-----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, ShqFqFKf/VnxWLDhbrgfeF3uFzxUwHAfQc5EwIlCZeWfc6/SbF/vdUTeSbYBAYy4 LvZ8wfy2keIN37oErPr5cw== 0001193125-05-225391.txt : 20051114 0001193125-05-225391.hdr.sgml : 20051111 20051114133330 ACCESSION NUMBER: 0001193125-05-225391 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20050930 FILED AS OF DATE: 20051114 DATE AS OF CHANGE: 20051114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BOLT TECHNOLOGY CORP CENTRAL INDEX KEY: 0000354655 STANDARD INDUSTRIAL CLASSIFICATION: OIL & GAS FILED MACHINERY & EQUIPMENT [3533] IRS NUMBER: 060773922 STATE OF INCORPORATION: CT FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-12075 FILM NUMBER: 051199432 BUSINESS ADDRESS: STREET 1: FOUR DUKE PL CITY: NORWALK STATE: CT ZIP: 06854 BUSINESS PHONE: 2038530700 MAIL ADDRESS: STREET 1: FOUR DUKE PL CITY: NORWALK STATE: CT ZIP: 06854 10-Q 1 d10q.htm FORM 10-Q Form 10-Q
Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM 10-Q

 


 

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended: September 30, 2005

 

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: 0-10723

 


 

BOLT TECHNOLOGY CORPORATION

(Exact name of registrant as specified in its charter)

 


 

Connecticut   06-0773922
(State or other jurisdiction of
incorporation or organization)
  (I.R.S. Employer
Identification No.)

 

Four Duke Place, Norwalk, Connecticut   06854
(Address of principal executive offices)   (Zip Code)

 

Registrant’s telephone number, including area code: (203) 853-0700

 


 

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  ¨

 

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).    Yes  ¨    No  x

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).    Yes  ¨    No  x

 

At November 11, 2005, there were 5,435,960 shares of Common Stock, without par value, outstanding.

 



Table of Contents

BOLT TECHNOLOGY CORPORATION

 

INDEX

 

 

     Page Number

Part I - Financial Information:     
Item 1. Financial Statements     
    Consolidated Statements of Operations (Unaudited) -
Three months ended September 30, 2005 and 2004
   3
    Consolidated Balance Sheets -
September 30, 2005 (Unaudited) and June 30, 2005
   4
    Consolidated Statements of Cash Flows (Unaudited) -
Three months ended September 30, 2005 and 2004
   5
    Notes to Consolidated Financial Statements (Unaudited)    6-13
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations    14-20
Item 3. Quantitative and Qualitative Disclosures about Market Risk    21
Item 4. Controls and Procedures    21
Part II - Other Information:     
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds    22
Item 6. Exhibits    22
Signatures    23
Exhibit Index    24

 

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PART I – FINANCIAL INFORMATION

 

Item 1 – Financial Statements

 

BOLT TECHNOLOGY CORPORATION AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

     Three Months Ended
September 30,


 
     2005

    2004

 

Sales

   $ 7,994,000     $ 3,839,000  
    


 


Costs and Expenses:

                

Cost of sales

     4,954,000       2,317,000  

Research and development

     69,000       45,000  

Selling, general and administrative

     1,386,000       1,143,000  

Interest income

     (25,000 )     (6,000 )
    


 


       6,384,000       3,499,000  
    


 


Income before income taxes

     1,610,000       340,000  

Provision for income taxes

     590,000       129,000  
    


 


Net income

   $ 1,020,000     $ 211,000  
    


 


Earnings per share:

                

Basic

   $ 0.19     $ 0.04  

Diluted

   $ 0.18     $ 0.04  

Average shares Outstanding:

                

Basic

     5,434,656       5,414,357  

Diluted

     5,607,761       5,484,696  

 

See Notes to Consolidated Financial Statements (Unaudited).

 

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BOLT TECHNOLOGY CORPORATION AND ITS SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

ASSETS

 

     September 30,
2005
(unaudited)


  

June 30,

2005


Current Assets:

             

Cash and cash equivalents

   $ 4,011,000    $ 3,654,000

Accounts receivable, net

     4,683,000      3,043,000

Inventories, net

     5,975,000      7,141,000

Deferred income taxes

     324,000      354,000

Other

     153,000      162,000
    

  

Total current assets

     15,146,000      14,354,000
    

  

Property, Plant and Equipment, net

     1,820,000      1,815,000

Goodwill, net

     11,031,000      11,042,000

Other Assets

     112,000      105,000
    

  

Total assets

   $ 28,109,000    $ 27,316,000
    

  

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

Current Liabilities:

                

Accounts payable

   $ 1,100,000     $ 2,100,000  

Accrued expenses

     1,579,000       1,042,000  

Income taxes payable

     582,000       348,000  

Customer deposits

     380,000       414,000  
    


 


Total current liabilities

     3,641,000       3,904,000  

Deferred Income Taxes

     373,000       337,000  
    


 


Total liabilities

     4,014,000       4,241,000  
    


 


Stockholders’ Equity:

                

Common stock

     26,231,000       26,176,000  

Note receivable for sale of common stock

     (55,000 )     —    

Accumulated deficit

     (2,081,000 )     (3,101,000 )
    


 


Total stockholders’ equity

     24,095,000       23,075,000  
    


 


Total liabilities and stockholders’ equity

   $ 28,109,000     $ 27,316,000  
    


 


 

See Notes to Consolidated Financial Statements (Unaudited).

