================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------- FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the year ended June 30, 1996 OR [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 0-4041 HATHAWAY CORPORATION (Exact name of registrant as specified in its charter) Colorado 84-0518115 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 8228 Park Meadows Drive Littleton, Colorado 80124 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (303) 799-8200 Securities registered pursuant to section 12(b) of the Act: None Securities registered pursuant to section 12(g) of the Act: Common Stock (no par value) Common Stock (No Par Value) (Title of Class) The check mark below indicates whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --------- --------- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. The aggregate market value of the voting stock held by non-affiliates of the registrant, computed by reference to the average bid and asked prices of such stock, as of August 29, 1996 was: $10,936,000. The number of shares outstanding of the registrant's only class of common stock, as of August 29, 1996, was: 4,235,817. Documents incorporated by reference: Portions of the Registrant's definitive Proxy Statement dated September 19, 1996 are incorporated by reference in Part III of this Report. The Registrant's Fiscal Year 1996 Annual Report is incorporated by reference in Parts I and II of this Report. ================================================================================
Hathaway Corporation Form 10-K For the Year Ended June 30, 1996 Table of Contents <TABLE> <CAPTION> Form 10-K Page Item No. Description Number - -------- ----------- ------ <S> <C> <C> Part I. Item 1. Business............................................................................................ 1 Item 2. Properties.......................................................................................... 4 Item 3. Legal Proceedings................................................................................... 5 Item 4. Submission of Matters to a Vote of Security Holders................................................. 5 Part II. Item 5. Market for Registrant's Common Equity and Related Stockholder Matters............................... 5 Item 6. Selected Financial Data............................................................................. 6 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.......................................................................................... 6 Item 8. Financial Statements and Supplementary Data......................................................... 6 Report of Independent Public Accountants............................................................ 7 Item 9. Disagreements on Accounting and Financial Disclosure................................................ 8 Part III. Item 10. Directors and Executive Officers of the Registrant.................................................. 8 Item 11. Executive Compensation.............................................................................. 8 Item 12. Security Ownership of Certain Beneficial Owners and Management...................................... 8 Item 13. Certain Relationships and Related Transactions...................................................... 8 Part IV. Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K..................................... 8 Signatures.......................................................................................... 14 Financial Statement Schedule........................................................................ 15 </TABLE> i
PART I Item 1. Business. INTRODUCTION Hathaway Corporation (the Company) was organized under the laws of Colorado in 1962. At the end of fiscal year 1996 (ended June 30, 1996), the Company had two wholly-owned subsidiaries, Hathaway Systems Corporation (HSC) and subsidiaries and Computer Optical Products, Inc. As used herein, the "Company" refers to both the Company and its wholly-owned subsidiaries. The Company's executive offices are located at 8228 Park Meadows Drive, Littleton, Colorado 80124. PRINCIPAL BUSINESSES The Company is engaged in the business of designing, manufacturing and selling advanced electronic instrumentation products to the worldwide power and process industries, as well as motion control products to a broad spectrum of customers throughout the world. Power and Process Instrumentation. Power monitoring and control systems are comprised of systems and instrumentation used to monitor and control the operations of power generating, transmission and distribution facilities of electric utility and process control companies, to provide the means to remotely monitor and control power utility substations, and to test circuit breakers and calibrate instruments used by electric utility and process control companies. HSC operates three product