-----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, HRQW0ladiEGVu37n2NlHgcHUICVeugP/VnWaHW43xR1rbYp+yX1yNOUpLh/hC5vC +umwHsZSOCpZUwF+E79xOQ== /in/edgar/work/20000814/0000950152-00-006044/0000950152-00-006044.txt : 20000921 0000950152-00-006044.hdr.sgml : 20000921 ACCESSION NUMBER: 0000950152-00-006044 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HICKOK INC CENTRAL INDEX KEY: 0000047307 STANDARD INDUSTRIAL CLASSIFICATION: [3823 ] IRS NUMBER: 340288470 STATE OF INCORPORATION: OH FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-00147 FILM NUMBER: 698119 BUSINESS ADDRESS: STREET 1: 10514 DUPONT AVE CITY: CLEVELAND STATE: OH ZIP: 44108 BUSINESS PHONE: 2165418060 MAIL ADDRESS: STREET 1: 10514 DUPONT AVE CITY: CLEVELAND STATE: OH ZIP: 44108 FORMER COMPANY: FORMER CONFORMED NAME: HICKOK ELECTRICAL INSTRUMENT CO DATE OF NAME CHANGE: 19920703 10-Q 1 e10-q.txt HICKOK INCORPORATED 10-Q 1 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 JUNE 30, 2000 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 No. 0-147 HICKOK INCORPORATED - -------------------------------------------------------------------------------- (Exact name of Registrant as specified in its charter) Ohio 34-0288470 - ---------------------------- --------------------------------- (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 10514 DuPont Avenue; Cleveland, Ohio 44108 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number including area code (216) 541-8060 - -------------------------------------------------------------------------------- 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 the filing requirements for the past 90 days. Yes X No ----- ----- As of AUGUST 14, 2000, 762,884 Hickok Incorporated Class A Common Shares and 454,866 Class B Common Shares were outstanding. 2 FORM 10-Q PART I. FINANCIAL INFORMATION - ------------------------------ ITEM 1. FINANCIAL STATEMENTS:
HICKOK INCORPORATED CONSOLIDATED INCOME STATEMENTS (Unaudited) Three months ended Nine months ended June 30, June 30, ----------------------------- ------------------------------ 2000 1999 2000 1999 ----------- ----------- ------------ ----------- Net Sales Product Sales $ 3,780,369 $ 4,756,887 $12,918,332 $12,509,365 Service Sales 412,878 351,966 1,051,317 994,587 ----------- ----------- ----------- ----------- Total Net Sales 4,193,247 5,108,853 13,969,649 13,503,952 Costs and Expenses: Cost of Product Sold 2,181,791 2,912,228 7,219,999 7,688,413 Cost of Service Sold 286,476 233,955 730,541 669,408 Product Development 650,871 700,178 2,112,676 2,058,709 Operating Expenses 1,315,809 1,230,091 4,032,392 3,807,927 Interest Charges 17,083 16,504 41,515 49,814 Other (Income) Expense 425,474 (8,199) 436,939 (43,833) ----------- ----------- ----------- ----------- 4,877,504 5,084,757 14,574,062 14,230,438 ----------- ----------- ----------- ----------- Income (Loss) before Income Taxes (684,257) 24,096 (604,413) (726,486) Income (Recovery of) Taxes (239,400) 8,900 (211,500) (268,800) ----------- ----------- ----------- ----------- Net Income (Loss) $ (444,857) $ 15,196 $ (392,913) $ (457,686) =========== =========== =========== =========== EARNINGS PER COMMON SHARE: Net Income (Loss) $ (.37) $ .01 $ (.33) $ (.38) =========== =========== =========== =========== EARNING PER COMMON SHARE ASSUMING DILUTION: Net Income (Loss) $ (.37) $ .01 $ (.33) $ (.38) =========== =========== =========== =========== Dividends per Share $ - 0 - $ - 0 - $ .10 $ .15 =========== =========== =========== ===========
See Notes to Consolidated Financial Statements. (2) 3
CONSOLIDATED BALANCE SHEETS June 30, September 30, June 30, 2000 1999 1999 ----------- ------------- ----------- (Unaudited) (Note) (Unaudited) ASSETS CURRENT ASSETS Cash and Cash Equivalents $ 392,907 $ 533,579 $ 432,848 Trade Accounts Receivable - Net 2,539,995 3,377,291 3,641,543 Inventories 6,171,636 5,708,098 5,866,519 Deferred Income Taxes 315,900 315,900 196,000 Prepaid Expenses 93,770 51,569 37,802 Refundable Income Taxes 241,810 199,624 162,763 ----------- ----------- ----------- TOTAL CURRENT ASSETS 9,756,018 10,186,061 10,337,475 ----------- ----------- ----------- PROPERTY, PLANT AND EQUIPMENT Land 229,089 229,089 226,738 Buildings 1,454,222 1,565,021 1,541,245 Machinery and Equipment 3,924,392 3,973,241 4,397,330 ----------- ----------- ----------- 5,607,703 5,767,351 6,165,313 Less: Allowance for Depreciation 3,529,468 3,542,098 3,828,477 ----------- ----------- ----------- TOTAL PROPERTY - NET 2,078,235 2,225,253 2,336,836 ----------- ----------- ----------- OTHER ASSETS Goodwill - Net of Amortization 1,828,002 1,833,324 1,860,351 Deferred Charges - Net of Amortization 16,852 35,752 36,398 Deposits 1,750 1,750 1,850 ----------- ----------- ----------- TOTAL OTHER ASSETS 1,846,604 1,870,826 1,898,599 ----------- ----------- ----------- TOTAL ASSETS $13,680,857 $14,282,140 $14,572,910 =========== =========== ===========
