-----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, GIrBPvE9ru+x/qNq6yWDJu71hlHDF9cLe86WBpAsLg/67jxeGKtj+yRR2EMoHQ2r 62fb6m2TFC69KDLILUQrTw== 0000950135-96-001993.txt : 19960513 0000950135-96-001993.hdr.sgml : 19960513 ACCESSION NUMBER: 0000950135-96-001993 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960510 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: GALILEO ELECTRO OPTICS CORP CENTRAL INDEX KEY: 0000711425 STANDARD INDUSTRIAL CLASSIFICATION: OPTICAL INSTRUMENTS & LENSES [3827] IRS NUMBER: 042526583 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-11309 FILM NUMBER: 96560387 BUSINESS ADDRESS: STREET 1: GALILEO PARK STREET 2: PO BOX 550 CITY: STURBRIDGE STATE: MA ZIP: 01566 BUSINESS PHONE: 5083479191 MAIL ADDRESS: STREET 1: GALILEO PARK STREET 2: PO BOX 550 CITY: STURBRIDGE STATE: MA ZIP: 01566 10-Q 1 GALILEO ELECTRO-OPTICS CORPORATION 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 MARCH 31, 1996 or ( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from _____________________ to _____________________ COMMISSION FILE NUMBER 0-11309 GALILEO ELECTRO-OPTICS CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 04-2526583 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) GALILEO PARK, P.O. BOX 550, STURBRIDGE, MASSACHUSETTS 01566 (Address of principal executive offices) (Zip Code) Registrant's telephone number including area code (508) 347-9191 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 the number of shares outstanding of the Issuer's classes of common stock, as of the latest practicable date. COMMON STOCK, PAR VALUE $.01: 6,532,779 SHARES OUTSTANDING AT APRIL 30, 1996. 2 GALILEO ELECTRO-OPTICS CORPORATION INDEX Page No. -------- PART I. Financial Information: Consolidated Condensed Balance Sheets - March 31, 1996 and September 30, 1995.............................. 3 Consolidated Condensed Statements of Income - Three months ended and six months ended March 31, 1996 and March 31, 1995....... 5 Consolidated Condensed Statements of Cash Flows - Six months ended March 31, 1996 and March 31, 1995................. 6 Notes to Consolidated Condensed Financial Statements................ 8 Management's Discussion and Analysis of Financial Condition and Results of Operations................................ 9 PART II. Other Information: Other Information................................................... 11 Index to Exhibits................................................... 13 Exhibit 11 - Calculation of Earnings Per Share...................... 14 2 3 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS GALILEO ELECTRO-OPTICS CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS (In thousands of dollars)
Unaudited Audited Mar. 31, 1996 Sept. 30, 1995 ------------- -------------- ASSETS - ------ Current assets: Cash and cash equivalents $ 13,467 $ 8,274 Accounts receivable, net 5,696 6,961 Inventories: Finished goods 152 97 Work-in-process 456 367 Raw materials 4,215 4,418 -------- -------- 4,823 4,882 Deferred income taxes 308 308 Other current assets 275 97 Assets held for sale, net -- 2,345 -------- -------- Total current assets 24,569 22,867 Property, plant and equipment: Land, buildings and improvements 16,147 16,147 Machinery, equipment and furniture 23,449 23,726 Capital projects in process 2,545 1,110 -------- -------- 42,141 40,983 Less accumulated depreciation (22,776) (21,348) -------- -------- Net property, plant and equipment 19,365 19,635 Other assets, net 2,632 2,661 -------- -------- Total assets $ 46,566 $ 45,163 ======== ========
See accompanying notes. - Continued - 3 4 GALILEO ELECTRO-OPTICS CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS (In thousands of dollars)
Unaudited Audited Mar. 31, 1996 Sept. 30, 1995 ------------- -------------- LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------ Current liabilities: Accounts payable $ 1,229 $ 2,412 Accrued liabilities 1,664 1,711 ------- ------- Total current liabilities 2,893 4,123 Deferred income taxes 469 469 Long-term obligation -- Capital leases 174 174 Accrued postretirement benefits other than pensions 663 623 Shareholders' equity: Common stock 65 65 Additional paid-in capital 42,485 42,241 Accumulated deficit (183) (2,532) ------- ------- Total shareholders' equity 42,367 39,774 ------- ------- Total liabilities and shareholders' equity $46,566 $45,163 ======= =======
See accompanying notes. 4 5 GALILEO ELECTRO-OPTICS CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF INCOME (In thousands of dollars except share and per share data) UNAUDITED
Three Months Ended Six Months Ended ----------------------- ------------------------ 3/31/96 3/31/95 3/31/96 3/31/95 ------- ------- ------- ------- Net sales $ 9,283 $ 8,261 $ 17,636 $ 15,459 Cost of sales 5,667 5,973 11,153 11,526 --------- --------- --------- --------- Gross profit 3,616 2,288 6,483 3,933 Selling, engineering and administrative expenses 2,537 2,183 4,699 4,347 --------- --------- --------- --------- Operating profit (loss) 1,079 105 1,784 (414) Other income 207 80 325 147 --------- --------- --------- --------- Income (loss) before income taxes and extraordinary gain 1,286 185 2,109 (267) Provision (benefit) for income taxes 25 16 (82) 40 --------- --------- --------- --------- Income (loss) before extraordinary gain 1,261 169 2,191 (307) Extraordinary gain on receipt and sale of stock (net of income tax expense of $161) -- -- 158 -- --------- --------- --------- --------- Net income (loss) $ 1,261 $ 169 $ 2,349 $ (307) ========= ========= ========= ========= Net income (loss) per common and common equivalent share outstanding Before extraordinary gain $ .19 $ .03 $ .33 $ (.05) Effect of extraordinary gain -- -- .02 -- --------- --------- --------- --------- Net income (loss) $ .19 $ .03 $ .35 $ (.05) ========= ========= ========= ========= Weighted average common and common equivalent shares outstanding 6,664,407 6,486,962 6,629,706 6,473,654