divisions - Hathaway Systems (located in Denver, Colorado), Hathaway Automation Technology (located in Seattle, Washington), and Hathaway Process Instrumentation (located in Dallas, Texas). HSC also operates three subsidiaries - Hathaway, Inc. (located in Toronto, Canada), Hathaway Systems Limited (HSL) and Hathaway Instruments Limited (HIL). Both HSL and HIL are located in the United Kingdom. The subsidiaries and divisions of HSC are engaged in the development, manufacturing and marketing of power monitoring and control systems and process instrumentation. The power instrumentation products group manufactures fault and disturbance monitoring and circuit breaker testing systems which provide a graphic waveform record of the performance of electric power systems during periods of recovery from faults and disturbances. These fault recording systems are sold primarily to electric utility companies who use the data obtained to assure the proper operation and reliability of the power system. The group also manufactures Remote Terminal Units (RTUs) for Supervisory Control and Data Acquisition (SCADA) systems and Energy Management Systems (EMS). RTUs are located in power substations or on utility poles and electronically report power system measurements and status to a central computer system. The primary mission of these systems is to present the state of the power system to power dispatch personnel, and to allow them to remotely effect changes in its configuration or operation to maintain efficient and continuous delivery of power. Effective June 30, 1996 the net assets and substantially all operations of HIL were transferred to HSL. Since September, 1992 HIL, located in Hoddesdon, England, had been responsible for the design, manufacture and sale of fault location instruments to power utility companies located throughout the world. In connection with the asset transfer, substantially all operations of HIL will be combined with the operations of HSL. The consolidation of the operations of HSL and HIL is aimed at reducing costs and enhancing productivity and efficiency. To further increase productivity and efficiency and gain additional cost savings, the Company decided in the first quarter of 1997 to consolidate its U.S. power products manufacturing operations located in Denver and Seattle into one manufacturing facility located in Seattle. The consolidation of the U.S. power manufacturing operations will take place in the second quarter of fiscal 1997. The process instrumentation products group manufactures and markets monitoring systems which provide either visual annunciation and/or printed messages whenever a monitored "point" changes from an existing state. These systems are called visual annunciators and sequential event recorders (SER's). Visual annunciators and SER's are sold to electric utility companies and the process industry in general. Visual annunciators provide both visual and audible alert signals whenever a process variable goes into an alarm state. SER's provide a printed message whenever a monitored "point" changes state. 1
The group also manufactures and sells combined annunciator/SER systems with distributed architecture (which significantly reduces installation costs) for power plant applications and is engaged in the design, manufacture and sale of power transducers which are sold to the process and power utility industries, as well as calibrators and signal conditioning products which are sold to the process industry. In order to gain cost savings and efficiencies, as of June 30, 1996 the Company had decided to combine the operations of Hathaway, Inc and Hathaway Process Instrumentation. Accordingly, all operations of Hathaway, Inc. will be moved to Dallas, Texas in fiscal 1997. The Company has three joint venture investments in China - Zibo Kehui Electric Company Ltd. (Kehui), Hathaway Si Fang Protection and Control Company (Si Fang), and Hathaway Power Monitoring Systems Company, Ltd. (HPMS). The Company holds a 25% interest in Kehui and Si Fang and a 40% interest in HPMS. The Company's joint venture interests in Kehui and Si Fang were acquired in fiscal 1994. The Company's joint venture interest in HPMS was acquired in the first quarter of fiscal 1996 upon approval of the joint venture by the Chinese government. Kehui designs, manufactures and sells cable and overhead fault location, SCADA systems and other test instruments within the China market and the Company will sell these products outside of China. Si Fang designs, manufactures and sells a new generation of digital protective relays, control equipment and instrumentation products for substations in power transmission and distribution systems. HPMS will design, manufacture and sell, under a license from the Company, instrumentation products designed by the Company, to electric power companies in China. Motion Control Instrumentation. The Company's motion control products