 

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BOLT TECHNOLOGY CORPORATION AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

    

Three Months Ended

September 30,


 
     2005

    2004

 

Cash Flows From Operating Activities:

                

Net income

   $ 1,020,000     $ 211,000  

Adjustments to reconcile net income to cash provided by operating activities:

                

Depreciation

     65,000       69,000  

Deferred income taxes

     77,000       107,000  
    


 


       1,162,000       387,000  

Changes in operating assets and liabilities:

                

Accounts receivable

     (1,640,000 )     (190,000 )

Inventories

     1,166,000       (142,000 )

Other assets

     2,000       18,000  

Accounts payable

     (1,000,000 )     135,000  

Accrued expenses

     537,000       25,000  

Income taxes payable

     234,000       11,000  

Customer deposits

     (34,000 )     —    
    


 


Net cash provided by operating activities

     427,000       244,000  
    


 


Cash Flows From Investing Activities:

                

Purchase of plant and equipment

     (70,000 )     (13,000 )
    


 


Net cash used in investing activities

     (70,000 )     (13,000 )
    


 


Net increase in cash and cash equivalents

     357,000       231,000  

Cash and cash equivalents at beginning of period

     3,654,000       2,890,000  
    


 


Cash and cash equivalents at end of period

   $ 4,011,000     $   3,121,000  
    


 


Supplemental disclosure of cash flow information:

                

Cash transactions:

                

Income taxes paid

   $ 279,000     $ 10,000  
    


 


Non-cash transactions:

                

Exercise of stock option in exchange for a note receivable

   $ 55,000     $ —    
    


 


 

See Notes to Consolidated Financial Statements (Unaudited).

 

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BOLT TECHNOLOGY CORPORATION AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

Note 1– Basis of Presentation

 

The consolidated balance sheet as of September 30, 2005, the consolidated statements of operations for the three month periods ended September 30, 2005 and 2004 and the consolidated statements of cash flows for the three month periods ended September 30, 2005 and 2004 are unaudited. In the opinion of management, all adjustments necessary for a fair presentation of such financial statements have been included. Such adjustments consisted only of normal, recurring items. Interim results are not necessarily indicative of results for a full year. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2005.

 

Note 2 – Description of Business and Significant Accounting Policies

 

The Company consists of three operating units: Bolt Technology Corporation (“Bolt”), A-G Geophysical Products, Inc. (“A-G”) and Custom Products Corporation (“Custom Products”). Bolt and A-G are in the “geophysical equipment” segment. Bolt manufactures and sells air guns and replacement parts, and A-G manufactures and sells underwater cables, connectors, hydrophones and seismic source monitoring systems. Custom Products, which is in the “industrial products” segment, manufactures and sells miniature industrial clutches and brakes and sells sub-fractional horsepower electrical motors.

 

Principles of Consolidation:

 

The consolidated financial statements include the accounts of Bolt Technology Corporation and its subsidiary companies. All significant intercompany balances and transactions have been eliminated.

 

Cash and Cash Equivalents:

 

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.

 

Allowance for Uncollectible Accounts:

 

The allowance for uncollectible accounts is established through a provision for bad debts charged to expense. Accounts receivable are charged against the allowance for uncollectible accounts when the Company believes that collectibility of the principal is unlikely. The allowance is an amount that the Company believes will be adequate to absorb estimated losses on existing accounts receivable balances, based on the evaluation of their collectibility and prior bad debt experience. This evaluation also takes into consideration such factors as changes in the nature and volume of the accounts receivable, overall quality of accounts receivable, review of specific problem accounts receivable, and current economic and industry conditions that may affect the customers’ ability to pay. While the Company uses the best information available to make its evaluation, future adjustments to the allowance may be necessary if there are significant changes in economic and industry conditions or any other factors considered in the Company’s evaluation.

 

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Inventories:

 

Inventories are valued at the lower of cost or market, with cost principally determined on an average cost method which approximates the first-in, first-out method. The Company maintains an inventory valuation reserve to provide for slow moving and obsolete inventory. Amounts are charged to the reserve when the Company scraps or disposes of inventory. See Note 5 to Consolidated Financial Statements (Unaudited) for additional information concerning inventories.

 

Property, Plant and Equipment:

 

Property, plant and equipment are stated at cost. Depreciation for financial accounting purposes is computed using the straight-line method over the estimated useful lives of 15 to 30 years for buildings, over the term of the lease for leasehold improvements and 5 to l0 years for machinery and equipment. Major improvements which add to the productive capacity or extend the life of an asset are capitalized, while repairs and maintenance are charged to expense as incurred. See Note 6 to Consolidated Financial Statements (Unaudited) for additional information concerning property, plant and equipment.

 

Goodwill and Other Long-Lived Assets:

 

Goodwill represents the excess cost over the value of net tangible assets acquired in business combinations and until June 30, 2001 was being amortized using the straight-line method over 20 years. Accumulated amortization at September 30, 2005 and June 30, 2005 was $1,750,000. Effective July 1, 2001, the Company adopted SFAS No. 142, “Goodwill and Other Intangible Assets.” Under SFAS No. 142, goodwill amortization ceased when the new standard was adopted. The standard also requires an annual goodwill impairment test. The goodwill balance was tested for impairment as of July 1, 2005 and 2004, and the tests indicated no impairment. The tests were conducted by management with the assistance of an independent valuation company. See Note 3 to Consolidated Financial Statements (Unaudited) for additional information concerning goodwill.

 

The Company’s other long-lived assets consist of property, plant and equipment and other non-current assets. The Company reviews for the impairment of these assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The carrying amount is considered impaired when anticipated undiscounted cash flows expected to result from the use of the asset and its eventual disposition are less than its carrying amount. The Company’s reviews as of September 30, 2005 and June 30, 2005 did not result in any indicators of impairment, and therefore no impairment tests were performed on these other long-lived assets.

 

Revenue Recognition and Warranty Costs:

 

The Company recognizes sales revenue when it is realized and earned. The Company’s reported sales revenue is based on meeting the following criteria:

 

  1. Manufacturing products based on customer specifications.

 

  2. Delivering product to the customer before the close of the reporting period, whereby delivery results in the transfer of ownership risk to the customer.

 

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Table of Contents
  3. Establishing a set sales price with the customer.

 

  4. Collecting the sales revenue from the customer is reasonably assured.

 

  5. No significant contingencies exist.

 

Warranty costs and product returns incurred by the Company have not been significant.

 

Income Taxes:

 

The provision for income taxes is determined under the liability method. Deferred tax assets and liabilities are recognized based on differences between the book and tax bases of assets and liabilities using currently enacted tax rates. The provision for income taxes is the sum of the amount of income tax paid or payable for the period determined by applying the provisions of enacted tax laws to the taxable income for that period and the net change during the period in the Company’s deferred tax assets and liabilities. See Note 4 to Consolidated Financial Statements (Unaudited) for additional information concerning the provision for income taxes.