See accompanying notes. 5 6 GALILEO ELECTRO-OPTICS CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (In thousands of dollars) UNAUDITED
Six Months Ended ---------------- Mar. 31, 1996 Mar. 31, 1995 ------------- ------------- Cash flows from operating activities: - ------------------------------------- Cash received from customers $ 18,866 $ 15,684 Cash paid to suppliers and employees (15,555) (15,554) Other income received 53 13 Interest paid (10) (7) Investment income received 282 141 Income taxes paid (46) (14) -------- -------- Net cash provided by operating activities 3,590 263 Cash flows from investing activities: - ------------------------------------- Proceeds from sales of assets 2,409 -- Proceeds from receipt and sale of stock 403 -- Capital expenditures (1,435) (450) -------- -------- Net cash provided (used) by investing activities 1,377 (450) Cash flows from financing activities: - ------------------------------------- Principal payments under capital lease obligations (18) (34) Proceeds from issuance of common stock 244 -- -------- -------- Net cash provided (used) by financing activities 226 (34) Net increase (decrease) in cash and cash equivalents 5,193 (221) Cash and cash equivalents at beginning of period 8,274 6,185 -------- -------- Cash and cash equivalents at end of period $ 13,467 $ 5,964 ======== ========
See accompanying notes. -Continued- 6 7 GALILEO ELECTRO-OPTICS CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (In thousands of dollars) UNAUDITED
Six Months Ended ---------------- Mar. 31, 1996 Mar. 31, 1995 ------------- ------------- Reconciliation of net income (loss) to net cash provided - -------------------------------------------------------- by operating activities: - ------------------------ Net income (loss) $ 2,349 $ (307) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Extraordinary gain on receipt and sale of stock (319) -- Depreciation and amortization 1,651 1,625 Provision for losses on accounts receivable, net (35) -- Postretirement benefits 40 15 Gain on sale of fixed assets (34) -- Increase (decrease) in cash from changes in operating assets and liabilities: Accounts receivable 1,300 225 Inventories 59 (1,012) Other current assets (178) (61) Other assets, net (5) 36 Accounts payable (1,183) (80) Accrued liabilities (55) (178) ------- ------- Total adjustments 1,241 570 ------- ------- Net cash provided by operating activities $ 3,590 $ 263 ======= =======
See accompanying notes. 7 8 GALILEO ELECTRO-OPTICS CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 1. In the opinion of management, the accompanying unaudited consolidated condensed financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the Company's financial position as of March 31, 1996 and the results of operations and cash flows for the three and six month periods ended March 31, 1996 and 1995. 2. The accounting policies followed by the Company are set forth in Note 1 to the Company's consolidated financial statements in the Company's Annual Report for fiscal year 1995. 8 9 ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS - --------------------- Sales for the quarter ended March 31, 1996 were $9,283,000, an increase of $1,022,000 or 12% from the same quarter last year. Operating profit amounted to $1,079,000 for the quarter versus $105,000 for the prior year's second quarter while net income rose to $1,261,000, or $.19 per share, from $169,000, or $.03 per share, for the same period last year. The second quarter generated the highest level of operating profit, net income and earnings per share in approximately nine years. For the first six months, sales amounted to $17,636,000, up $2,177,000 or 14% from a year ago while operating profit came to $1,784,000. Last year, the Company incurred an operating loss of $414,000 for the same period. Net income was $2,349,000, or $.35 per share, which included an extraordinary gain, net of taxes, of $158,000, or $.02 per share, from the receipt and sale of stock following the demutualization of the Company's health insurance carrier in the first quarter. For the first half of last year, the Company reported a net loss of $307,000 or $.05 per share. The improvement in profitability versus last year reflects the success of the Company's strategy to focus on commercial markets with strong growth potential, selective price increases, fine tuning of the product mix and maintaining stringent cost controls. Commercial sales increased 14% from the second quarter of 1995 and accounted for 96% of total sales. In the Office Products business, sales for the quarter were up 20% from a year ago and set a new record, driven by the continuing strong demand for dicorotrons, the glass-coated wire assembly which generates ions to charge a copier's photoreceptor. Likewise, for the first six months, sales increased 25% from the first six months of last year. Xerox Corporation is the Company's largest customer for this product, and sales to Xerox represented 58% of the Company's total sales in the quarter. The phase-out of a number of products for this business due to their lower than desired profitability was completed this quarter. Sales of Scientific Detector Products were virtually unchanged from the same quarter of last year. However, last year's sales included billings for a contract with the National Institute of Standards and Technology which was completed in fiscal year 1995. On a year-to-date basis, shipments declined 3% also because of the National Institute of Standards and Technology billings last year. Shipments of microchannel plate-based detectors and assemblies as well as of Channeltron[Registered Trademark] single-channel detectors were particularly strong in the quarter while on a year-to-date basis, sales of microchannel plate-based detectors and assemblies and microchannel plates increased significantly. 