NOTE: Amounts derived from audited financial statements previously filed with the Securities and Exchange Commission. See Notes to Consolidated Financial Statements. (3) 4 FORM 10-Q
June 30, September 30, June 30, 2000 1999 1999 ------------- ------------- ----------- (Unaudited) (Note) (Unaudited) LIABILITIES CURRENT LIABILITIES Short-term Financing $ 703,000 $ 100,000 $ 475,000 Current Portion of Long-term Debt 102,071 132,616 134,729 Trade Accounts Payable 255,693 682,950 693,789 Accrued Payroll & Related Expenses 401,780 440,107 574,644 Accrued Expenses 387,044 180,481 177,236 Accrued Income Taxes -- 176,757 -- ----------- ----------- ----------- TOTAL CURRENT LIABILITIES 1,849,588 1,712,911 2,055,398 ----------- ----------- ----------- LONG-TERM LIABILITIES Deferred Income Taxes 41,500 41,500 165,000 Long-Term Debt 51,731 417,928 432,226 Other Long-Term Liabilities 134,125 -- -- ----------- ----------- ----------- TOTAL LONG-TERM LIABILITIES 227,356 459,428 597,226 ----------- ----------- ----------- STOCKHOLDERS' EQUITY Class A, $1.00 par value; authorized 3,750,000 shares; 746,884 shares outstanding(744,884 shares at September 30, 1999 and at June 30, 1999) excluding 9,586 shares in treasury 746,884 744,884 744,884 Class B, $1.00 par value; authorized 1,000,000 shares; 454,866 shares outstanding excluding 20,667 shares in treasury 454,866 454,866 454,866 Contributed Capital 953,803 948,803 948,803 Retained Earnings 9,448,360 9,961,248 9,771,733 ----------- ----------- ----------- TOTAL STOCKHOLDERS' EQUITY 11,603,913 12,109,801 11,920,286 ----------- ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $13,680,857 $14,282,140 $14,572,910 =========== =========== ===========
(4) 5
HICKOK INCORPORATED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED JUNE 30, (Unaudited) 2000 1999 ------------- ------------- Cash Flows from Operating Activities: Cash received from customers $ 14,806,945 $ 12,560,421 Cash paid to suppliers and employees (14,505,352) (13,522,232) Interest paid (30,210) (63,185) Interest received 9,777 24,252 Income taxes (paid) refunded (7,443) 124,962 ------------ ------------ Net Cash Provided by (Used in) Operating Activities 273,717 (875,782) Cash Flows from Investing Activities: Capital expenditures (436,205) (443,789) Decrease in deposits -- 2,500 Proceeds on sale of assets 7,875 -- Payments for business purchased (Net) (78,192) -- ------------ ------------ Net Cash Used in Investing Activities (506,522) (441,289) Cash Flows from Financing Activities: Change in short-term borrowing 572,455 447,967 Decrease in long-term financing (366,197) (117,249) Sale of Class A shares under option 5,850 5,850 Dividends paid (119,975) (179,963) ------------ ------------ Net Cash Provided by (Used in) Financing Activities 92,133 156,605 ------------ ------------ Net increase (decrease) in cash and cash equivalents (140,672) (1,160,466) Cash and cash equivalents at beginning of year 533,579 1,593,314 ------------ ------------ Cash and cash equivalents at end of third quarter $ 392,907 $ 432,848 ============ ============
See Notes to Consolidated Financial Statements. (5) 6 FORM 10-Q
2000 1999 ----------- ----------- Reconciliation of Net Income (Loss) to Net Cash Provided by Operating Activities: Net Income (Loss) $(392,913) $(457,686) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 531,068 653,129 Non-cash compensation charge related to stock options 1,150 1,150 Loss (Gain) on disposal of assets 146,694 -- Changes in assets and liabilities: Decrease (Increase) in accounts receivable 837,296 (943,531) Decrease (Increase) in inventories (463,538) 25,570 Decrease (Increase) in prepaid expenses (42,201) 1,000 Decrease (Increase) in refundable Income taxes (42,186) 19,049 Increase (Decrease) in trade accounts payable (427,257) 37,487 Increase (Decrease) in accrued payroll and related expenses (38,327) (29,995) Increase (Decrease) in accrued expenses 206,563 (19,667) Increase (Decrease) in accrued income taxes (176,757) (162,288) Increase (Decrease) in other long-term liabilities 134,125 -- --------- --------- Total Adjustments 666,630 (418,096) --------- --------- Net Cash Provided by (Used in) Operating Activities $ 273,717 $(875,782) ========= =========