 

Stock-Based Compensation:

 

The Company adopted SFAS No. 148, “Accounting for Stock-Based Compensation - Transition and Disclosure,” in 2003 and SFAS No. 123, “Accounting for Stock-Based Compensation,” in 1997. Under SFAS No. 123, as amended by SFAS No. 148, companies can, but are not required to, elect to recognize compensation expense for all stock-based awards using a fair value methodology. The Company adopted the disclosure-only provisions, as permitted by SFAS Nos. 123 and 148. In this regard, the Company applied Accounting Principles Board Opinion No. 25 and related interpretations in accounting for its stock-based plans. Accordingly, no compensation expense was recognized for grants under the Company’s Amended and Restated 1993 Stock Option Plan.

 

Had compensation cost for stock options granted been recognized in accordance with the provisions of SFAS No. 123, as amended by SFAS No. 148, net income and earnings per share for the three month periods ended September 30, 2005 and 2004 would have been the same as reported because all options were fully vested on or prior to June 30, 2004. See Note 8 to Consolidated Financial Statements (Unaudited) for additional information concerning stock options.

 

The Company adopted SFAS No. 123 (Revised 2004), “Share-Based Payment” (“SFAS 123 Revised”), effective July 1, 2005. A key requirement of SFAS 123 Revised is that all share-based payments to employees, including stock option grants, be recognized in the income statement based on their fair values. Pro forma disclosure of the cost of employee share payments is no longer an alternative. SFAS 123 Revised did not have an impact on the Company’s consolidated financial statements for the quarter ended September 30, 2005 because under the terms of the Company’s 1993 Stock Option Plan, no options can be granted subsequent to June 30, 2003 and all options were fully vested as of June 30, 2004. The Board of Directors has approved the Bolt Technology Corporation 2005 Stock Option Plan subject to shareholder approval at the Company’s Annual Meeting of Stockholders to be held on November 22, 2005. If the Company’s stockholders approve the 2005 Stock Option Plan and the Company provides share based payments in the future, the Company will have to fair value these awards and recognize this cost in its consolidated financial statements in accordance with the requirements of SFAS 123 Revised.

 

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Table of Contents

Use of Estimates:

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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 financial statements, and the reported amounts of revenues and expenses during the reporting period. The most critical estimates made by the Company are those relating to inventory valuation reserves, goodwill impairment and the realization of deferred tax assets. Actual results could differ from those estimates.

 

Computation of Earnings Per Share:

 

Basic earnings per share is computed by dividing net income by the average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income by the average number of common shares outstanding assuming dilution, the calculation of which assumes that all stock options are exercised at the beginning of the period and the proceeds used to purchase shares at the average market price for the period. The following is a reconciliation of basic earnings per share to diluted earnings per share for the three month periods ended September 30, 2005 and 2004:

 

     Three Months Ended
September 30,


     2005

   2004

Net income available to common stockholders

   $ 1,020,000    $ 211,000
    

  

Divided by:

             

Weighted average common shares (basic)

     5,434,656      5,414,357

Weighted average common share equivalents

     173,105      70,339
    

  

Total weighted average common shares and common share equivalents (diluted)

     5,607,761      5,484,696
    

  

Basic earnings per share

   $ 0.19    $ 0.04
    

  

Diluted earnings per share

   $ 0.18    $ 0.04
    

  

 

For the three month period ended September 30, 2004, the calculations do not include options to acquire 28,000 shares since their inclusion would have been anti-dilutive. There were no anti-dilutive options for the three-month period ended September 30, 2005. Therefore, the calculations include all options outstanding for this period.

 

Note 3 – Goodwill

 

The Company’s goodwill carrying amounts relate solely to the acquisition of Custom Products in fiscal year 1998 and A-G in fiscal year 1999, which are two SFAS No. 142 reporting units. Bolt, the parent of Custom Products and A-G, is a third reporting unit and has no goodwill. Both Bolt and A-G are in the geophysical equipment segment, and Custom Products is in the industrial products segment.

 

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Table of Contents

The composition of the net goodwill balance by reporting segment is as follows:

 

     September 30,
2005


  

June 30,

2005


Geophysical Equipment Segment

   $ 7,679,000    $ 7,679,000

Industrial Products Segment

     3,352,000      3,363,000
    

  

     $ 11,031,000    $ 11,042,000
    

  

 

The acquisition of Custom Products generated tax deductible goodwill which exceeded the goodwill recorded for book purposes. The goodwill reduction for Custom Products during the three month period ended September 30, 2005 of $11,000 is a result of the tax benefits generated by the goodwill deduction for tax purposes.

 

As required by SFAS No. 142, “Goodwill and Other Intangible Assets,” the Company reviews goodwill for impairment annually or more frequently if impairment indicators arise. Goodwill was tested for impairment as of July 1, 2005 and 2004, and the tests indicated no impairment. The tests were conducted by management with the assistance of an independent valuation company.

 

Goodwill represents approximately 39% of the Company’s total assets at September 30, 2005 and is thus a significant estimate by management. Even if management’s estimate were incorrect, that would not result in a current cash charge because the Company’s goodwill amounts reflected on its balance sheet arose out of acquisition accounting several years ago.

 

See Note 2 to Consolidated Financial Statements (Unaudited) for additional information concerning goodwill.

 

Note 4 – Income Taxes

 

The components of income tax expense for the three months ended September 30 are as follows:

 

     2005

   2004

Current:

             

Federal

   $ 450,000    $ —  

State

     64,000      21,000

Deferred:

             

Federal

     52,000      108,000

State

     24,000      —  
    

  

Income tax expense

   $ 590,000    $ 129,000
    

  

 

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Table of Contents

Note 5 – Inventories

 

Inventories consist of the following:

 

    

September 30,

2005


   

June 30,

2005


 

Finished goods

   $ —       $ 1,586,000  

Raw materials and sub-assemblies

     6,182,000       5,811,000  

Work in process

     540,000       459,000  
    


 


       6,722,000       7,856,000  

Less - reserve for inventory valuation

     (747,000 )     (715,000 )
    


 


     $ 5,975,000     $ 7,141,000  
    


 


 

Although the Company does not generally maintain finished goods inventory, at June 30, 2005 a large order was complete and was ready for shipment, awaiting final shipping destination information from the customer. The finished goods inventory balance at June 30, 2005 represents the cost of this order, which was recorded as a sale during the three months ended September 30, 2005.