include direct current (brush and brushless) motors, optical encoders, servo amplifiers and fiber optic encoders which suit a wide range of applications in the industrial, medical, military and aerospace sectors. The products are also used by manufacturers of analytical instruments and computer peripherals. The Company's motion control business is organized into two divisions and one subsidiary: Hathaway Motion Control Division, Hathaway Motors and Instruments Division and Computer Optical Products, Inc., respectively. The Hathaway Motion Control Division provides brushless direct current motors, servo amplifiers and related system components to industrial, medical, automotive and military/aerospace markets in a diverse range of applications. The Hathaway Motors and Instruments Division in Tulsa, Oklahoma, manufactures precision direct-current fractional horsepower motors with .8" to 4.0" diameters and certain motor components. Industrial equipment and military products are the major application for the motors. This division also supplies spare parts and replacement equipment for general purpose instrumentation products. Optical encoders are manufactured by Computer Optical Products, Inc., in Chatsworth, California. An optical encoder determines the speed of various mechanical parts within computer printers and plotters and analytical instruments. In plotters, the encoder is used to control the position of the x and y axis pins. The primary markets for the optical encoders are industrial, medical and computer peripheral manufacturers. In order to optimize the profitability of the motor/encoder assemblies, the Company also manufactures encoder-compatible precision direct-current fractional horsepower motors from in its Computer Optical Products, Inc. facility. The 1" to 4" diameter motors are sold separately or are combined with optical encoders for sale as an assembly. The primary markets are computer peripheral manufacturers, instrumentation and industrial equipment manufacturers and military applications. The Fiberoptics Division of Computer Optical Products designs, manufactures and markets fiber optic-based encoders with characteristics suited for industrial, aerospace and military environments. Fiber optical encoders are immune to radio frequency interference and electromagnetic pulses and will tolerate temperatures to 300(degree)C. Applications include airborne navigational systems, anti-lock braking transducers, missile flight surface controls and high temperature process control equipment. 2
AVAILABILITY OF RAW MATERIALS All parts and materials used by the company are in adequate supply. No significant parts or materials are acquired from a single source. SEASONALITY OF THE BUSINESS The Company's business is not of a seasonal nature. FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS The Company considers all of its operations to be in one industry segment - electronic instrumentation. PRODUCT DISTRIBUTION AND OTHER INFORMATION Product Distribution and Principal Markets. In addition to its own marketing and sales force, the Company has developed a worldwide network of independent sales representatives and agents to market its various product lines. Historically, the principal market for the Company's products has been the power and process industries. Since fiscal year 1991, however, with the acquisition of subsidiaries, development of new products and the expansion of existing products to other industrial applications, the Company has penetrated a variety of markets. The Company faces competition in all of its markets, although the number of competitors varies depending upon the product. The Company believes there are only a small number of competitors in the power and process markets, but there are numerous competitors in the motion control market. The Company believes it is the world's leading manufacturer of electric power fault recording equipment, with approximately 30% of the world market in the last fiscal year. No clear market share data is available for the Company's other product areas. Competition involves primarily product performance and price, although service and warranty are also important. Two significant changes in the power industry have recently had an impact on the domestic and European power instrumentation markets. In October of 1992, the Energy Policy Act of 1992 became law in the United States and is causing increased competition among the domestic electric utility companies. The Act requires power companies to transmit competitors' power across their own power networks and allows them to compete with each other for sales to major customers across the United States. In March of 1990, the government owned utility company in the United Kingdom was privatized in order to increase competition throughout the United Kingdom power industry (a major foreign market of the Company). The Energy Policy Act in the United