-----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, HhC0Bflm9RujVQ9U69GgIYfIfHI9eAT3NNNu9UtcejVLNPjbZQ1GZ+PZniL89ZZj WBSrqjDpqikvL9g2r2EFlw== 0000319815-95-000007.txt : 19951218 0000319815-95-000007.hdr.sgml : 19951218 ACCESSION NUMBER: 0000319815-95-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19951031 FILED AS OF DATE: 19951215 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MAXWELL LABORATORIES INC /DE/ CENTRAL INDEX KEY: 0000319815 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMMERCIAL PHYSICAL & BIOLOGICAL RESEARCH [8731] IRS NUMBER: 952390133 STATE OF INCORPORATION: DE FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-10964 FILM NUMBER: 95602157 BUSINESS ADDRESS: STREET 1: 8888 BALBOA AVE CITY: SAN DIEGO STATE: CA ZIP: 92123 BUSINESS PHONE: 6192795100 MAIL ADDRESS: STREET 2: 8888 BALBOA AVE CITY: SAN DIEGO STATE: CA ZIP: 92123 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended October 31, 1995 Commission File Number 0-10964 MAXWELL LABORATORIES, INC. Delaware IRS ID #95-2390133 8888 Balboa Avenue, San Diego, California 92123 Telephone (619) 279-5100 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or 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 [ ] As of November 30, 1995 Registrant had only one class of common stock of which there were 2,702,499 shares outstanding. PART I - FINANCIAL STATEMENTS Maxwell Laboratories, Inc. Consolidated Condensed Balance Sheet (in thousands) Assets ______
October 31, July 31, 1995 1995 _________ _________ (Unaudited) (Note) Current Assets: Cash and cash equivalents $ 884 $ 4,053 Accounts receivable - net 17,306 16,030 Inventories: Finished products 1,740 1,181 Work in process 2,403 2,292 Parts and raw materials 4,199 3,766 _________ _________ 8,342 7,239 Recoverable income taxes 852 861 Prepaid expenses 773 572 Deferred income taxes 2,090 2,090 _________ _________ Total current assets 30,247 30,845 Property, plant and equipment - net 19,928 20,315 Deposits and other assets 1,228 1,210 _________ _________ $ 51,403 $ 52,370 ========= =========
Liabilities and Shareholders' Equity ____________________________________ Current Liabilities: Accounts payable $ 8,863 $ 9,400 Accrued employee compensation 2,473 2,681 Current portion of long-term debt 909 909 _________ _________ Total current liabilities 12,245 12,990 Long-term debt 1,658 1,928 Deferred income taxes 805 805 Minority interest and additional amounts contributed 1,168 1,283 Shareholders' equity: Common stock 270 269 Additional paid-in capital 18,991 18,889 Retained earnings 16,266 16,206 _________ _________ 35,527 35,364 _________ _________ $ 51,403 $ 52,370 ========= ========= Note: The Balance Sheet at July 31, 1995 has been derived from the audited financial statements at that date. See notes to consolidated condensed financial statements.
PART I - FINANCIAL STATEMENTS, continued Maxwell Laboratories, Inc. Consolidated Condensed Statement of Income - (Unaudited) (in thousands except per share data)
Three Months Ended October 31, ______________________ 1995 1994 _________ _________ Sales $ 19,172 $ 17,918 Costs and expenses: Cost of sales 15,046 12,946 Research and development expenses 983 1,354 Selling, administrative and general expenses 3,133 3,189 Other - net (90) (85) _________ _________ 19,072 17,404 _________ _________ Income before income taxes and minority interest 100 514 Provision for income taxes 28 163 _________ _________ 72 351 Minority interest in net income of subsidiary 12 28 _________ _________ Net income $ 60 $ 323 ========= ========= Primary earnings per share of common stock $ .02 $ .12 ========= ========= Weighted average number of shares 2,733,000 2,675,000 ========= ========= Note: Primary earnings per share is based upon weighted average number of shares of common stock outstanding and all dilutive stock options. Per share amounts are unchanged on a fully dilutive basis. See notes to consolidated condensed financial statements.