 

A significant source of the Company’s revenue arises from the sale of replacement parts required by customers who have previously purchased products. As a result, the Company maintains a large quantity of parts on hand that may not be sold or used in final assemblies for an extended period of time. In order to recognize that certain inventory may become obsolete or have supplies in excess of reasonable supportable sales forecasts, an inventory valuation reserve has been established. The inventory valuation reserve is a significant estimate made by management. Actual results may differ from this estimate, and the difference could be material. Management establishes the inventory valuation reserve by reviewing the inventory for items that should be reserved in full based on a lack of usage for a specified period of time and for which future demand is not forecasted and establishes an additional reserve for slow moving inventory based on varying percentages of the cost of the items. At September 30, 2005 and June 30, 2005, approximately $1,861,000 and $1,944,000, respectively, of the raw materials and sub-assemblies inventory were considered slow moving and subject to a reserve provision equal to all or a portion of the cost, less an estimate for scrap value. In certain instances, this inventory has been unsold for more than five years from date of manufacture or purchase, and in other instances the Company has more than a five-year supply of inventory on hand based on recent sales volume. At September 30, 2005 and June 30, 2005, the cost of inventory which has more than a five-year supply of inventory on hand and the cost of inventory which has had no sales during the last five years amounted to approximately $1,539,000 and $1,422,000, respectively. Management believes that this inventory is properly valued and appropriately reserved. Even if management’s estimate were incorrect, that would not result in a current cash charge since the cash required to manufacture or purchase the older inventory was expended in prior years.

 

The Company records increases in the inventory valuation reserve in cost of sales and decreases in the inventory valuation reserve when items are scrapped or disposed of. During the three month period ended September 30, 2005, the inventory valuation reserve was increased by $32,000, and no items were scrapped or disposed of.

 

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Note 6 – Property, Plant and Equipment

 

Property, plant and equipment are comprised of the following:

 

    

September 30,

2005


   

June 30,

2005


 

Land

   $ 253,000     $ 253,000  

Buildings

     760,000       760,000  

Leasehold improvements

     348,000       348,000  

Machinery and equipment

     6,429,000       6,359,000  
    


 


       7,790,000       7,720,000  

Less - accumulated depreciation

     (5,970,000 )     (5,905,000 )
    


 


     $ 1,820,000     $ 1,815,000  
    


 


 

Note 7 – Segment Information

 

The Company’s reportable segments are “geophysical equipment” and “industrial products.” Bolt and A-G are in the geophysical equipment segment. Custom Products is in the industrial products segment. The following table provides selected financial information for each segment for the three month periods ended September 30, 2005 and 2004:

 

Three months ended Sept. 30, 2005

 

    

Geophysical

Equipment


  

Industrial

Products


   Total

Sales

   $ 7,236,000    $ 758,000    $ 7,994,000

Interest income

     25,000      —        25,000

Depreciation

     60,000      5,000      65,000

Income before income taxes

     1,470,000      140,000      1,610,000

Segment assets

     23,434,000      4,675,000      28,109,000

Fixed asset additions

     70,000      —        70,000

 

Three months ended Sept. 30, 2004

 

    

Geophysical

Equipment


  

Industrial

Products


   Total

Sales

   $ 3,074,000    $ 765,000    $ 3,839,000

Interest income

     6,000      —        6,000

Depreciation

     63,000      6,000      69,000

Income before income taxes

     206,000      134,000      340,000

Segment assets

     18,072,000      4,887,000      22,959,000

Fixed asset additions

     12,000      1,000      13,000

 

The Company does not allocate income taxes to its segments.

 

Note 8 – Stock Options

 

The Bolt Technology Corporation Amended and Restated 1993 Stock Option Plan provided for the granting of options to purchase up to 550,000 shares of Common Stock of the Company at a price not less than fair market value at date of grant.

 

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Options granted to employees are exercisable for a period of up to ten years. The plan also provided for the granting to non-employee directors of options to purchase 3,000 shares of Common Stock each time they were elected directors. Under the terms of the plan, no options can be granted subsequent to June 30, 2003 but options granted prior to that date shall remain in effect until such options have been exercised or terminated in accordance with the plan and the terms of such options.

 

A summary of changes in the 1993 Stock Option Plan during the three month period ended September 30, 2005 is presented below:

 

     Shares

   

Weighted Average

Exercise Price


Outstanding at June 30, 2005

   311,975     $ 3.17

Granted

   —         —  

Exercised

   (12,000 )   $ 4.56

Expired

   (7,000 )   $ 4.56
    

 

Outstanding at September 30, 2005

   292,975     $ 3.08
    

 

 

Note 9 – Contingencies

 

Litigation:

 

From time to time, the Company is a party to routine litigation and proceedings that are considered part of the ordinary course of business. The Company is not aware of any material current or pending litigation.

 

Securities and Exchange Commission Informal Inquiry:

 

By letter dated January 23, 2004, the Company was informed that the staff of the Securities and Exchange Commission (the “Staff”) had begun an informal inquiry regarding certain corporate and accounting matters. In its letter, the Staff stated that the inquiry should not be construed to indicate that any federal securities laws had been violated or to reflect on the integrity of any person, the Company or its securities. Although the Company believes that it has acted properly and legally and has voluntarily cooperated with the Staff’s informal inquiry, it can neither predict the length, scope or results of the informal inquiry, or the impact, if any, on its operations. The Company has complied with the information requests of the Staff.

 

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Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

The following management’s discussion and analysis should be read together with the Consolidated Financial Statements (Unaudited) and accompanying notes and other detailed information appearing elsewhere in this Form 10-Q. This discussion includes forward-looking statements about the demand for our products and future results. Please refer to the “Cautionary Statement for Purposes of Forward-Looking Statements” below.

