1-7109) **Indicates management contract or compensatory plan or arrangement -18- 19 income tax laws, governmental regulation, legislation, population changes and those risk factors discussed elsewhere in this Form 10-KSB. Readers are cautioned not to place undue reliance on forward-looking statements, which reflect management's analysis only as the date hereof. The Company assumes no obligation to update forward-looking statements. -------------------------------------------------------------- *Incorporated herein by reference (File No. 1-7109) **Indicates management contract or compensatory plan or arrangement -19- 20 SIGNATURES ---------- In accordance with of Section 13 or 15(d) 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. SERVOTRONICS, INC. March 20, 1997 By /s/ Nicholas D. Trbovich, President ----------------------------------- Nicholas D. Trbovich President, Chief Executive Officer and Chairman of the Board In accordance with the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. /s/ Nicholas D. Trbovich President, Chief Executive March 20, 1997 - -------------------------- Officer, Chairman of the Nicholas D. Trbovich Board and Director /s/ Lee D. Burns Treasurer and Secretary March 20, 1997 - -------------------------- (Chief Financial Officer) Lee D. Burns /s/ Donald W. Hedges Director March 20, 1997 - -------------------------- Donald W. Hedges /s/ William H. Duerig Director March 20, 1997 - -------------------------- William H. Duerig /s/ Nicholas D. Trbovich Jr. Director March 20, 1997 - -------------------------- Nicholas D. Trbovich Jr.
-20- 21 SERVOTRONICS, INC. AND SUBSIDIARIES ----------------------------------- INDEX TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------
Page ---- Report of independent accountants F2 Consolidated balance sheet at December 31, 1996 F3 Consolidated statement of income for the years ended December 31, 1996 and 1995 F4 Consolidated statement of cash flows for the years ended December 31, 1996 and 1995 F5 Notes to consolidated financial statements F6-F18
Financial statement schedules are omitted because they are not applicable or the required information is shown in the financial statements or the notes thereto. F1 22 Report of Independent Accountants --------------------------------- To the Board of Directors and Shareholders of Servotronics, Inc. In our opinion, the consolidated financial statements listed in the accompanying index on page F1 present fairly, in all material respects, the financial position of Servotronics, Inc. and its subsidiaries at December 31, 1996 and the results of their operations and their cash flows for each of the two years in the period ended December 31, 1996, in conformity with generally accepted accounting principles. 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 audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. PRICE WATERHOUSE LLP Buffalo, New York March 20, 1997 F2 23 SERVOTRONICS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET DECEMBER 31, 1996 ($000'S OMITTED EXCEPT PER SHARE DATA)
Assets Current assets: Cash $ 1,389 Accounts receivable 2,714 Inventories 7,207 Deferred tax asset 564 Other 1,129 -------- Total current assets 13,003 Property, plant and equipment, net 7,352 Other assets 455 -------- $ 20,810 ======== Liabilities and Shareholders' Equity Current liabilities: Current portion of long-term debt $ 243 Accounts payable 991 Accrued employee compensation and benefit costs 874 Accrued income taxes 200 Other accrued liabilities 220 -------- Total current liabilities 2,528 -------- Long-term debt 6,645 Non-current deferred tax liability 543 Shareholders' equity: Common stock, par value $.20; authorized 4,000,000 shares; Issued 2,614,506 shares 523 Capital in excess of par value 13,269 Retained earnings 1,485 -------- 15,277 Employee stock ownership trust commitment (2,943) Treasury stock, at cost, 259,028 shares (1,240) -------- Total shareholders' equity 11,094 -------- $ 20,810 ========
See notes to consolidated financial statements F3 24 SERVOTRONICS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME ($000's OMITTED EXCEPT PER SHARE DATA) Year Ended December 31, 1996 1995 ---- ---- Net sales $ 15,600 $ 16,359 Costs and expenses: Cost of goods sold 10,796 11,936 Selling, general and administrative 3,010 3,026 Interest 335 378 Depreciation and amortization 637 691 Gain on sale of assets (1,116) 0 Charges related to sale of assets 477 0 -------- ------- 14,139 16,031 -------- ------- Income before income taxes 1,461 328 Income tax provision 587 127 -------- ------- Net income $ 874 $ 201 ======== ======= Net income per share $ 0.52 $ 0.12 * ======== ======= *Restated to give effect for shares issued in conjunction with the 8% stock dividend declared in May 1996 (See Note 7 to Consolidated Financial Statements).