(6) 7 FORM 10-Q HICKOK INCORPORATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) June 30, 2000 1. BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine-month periods ended June 30, 2000 are not necessarily indicative of the results that may be expected for the year ended September 30, 2000. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended September 30, 1999. 2. INVENTORIES Inventories are valued at the lower of cost or market and consist of the following:
June 30, Sept. 30, June 30, 2000 1999 1999 ----------- ----------- ----------- Components $ 3,033,549 $ 3,336,853 $ 3,472,175 Work-in-Process 1,703,516 1,408,452 1,107,173 Finished Product 1,434,571 962,293 1,287,171 ----------- ----------- ----------- $ 6,171,636 $ 5,708,098 $ 5,866,519 =========== =========== ===========
3. CAPITAL STOCK, TREASURY STOCK, CONTRIBUTED CAPITAL AND STOCK OPTIONS Under the Company's Key Employees Stock Option Plans (collectively the "Employee Plans"), incentive stock options, in general, are exercisable for up to ten years, at an exercise price of not less than the market price on the date the option is granted. Non-qualified stock options may be granted at such exercise price and such other terms and conditions as the Compensation Committee of the Board of Directors may determine. No options may be granted at a price less than $2.925. Options for 132,300 Class A shares were outstanding at June 30, 2000 (106,500 shares at September 30, 1999 and 113,600 shares at June 30, 1999) at prices ranging from $2.925 to $17.25 per share. Options for 27,800 shares and 23,000 shares were granted during the three month periods ended December 31, 1999 and December 31, 1998 respectively, at a price of $ 5.00 and $7.125 per share respectively, and all options are exercisable. Options for 2,000 shares were exercised at $2.925 per share during the three month period ended June 30, 2000 resulting in non-cash compensation to the optionee of $1,150. Options for 2,000 shares were execised at $2.925 per share during the three month period ended December 31, 1998 resulting in non-cash compensation to the optionee of $1,150. Options for 1,000 shares were cancelled during the three month period ended March 31, 1999. (7) 8 FORM 10-Q NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED No other options were granted, exercised or cancelled during the three, six or nine month periods under the Employee Plans. The Company's Outside Directors Stock Option Plans (collectively the "Directors Plans"), provide for the automatic grant of options to purchase up to 45,000 shares of Class A Common Stock to members of the Board of Directors who are not employees of the Company, at the fair market value on the date of grant. Options for 30,000 Class A shares were outstanding at June 30, 2000 (36,000 shares at September 30, 1999 and June 30, 1999) at prices ranging from $7.125 to $18.00 per share. Options for 6,000 shares were granted under the Directors Plans during each of the three month periods ended March 31, 2000 and March 31, 1999, at a price of $8.50 and $7.125 per share, respectively. Options for 6,000 shares expired during the three month period ended March 31, 1999. Options for 12,000 shares were cancelled during the three month period ended June 30, 2000. All outstanding options under the Directors Plans become fully exercisable on February 25, 2003. Unissued shares of Class A common stock (617,166 shares) are reserved for the share-for-share conversion rights of the Class B common stock and stock options under the Employee Plans and the Directors Plans. The Company declared a $.10 per share special dividend on its Class A and Class B common shares on February 23, 2000 payable March 31, 2000 to shareholders of record March 15, 2000. A special dividend of $.15 per share on Class A and Class B common shares, payable January 22, 1999 to shareholders of record January 4, 1999, was declared on December 9, 1998. (8) 9 FORM 10-Q NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - continued 4. EARNINGS PER COMMON SHARE Earnings per common share are based on the provisions of FAS Statement No. 128, "Earnings per Share." Accordingly, the adoption of this statement did not affect the Company's results of operations, financial position or liquidity. The effects of applying FAS No. 128 on earnings per share and required reconciliations are as follows:
Three Months Ended Nine Months Ended June 30, June 30, -------------------------- ----------------------------- 2000 1999 2000 1999 ---------- ----------- ------------ ------------- BASIC EARNINGS PER SHARE Income (Loss) available to common stockholders $ (444,857) $ 15,196 $ (392,913) $ (457,686) Shares denominator 1,200,564 1,199,750 1,201,235 1,199,303 Per share amount $ (.37) $ .01 $ (.33) $ (.38) =========== ========== =========== =========== EFFECT OF DILUTIVE SECURITIES Average shares Outstanding 1,200,564 1,199,750 1,201,235 1,199,303 Stock options -- 13,995 -- -- ----------- ---------- ----------- ----------- 1,200,564 1,213,745 1,201,235 1,199,303 DILUTED EARNINGS PER SHARE Income (Loss) available to common stockholders $ (444,857) $ 15,196 $ (392,913) $ (457,686) Per share amount $ (.37) $ .01 $ (.33) $ (.38) =========== ========== =========== ===========
Options to purchase 162,300 and 98,400 shares of common stock during the third quarter of fiscal 2000 and the third quarter of fiscal 1999, respectively, at prices ranging from $2.925 to $18.00 per share were outstanding but were not included in the computation of diluted earnings per share because the option's effect was antidilutive or the exercise price was greater than the average market price of the common shares. For the nine month periods ended June 30, 2000 and 1999 options to purchase 162,300 and 149,600 shares of common stock, respectively, at prices ranging from $2.925 to $18.00 per share were outstanding but were not included in the computation of diluted earnings per share because the option's effect was antidilutive or the exercise price was greater than the average market price of the common shares. (9) 10 FORM 10-Q NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED 5. PURCHASE On February 17, 1998, the Company purchased certain assets of Waekon Industries, Inc. which has been accounted for under the purchase method of accounting. The Company initially paid $2,221,302 for the assets consisting of accounts receivable ($504,282), inventory ($719,244), prepaid and other assets ($42,786), machinery and equipment ($380,100), assumption of current liabilities ($425,895), and goodwill ($1,000,785). The Company also recorded as goodwill closing costs related to the purchase ($205,216) and the present value of an earn out contract ($585,892). In December 1999 the Company renegotiated and accelerated the terms of the future earn out contract incurring an additional amount due of $78,192 deemed to be additional purchase price and recorded as an increase in goodwill. The revised earn out balance ($61,943) has been classified as a current liability at June 30, 2000. Goodwill is being amortized over 20 years. 6. NON-RECURRING CHARGES During the third quarter of fiscal 2000, the Company decided to close its Kirkwood, Pennsylvania production facility and incorporate this operation into its existing Greenwood, Mississippi production facility. The actual closing occurred on July 14, 2000. In connection with this decision, the Company recorded charges of $434,015 consisting of future lease payments ($228,375), losses and abandonment of the plant facility and equipment ($111,750) and employee severance and related expenses ($93,890). These costs are included in other (income) expense. The corresponding liability consists of a current portion of $200,079 which is included in accrued expenses and a long-term portion of $134,125 which is included in other long-term liabilities. 7. SEGMENT AND RELATED INFORMATION The Company has adopted SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information, which changes the way the Company reports the information about its operating segments. The information for 1999 has been restated from the prior year's presentation in order to conform to the current-year presentation. The Company's four business units have separate management teams and infrastructures that offer different products and services. The business units have been aggregated into two reportable segments: 1.) indicators and gauges and 2.) automotive related diagnostic tools and equipment. INDICATORS AND GAUGES This segment consists of products manufactured and sold primarily to companies in the aircraft and locomotive industry. Within the aircraft market, the primary customers are those companies that manufacture business and pleasure aircraft. Within the locomotive market, indicators and gauges are sold to both original equipment manufacturers and to operators of railroad equipment. (10) 11 FORM 10Q NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED AUTOMOTIVE DIAGNOSTIC TOOLS AND EQUIPMENT This segment consists primarily of products designed and manufactured to support the servicing of automotive electronic systems. These products are sold to the aftermarket using a variety of distribution methods. The acquisition of Waekon Industries in 1998 added significant new products and distribution sources for the aftermarket. Included in this segment are fastening control products used by a large automobile manufacturer to monitor and control the nut running process in an assembly plant. This equipment provides high quality threading applications. The product was added in fiscal 1994 when the Company acquired the fastening systems business from Allen-Bradley Company. (11) 12 FORM 10-Q NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED INFORMATION BY INDUSTRY SEGMENT IS SET FORTH BELOW:
Three Months Ended Nine Months Ended June 30, June 30, --------------------------- ----------------------------- 2000 1999 2000 1999 ------------ ----------- ------------ ------------- NET REVENUE Indicators and Gauges $ 690,423 $ 676,907 $ 1,879,400 $ 1,968,925 Automotive Diagnostic Tools and Equipment 3,502,824 4,431,946 12,090,249 11,535,027 ----------- ----------- ----------- ----------- $ 4,193,247 $ 5,108,853 $13,969,649 $13,503,952 =========== =========== =========== =========== INCOME (LOSS) FROM OPERATIONS Indicators and Gauges $ 118,762 $ 171,685 $ 391,248 $ 453,910 Automotive Diagnostic Tools and Equipment 268,947 616,339 1,504,859 1,191,702 General Corporate Expenses (1,071,966) (763,928) (2,500,520) (2,372,098) ----------- ----------- ----------- ----------- $ (684,257) $ 24,096 $ (604,413) $ (726,486) =========== =========== =========== =========== ASSET INFORMATION Indicators and Gauges $ 1,265,569 $ 1,417,002 Automotive Diagnostic Tools and Equipment 9,313,926 10,296,293 Corporate 3,101,362 2,859,615 ----------- ----------- $13,680,857 $14,572,910 =========== =========== GEOGRAPHICAL INFORMATION Included in the consolidated financial statements are the following amounts related to geographical locations: REVENUE: United States $ 3,838,469 $ 4,936,987 $13,051,239 $12,808,036 Canada 128,118 113,106 291,754 460,775 Other foreign countries 226,660 58,760 626,656 $ 235,141 ----------- ----------- ----------- ----------- $ 4,193,247 $ 5,108,853 $13,969,649 $13,503,952 =========== =========== =========== ===========
(12) 13 FORM 10-Q ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations, Third Quarter (April 1, 2000 through June 30, 2000) Fiscal 2000 Compared to Third Quarter Fiscal 1999 -------------------------------------------------------------------------- REPORTABLE SEGMENT INFORMATION The Company has determined that it has two reportable segments: 1) indicators and gauges and 2) automotive related diagnostic tools and equipment. The indicators and gauges segment consists of products manufactured and sold primarily to companies in the aircraft and locomotive industry. Within the aircraft market, the primary customers are those companies that manufacture business and pleasure aircraft. Within the locomotive market, indicators and gauges are sold to both original equipment manufacturers and to operators of railroad equipment. Revenue in this segment was $690,423 and $676,907 for the third quarter of fiscal 2000 and fiscal 1999, respectively and $1,879,400 and $1,968,925 for the first nine months of fiscal 2000 and fiscal 1999, respectively. The automotive diagnostic tools and equipment segment consists primarily of products designed and manufactured to support the servicing of automotive electronic systems. These products are sold both directly to the end user and to the aftermarket using a variety of distribution methods. Included in this segment are fastening control products used primarily by a large automobile manufacturer to monitor and control the nut running process in an assembly plant. Revenue in this segment was $3,502,824 and $4,431,946 for the third quarter of fiscal 2000 and fiscal 1999, respectively and $12,090,249 and $11,535,027 for the first nine months of fiscal 2000 and fiscal 1999, respectively. RESULTS OF OPERATIONS Product sales for the quarter ended June 30, 2000 were $3,780,369 versus $4,756,887 for the quarter ended June 30, 1999. The 21% decrease in product sales in the current quarter is volume related and due entirely to a decrease in sales of automotive diagnostic products to the aftermarket. The Company anticipates that the current amount of product sales