 

Cautionary Statement for Purposes of Forward-Looking Statements

 

Forward-looking statements in this Form 10-Q, future filings by the Company with the Securities and Exchange Commission, the Company’s press releases and oral statements by authorized officers of the Company are intended to be subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These include statements about anticipated financial performance, future revenues or earnings, business prospects, new products, anticipated market performance, planned production and shipping of products, expected cash needs and similar matters. Investors are cautioned that all forward-looking statements involve risks and uncertainty, including without limitation (i) the risk of technological change relating to the Company’s products and the risk of the Company’s inability to develop new competitive products in a timely manner, (ii) the risk of decreased demand for the Company’s products due to changes in oil and gas prices and fluctuations in energy industry activity, (iii) the Company’s reliance on certain significant customers, (iv) risks associated with a significant amount of foreign sales, and (v) the risk of fluctuations in future operating results. The Company believes that forward-looking statements made by it are based on reasonable expectations. However, no assurances can be given that actual results will not differ materially from those contained in such forward-looking statements. The words “estimate,” “project,” “anticipate,” “expect,” “predict,” “believe” and similar expressions are intended to identify forward-looking statements.

 

Overview

 

Sales of the Company’s geophysical products are generally related to the level of worldwide oil and gas exploration and development activity which is dependent, primarily, on oil and gas prices. After a slowdown in fiscal 2003, marine seismic exploration started to improve during fiscal 2004, and this improvement continued throughout fiscal 2005 and into the first quarter of fiscal 2006. The current high price of oil, increased worldwide energy demand and the depletion of proven oil and natural gas reserves have contributed to an increased demand for marine seismic surveys. The Company’s geophysical equipment sales increased 135% for the three months ended September 30, 2005 compared to the three months ended September 30, 2004. Based on the level of sales during the first quarter, current orders and customer requests for quotations, the Company anticipates that geophysical equipment sales for the remainder of fiscal 2006 should remain strong.

 

Sales in the industrial products segment decreased 1% during the three months ended September 30, 2005 compared to the three months ended September 30, 2004. Assuming continuing strength in the U.S. economy, the Company anticipates that industrial products sales for the remainder of fiscal 2006 should increase.

 

Due primarily to the increase in the geophysical equipment business as described above, the Company’s balance sheet continued to strengthen in the first quarter of fiscal 2006 and based on the factors noted above, the Company anticipates that its balance sheet will remain strong during the remainder of fiscal 2006.

 

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Liquidity and Capital Resources

 

As of September 30, 2005, the Company believes that current cash and cash equivalent balances and projected cash flow from operations are adequate to meet foreseeable operating needs.

 

Three Months Ended September 30, 2005

 

At September 30, 2005, the Company had $4,011,000 in cash and cash equivalents. This amount is $357,000 or 10% higher than the amount of cash and cash equivalents at June 30, 2005. For the three months ended September 30, 2005, cash flow from operating activities after changes in working capital items was $427,000, primarily due to net income adjusted for depreciation and deferred income taxes and lower inventories partially offset by higher accounts receivable and lower current liabilities.

 

For the three months ended September 30, 2005, the Company used $70,000 for capital expenditures which relate to new and replacement equipment. The Company estimates that capital expenditures for fiscal 2006 will not exceed $200,000 and expects that the capital expenditures will be funded from operating cash flow.

 

Since a relatively small number of customers account for the majority of the Company’s geophysical segment sales, the consolidated accounts receivable balance at the end of any period tends to be concentrated in a small number of customers. At September 30, 2005 and June 30, 2005, the five customers with the highest balances due represented 76% and 69%, respectively, of the consolidated accounts receivable balances on those dates.

 

In October 1998, the Company’s Board of Directors approved a stock repurchase program under which the Company was authorized to buy up to 500,000 shares of its Common Stock in open market or private transactions. Although the program remains authorized, the Company has not repurchased any shares and currently has no plan to make repurchases.

 

Three Months Ended September 30, 2004

 

At September 30, 2004, the Company had $3,121,000 in cash and cash equivalents. For the three months ended September 30, 2004, cash and cash equivalents increased by $231,000 or 8% from the amount at June 30, 2004. For the three months ended September 30, 2004, cash flow from operating activities after changes in working capital items was $244,000 primarily due to net income adjusted for depreciation and deferred income taxes and higher current liabilities partially offset by higher accounts receivable and inventories.

 

For the three months ended September 30, 2004, the Company used $13,000 for capital expenditures funded from operating cash flow.

 

Off-Balance Sheet Arrangements

 

The Company has no off-balance sheet financing arrangements. In addition, the Company does not have any relationship with unconsolidated entities or special purpose entities and has not issued any guarantees other than its guarantee of an employment agreement between A-G and A-G’s president.

 

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Contractual Obligations

 

During the period ended September 30, 2005, there were no changes in the operating leases described in the Company’s Annual Report on Form 10-K for the Fiscal Year Ended June 30, 2005. The Company had no long-term borrowings, capital leases, purchase obligations or other long-term liabilities at September 30, 2005 and June 30, 2005.

 

Securities and Exchange Commission Informal Inquiry

 

By letter dated January 23, 2004, the Company was informed that the staff of the Securities and Exchange Commission (the “Staff”) had begun an informal inquiry regarding certain corporate and accounting matters. In its letter, the Staff stated that the inquiry should not be construed to indicate that any federal securities laws had been violated or to reflect on the integrity of any person, the Company or its securities. Although the Company believes that it has acted properly and legally and has voluntarily cooperated with the Staff’s informal inquiry, it can neither predict the length, scope or results of the informal inquiry, or the impact, if any, on its operations. The Company has complied with the information requests of the Staff.

 

Results of Operations

 

Three Months Ended September 30, 2005 Compared to Three Months Ended September 30, 2004

 

Consolidated sales for the three months ended September 30, 2005 totaled $7,994,000, which are the highest quarterly sales ever recorded by the Company. Sales for the three months ended September 30, 2005 increased by $4,155,000 or 108% from the corresponding period last year. Sales of geophysical equipment increased by $4,162,000 or 135%, due primarily to higher sales of complete energy source systems ($2,543,000), air gun replacement parts ($756,000), underwater electrical connectors ($481,000), and Seismic Source Monitoring Systems (“SSMS”) ($382,000). During the three months ended September 30, 2005, the Company recorded its second sale of an Annular Port Gun system (“APG”) which totaled $1,993,000. During the three months ended September 30, 2004, there were no sales of APG systems or SSMS. Industrial products sales for the three months ended September 30, 2005 decreased by $7,000 or 1% compared to the three months ended September 30, 2004, reflecting lower volume.