See notes to consolidated financial statements F4 25 SERVOTRONICS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS ($000'S OMITTED)
Year Ended December 31, 1996 1995 -------- ------ Cash flows related to operating activities: Net income $ 874 $ 201 Adjustments to reconcile net income to net cash provided by (used in) operating activities -- Depreciation and amortization 637 691 Deferred taxes (155) (6) Gain on sale of assets (exclusive of related charges) (1,116) 0 Change in assets and liabilities -- Accounts receivable (219) 566 Inventories (539) (358) Prepaid income taxes 261 23 Other current assets (179) 159 Other assets 15 (181) Accounts payable 93 (892) Accrued employee compensation & benefit costs 187 19 Accrued income tax 200 0 Other accrued liabilities 12 (172) Employee stock ownership trust payment 101 101 ------- ------- Net cash provided by operating activities 172 151 ------- ------- Cash flows related to investing activities: Sale of assets 1,255 0 Capital expenditures -- property, plant & equipment (422) (126) ------- ------- Net cash provided by (used in) investing activities 833 (126) ------- ------- Cash flows related to financing activities: Increase in demand loan 100 667 Increase in long-term debt 0 575 Principal payments on long-term debt (228) (170) Payments on demand loan (100) (975) ------- ------- Net cash (used in) provided by financing activities (228) 97 ------- ------- Net increase in cash 777 122 Cash at beginning of period 612 490 ------- ------- Cash at end of period $ 1,389 $ 612 ======= ======= Supplemental disclosures: Income taxes paid $ 294 $ 298 Interest paid $ 339 $ 335
See notes to consolidated financial statements F5 26 SERVOTRONICS, INC. AND SUBSIDIARIES ----------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------ 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies of Servotronics, Inc. (the Company) and subsidiaries are as follows: PRINCIPLES OF CONSOLIDATION --------------------------- The consolidated financial statements include the accounts of Servotronics, Inc. and its wholly-owned subsidiaries. REVENUE RECOGNITION ------------------- The Company incurred costs for certain contracts which are long term. These contracts are accounted for under the percentage of completion method (cost-to-cost) which recognizes revenue as the work progresses towards completion. Revenues on the remaining contracts are recognized when the terms of purchase orders are met. Included in other current assets is $187,000 of unbilled revenues which represents revenue earned under the percentage of completion method (cost-to-cost) not yet billable under the terms of the contracts. Included in other accrued liabilities is $80,000 of deferred revenue which represents billings under the terms of the contracts in excess of revenues earned under the percentage of completion method. INVENTORIES ----------- Inventories are stated generally at the lower of standard cost, which approximates actual cost (first-in, first-out), or market. PROPERTY, PLANT AND EQUIPMENT ----------------------------- Property, plant and equipment is carried at cost; expenditures for new facilities and equipment and expenditures which substantially increase the useful lives of existing plant and equipment are capitalized; expenditures for maintenance and repairs are charged directly to cost or F6 27 expenses as incurred. Upon retirement or disposal of properties, the related cost and accumulated depreciation are removed from the respective accounts and any profit or loss on disposition is included in income. Depreciation is provided on the basis of estimated useful lives of depreciable properties, primarily by the straight-line method for financial statement purposes and by accelerated methods for tax purposes. Depreciation expense includes the amortization of capital lease assets. The estimated useful lives of depreciable properties are generally as follows:
Buildings and improvements 5-39 years Machinery and equipment 5-15 years Tooling 3-5 years
INCOME TAXES ------------ The Company and its subsidiaries file a consolidated federal income tax return and separate state income tax returns. The Company follows the asset and liability approach to account for income taxes. This approach requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. EMPLOYEE STOCK OWNERSHIP PLAN ----------------------------- Contributions to the employee stock ownership plan are determined annually by the Company according to plan formula. INCOME PER SHARE ---------------- Income per share is based on weighted average outstanding shares of 1,665,727 for 1996 and 1,632,690 in 1995. All shares owned by the Employee Stock Ownership Plan (ESOP) which are unallocated are not deemed to be outstanding for purposes of calculating income per share. F7 28 USE OF ESTIMATES ---------------- The preparation of the consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates employed by management include those used in revenue recognition, amortization of engineering and other support costs included in inventory (See Note 2) and calculating amounts receivable under an insurance claim (See Note 11). Actual results could differ from those estimates. 2. INVENTORIES
DECEMBER 31, 1996 ----------------- ($000's omitted) Raw materials and common parts $ 1,107 Work-in-process (including engineering and other support costs of $2,428,000) 6,034 Finished goods 302 ---------- 7,443 Less common parts expected to be used after one year (236) ---------- $ 7,207 ==========
Engineering and other support costs are incurred in fulfilling certain contracts which have a production cycle longer than one year. A portion of these costs will therefore not be realized within one year. F8 29 3. PROPERTY, PLANT AND EQUIPMENT
DECEMBER 31, 1996 ----------------- ($000's omitted) Land $ 11 Buildings and improvements 6,063 Machinery, equipment and tooling 7,396 ---------- 13,470 Less accumulated depreciation (6,118) ---------- $ 7,352 ==========
4. LONG-TERM DEBT
DECEMBER 31, 1996 ----------------- ($000's omitted) Industrial Development Revenue Bonds; secured by a letter of credit from a bank with interest payable monthly at a floating rate (4.50% at December 31, 1996 and an average rate for the year of 3.80%) $ 5,000 Unsecured term note; payable to a bank with interest at prime plus 1/4% (8 1/2% at December 31, 1996); quarterly principal payments of $34,439 through November 1, 2000 517 Secured term note; payable to a government agency with interest at 6%; monthly principal payments of $2,778 commencing on July 1, 1995 through May 1, 2004, with a final principal payment of $102,754 due June 1, 2004 350 Various other secured term notes payable to government agencies 1,021 ---------- 6,888 Less current portion 243 ---------- $ 6,645 ==========