experienced in the third quarter will increase slightly in the fourth quarter based on recent order levels. Service sales for the quarter ended June 30, 2000 were $412,878 versus $351,966 for the quarter ended June 30, 1999. The increase was both volume and price related. The current level of service sales is expected to continue in the fourth quarter of the fiscal year. Cost of product sold in the third quarter of fiscal 2000 was $2,181,791 or 57.7% of product sales as compared to $2,912,228 or 61.2% of product sales in the third quarter of 1999. This decrease in the cost of product sold percentage was due primarily to a change in product mix applicable to sales of higher margin automotive diagnostic products to the aftermarket and other markets. The current cost of products sold percentage is anticipated to decrease slightly during the balance of the fiscal year due to a change in product mix and improved plant utilization. Cost of service sold for the quarter ended June 30, 2000 was $286,476 or 69.4% of service sales as compared to $233,955 or 66.5% of service sales in the quarter ended June 30, 1999. This increase in the cost of service sold percentage was due to a slight increase in warranty repairs. The cost of service sold percentage is expected to remain at the current level in the fourth quarter of the fiscal year. Product development expenses were $650,871 in the third quarter of fiscal 2000 or 17.2% of product sales as compared to $700,178 or 14.7% of product sales in the third quarter of fiscal 1999. The dollar decrease was due to a reduction in staff, primarily part-time engineers, due to a temporary reduction in current development projects. (13) 14 FORM 10-Q The percentage increase is due primarily to a 21% decrease in product sales. The level of expenditures incurred during the third quarter of fiscal 2000 is expected to continue in the fourth quarter. Operating expenses in the most recent quarter were $1,315,809 or 31.4% of total sales versus $1,230,091 or 24.1% of total sales for the same period a year ago. The dollar increase in operating expenses is due entirely to higher royalty payments associated with sales of automotive OEM diagnostic products. The current level of operating expenses is expected to continue for the balance of the fiscal year. Interest expense was $17,083 in the third quarter of fiscal 2000, as compared to $16,504 in the third quarter of fiscal 1999. The current level of interest expense will continue for the remainder of fiscal 2000. Other expense of $425,474 in the current quarter compares with other income of $8,199 in the same quarter last year. The change is due to recording a one-time charge of $434,015 associated with the decision to close the Company's manufacturing facility in Kirkwood, Pennsylvania. The facility was closed on July 14, 2000 and all production was moved to the Company's Greenwood, Mississippi manufacturing facility. The Company expects to save approximately $600,000 annually as a result of the restructuring. Costs recorded include lease termination expense of $228,375, severance and related payroll expenses of $93,890 and fixed asset impairment costs of $111,750. The net loss in the third quarter of fiscal 2000 was $444,857 which compared with net income of $15,196 in fiscal 1999. Approximately two-thirds of the change was due to costs associated with the closing of the Company's Kirkwood, Pennsylvania manufacturing facility. The balance of the change was due to a 21% reduction in product sales. Unshipped customer orders as of June 30, 2000 were $4,745,000 versus $4,095,000 at June 30, 1999. The increase was primarily due to an increase in orders for indicators and gauges ($540,000) and for automotive diagnostic products ($110,000). Almost all of the increase in orders highlighted above are expected to ship in early fiscal 2001. Results of Operations, Nine Months Ended June 30, 2000 Compared to Nine Months Ended June 30, 1999 ------------------------------------------------------ Product sales for the nine months ended June 30, 2000 were $12,918,332 versus $12,509,365 for the same period in fiscal 1999. The increase is volume related due to higher sales of automotive diagnostic products during the first three months of fiscal 2000. Service sales for the nine months ended June 30, 2000 were $1,051,317 compared with $994,587 for the same period in fiscal 1999. The increase was both volume and price related. Cost of product sold was $7,219,999 or 55.9% of product sales as compared to $7,688,413 or 