States and privatization in the United Kingdom has led to downsizing and cost reductions by most utility companies and, accordingly, a reduction in demand for power instrumentation products. It is uncertain how long this trend will continue, but the Company believes that utilities will have to increase purchases of instrumentation that protect and monitor their systems in order to maintain the high quality of power provided to the consumer. The Company is developing new technology that will allow power companies to automate their systems, which will both reduce the cost of operation and improve the reliability of the power supply. Government Sales from Continuing Operations. Approximately $63,000 of the Company's backlog from continuing operations as of June 30, 1996 consisted of contracts with the United States Government. The Company's contracts with the government contain a provision generally found in government contracts which permits the government to terminate the contract at its option. When the termination is attributable to no fault of the Company, the government would, in general, have to pay the Company certain allowable costs up to the time of termination, but there is no compensation for loss of profits. Sales to Large Customers. During fiscal 1996, no single customer accounted for more than 10% of the Company's consolidated revenue from continuing operations. Export Sales from Continuing Domestic Operations and Foreign Operations. The information required by this item is set forth in pages 13 and 17 of the Company's 1996 Annual Report and is incorporated herein by reference. 3
Sales Backlog. The backlog of the Company's continuing operations at June 30, 1996 consisted of sales orders totaling approximately $10,094,000. The Company expects to ship goods filling $9,982,000 of those purchase orders within fiscal 1997. This compares to a backlog from continuing operations of $8,878,000 at June 30, 1995, of which $8,314,000 was scheduled for shipment is fiscal 1996. The Company's expenditures on engineering and development for continuing operations were $3,722,000 in fiscal 1996, $3,616,000 in fiscal 1995 and $4,111,000 in fiscal 1994. Of these expenditures, no material amounts were charged directly to customers. The Company currently maintains inventory levels adequate for its short-term needs based upon present levels of production. The Company considers the component parts of its different product lines to be readily available and current suppliers to be reliable and capable of satisfying anticipated needs. No pollution or other types of emission result from the Company's operations and it is not anticipated that the Company's proposed operations will be affected by Federal, State or local provisions concerning environmental controls. As of the end of fiscal 1996, the Company had approximately 382 full-time employees. Patents, Trademarks, Licenses, Franchises, and Concessions. The Company holds several patents and trademarks regarding components used by the various subsidiaries; however, none of these patents and trademarks are considered to be of major significance. Executive Officers. The Executive Officers of the Company are: Mr. Eugene E. Prince, 64, has been President of the Company since October 1975, was appointed Chief Executive Officer in September 1976, and was appointed Chairman of the Board of Directors in January 1981. Mr. Richard D. Smith, 49, has been the Company's Treasurer and Chief Financial Officer since June 1983. From June 1983 until March 1986, Mr. Smith was the Company's Secretary, and from March 1986 to January 1990 he was the Company's Assistant Secretary. Since January 1990, Mr. Smith has resumed the responsibilities of Secretary. Mr. Smith also served as the Company's Vice President of Finance from June 1983 until August 1993. In August 1993, Mr. Smith was made an Executive Vice President of the Company. In August 1996, Mr. Smith became a Director of the Company. Each of the above officers is elected for a term of one year. Item 2. Properties. The Company's corporate administration offices, the corporate office of HSC and the principal office and main plant facility of the Hathaway Systems Division of HSC is located at 8228 Park Meadows Drive, Littleton, Colorado, and contains 31,152 square feet. The lease expires in October 1996 and has an option to renew for an additional five-year term. The Hathaway Automation Technology Division of HSC leases 16,155 square feet of office and manufacturing facility at 7661 South 180th Street, Kent, Washington. The four-year lease term commenced July 1, 1995 and expires June 30, 1999. The Process Instrumentation Division leases 28,585 square feet of office and manufacturing space at 1840 Hutton Drive, Carrollton, Texas. This lease expires on February 28, 1999. Hathaway, Inc. leases 16,189 square feet of office and manufacturing/warehouse space located at 370 Tapscott Road, Scarborough, Ontario, Canada. The lease expires on January 31, 1997. Hathaway Systems Limited has leased 17,300 square feet of administration, sales, engineering and manufacturing space at Wildflower Way/Apollo Road in Belfast for a 20-year term which expires in 2012. 4