F9 30 Industrial Development Revenue Bonds were issued by a government agency to finance the construction of the Company's new headquarters/Advanced Technology facility. Annual sinking fund payments of $170,000 commence December 1, 2000 and continue through 2013, with a final payment of $2,620,000 due December 1, 2014. The Company has agreed to reimburse the issuer of the letter of credit if there are draws on that letter of credit. The Company pays the letter of credit bank an annual fee of 1% of the amount secured thereby and pays the remarketing agent for the bonds an annual fee of .25% of the principal amount outstanding. The Company's interest under the facility capital lease has been pledged to secure its obligations to the government agency, the bank and the bondholders. The letter of credit reimbursement agreement, the unsecured term note agreement and the secured term note contain, among other things, covenants relative to maintenance of working capital and tangible net worth and restrictions on capital expenditures, leases and additional borrowings. Principal maturities of long-term debt are as follows: 1998 - $248,000; 1999 - $249,000; 2000 - $404,000; 2001 - $250,000; 2002 and thereafter $5,494,000. The Company also has a $1,000,000 line of credit on which there was no amount outstanding at December 31, 1996. 5. EMPLOYEE BENEFIT PLANS ---------------------- EMPLOYEE STOCK OWNERSHIP PLAN (ESOP) ------------------------------------ Under the Company's ESOP adopted in 1985, participating employees are awarded shares of the Company's common stock based upon salary levels and minimum service requirements. Upon inception of the ESOP, the Company borrowed $2,000,000 from a bank and lent the proceeds to the trust established under the ESOP to purchase shares of the Company's common stock. The Company's loan to the trust is at an interest rate approximating the prime rate and is repayable to the Company over a 40-year term ending in December 2024. During 1987 and 1988, the Company loaned an additional $1,942,000 to the trust under terms similar to the F10 31 Company's original loan. Each year the Company makes contributions to the trust which the plan's trustees use to repay the principal and interest due the Company under the trust loan agreement. Shares held by the trust are allocated in the aggregate to participating employees in proportion to the amount of the loan repayment made by the trust to the Company. Since inception of the ESOP, approximately 281,000 shares have been allocated, exclusive of shares distributed to ESOP participants. At December 31, 1996 and 1995, approximately 662,000 and 696,000 shares, respectively, purchased by the ESOP remain unallocated, after adjustment for the 8% stock dividend declared in 1996. Related compensation expense associated with the Company's ESOP, which is equal to the principal reduction on the loans receivable from the trust, amounted to $101,000 in 1996 and 1995. Included as a reduction to shareholders' equity is the employee stock ownership trust commitment which represents the remaining indebtedness of the trust to the Company. Employees are entitled to vote allocated shares and the ESOP trustees are entitled to vote unallocated shares. DEFINED BENEFIT PLAN -------------------- A Consumer Products division subsidiary of the Company maintains a noncontributory defined benefit pension plan covering substantially all its employees. Plan benefits are based on stated amounts for each year of service; funding is in accordance with statutory requirements. Pension cost of $31,000 and $36,000 was recognized in 1996 and 1995, respectively, calculated using a weighted-average discount rate and weighted-average expected rate of return on plan assets of 8%. The projected benefit obligation under the plan at December 31, 1996 was $124,000, net of $99,000 of plan assets at fair value. Included in the December 31, 1996 consolidated balance sheet is $37,000 of prepaid pension cost related to the plan. DEFERRED COMPENSATION PLAN -------------------------- The Company maintains a deferred compensation program designed to achieve, among other things, benefit parity for an officer of the Company. During 1996, $165,000 was accrued under this program. No amount was accrued under this program in 1995. No amounts under this plan have been paid since its inception and accrued in the December 31, 1996 consolidated balance sheet is $420,000. F11 32 6. INCOME TAXES ------------ The provision for income taxes included in the consolidated statement of income consists of the following:
1996 1995 ---- ---- ($000's omitted) Current: Federal income tax $ 611 $ 111 State income tax 131 22 ------- ------- 742 133 ------- ------- Deferred: Federal income tax (benefit) (131) (4) State income tax (benefit) (24) (2) -------- -------- (155) (6) ------- ------- $ 587 $ 127 ======= =======
The reconciliation of the difference between the Company's effective tax rate based upon the total income tax provision and the federal statutory income tax rate is as follows:
1996 1995 ---- ---- Statutory rate 34% 34% Increase resulting from: State tax (net of federal benefit) 5% 4% Other 1% 1% -- -- 40% 39% == ==
F12 33 At December 31, 1996, the deferred tax assets (liabilities) were comprised of the following:
($000's omitted) Inventory $ 228 Accrued pension 172 Accrued vacation 106 Other 58 -------- Gross deferred tax assets 564 Property, plant and equipment (519) Other (24) Gross deferred tax liabilities (543) -------- Net deferred tax asset $ 21 ========
7. COMMON SHAREHOLDERS' EQUITY
COMMON STOCK ------------ NUMBER CAPITAL IN OF SHARES EXCESS OF RETAINED TREASURY ISSUED AMOUNT PAR VALUE EARNINGS ESOP STOCK ---------------------------------------------------------------------------------- ($000's omitted) Balance December 31, 1994 2,317,248 $ 463 $ 11,982 $ 1,762 ($ 3,145) ($ 1,240) Compensation expense -- -- -- -- 101 -- Stock dividend paid 123,160 25 513 (541) -- -- Net income -- -- -- 201 -- -- --------- --------- --------- --------- --------- --------- Balance December 31, 1995 2,440,408 $ 448 $ 12,495 $ 1,422 ($ 3,044) ($ 1,240) Compensation expense -- -- -- -- 101 -- Stock dividend paid 174,098 35 774 (811) -- -- Net income -- -- -- 874 -- -- --------- --------- --------- --------- --------- --------- Balance December 31, 1996 2,614,506 $ 523 $ 13,269 $ 1,485 ($ 2,943) ($ 1,240) ========= ========= ========= ========= ========= =========