61.5% product sales for the nine months ended June 30, 1999. This decrease in the cost of product sold percentage was due to a change in product mix and to operating efficiencies realized at the manufacturing level. Cost of service sold was $730,541 or 69.5% of service sales compared with $669,408 or 67.3% of service sales for the nine months ended June 30, 1999. Product development expenses were $2,112,676 or 16.4% of product sales as compared to $2,058,709 or 16.5% of product sales for the nine months ended June 30, 1999. (14) 15 FORM 10-Q Operating expenses were $4,032,392 for the nine months ended June 30, 2000 or 28.9% of total sales versus $3,807,927 or 28.2% of total sales for the nine months ended June 30, 1999. Most of the dollar increase represents higher marketing expenses applicable to automotive product sales to the aftermarket. Interest expense was $41,515 for the nine months ended June 30, 2000, and $49,814 for the same period in 1999. This decrease was due to lower long-term debt. Other expense of $436,939 in first nine months of fiscal 2000 compares with other income of $43,833 in the same period last year. The change was due primarily to recording a one-time charge of $434,015 associated with the decision to close the Company's manufacturing facility in Kirkwood, Pennsylvania. The net loss for the nine months ended June 30, 2000 was $392,913 compared with a net loss of $457,686 for the nine months ended June 30, 1999. The improvement was due to an increase in gross product margin offset by an increase in other costs of almost $480,000, most of which represented one-time charges associated with the decision to close the Company's manufacturing facility in Kirkwood, Pennsylvania. The facility was closed on July 14, 2000 as a cost saving measure and production was transferred to the Company's Greenwood, Mississippi facility. LIQUIDITY AND CAPITAL RESOURCES Total current assets were $9,756,018, $10,186,061 and $10,337,475 at June 30, 2000, September 30, 1999 and June 30, 1999, respectively. The decrease from June to June was due primarily to a reduction in accounts receivable due to lower product sales in the last two months of the current quarter versus the comparable period a year ago. Between September 1999 and June 2000, current assets dropped by approximately $430,000 due to a decrease in accounts receivable of $837,000 as a result of lower sales in the current period offset by an increase in inventory of $464,000. Working capital as of June 30, 2000 amounted to $7,906,430 compared to $8,282,077 a year earlier. Current assets were 5.3 times current liabilities and total cash and receivables were 1.6 times current liabilities. These ratios compare to 5.0 and 2.0, respectively, at June 30, 1999. Internally generated funds were $273,717 during the nine months ended June 30, 2000 but were not adequate to fund the Company's primary non-operating cash requirements consisting of capital expenditures of $436,205 and long term debt payments of $366,197. The shortfall was made up by a comparable increase in short term financing. Management of the Company believes that cash and cash equivalents, together with funds anticipated to be generated by operations and funds available under the Company's credit agreement, will provide the liquidity necessary to support its current and anticipated capital expenditures through the end of fiscal 2000. Shareholders' equity during the nine months ended June 30, 2000 decreased by $505,888 ($.42 per share) resulting primarily from a net loss of $392,913 plus a $119,975 payment of dividends. In February 2000, the Company renewed its credit agreement with its financial lender. The agreement expires in February 2001, and provides for a revolving credit facility of $5,000,000 with interest at the bank's prime commercial rate with a LIBOR option and is unsecured. The Company remains in compliance with its loan covenants. (15) 16 FORM 10-Q YEAR 2000 READINESS DISCLOSURE The Company has completed its Year 2000 remediation efforts and, since the turn of the century, has not experienced any significant problems internally or with suppliers and customers in connection with this event. Nevertheless, additional dates in the future exist which could potentially cause computer system failures. The Company's most likely worst case scenario would be a short-term slowdown or cessation of manufacturing operations at one or more of its facilities and a short-term inability on the part of the Company to process orders and to deliver product