 

Consolidated cost of sales as a percentage of consolidated sales was 62% for the three months ended September 30, 2005 versus 60% for the three months ended September 30, 2004. Cost of sales as a percentage of sales for the geophysical equipment segment was 62% for the three months ended September 30, 2005 versus 61% for the three months ended September 30, 2004. The increase in the cost of sales percentage for geophysical equipment for the three months ended September 30, 2005 was primarily due to the APG system sale which included several items of auxiliary equipment purchased from third-party suppliers. The third-party auxiliary equipment has significantly lower margins than the Company’s proprietary APG guns. Excluding the APG system sale, cost of sales as a percentage of sales for the geophysical equipment segment for the three months ended September 30, 2005 would have been 55%, instead of 62%, and reflects higher manufacturing efficiencies associated with the increase in geophysical equipment sales. Cost of sales as a percentage of sales for the industrial products segment increased from 58% for the three months ended September 30, 2004 to 60% for the three months ended September 30, 2005 primarily due to higher manufacturing costs.

 

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Research and development costs for the three months ended September 30, 2005 increased by $24,000 or 53% from the three months ended September 30, 2004. The major portion of this increase relates to SSMS. SSMS is utilized to measure air gun depth, air pressure and “near field” energy output for each gun array, thereby enhancing the accuracy and therefore the usefulness of marine seismic survey data. The Company is currently working on more advanced stages of SSMS that it expects will deliver additional benefits.

 

Selling, general and administrative expenses increased by $243,000 for the three months ended September 30, 2005 from the three months ended September 30, 2004 primarily due to higher compensation expense ($167,000), freight out ($24,000) and bad debt expense ($10,000). The increase in compensation expense reflects the addition of personnel, salary increases and bonuses.

 

The provision for income taxes for the three months ended September 30, 2005 was $590,000, an effective tax rate of 37%. This rate was higher than the federal statutory rate of 34%, primarily due to state income taxes and deferred income taxes attributable to goodwill amortization for tax purposes, partially offset by the tax benefit for export sales. The provision for income taxes for the three months ended September 30, 2004 was $129,000, an effective tax rate of 38%. This rate was higher than the federal statutory rate of 34%, primarily due to state income taxes and deferred income taxes attributable to goodwill amortization for tax purposes, partially offset by the tax benefit for export sales.

 

The above mentioned factors resulted in net income for the three months ended September 30, 2005 of $1,020,000 compared to net income of $211,000 for the three months ended September 30, 2004.

 

Critical Accounting Policies

 

The methods, estimates and judgments the Company uses in applying the accounting policies most critical to its financial statements have a significant impact on the results the Company reports in its financial statements. The Securities and Exchange Commission has defined the most critical accounting policies as the ones that are most important to the portrayal of the Company’s financial condition and results, and requires the Company to make its most difficult and subjective judgments.

 

Based on this definition, the Company’s most critical policies include: revenue recognition, recording of inventory reserves, deferred taxes, and the potential impairment of goodwill. These policies are discussed below. The Company also has other key accounting policies, including the establishment of bad debt reserves. The Company believes that these other policies either do not generally require it to make estimates and judgments that are as difficult or as subjective, or that it is less likely that they would have a material impact on the Company’s reported results of operations for a given period.

 

Although the Company believes that its estimates and assumptions are reasonable, these are based upon information available at the end of each reporting period and involve inherent risks and uncertainties. Actual results may differ significantly from the Company’s estimates and its estimates could be different using different assumptions or conditions.

 

See Note 2 to Consolidated Financial Statements (Unaudited) for additional information concerning significant accounting policies.

 

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Revenue Recognition

 

The Company recognizes sales revenue when it is realized and earned. The Company’s reported sales revenue is based on meeting the following criteria:

 

1. Manufacturing products based on customer specifications.

 

2. Delivering product to the customer before the close of the reporting period, whereby delivery results in the transfer of ownership risk to the customer.

 

3. Establishing a set sales price with the customer.

 

4. Collecting the sales revenue from the customer is reasonably assured.

 

5. No significant contingencies exist.

 

Inventory Reserves

 

A significant source of the Company’s revenue arises from the sale of replacement parts required by customers who have previously purchased products. As a result, the Company maintains a large quantity of parts on hand that may not be sold or used in final assemblies for an extended period of time. In order to recognize that certain inventory may become obsolete or have supplies in excess of reasonable supportable sales forecasts, an inventory valuation reserve has been established. The inventory valuation reserve is a significant estimate made by management. Actual results may differ from this estimate, and the difference could be material. Management establishes the inventory valuation reserve by reviewing the inventory for items that should be reserved in full based on a lack of usage for a specified period of time and for which future demand is not forecasted and establishes an additional reserve for slow moving inventory based on varying percentages of the cost of the items. At September 30, 2005 and June 30, 2005, approximately $1,861,000 and $1,944,000, respectively, of the raw materials and sub-assemblies inventory were considered slow moving and subject to a reserve provision equal to all or a portion of the cost, less an estimate for scrap value. In certain instances, this inventory has been unsold for more than five years from date of manufacture or purchase, and in other instances the Company has more than a five-year supply of inventory on hand based on recent sales volume. At September 30, 2005 and June 30, 2005, the cost of inventory which has more than a five-year supply of inventory on hand and the cost of inventory which has had no sales during the last five years amounted to approximately $1,539,000 and $1,422,000, respectively. Management believes that this inventory is properly valued and appropriately reserved. Even if management’s estimate were incorrect, that would not result in a current cash charge since the cash required to manufacture or purchase the older inventory was expended in prior years.

 

The Company records increases in the inventory valuation reserve in cost of sales and decreases in the inventory valuation reserve when items are scrapped or disposed of. During the three month period ended September 30, 2005, the inventory valuation reserve was increased by $32,000, and no items were scrapped or disposed of.