STOCK DIVIDEND - -------------- On May 3, 1996, the Board of Directors declared an 8% stock dividend to shareholders of record on May 31, 1996, payable July 1, 1996. F13 34 STOCK OPTIONS ------------- Under the Servotronics, Inc. 1989 Employees Stock Option Plan (the Option Plan) and other separate agreements authorized by the Board of Directors, the Company has granted options to its Chairman, directors and/or officers. The Company applies APB Opinion No. 25 and related interpretations in accounting for the Option Plan and the separate option agreements. Accordingly, no compensation expense has been recognized as stock options granted have an exercise price equal to the market price on the date of grant. The Company did not grant options under the Option Plan or through separate agreements in either 1996 or 1995. At December 31, 1996, 33,200 shares of common stock were available under the Option Plan. Options granted under the Option Plan have durations of ten years. At December 31, 1996, the number of shares subject to and the exercise price of options granted to its Chairman, directors and/or officers, as adjusted for the 1996 stock dividend, are 37,778 at approximately $2.63 per share, 12,593 at approximately $2.56 per share, 25,186 at approximately $2.07 per share and 17,172 at approximately $5.95 per share. At December 31, 1996, all of the 92,729 shares granted under the Option Plan and through the separate agreements are exercisable and have a weighted average remaining contractual life of 4 years. SHAREHOLDERS' RIGHTS PLAN ------------------------- During 1992, the Company's Board of Directors adopted a shareholders' rights plan (the "Rights Plan") and simultaneously declared a dividend of one Right for each outstanding share of the Company's common stock outstanding at August 28, 1992. The Rights do not become exercisable until the earlier of (i) the date of the Company's public announcement that a person or affiliated group other than Dr. Nicholas D. Trbovich or the ESOP trust (an "Acquiring Person") has acquired, or obtained the right to acquire, beneficial ownership of 25% or more of the Company's common stock (excluding shares held by the ESOP trust) or (ii) ten business days following the commencement of a tender offer that would result in a person or affiliated group becoming an Acquiring Person. The exercise price of a Right has been established at $30.00. Once exercisable, each Right would entitle the holder to purchase one one-hundredth of a share of Series A Junior Participating Preferred Stock. In the event that any person becomes an Acquiring Person, each F14 35 Right would entitle any holder other than the Acquiring Person to purchase common stock or other securities of the Company having a value equal to three times the exercise price. The Board of Directors has the discretion in such event to exchange two shares of common stock or two one-hundredths of a share of preferred for each Right held by any holder other than the Acquiring Person. 8. COMMITMENTS ----------- The Company leases certain equipment pursuant to operating lease arrangements. Total rental expense in 1996 and 1995 and future minimum payments under such leases are not significant. 9. LITIGATION ---------- There are no legal proceedings which are material to the Company currently pending by or against the Company other than ordinary routine litigation incidental to the business which is not expected to materially adversely affect the business or earnings of the Company. 10. GAIN ON SALE OF ASSETS ---------------------- Included in 1996 income before taxes is $639,000 realized from the sale of the Company's former headquarters, net of charges related to the sale including certain environmental and compensation costs. 11. INVOLUNTARY CONVERSION ---------------------- During the fourth quarter of 1994, the Company suffered damages caused by a fire at one of its subsidiaries. The Company maintained property and business interruption insurance and during 1995 recognized approximately $130,000 as miscellaneous income and $150,000 as reductions of expenses incurred for losses due to business interruption. Included in other current assets at December 31, 1996 is a $441,000 receivable for the business interruption claim, of which $101,000 has been collected subsequent to year end. Insurance proceeds from property damage claims were collected during 1995. 12. BUSINESS SEGMENTS ----------------- The Company operates in two business segments, Advanced Technology Products and Consumer Products. Operations in Advanced Technology Products involve the design, manufacture, and marketing of servo-control components for government and commercial industrial applications. Consumer Products operations involve the design, manufacture and F15 36 marketing of a variety of cutlery products for use by consumers and government agencies. Information regarding the Company's operations in these segments is summarized as follows: F16 37
Advanced Year ended Technology Consumer December 31, 1996 Products Products Consolidated ----------------- -------- -------- ------------ ($000's omitted) Sales to unaffiliated customers $ 8,197 $ 7,403 $ 15,600 ============= =========== ================= Operating profit $ 2,703 $ (493) $ 2,210 * ============= ============ Interest expense (335) General corporate expense (414) ----------------- Income before income taxes $ 1,461 ================= Identifiable assets $ 14,339 $ 5,862 $ 20,201 ============= =========== ================= Depreciation expense $ 336 $ 301 $ 637 ============= =========== ================= Capital expenditures $ 193 $ 229 $ 422 ============= =========== =================
Advanced Year ended Technology Consumer December 31, 1995 Products Products Consolidated ----------------- -------- -------- ------------ ($000's omitted) Sales to unaffiliated customers $ 8,382 $ 7,977 $ 16,359 ============== =========== ================= Operating profit $ 943 $ 148 $ 1,091 ** ============== =========== Interest expense (378) General corporate expense (385) ----------------- Income before income taxes $ 328 ================= Identifiable assets $ 13,388 $ 6,318 $ 19,706 ============== =========== ================= Depreciation expense $ 358 $ 333 $ 691 ============== =========== ================= Capital expenditures ($ 122) $ 248 $ 126 =============== =========== ================= * Includes $639,000 as a net gain from sale of former headquarters. - See Note 10. ** Includes $280,000 as miscellaneous income and reductions of expenses from business interruption insurance proceeds.