to customers in a timely manner. Because the Company has not, to date, experienced any significant problems in the Year 2000, it does not anticipate any major impact in its operations. FORWARD-LOOKING STATEMENTS The foregoing discussion includes forward-looking statements relating to the business of the Company. These forward-looking statements, or other statements made by the Company, are made based on management's expectations and beliefs concerning future events impacting the Company and are subject to uncertainties and factors (including, but not limited to, those specified below) which are difficult to predict and, in many instances, are beyond the control of the Company. As a result, actual results of the Company could differ materially from those expressed in or implied by any such forward-looking statements. These uncertainties and factors include (a) the Company's dependence upon a limited number of customers, including Ford and General Motors, (b) the highly competitive industry in which the company operates, which includes several competitors with greater financial resources and larger sales organizations, and (c) the acceptance in the marketplace of new products and/or services developed or under development by the Company including automotive diagnostic products, fastening systems products and indicating instrument products, and (d) the ability of the Company to effectively make the transition from primarily serving OEM customers to serving smaller customers in the automotive aftermarket. (16) 17 FORM 10-Q ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK - ------------------------------------------------------------------ The Company is exposed to certain market risks from transactions that are entered into during the normal course of business. The Company has not entered into derivative financial instruments for trading purposes. The Company's primary market risk exposure relates to interest rate risk. There were no material changes in the Company's exposure to market risk from September 30, 1999. PART II. OTHER INFORMATION - --------------------------- ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K: --------------------------------- a) The following exhibits are included herein: (11) Statement re: Computation of earnings per share. (27) Financial Data Schedule b) The Company did not file any reports on Form 8-K during the three months ended June 30, 2000. 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. Date: AUGUST 14, 2000 HICKOK INCORPORATED (Registrant) /s/ E. T. Nowakowski ----------------------------------------- E. T. Nowakowski, Chief Financial Officer (17) EX-11 2 ex11.txt EXHIBIT 11 1 FORM 10-Q EXHIBIT 11
HICKOK INCORPORATED STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS Three Months Ended Nine Months Ended June 30, June 30, ----------------------------- ----------------------------- 2000 1999 2000 1999 ---------- ----------- ----------- ----------- PRIMARY - ------- Average shares outstanding 1,200,564 1,199,750 1,201,235 1,199,303 Net effect of dilutive stock options - based on the treasury stock method using average market price - * 12,755 - * - * ----------- ---------- ----------- ----------- Total Shares 1,200,564 1,212,505 1,201,235 1,199,303 ----------- ---------- ----------- ----------- Net Income (Loss) $ (444,857) $ 15,196 $ (392,913) $ (457,686) =========== ========== =========== =========== Per Share $ (.37) $ .01 $ (.33) $ (.38) =========== ========== =========== =========== FULLY DILUTED - ------------- Average shares outstanding 1,200,564 1,199,750 1,201,235 1,199,303 Net effect of dilutive stock options - based on the treasury stock method using year-end market price, if higher than average market price - * 13,995 - * - * ----------- ---------- ----------- ----------- Total Shares 1,200,564 1,213,745 1,201,235 1,199,303 ----------- ---------- ----------- ----------- Net Income (Loss) $ (444,857) $ 15,196 $ (392,913) $ (457,686) =========== ========== =========== =========== Per Share $ (.37) $ .01 $ (.33) $ (.38) =========== ========== =========== ===========
* Net effect of stock options was antidilutive for the period. (18) EX-27 3 ex27.txt EXHIBIT 27
5 9-MOS SEP-30-2000 OCT-01-1999 JUN-30-2000 392,907 0 2,539,995 0 6,171,636 9,756,018 5,607,703 3,529,468 13,680,857 1,849,588 51,731 0 0 1,201,750 10,402,163 13,680,857 13,969,649 13,969,649 7,950,540 6,145,068 436,939 0 41,515 (604,413) (211,500) (392,913) 0 0 0 (392,913) (.33) (.33)
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