During fiscal 1993, HIL took over Hathaway Systems Limited's office lease on Brewery Road in Hoddesdon, Hertfordshire, England. This lease for 2,800 square feet expires in 2007. Although substantially all operations of HIL were moved to Belfast as of June 30, 1996, this facility will be maintained as a branch sales office. The Motors and Instruments Division has a lease for approximately 7,650 square feet of office and manufacturing space located at 10816 East Newton Street, Tulsa, Oklahoma. The current lease term expires December 31, 1996. Management believes this lease can be renewed on terms and conditions similar to the current lease. The Motion Control Division leases 12,555 square feet of office and manufacturing space located at 10002-B East 43rd Street South, Tulsa, Oklahoma. The two-year lease term commenced August 1, 1995 and expires July 31, 1997, with an option to renew on similar terms for three more years. Computer Optical Products, Inc. leases one facility in Chatsworth, California. In May 1994, the subsidiary entered into a three-year lease commencing June 1, 1994 with two one-year renewal options. The 10,560 square feet at 9305/09 Eton Avenue houses Computer Optical Products, including the Fiberoptics Division. The Company's management believes the above described facilities are adequate to meet the Company's current and foreseeable needs. All facilities described above are operating at or near full capacity, except as noted. Item 3. Legal Proceedings. The Company has been named as a defendant in certain actions that have arisen out of the ordinary course of business. Management, based upon the advice of the Company's legal counsel, believes the actions are without merit and will not have a significant adverse effect on the Company's consolidated financial position. Item 4. Submission of Matters to Vote of Security Holders. No matter was submitted to a vote of the security holders of the Company during the fourth quarter of fiscal 1996. PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters. Hathaway Corporation's common stock is traded on the National Association of Securities Dealers Automated Quotation System (NASDAQ) National Market System under the symbol HATH. The number of holders of record of the Company's common stock as of the close of business on August 29, 1996 was 732. The following table sets forth, for the periods indicated, the high and low prices of the Company's common stock on the NASDAQ National Market System, as reported by NASDAQ. <TABLE> <CAPTION> Price Range Dividends ----------- Per Share High Low --------- ---- --- <S> <C> <C> <C> FISCAL 1995 First Quarter $0.12 $4.13 $3.13 Second Quarter --- 3.88 2.75 Third Quarter --- 3.13 2.25 Fourth Quarter --- 3.13 2.38 FISCAL 1996 First Quarter $0.10 $3.13 $2.50 Second Quarter --- 2.88 1.88 Third Quarter --- 2.56 1.81 Fourth Quarter --- 4.00 1.69 </TABLE> 5
The Bid and Asked quotations as published by NASDAQ reflect interdealer prices without retail mark-up, mark-down or commission and may not necessarily represent actual transactions. Item 6. Selected Financial Data. The following table summarizes data from the Company's annual financial statements for the years 1992 through 1996 and notes thereto; the Company's complete annual financial statements and notes thereto for the current fiscal year appear in the 1996 Annual Report. See Item 1 in the Business section of this report and Notes 2 and 3 to Consolidated Financial Statements in the 1996 Annual Report for discussion of acquisitions and dispositions of business operations. <TABLE> <CAPTION> For the fiscal years ended 1996 1995 1994 1993 1992 -------- -------- -------- --------- --------- <S> <C> <C> <C> <C> <C> (In thousands, except per share data) Net income (loss) from continuing operations................................... $(1,013) $ 842 $ 955 $ 23 $ 2,064 Net income (loss) from operations of divested segment and divested operation...... --- --- 885 958 (323) Gain on sale of segment....................... --- --- 4,023 --- --- Net income (loss)............................. (1,013) 842 5,863 981 1,741 Net revenues from continuing operations....... 35,411 39,838 43,028 45,741 42,806 Fully diluted earnings (loss) per share: Continuing operations........................ (0.24) 0.19 0.19 --- 0.45 Operations of divested segment and divested operation......................... --- --- 0.18 0.21 (0.07) Sale of segment.............................. --- --- 0.81 --- --- Net income (loss)............................ (0.24) 0.19 1.18 0.21 0.38 Cash dividends: Per share.................................... 0.10 0.12 0.205 --- --- Total amount paid............................ 426 536 992 --- --- Total assets at June 30....................... 21,139 23,312 24,432 28,326 27,763 Total long-term debt at June 30............... 1,777 2,144 2,298 5,819 6,953 </TABLE> Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. The information required by this item is set forth in pages 4 through 6 of the Company's 1996 Annual Report and is incorporated herein by reference. Item 8. Financial Statements and Supplementary Data. The information required by this item is included in pages 7 through 20 of the Company's 1996 Annual Report and is incorporated herein by reference. 6