F17 38 The Company engages in a significant amount of business with the United States Government through sales to its prime contractors and otherwise. Such contracts by the Advanced Technology segment accounted for revenues of approximately $2,795,000 in 1996 and $3,258,000 in 1995. Similar contracts by the Consumer Products segment accounted for revenues of approximately $646,000 in 1996 and $568,000 in 1995. Sales of advanced technology products to one prime contractor, including various divisions and subsidiaries of a common parent company, amounted to approximately 15% and 10% of total sales in 1996 and 1995, respectively, another customer amounted to approximately 13% of total sales in 1996 and 1995. No other single customer represented more than 10% of the Company's sales in any of these years. F18 EX-3.A.1 2 EXHIBIT 3(A)(1) 1 EXHIBIT 3(A)(i) CERTIFICATE OF INCORPORATION OF SERVOTRONICS, INC. FIRST: The name of the Corporation is Servotronics, Inc. SECOND: The address of its registered office in the State of Delaware is 100 West Tenth Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company. THIRD: The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. FOURTH: The total number of shares of stock which the Corporation shall have authority to issue is Four Million (4,000,000) shares of Common Stock with a par value of $.20 per share and Four Million (4,000,000) shares of Preferred Stock with a par value of $.20 per share. The Board of Directors of the Corporation is hereby expressly vested with authority to authorize the issuance of the preferred stock in any class or classes or any series of any class, and which classes or series may have such voting powers, full or limited, or non voting powers, and such designations, preferences and relative, participating, optional or other special rights and qualifications, limitations or restrictions 2 thereof, as shall be stated and expressed in the resolution or resolutions providing for the issue of such stock adopted by the Board of Directors pursuant to authority expressly vested in it by the provisions of this Certificate of Incorporation. FIFTH: The name and mailing address of the incorporator is as follows: NAME ADDRESS Robert S. Kant 12th Floor Packard Building 15th and Chestnut Streets Philadelphia, Pennsylvania 19102 SIXTH: The Corporation shall have perpetual existence. SEVENTH: In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to make, alter or repeal the By-Laws of the Corporation. EIGHTH: Meetings of stockholders may be held within or without the State of Delaware, as the By-Laws may provide. The books of the Corporation may be kept (subject to any provision contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the By-Laws of the Corporation. Election of directors need not be by written ballot unless the By-Laws of the Corporation shall so provide. -2- 3 NINTH: The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. IN WITNESS WHEREOF, I have hereunder set my hand and seal this 6th day of September 1972. /s/ Robert S. Kant -------------------------------- Robert S. Kant -3- EX-3.A.2 3 EXHIBIT 3(A)(2) 1 Exhibit 3(A)(2) CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF SERVOTRONICS, INC. Servotronics, Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY: FIRST: That, at a meeting duly called and held on April 24, 1984, the Board of Directors of said corporation adopted a resolution proposing and declaring advisable an amendment to the Certificate of Incorporation of said corporation consisting of the addition thereto of the following new articles "TENTH" and "ELEVENTH": "TENTH: Notwithstanding any other provision of this Certificate of Incorporation or the By-Laws of the Corporation to the contrary, no action required to be taken or which may be taken at any annual or special meeting of stockholders of the Corporation may be taken by written consent without a meeting except action taken upon the signing of a consent in writing, setting forth the action so taken, by holders of all the outstanding capital stock of the Corporation entitled to vote thereon. ELEVENTH: 1. The affirmative vote of the holders of not less than seventy-five percent (75%) of the outstanding shares of "Common Stock" (all terms in this Article ELEVENTH identified by quotation marks on first use 2 are hereinafter defined) shall be required for the approval or authorization of any "Business Combination" of the Corporation or any "Subsidiary" with any "Related Person", or any "Affiliate" or "Associate" of any Related Person, notwithstanding the fact that the law or any agreement between the Corporation and a national securities exchange or any other agreement or authority may otherwise require or specify a lesser percentage, PROVIDED, HOWEVER, that the seventy-five percent (75%) voting requirement shall not be applicable, and such Business Combination shall require only such affirmative vote as is otherwise required by law, any agreement between the Corporation and a national securities exchange, or any other agreement or authority if: (a) such Business Combination shall have been approved by a resolution adopted by seventy-five percent (75%) of those members of the Board of Directors of the Corporation holding office at the time such resolution is adopted who are not "Related Person Directors"; or (b) all of the following conditions are met: (1) the cash or "Fair Market Value" of the property, securities or other consideration to be received per share by the holders of Common Stock of the Corporation is not less than the highest of: (A) the highest per share price (including brokerage commissions, transfer taxes and soliciting dealers' fees) paid by or on behalf of the Related Person to become the "Beneficial Owner" of any share of Common Stock of the Corporation (i) within the period beginning two (2) years prior to the "Announcement Date" and ending on the later of the "Announcement Date" or the date ten (10) calendar days before the "Combination Date" or (ii) in the transaction or series of transactions in which the Related Person became a Related Person, whichever is higher; or -2- 3 (B) the Fair Market Value per share of the shares of Common Stock of the Corporation being acquired in the Business Combination as of (i) the Announcement Date or (ii) the tenth calendar day prior to the Combination Date or (iii) the date on which the Related Person became a Related Person, whichever is highest; or (C) the Fair Market Value per share of Common Stock as determined pursuant to subparagraph (B) of this Section 1(b)(1) multiplied by a fraction, the numerator of which is the highest price per share (including any brokerage commission, transfer taxes and soliciting dealers' fees) paid by or on behalf of the Related Person for any shares of Common Stock of which it acquired Beneficial Ownership within the two-year period immediately prior to the date used to determine the Fair Market Value pursuant to subparagraph (B) of this Section 1(b)(1) and the denominator of which is the Fair Market Value per share of Common Stock of the Corporation on the first day in such two-year period on which the Related Person became the Beneficial Owner of any shares of Common Stock; and (2) the consideration to be received by holders of Common Stock of the Corporation shall be in cash or in the same form as previously has been paid by or on behalf of the Related Person in connection with its acquisition of Beneficial Ownership of shares of Common Stock of the Corporation. If the consideration so paid for any such share varied in form, the form of consideration shall be either cash or the form used to acquire Beneficial Ownership of the largest number of shares of Common Stock of the Corporation previously Beneficially Owned by such Related Person. 