 

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Deferred Taxes

 

The Company applies an asset and liability approach to accounting for income taxes. Deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the years in which the differences are expected to reverse. The recoverability of deferred tax assets is dependent upon the Company’s assessment of whether it is more likely than not that sufficient future taxable income will be generated in the relevant tax jurisdiction to utilize the deferred tax asset. The Company reviews its internal forecasted sales and pre-tax earnings estimates to make its assessment about the utilization of deferred tax assets. In the event the Company determines that future taxable income will not be sufficient to utilize the deferred tax asset, a valuation allowance is recorded. If that assessment changes, a charge or a benefit would be recorded in the consolidated statement of operations. The Company has concluded that no deferred tax valuation allowance was necessary at September 30, 2005 and June 30, 2005 because future taxable income is believed to be sufficient to utilize the deferred tax asset. Net deferred tax assets decreased by $66,000 from a net deferred asset of $17,000 at June 30, 2005 to a net deferred liability of $49,000 at September 30, 2005, reflecting principally the utilization of the alternative minimum tax credit carry-forward ($38,000) and amortization of goodwill for tax purposes ($25,000).

 

Goodwill Impairment Testing

 

As required by SFAS No. 142, “Goodwill and Other Intangible Assets,” the Company reviews goodwill for impairment annually or more frequently if impairment indicators arise. Goodwill was tested for impairment as of July 1, 2005 and 2004 and the tests indicated no impairment. The tests were conducted by management with the assistance of an independent valuation company. The Company’s goodwill carrying amounts relate solely to the acquisition of Custom Products and A-G, which are two SFAS No. 142 reporting units. Bolt, the parent of Custom Products and A-G, is a third reporting unit and has no goodwill. Both Bolt and A-G are in the geophysical equipment segment, and Custom Products is in the industrial products segment.

 

Goodwill represents approximately 39% of the Company’s total assets at September 30, 2005 and is thus a significant estimate by management. Even if management’s estimate were incorrect, that would not result in a current cash charge because the Company’s goodwill amounts reflected on its balance sheet arose out of acquisition accounting several years ago.

 

Recent Accounting Developments

 

Accounting Changes and Error Corrections

 

In May 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections” (“SFAS 154”), which is a replacement of APB Opinion No. 20, “Accounting Changes” (“APB 20”), and FASB Statement No. 3, “Reporting Accounting Changes in Interim Financial Statements” (“SFAS 3”). SFAS 154 applies to all voluntary changes in accounting principle, and changes the requirements for accounting for and reporting of a change in accounting principle. SFAS 154 requires that voluntary changes in accounting principle be applied retrospectively to prior period financial statements unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change. When it is impracticable to determine either the period-specific effects of an accounting change on one or more individual prior periods presented, SFAS 154 requires that the new accounting principle be applied to the balances of assets and liabilities as of the beginning of the earliest period for which retrospective application

 

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is practicable and that a corresponding adjustment be made to the opening balance of retained earnings for that period rather than being reported in the income statement. When it is impracticable to determine the cumulative effect of applying the new accounting principle to all prior periods, SFAS 154 requires that the new principle be applied prospectively from the earliest date practicable. APB 20 required that most voluntary changes in accounting principle be recognized by including in net income of the period of the change the cumulative effect of changing to the new accounting principle. SFAS 154 also applies to changes in accounting principle required by an accounting pronouncement in the unusual instance that the pronouncement does not include specific transition provisions. If the pronouncement includes specific transition provisions, those provisions should be followed. SFAS 154 requires that retrospective application be limited to the “direct” effects of the change. “Indirect” effects of a change in accounting principle, such as the impact on a profit sharing contribution or bonus, should be recognized in the period of the accounting change. SFAS 154 requires that a change in depreciation or amortization of long-lived assets be accounted for as a change in accounting estimate effected by a change in accounting principle. SFAS 154 leaves unchanged many of the requirements of APB 20, including those relating to the reporting of a change in accounting estimate, a change in the reporting entity and the correction of an error. In addition, SFAS 154 leaves unchanged the requirements of SFAS 3 relating to the reporting of accounting changes in interim financial statements. SFAS 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. Early adoption is allowed for accounting changes and corrections of errors made in fiscal years beginning after the date of SFAS 154. The provisions of SFAS 154 will have an impact on the Company’s financial statements in the future should there be voluntary changes in accounting principles.

 

Conditional Asset Retirement Obligations

 

In March 2005, the FASB issued Interpretation No. 47 (“FIN 47”), “Accounting for Conditional Asset Retirement Obligations,” which is an interpretation of SFAS Statement No. 143 (“SFAS 143”), “Accounting for Asset Retirement Obligations.” FIN 47 clarifies that the term “conditional asset retirement obligation” as used in SFAS 143 refers to a legal obligation to perform an asset retirement activity in which the timing and/or method of settlement are conditional on a future event that may or may not be within the control of the entity. The obligation to perform the asset retirement activity is unconditional even though uncertainty exists about the timing and/or method of settlement. FIN 47 requires that an entity recognize a liability for the fair value of a conditional asset retirement obligation if the fair value of the liability can be reasonably estimated. If the fair value of such liability can be reasonably estimated, such liability should be recognized when incurred, which is generally upon acquisition, construction, development or through the normal operation of the asset. Uncertainty about the timing of the conditional asset retirement obligation should be factored into the measurement of the liability when sufficient information exists. FIN 47 is effective no later than the end of fiscal years ending after December 15, 2005 and December 31, 2005 for calendar year entities. The Company believes that FIN 47 will not have an impact on the Company’s consolidated financial statements because the Company does not engage in conditional asset retirement obligations.

 

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Item 3 – Quantitative and Qualitative Disclosures About Market Risk

 

Not applicable.

 

Item 4 – Controls and Procedures

 

The chief executive officer and the chief financial officer, with the assistance of key employees throughout the Company, including its subsidiaries, evaluated the effectiveness of the Company’s disclosure controls and procedures as of September 30, 2005. Based upon the results of such evaluation, the chief executive officer and chief financial officer have concluded that such disclosure controls and procedures are effective in providing reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to management, including the principal executive and financial officers, as appropriate, to allow timely decisions regarding required disclosure.