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To Hathaway Corporation: We have audited, in accordance with generally accepted auditing standards, the consolidated financial statements included in Hathaway Corporation's 1996 Annual Report incorporated by reference in this Form 10-K, and have issued our report thereon dated July 31, 1996. Our audit was made for the purpose of forming an opinion on those statements taken as a whole. The supplemental Schedule II is the responsibility of the Company's management and is presented for purposes of complying with the Securities and Exchange Commission's rules and is not part of the basic consolidated financial statements. This schedule has been subjected to the auditing procedures applied in the audit of the basic consolidated financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic consolidated financial statements taken as a whole. ARTHUR ANDERSEN LLP Denver, Colorado, July 31, 1996. 7
Item 9. Disagreements on Accounting and Financial Disclosure. The Company has not changed its accounting or auditing firm during the past 24 months, nor has it had any material disagreements with its accountants or auditors regarding any accounting or financial statement disclosure matters. PART III The information required by Part III is included in the Company's Proxy Statement, and is incorporated herein by reference. Item 10. Directors and Executive Officers of the Registrant. Information required by this item is set forth in the sections entitled "Election of Directors" (page 2), "Executive Officers" (page 3) and "Compliance with Section 16(a) of the Securities Exchange Act of 1934" (page 10) in the Company's Proxy Statement and is incorporated herein by reference. Item 11. Executive Compensation. The information required by this item is set forth in the section entitled "Executive Compensation" (pages 5 through 8) in the Company's Proxy Statement and is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management. The information required by this item is set forth in the section entitled "Security Ownership of Certain Beneficial Owners and Management" (pages 4 and 5) in the Company's Proxy Statement and is incorporated herein by reference. Item 13. Certain Relationships and Related Transactions. Since July 1, 1995, the Company has not entered into any material related party transactions. PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K. I. FINANCIAL STATEMENTS. The information required by this item and detailed below is included in the 1996 Annual Report (pages 7 through 20) and is incorporated herein by reference. Consolidated Balance Sheets as of June 30, 1996 and June 30, 1995. Consolidated Statements of Operations for each of the years in the three-year period ended June 30, 1996. Consolidated Statements of Cash Flows for each of the years in the three-year period ended June 30, 1996. Consolidated Statements of Stockholders' Investment for each of the years in the three-year period ended June 30, 1996. Notes to Consolidated Financial Statements. Report of Independent Public Accountants. 8
II. FINANCIAL STATEMENT SCHEDULES The following financial statement schedule is included in this report: Schedule Subject ---------------- ------------------------------------- II Valuation and Qualifying Accounts Financial statement schedules, other than those listed above, are omitted because they are either not applicable or not required, or because the information sought is included in the Consolidated Financial Statements or the Notes thereto within the 1996 Annual Report. III. EXHIBITS Exhibit Index, regarding exhibits filed in accordance with Item 601, is at Page 10, hereof. IV. REPORTS ON FORM 8-K. The registrant did not file any reports on Form 8-K during the fourth quarter of fiscal year 1996. 9