2. For purposes of this Article ELEVENTH: (a) The term "Business Combination" shall mean: -3- 4 (1) any merger or consolidation of the Corporation or a Subsidiary with any Person which is, or after such merger or consolidation would be, a Related Person or an Affiliate or Associate of a Related Person; (2) any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions) with any Related Person or any Affiliate or Associate of any Related Person, of all or any "Substantial Part" of the assets of the Corporation or of a Subsidiary to a Related Person or any Affiliate or Associate of any Related Person; (3) the adoption of any plan or proposal for the liquidation or dissolution of the Corporation proposed by or on behalf of a Related Person or any Affiliate or Associate of any Related Person; (4) the issuance or transfer to any Related Person or any Affiliate or Associate of any Related Person, in exchange for cash, securities or other property, of (A) shares of Common Stock equivalent to ten percent (10%) or more of the shares of Common Stock outstanding immediately after such issuance or transfer or (B) other securities of the Corporation or securities of a Subsidiary having an aggregate Fair Market Value on the date of such issuance or transfer equivalent to fifteen percent (15%) of the Corporation's total assets as shown on its most recent audited consolidated balance sheet or more; PROVIDED HOWEVER, that this subparagraph (4) of Section 2(a) shall not apply to the issuance or transfer of securities pursuant to the conversion of convertible securities or the exercise of rights, warrants or options to acquire securities if the convertible securities, rights, warrants or options were outstanding on July 26, 1984 or were authorized by a resolution adopted by seventy-five percent (75%) of those members of the Board of Directors holding office at -4- 5 the time such resolution is adopted who are not Related Person Directors; (5) any reclassification of securities (including any reverse stock split) or recapitalization of the Corporation or any other transaction that would have the effect, either directly or indirectly, of increasing the proportionate share of the Common Stock of the Corporation or the equity securities of any Subsidiary which is Beneficially Owned by any Related Person; and (6) any agreement, contract or other arrangement providing for any of the transactions described in this definition of Business Combination. (b) Notwithstanding subparagraph (a) of this Section 2, the term "Business Combination" shall not include a transaction which would otherwise be a Business Combination if such transaction involves solely the Corporation and a Subsidiary none of whose stock is Beneficially Owned by a Related Person (other than Beneficial Ownership arising solely because of "Control" of the Corporation); PROVIDED, HOWEVER, that if the Corporation is not the surviving company or if the Business Combination will cause the shareholders of the Corporation to receive consideration in addition to or in total or partial exchange for their Common Stock of the Corporation: (1) each holder of Common Stock of the Corporation receives the same type of consideration in such transaction in proportion to such holder's stockholdings; (2) the provisions of Articles TENTH and ELEVENTH of the Corporation's Certificate of Incorporation are continued in effect or adopted by the surviving company as part of its articles of incorporation and such articles have no provisions inconsistent with Articles TENTH and ELEVENTH; and (3) the provisions of the Corporation's By-Laws are continued in effect or adopted by the surviving company. -5- 6 (c) The term "Person" shall mean any individual, firm, corporation or other entity and shall include any group comprised of any Person and any other Person or Persons with whom such Person or any Affiliate or Associate of such Person has any agreement, arrangement or understanding, directly or indirectly, for the purpose of acquiring, holding, voting or disposing of Common Stock of the Corporation. (d) The term "Related Person" shall mean any Person (other than the Corporation) who or which: (1) is the Beneficial Owner of over twenty percent (20%) of the Common Stock of the Corporation; or (2) is an Affiliate or Associate of the Corporation and at any time within the five-year period immediately prior to the date in question was the Beneficial Owner of over twenty percent (20%) of the Common Stock of the Corporation. (e) A Person shall be a "Beneficial Owner" and shall be deemed to have "Beneficial Ownership" of any shares of Common Stock of the Corporation (whether or not owned of record): (1) with respect to which such Person or any Affiliate or Associate of such Person directly or indirectly has or shares (A) voting power, including the power to vote or to direct the voting of such shares of Common Stock, or (B) investment power, including the power to dispose of or to direct the disposition of such shares of Common Stock; or (2) which such Person or any of its Affiliates or Associates has, directly or indirectly, (A) the right to acquire (whether such right is exercisable immediately or only after the passage of time), pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise, or (B) the right to vote pursuant to any agreement, arrangement -6- 7 or understanding (whether such right is exercisable immediately or only after the passage of time); or (3) which are Beneficially Owned, within the meaning of subparagraphs (1) and (2) of this Section 2(e), by any other Person with which such Person or any of its Affiliates or Associates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any shares of Common Stock of the Corporation or acquiring, holding or disposing of all or substantially all, or any Substantial Part, of the assets of the Corporation or a Subsidiary. (f) For the purposes of determining whether a Person is a Related Person pursuant to subparagraph (d) of this Section 2, (1) the number of shares of Common Stock of the Corporation deemed to be outstanding shall include shares deemed Beneficially Owned by such Person through application of subparagraph (2) of Section 2(e) above, but shall not include any other shares of Common Stock of the Corporation which may be issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options, or otherwise, and (2) the number of shares of Common Stock of the Corporation deemed Beneficially Owned by such Person shall not include any shares: (A) held by any trust for the benefit of an "Employee" or group or class of Employees described in Section 401(a) of the "Code" that is exempt from tax under Section 501(a) of the Code or any other compensation plan of the Corporation or a Subsidiary for the benefit of an Employee or group or class of Employees, or (B) acquired by any means other than purchase from any trust or plan described in subparagraph (A) above and held by an Employee, the personal -7- 8 representative of a deceased Employee or a distributee by reason of the death of an Employee, or (C) acquired upon exercise of any option or right issued by the Corporation or any Subsidiary for the benefit of an Employee or Employees, whether or not the option or right is described in Sections 422, 422A, 423 or 424 of the Code, and held by an Employee, the personal representative of a deceased Employee or a distributee by reason of the death of an Employee. (g) An "Affiliate" of a Related Person is a Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by, or is under common Control with, such Related Person, but no person shall be an Affiliate of a Related Person if the affiliation results solely because of service by both the person and the Related Person as one or more of the following: Directors of the Corporation or any Subsidiary or Employees. (h) An "Associate" of a Related Person is any: (1) corporation or organization (other than the Corporation or a Subsidiary) of which such Related Person is an officer or partner or is the Beneficial Owner of ten percent (10%) or more of any class of equity securities; or (2) trust or other estate in which such Related Person has a five percent or larger beneficial interest of any nature or as to which such Related Person serves as a trustee or in a similar fiduciary capacity; or (3) member of such Related Person's immediate family, which includes such Related Person's spouse, parents, children, siblings, mothers and fathers-in-law, sons and daughters-in-law and brothers and sisters-in-law; PROVIDED, HOWEVER, that no person shall be an Associate of a Related Person if the association results solely because of service by both the -8- 9 person or the Related Person as one or more of the following: Directors of the Corporation or any Subsidiary or Employees. (i) The term "Subsidiary" means any corporation of which a majority of any class of equity securities is owned, directly or indirectly, by the Corporation. (j) The term "Substantial Part" shall mean more than twenty percent (20%) of the Fair Market Value, as determined by a majority of the Directors who are not Related Person Directors, of the total consolidated assets of the Corporation and its Subsidiaries taken as a whole as of the end of its most recent fiscal year ended prior to the time the determination is being made. (k) In the event of any Business Combination in which the Corporation survives, the phrase "other consideration to be received" as used in Section 1(b)(1) of this Article ELEVENTH shall include the shares of Common Stock retained by the holders of such shares. (l) The term "Fair Market Value" means: (1) in the case of stock, the highest closing sale price during the 30-day period immediately preceding the date in question of a share of such stock on the Composite Tape for the New York Stock Exchange--Listed Stocks, or, if such stock is not quoted on the Composite Tape for the New York Stock Exchange or listed on the New York Stock Exchange, the highest closing sale price during the 30-day period immediately preceding the date in question of a share of such stock on the principal United States securities exchange registered under the Securities Exchange Act of 1934 on which such stock is listed, or, if such stock is not listed on any such stock exchange, the highest closing bid quotation with respect to a share of such stock during the 30-day period preceding the date in question on the National Association of Securities Dealers, Inc. Automated Quotation System or any successor system then in use, or, if no such quotations are available, the fair market value on the date in question of a share of -9- 10 such stock as determined in good faith by a majority of the Directors who are not Related Person Directors; and (2) in the case of property other than cash or stock, the fair market value of such property on the date in question as determined in good faith by a majority of the Directors who are not Related Person Directors. (m) The term "Related Person Director" means any member of the Board of Directors of the Corporation who concurrently is a Related Person or an Affiliate or Associate of a Related Person or an officer, director or employee of a Related Person or of an Affiliate or Associate of a Related Person. (n) A Related Person shall be deemed to have acquired a share of the Common Stock of the Corporation at the time when such Related Person became the Beneficial Owner thereof. If a majority of the Directors who are not Related Person Directors is not able to determine the price at which a Related Person has acquired a share of Common Stock of the Corporation, such price shall be deemed to be the Fair Market Value of the shares in question at the time when the Related Person became the Beneficial Owner thereof. With respect to shares Beneficially Owned by Affiliates, Associates or other Persons whose Beneficial Ownership is attributed to a Related Person under the foregoing definition of Related Person, the price deemed to be paid therefor by such Related Person shall be the price paid upon the acquisition thereof by such Affiliate, Associate or other Person, or, if such price is not determinable by a majority of the Directors who are not Related Person Directors, the Fair Market Value of the shares in question at the time when the Affiliate, Associate or other such Person became the Beneficial Owner thereof. (o) The term "Announcement Date" shall mean the date upon which any information with respect to a Business Combination is publicly announced which discloses: -10- 11 (1) the identity of the Corporation or a Subsidiary as a participant or proposed participant in any Business Combination; (2) the identity of the Related Person or any Affiliate or Associate of such Related Person as a participant or proposed participant in any Business Combination (unless the Business Combination is one of the transactions described in subparagraph (5) of Section 2(a) above, in which case the information specified in this subparagraph (2) need not be publicly announced in order for an Announcement Date to have occurred); and (3) the amount of consideration to be received by the