PART I - FINANCIAL STATEMENTS, continued Maxwell Laboratories, Inc. Consolidated Condensed Statement of Cash Flows - (Unaudited) (in thousands)
Three Months Ended October 31, ______________________ 1995 1994 _________ _________ OPERATING ACTIVITIES Net income $ 60 $ 323 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 734 685 Minority interest in net income of subsidiary 12 28 Changes in operating assets and liabilities - net (3,334) (2,712) _________ _________ NET CASH USED IN OPERATING ACTIVITIES (2,528) (1,676) _________ _________ INVESTING ACTIVITIES Purchases of property and equipment (474) (705) _________ _________ NET CASH USED IN INVESTING ACTIVITIES (474) (705) _________ _________ FINANCING ACTIVITIES Principal payments on long-term debt (270) (259) Proceeds from issuance of Company stock 103 -- _________ _________ NET CASH USED IN FINANCING ACTIVITIES (167) (259) _________ _________ DECREASE IN CASH AND CASH EQUIVALENTS (3,169) (2,640) Cash and cash equivalents at beginning of period 4,053 4,579 _________ _________ CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 884 $ 1,939 ========= ========= See notes to consolidated condensed financial statements.
PART I - continued NOTES TO FINANCIAL STATEMENTS The preceding interim consolidated condensed financial statements contain all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary for a fair and accurate presentation of financial position at October 31, 1995 and the results of operations for the three month period then ended. These interim financial statements should be read in conjunction with the Company's July 31, 1995 audited financial statements included in its Proxy Statement for the 1995 Annual Meeting of Shareholders. Interim results are not necessarily indicative of those to be expected for the full year. The consolidated financial statements include the accounts of Maxwell Laboratories, Inc., and its majority-owned subsidiary, PurePulse Technologies, Inc. All significant intercompany transactions and account balances are eliminated in consolidation. In January 1991, the California Department of Toxic Substances Control, or DTSC, notified the Company that it had been identified as one of a number of "potentially responsible parties" with respect to alleged hazardous substances released into the environment at a recycling facility in San Diego County. Although the Company was not involved in the transport or disposal of the substances, Maxwell remains a potentially responsible party under California and Federal "Superfund" laws. In 1992, the Company and approximately 40 other potentially responsible parties signed a consent order which had been negotiated with the DTSC, agreeing to pay $4 million of the $7.9 million response costs previously incurred by the State, and to pay for certain future site investigations and interim response actions outlined in the consent order. The currently estimated cost of such activities is $9.1 million, and the Company's share of the cost, as allocated by the parties to the consent order, is currently estimated at approximately 7.0%. The eventual cost of all removal and remediation activities, for which the Company and the other potentially responsible parties will share in additional reimbursements to the State, and including the $9.1 million referred to above, is currently estimated to be in the range of $15 - $20 million. The Company has accrued its share of such estimated costs; on the basis of amounts accrued by the Company, it is management's opinion that any additional liability resulting from this situation will not have a material effect on the Company's financial statements. There have been no material developments on this matter since the date of issuance of the Company's audited financial statements for the year ended July 31, 1995. Backlog of unfilled orders at October 31, 1995 was $75.7 million, of which $40.4 million is fully funded. PART I - continued MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL POSITION Results of Operations Sales for the three months ended October 31, 1995 were $19,172,000, a 7% increase over the $17,918,000 for the same period one year ago. This increase occurred in the Company's commercial, industrial and scientific products (CIS) business segment. Sales in the primarily Defense related technology programs and services (TPS) business segment dropped relative to last year's first quarter, although the decline is mostly attributable to chemical analytical services rather than Defense sales, as further described in the paragraphs below. CIS sales increased by approximately $2.4 million, or 27% over last year's first quarter, to $11.3 million. Contributing to this rise in CIS sales were gains in two of the Company's strategic focus areas: Information Technology and Power Conversion Systems/Components. In Information Technology, the revenue gains are primarily attributable to increased sales of the I-Bus division's PC-based controllers for original equipment manufacturers and the S-Cubed division's new commercial software business area, in which substantial work did not begin until after the first quarter of the prior fiscal year. Currently, the commercial software business at S-Cubed consists primarily of two long-term fixed price contracts, both of which are scheduled for completion in calendar 1996. Sales in several product lines, primarily pulsed power components, within the Power Conversion Systems/Components area increased over the prior year. While these are positive results overall for the CIS segment, it should be noted when making such comparisons that