EXHIBIT INDEX Exhibit No. Subject Page - ----------- ------- 3.1 Restated Articles of Incorporation. * 3.2 Amendment to Articles of Incorporation, dated September * 24, 1993. 3.3 By-laws of the Company adopted August 11, 1994. * 4 Rights Agreement between Hathaway Corporation and Bank of * America National Trust and Savings Association, dated June 15, 1989. Incorporated by reference to the Company's 1989 Annual Report and Form 10-K for the fiscal year ended June 30, 1989. 10.1 Amendment No. 1 to Warrant to Purchase Common Stock of * Hathaway Corporation granted to Household Commercial Financial Services, Inc., dated as of June 15, 1987. Incorporated by reference to Exhibit 10c(iii) to the Company's 1989 Annual Report and Form 10-K for the fiscal year ended June 30, 1989. 10.2 Amendment No. 1 to Warrant to Purchase Common Stock of * Hathaway Corporation granted to Ford Motor Credit Company, dated as of June 15, 1987. Incorporated by reference to Exhibit 10c(iv) to the Company's 1989 Annual Report and Form 10-K for the fiscal year ended June 30, 1989. 10.3 Severance Agreement dated June 15, 1989 between Hathaway * Corporation and Eugene E. Prince. Incorporated by reference to Exhibit 10n(i) to the Company's 1989 Annual Report and Form 10-K for the fiscal year ended June 30, 1989. 10.4 Severance Agreement dated June 15, 1989 between Hathaway * Corporation and Richard D. Smith. Incorporated by reference to Exhibit 10n(ii) to the Company's 1989 Annual Report and Form 10-K for the fiscal year ended June 30, 1989. 10.5 Lease Agreement between Circuits and Systems Design * Limited and Department of Economic Development (Northern Ireland) dated April 7, 1992. Incorporated by reference to Exhibit 10(iii)D to the Company's 1992 Annual Report and Form 10-K for the fiscal year ended June 30, 1992. 10.6 The Hathaway Corporation Amended 1980 Non-Incentive Stock * Option Plan. Incorporated by reference to the Company's Form S-8 filed August 3, 1981. 10.7 The 1983 Incentive and Non-Qualified Stock Option Plan * dated September 22, 1983. Incorporated by reference to the Company's Form S-8 filed May 10, 1984. 10.8 Amendment to the 1983 Incentive and Non-Qualified Stock * Option Plan dated January 4, 1989. Incorporated by reference to the Company's Form S-8 filed October 25, 1990. 10.9 The 1989 Incentive and Non-Qualified Stock Option Plan * dated August 10, 1989. Incorporated by reference to the Company's Form S-8 filed October 25, 1990. 10.10 The 1991 Incentive and Non-Statutory Stock Option Plan * dated September 19, 1991. Incorporated by reference to the Company's Form S-8 filed January 8, 1992. 10.11 Joint Venture Agreement between Zibo Kehui Electric * Company and Hathaway Instruments Limited, for the establishment of Zibo Kehui Electric Company Ltd., dated July 25, 1993. Incorporated by reference to Exhibit 10.15 to the Company's Form 10-K for the fiscal year ended June 30, 1994. 10
Exhibit No. Subject - ----------- ------- 10.12 Employment Agreement between Hathaway Corporation and * Eugene E. Prince, dated July 1, 1993. Incorporated by reference to Exhibit 10.17 to the Company's Form 10-K for the fiscal year ended June 30, 1994. 10.13 Employment Agreement between Hathaway Corporation and * Richard D. Smith, dated July 1, 1993. Incorporated by reference to Exhibit 10.18 to the Company's Form 10-K for the fiscal year ended June 30, 1994. 10.14 Loan and Security Agreement dated August 2, 1993 between * Hathaway Corporation, certain subsidiaries of Hathaway Corporation and Marine Midland Business Loans, Inc. Incorporated by reference to Exhibit 10.18 to the Company's Form 10-K for the fiscal year ended June 30, 1993. 10.15 Loan Facility Agreement dated August 2, 1993 between CSD * Hathaway Limited and Forward Trust Limited. Incorporated by reference to Exhibit 10.19 to the Company's Form 10-K for the fiscal year ended June 30, 1993. 10.16 Reimbursement Agreement dated August 2, 1993 between CSD * Hathaway Limited and Marine Midland Business Loans, Inc. Incorporated by reference to Exhibit 10.20 to the Company's Form 10-K for the fiscal year ended June 30, 1993. 10.17 Promissory Note from Richard D. Smith to Hathaway * Corporation, dated October 26, 1993. Incorporated by reference to Exhibit 10.23 to the Company's Form 10-K for the fiscal year ended June 30, 1994. 10.18 Joint Venture Contract between Si Fang Protection and * Control Company Limited and Hathaway Corporation for the establishment of Beijing Hathaway Si Fang Protection and Control Company, Ltd., dated March 2, 1994. Incorporated by reference to Exhibit 10.26 to the Company's Form 10-K for the fiscal year ended June 30, 1994. 10.19 Assignment and Assumption of Lease Agreement, Letter * Agreement, Collateral Assignment and Amendment to Lease Agreement between Trammel Crow Company No. 91, Petula Associates, Ltd., Symantec Corporation and Hathaway Systems Corporation-Beta Products Division, dated June 1, 1994. Incorporated by reference to Exhibit 10.27 to the Company's Form 10-K for the fiscal year ended June 30, 1994. 10.20 Joint Venture Contract between Wuhan Electric Power * Instrument Factory, Beijing Huadian Electric Power Automation Corporation and Hathaway Corporation for the establishment of Hathaway Power Monitoring Systems Company, Ltd., dated June 12, 1995. Incorporated by reference to Exhibit 10.29 to the Company's Form 10-K for the fiscal year ended June 30, 1995. 10.21 Technology License Contract between Wuhan Electric Power * Instrument Factory and Beijing Huadian Electric Power Automation Corporation on behalf of Hathaway Power Monitoring Systems Company, Ltd. and Hathaway Corporation, dated June 12, 1995. Incorporated by reference to Exhibit 10.30 to the Company's Form 10-K for the fiscal year ended June 30, 1995. 10.22 Supplementary Agreement between Wuhan Electric Power * Instrument Factory, Beijing Huadian Electric Power Automation Corporation and Hathaway Corporation, dated August 30, 1995. Incorporated by reference to Exhibit 10.31 to the Company's Form 10-K for the fiscal year ended June 30, 1995. 11