stockholders of the Corporation or a Subsidiary in exchange for their stock in or as a result of such Business Combination, or the amount of consideration to be received by the Corporation or a Subsidiary in or as a result of such Business Combination, or the basic terms of any such Business Combination that is one of the transactions described in subparagraph (5) of Section 2(a) above. (p) The term "Combination Date" shall mean the date upon which any Business Combination is consummated; if the tenth calendar day prior to any Combination Date is not a business day, then any reference thereto in this Article ELEVENTH shall mean the next succeeding business day. (q) The term "Common Stock" shall mean the Common Stock of the Corporation. (r) The term "Control" (used as a noun or in various verb forms) shall mean the direct or indirect possession of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. (s) The term "Code" shall mean the Internal Revenue Code of 1954, as amended, and each reference to any section of the Code -11- 12 shall include reference to any successor section. (t) The term "Employee" or "Employees" shall mean an employee or employees of the Corporation or any Subsidiary. 3. On the basis of information known to them, the Board of Directors of the Corporation, acting by resolutions adopted by a majority of those members of the Board of Directors who are not Related Person Directors, shall make all determinations to be made under this Article ELEVENTH, including: (a) the Announcement Date and Combination Date of a Business Combination; (b) the number of shares of Common Stock of which a Person is the Beneficial Owner; (c) whether a Person is an Affiliate or Associate of another Person; (d) whether a Person has an agreement, arrangement or understanding with another Person as to the matters specified in Section 2(e) of this Article ELEVENTH; (e) the date upon which a Person became the Beneficial Owner of any share or shares of Common Stock; (f) the price paid by a Person to acquire Beneficial Ownership of any share or shares of Common Stock; and (g) the resolution of any ambiguity or conflict arising in connection with the interpretation or application of this Article ELEVENTH. 4. The fact that any Business Combination complies with the provisions of Section 1(b) of this Article ELEVENTH shall not be construed to impose any fiduciary duty, obligation or responsibility on the Board of Directors, or any member thereof, to approve such Business Combination or -12- 13 recommend its adoption or approval to the shareholders of the Corporation, nor shall such compliance limit, prohibit or otherwise restrict in any manner the Board of Directors, or any member thereof, with respect to evaluations of or actions and responses taken with respect to such Business Combination. 5. This Article ELEVENTH shall not be altered, amended or repealed except by a vote of the holders of eighty percent (80%) of the issued and outstanding Common Stock of the Corporation." SECOND: That thereafter a meeting of the stockholders of said corporation was duly called and held, upon written notice, at which meeting a majority of the shares entitled to vote on said amendment voted in favor of the adoption thereof, such vote being sufficient under the General Corporation Law of Delaware and said corporation's Certificate of Incorporation to adopt said amendment. THIRD: That the aforesaid amendment was duly adopted in accordance with the applicable provisions of Section 242 of the General Corporation Law of Delaware. - 13 - 14 IN WITNESS WHEREOF, Servotronice, Inc. has caused its corporate seal to be hereunto affixed and this Certificate to be signed by its President and attested by its Assistant Secretary this 27th day of August, 1984. SERVOTRONICS, INC. By /s/ Nicholas D. Trbovich ---------------------------- Nicholas D. Trbovich President ATTEST: /s/ Bernadine E. Kucinski - ---------------------------- Bernadine E. Kucinski Assistant Secretary - 14 - EX-10.A.1 4 EXHIBIT 10(A)(1) 1 Servotronics, Inc. and Subsidiaries Exhibit 10(A)(1) July 11, 1996 Dr. Nicholas D. Trbovich 1110 Maple Street Elma, NY 14059 Dear Dr. Trbovich: You and Servotronics, Inc. (the "Company") are parties to an employment agreement, as amended and restated on August 8, 1986 and as subsequently amended as of October 1, 1986, October 1, 1987, July 20, 1988, October 1, 1988, October 1, 1989, May 1, 1990, May 1, 1991, May 1, 1992, May 1, 1993, March 28, 1994, May 1, 1994, May 1, 1995 and May 1, 1996 (the "Agreement"), pursuant to which you are employed by the Company. This will confirm your agreement and that of the Company (pursuant to a resolution of the Board of Directors passed at a meeting held on June 28, 1996) to amend Paragraph 1 of the Agreement to delete "September 30, 1999" and insert in its place "September 30, 2001". Except as specifically provided herein, all of the other terms and conditions of the Agreement shall remain in full force and effect. If the foregoing meets with your approval and you are willing to become bound hereby, will you please sign and return to the undersigned the enclosed copy of this letter. Very truly yours, SERVOTRONICS, INC. /s/ Lee D. Burns Lee D. Burns, Treasurer/Secretary ACCEPTED AND AGREED /s/ Dr. Nicholas D. Trbovich - ---------------------------- Dr. Nicholas D. Trbovich EX-10.A.2 5 EXHIBIT 10(A)(2) 1 Servotronics, Inc. and Subsidiaries Exhibit 10(A)(2) As of May 1, 1996 Dr. Nicholas D. Trbovich 1110 Maple Street Elma, NY 14059 Dear Dr. Trbovich: You and Servotronics, Inc. (the "Company") are parties to an employment agreement, as amended and restated on August 8, 1986 and as subsequently amended as of October 1, 1986, October 1, 1987, July 20, 1988, October 1, 1988, October 1, 1989, May 1, 1990, May 1, 1991, May 1, 1992, May 1, 1993, March 28, 1994, May 1, 1994 and May 1, 1995 (the "Agreement"), pursuant to which you are employed by the Company. This will confirm your agreement and that of the Company (pursuant to a resolution of the Board of Directors passed at a meeting held on June 28, 1996) to amend Paragraph 3 of the Agreement to delete "$264,000.00" and insert in its place "$271,920.00". Except as specifically provided herein, all of the other terms and conditions of the Agreement shall remain in full force and effect. If the foregoing meets with your approval and you are willing to become bound hereby, will you please sign and return to the undersigned the enclosed copy of this letter. Very truly yours, SERVOTRONICS, INC. /s/ Lee D. Burns Lee D. Burns, Treasurer/Secretary ACCEPTED AND AGREED /s/ Dr. Nicholas D. Trbovich - ---------------------------- Dr. Nicholas D. Trbovich EX-27 6 EXHIBIT 27
5 0000089140 SERVOTRONICS, INC. 1,000 YEAR DEC-31-1996 JAN-1-1996 DEC-31-1996 1,389 0 2,714 0 7,207 13,003 7,352 0 20,810 2,528 6,645 523 0 0 10,571 20,810 15,600 15,600 10,796 14,139 0 0 335 1,461 587 874 0 0 0 874 0.52 0.52
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