 

There were no changes in the Company’s internal control over financial reporting that occurred during the quarter ended September 30, 2005 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

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PART II – OTHER INFORMATION

 

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds

 

An employee stock option to purchase an aggregate of 12,000 shares of Common Stock was exercised on July 11, 2005. The stock option was granted under the Bolt Technology Corporation Amended and Restated 1993 Stock Option Plan. In connection with this exercise, the Company extended a loan to the optionee, who is not a director or executive officer (or equivalent thereof) of the Company. In consideration for issuance of the option, the optionee has delivered to the Company a note in a principal amount equal to the option’s exercise price of $54,750. In addition, the optionee has pledged the shares issued upon exercise of the option to the Company as collateral for the loan. The issuance of Common Stock was exempt from registration under the Securities Act of 1933 (the “Act”) pursuant to Section 4(2) of the Act. As a result of this exercise, the number of shares of Common Stock outstanding increased from 5,423,960 at June 30, 2005 to 5,435,960 at September 30, 2005.

 

Item 6 – Exhibits

 

Exhibits.

 

31.1    Certification pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer).
31.2    Certification pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer).
32.1    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer).
32.2    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer).

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

    BOLT TECHNOLOGY CORPORATION
Date: November 14, 2005  

/s/ Raymond M. Soto


    Raymond M. Soto
    Chairman of the Board, President and Chief
    Executive Officer (Principal Executive Officer)
Date: November 14, 2005  

/s/ Joseph Espeso


    Joseph Espeso
    Senior Vice President-Finance and
    Chief Financial Officer (Principal Financial
    and Accounting Officer)

 

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EXHIBIT INDEX

 

Exhibit No.


  

Description


3.1    Amended and Restated Certificate of Incorporation of the Registrant, as further amended (incorporated by reference to Exhibit 3.1 to Form 10-Q for the quarter ended December 31, 2001).
3.2    By-laws of the Registrant, as amended and restated effective January 16, 2002 (incorporated by reference to Exhibit 3.1 to Form 10-Q for the quarter ended March 31, 2002).
10.1    Bolt Technology Corporation Amended and Restated 1993 Stock Option Plan (incorporated by reference to Exhibit 10.1 to Form 10-K for the year ended June 30, 2003).†
10.2    Employment Agreement between Bolt Technology Corporation and Raymond M. Soto effective as of June 10, 1996; Amendment to Employment Agreement between Bolt Technology Corporation and Raymond M. Soto effective as of September 20, 2001 (incorporated by reference to Exhibits 10.1 and 10.2 to Form 10-Q for the quarter ended September 30, 2001).†
10.3    Bolt Technology Corporation Severance Compensation Plan (incorporated by reference to Exhibit 10.4 to Form 10-K for the year ended June 30, 2002).†
10.4    Employment Agreement between Custom Products Corporation and Gerald H. Shaff effective as of January 1, 2003 (incorporated by reference to Exhibit 10.5 to Form 10-K for the year ended June 30, 2003).†
10.5    Lease Agreement dated January 10, 2003 between 381 Connecticut Avenue Corporation and Bolt Technology Corporation (incorporated by reference to Exhibit 10.6 to Form 10-K for the year ended June 30, 2003).
10.6    Lease Agreement dated January 10, 2003 between 381 Connecticut Avenue Corporation and Bolt Technology Corporation (incorporated by reference to Exhibit 10.7 to Form 10-K for the year ended June 30, 2003).
10.7    Letter Agreement dated as of February 9, 2005 amending the Employment Agreement between Custom Products Corporation and Gerald H. Shaff, effective as of January 1, 2003 (incorporated by reference to Exhibit 10.8 to Form 10-Q for the quarter ended December 31, 2004).†

 

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10.8    Employment Agreement between A-G Geophysical Products, Inc. and Michael C. Hedger, dated May 13, 2005 (incorporated by reference to Exhibit 10.10 to Form 10-Q for the quarter ended March 31, 2005).†
31.1    Certification pursuant to Rule 13a-14(a) / 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer).*
31.2    Certification pursuant to Rule 13a-14(a) / 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer).*
32.1    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer).*
32.2    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer).*

* filed herewith
Management contract or compensatory plan.

 

25

EX-31.1 2 dex311.htm SECTION 302 CEO CERTIFICATION Section 302 CEO Certification

EXHIBIT 31.1

 

CERTIFICATION

 

I, Raymond M. Soto, Chairman of the Board, President and Chief Executive Officer of Bolt Technology Corporation, certify that:

 

  1. I have reviewed this quarterly report on Form 10-Q of Bolt Technology Corporation;

 

  2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

  3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

  4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

 

  (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  (b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

  (c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

  5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

  (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: November 14, 2005

 

/s/ Raymond M. Soto


Raymond M. Soto
Chairman of the Board, President and
Chief Executive Officer
EX-31.2 3 dex312.htm SECTION 302 CFO CERTIFICATION Section 302 CFO Certification

EXHIBIT 31.2

 

CERTIFICATION

 

I, Joseph Espeso, Senior Vice President – Finance and Chief Financial Officer of Bolt Technology Corporation, certify that:

 

  1. I have reviewed this quarterly report on Form 10-Q of Bolt Technology Corporation;

 

  2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

  3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

  4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

 

  (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  (b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

  (c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

  5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

  (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: November 14, 2005

 

/s/ Joseph Espeso


Joseph Espeso
Senior Vice President – Finance and
Chief Financial Officer
EX-32.1 4 dex321.htm SECTION 906 CEO CERTIFICATION Section 906 CEO Certification

EXHIBIT 32.1

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of Bolt Technology Corporation (the “Company”) on Form 10-Q for the quarter ended September 30, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Raymond M. Soto, Chairman of the Board, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that:

 

1. The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and

 

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Date: November 14, 2005

 

/s/ Raymond M. Soto


Raymond M. Soto
Chairman of the Board, President and
Chief Executive Officer
EX-32.2 5 dex322.htm SECTION 906 CFO CERTIFICATION Section 906 CFO Certification

EXHIBIT 32.2

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of Bolt Technology Corporation (the “Company”) on Form 10-Q for the quarter ended September 30, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Joseph Espeso, Senior Vice President-Finance and Chief Financial Officer certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that:

 

1. The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and

 

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Date: November 14, 2005

 

/s/ Joseph Espeso


Joseph Espeso
Senior Vice President – Finance and
Chief Financial Officer
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