Exhibit No. Subject Page - ----------- ------- ---- 10.23 Management Incentive Bonus Plan for the fiscal year * ending June 30, 1996. Incorporated by reference to Exhibit 10.28 to the Company's Form 10-K for the fiscal year ended June 30, 1995. 10.24 Management Incentive Bonus Plan for the fiscal year ending June 30, 1997. 13 1996 Annual Report. 21 List of Subsidiaries. 12 22 Definitive Proxy Statement, dated September 19, 1996 for * the Registrant's 1996 Annual Meeting of Shareholders. 23 Consent of ARTHUR ANDERSEN LLP. 13 27 Financial Data Schedule - ----------- * These documents have been filed with the Securities and Exchange Commission, and are incorporated herein by reference. - -------------------------------------------------------------------------------- SUBSIDIARIES OF HATHAWAY CORPORATION 1) Hathaway Systems Corporation, a Colorado corporation. 2) Computer Optical Products, Inc., a Colorado corporation. 3) Hathaway, Inc., a Canadian corporation. 4) Hathaway Systems Limited, a Northern Ireland corporation. 5) Hathaway Instruments Limited, a United Kingdom corporation. 12
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our report dated July 31, 1996 incorporated by reference in this Form 10-K, into the Company's previously filed Registration Statement on Form S-8 (No. 2-73235) of the Hathaway Corporation Amended 1980 Non-Incentive Stock Option Plan dated August 3, 1981, into the Registration Statement on Form S-8 (No. 2-90687) of the 1983 Incentive and Non-Qualified Stock Option Plan of Hathaway Corporation dated May 10, 1984, into the Registration Statement on Form S-8 (No. 3344998) of the 1992 Employee Stock Purchase Plan of Hathaway Corporation dated January 8, 1992, into the Registration Statement on Form S-8 (No. 33-37473) of the 1989 Incentive and Non-Qualified Stock Option Plan of Hathaway Corporation dated October 25, 1990, and into the Registration Statement on Form S-8 (No. 3344997) of the 1991 Incentive and Non-Statutory Stock Option Plan of Hathaway Corporation dated January 8, 1992. ARTHUR ANDERSEN LLP Denver, Colorado, September 19, 1996. 13
SIGNATURES Pursuant to the requirements 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. HATHAWAY CORPORATION By /s/ Eugene E. Prince ----------------------------- Eugene E. Prince President, Chief Executive Officer and Chairman of the Board of Directors Date: September 19, 1996 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated. <TABLE> <CAPTION> Signatures Title Date ---------- ----- ---- <S> <C> <C> /s/ Eugene E. Prince President, Chief Executive September 19, 1996 - ------------------------------ Officer, and Chairman of the Eugene E. Prince Board of Directors /s/ Richard D. Smith Executive Vice President, September 19, 1996 - ------------------------------ Treasurer, Secretary, Richard D. Smith Chief Financial Officer (Chief Accounting Officer) and Director /s/ George J. Pilmanis Director September 19, 1996 - ------------------------------ George J. Pilmanis /s/ Marvin J. Fein Director September 19, 1996 - ------------------------------ Marvin J. Fein /s/ Chester H. Clarridge Director September 19, 1996 - ------------------------------ Chester H. Clarridge /s/ Graydon D. Hubbard Director September 19, 1996 - ------------------------------ Graydon D. Hubbard </TABLE> 14
HATHAWAY CORPORATION SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS <TABLE> <CAPTION> Balance at Charged to Deductions Balance at Beginning of Costs and from End of Period Expenses Reserves` Period - ------------------------------------------------------------------------------------------------------------ <S> <C> <C> <C> <C> Year Ended June 30, 1996: Reserve for bad debts ................... $ 305,000 $ 87,000 $71,000 $ 321,000 - ------------------------------------------------------------------------------------------------------------ Year Ended June 30, 1995: Reserve for bad debts ................... 394,000 46,000 135,000 305,000 - ------------------------------------------------------------------------------------------------------------ Year Ended June 30, 1994; Reserve for bad debts ................... 463,000 158,000 227,000 394,000 - ------------------------------------------------------------------------------------------------------------ </TABLE> 15