fluctuations either upward or downward occur from time to time in many of the Company's CIS groups. TPS sales declined by approximately $1.1 million, or 13% from last year's first quarter, to $7.9 million. While certain areas of the Defense business were down compared to last year, primarily related to nuclear weapons effects simulation work for the Defense Nuclear Agency, overall Defense sales were slightly higher than in the prior year's first quarter. Although we believe the Company may be approaching a level of Defense work that could remain a stable core, the federal budget effect on future Defense spending and the impact on the Company is not predictable and, therefore, previously reported results are not necessarily indicative of those to be expected in the future. The major factors affecting TPS sales in this year's first quarter are a significant decline in the flow of samples, primarily from the Department of Energy (DOE) and the EPA, into the S-Cubed chemical analytical services laboratory, and a delay in the funding for a DOE supported technology development program, the follow-on funding for which is now expected in this year's second quarter. The chemical analytical services laboratory's business to this point has been focused on sample analysis for DOE and EPA. Due to federal budget delays and a current shift in emphasis at federal levels from characterization to remediation, DOE and EPA samples under the laboratory's current contracts have been substantially curtailed. These low federal sample volumes are likely to continue for at least some months, and the level of their recovery is not currently known. The Company is following a dual strategy of investing in additional marketing for the laboratory, with an emphasis on commercial sample analysis, and exploring its possible sale. A disposition of the laboratory, should it occur, may not result in realization of the Company's full investment in the assets of the laboratory. The current book value of this operation's assets is approximately $2.5 million. PART I - continued Cost of sales for the quarter ended October 31, 1995, was $15,046,000 or 78.5% of sales, as compared to $12,946,000 or 72.3% of sales for the same period last year. While no one operation had a significant impact on cost of sales as a percentage of sales in the CIS business segment, the Balboa, S-Cubed, Business Systems and Sierra divisions all experienced a rise in the CIS cost of sales percentage resulting in an aggregate increase of just under 5%. At S-Cubed this reflects the low profit margins associated with entry into the commercial software market, and at Sierra it reflects the re-working and re-design of products and manufacturing processes. The TPS cost of sales percentage was primarily impacted by the previously mentioned large decrease in chemical analytical services laboratory revenues. As the laboratory has a relatively high amount of fixed costs associated with operations and facilities, the lack of sample flow to cover these costs was the most significant factor in the over 6% increase in the TPS cost of sales percentage. Research and development expenses were $983,000 during the three-month period compared to $1,354,000 for the same period last year. This decrease is primarily attributable to the planned high level of expenditures in last year's first quarter in the S-Cubed division, which fell to a slightly less than typical level in this year. It is currently anticipated that such expenditures at S-Cubed over the remainder of the year will be more comparable to the prior year's last three quarters. As a result of the above factors, net income for the three months ended October 31, 1995 was $60,000, as compared to $323,000 for the same period one year ago. Liquidity and Capital Resources The ratio of current assets to current liabilities was 2.5 to 1 at October 31, 1995, compared to 2.4 to 1 at the end of fiscal year 1995. The Company's operations used $2.5 million in cash in the first quarter, due primarily to inventory growth at I-Bus and an increase in receivables associated with S-Cubed's commercial software projects. Management believes the Company will continue to use cash in operating activities until later in the fiscal year, when it is anticipated that there will be some recovery in these areas. Cash requirements not met with funds on hand are planned to be met with funds available through the Company's bank line of credit of $7.5 million. In the Company's strategic planning process, business unit performance is being analyzed to determine acceptable returns and strategic investments. Business units not meeting internal requirements may be targeted for disposition, or discontinuance of unprofitable or non-strategic product lines, and the Company may not realize its full investment in the assets of such business areas should a sale or discontinuance occur. PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits No exhibits are included with the Form 10-Q for the period ended October 31, 1995. (b) Reports on Form 8-K No reports on Form 8-K were filed during the quarter ended October 31, 1995. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. MAXWELL LABORATORIES, INC. December 15, 1995 Gary J. Davidson Date Gary Davidson, Chief Financial Officer and Authorized Officer EX-27 2 ARTICLE 5 FINANCIAL DATA SCHEDULE FOR 1ST QUARTER 1995 10-Q
5 1,000 3-MOS JUL-31-1996 OCT-31-1995 884 0 17,306 0 8,342 30,247 56,412 36,484 51,403 12,245 1,658 270 0 0 35,257 51,403 19,172 19,172 15,046 15,046 983 0 0 100 (28) 60 0 0 0 60 .02 .02
-----END PRIVACY-ENHANCED MESSAGE-----