9 10 In the Medical Products business, sales were also up versus a year ago, although they still account for a small percentage of the Company's total sales. Good progress was made in several programs to develop medical endoscopes to broaden the Company's product line and achieve a volume level to make this business profitable. Revenues in the Remote Sensor Products business also increased versus the same quarter a year ago as well as compared to the first six months last year. Although this business is not yet profitable at the operating profit level, shipments of these products, primarily consisting of systems and accessories for on-line monitoring of industrial processes and Fluorolase[Trademark] doped fluoride fiber and fiber amplifiers for telecommunications applications, met expectations. The Company's strategy is to make acquisitions to complement its core capabilities, improve its market penetration and achieve direct market access in its businesses. The Company is currently investigating and evaluating several situations which it believes would accomplish these objectives and strengthen its competitive position if they are successfully completed. It is the Company's hope to complete some of these acquisitions over the next several quarters. However, there are no binding agreements or undertakings in place, and there can be no assurance that any of these opportunities will result in a completed transaction and, if completed, will prove advantageous to the Company. The Company's Forest, Virginia facility, which had been for sale since it was closed in fiscal year 1994, was sold this quarter. The sale did not have a material impact on the financial results for the quarter. FINANCIAL CONDITION - ------------------- The Company's working capital at March 31, 1996, of $21,676,000 increased $2,932,000 from the balance at September 30, 1995, of $18,744,000. The cash and short-term investments balance at March 31, 1996 was $13,467,000 versus $8,274,000 at September 30, 1995. The change in working capital was primarily due to an increase in cash and to a lesser degree, a decrease in accounts receivable and a decrease in accounts payable. The higher level of cash resulted from cash generated from operations and $2,350,000 received from the sale of the Company's Forest, Virginia facility. The Company considers its working capital position to be adequate to support its currently planned operations and does not anticipate a need for external financing. Capital spending for the quarter amounted to $921,000. This compares with $351,000 of capital expenditures in the second quarter of fiscal year 1995. For the year-to-date, capital spending this year was $1,435,000 versus $450,000 for the first six months last year. The higher capital spending this year was the result of investments in a variety of equipment to improve manufacturing efficiencies and reduce costs. 10 11 PART II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS At the Annual Meeting of Shareholders held on January 19, 1996, the shareholders of the Company elected five directors. The votes were as follows:
Abstentions Votes Cast Votes and Broker For Withheld Non-Votes ---------- -------- ----------- William T. Burgin 5,859,714 19,276 -- Allen E. Busching 5,855,015 23,975 -- Kenneth W. Draeger 5,855,215 23,775 -- William T. Hanley 5,856,714 22,276 -- Robert D. Happ 5,854,415 24,575 --
Also at the Annual Meeting of Shareholders held January 19, 1996, the Company's proposed 1996 Director Stock Option Plan covering 200,000 shares of the Company's common stock was approved with 4,939,949 votes in favor, 202,324 votes opposed, 53,212 votes abstaining and 683,505 broker non-votes. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a. Exhibits: Exhibit 10 - 1996 Director Stock Option Plan (filed as Exhibit 99.1 to the Registrant's registration statement on Form S-8, registration number 333-02435, and incorporated herein by reference). Exhibit 11 - Calculation of Earnings Per Share. Exhibit 27 - Financial Data Schedule (EDGAR filing only). b. Reports on Form 8-K: There were no reports on Form 8-K filed for the three months ended March 31, 1996.
11 12 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. GALILEO ELECTRO-OPTICS CORPORATION Dated: May 2, 1996 /s/ William T. Hanley ------------------------------------- William T. Hanley, President and Chief Executive Officer (Principal Executive Officer) /s/ Josef W. Rokus ------------------------------------- Josef W. Rokus, Vice President, Finance and Chief Financial Officer (Principal Financial and Accounting Officer) 12 13 GALILEO ELECTRO-OPTICS CORPORATION INDEX TO EXHIBITS Exhibit No. Page No. - ----------- -------- 10 1996 Director Stock Option Plan (filed as Exhibit -- 99.1 to the Registrant's registration statement on Form S-8, registration number 333-02435, and incorporated herein by reference). 11 Calculation of Earnings Per Share 14 27 Financial Data Schedule EDGAR Filing Only 13 EX-11 2 CALCULATION OF EARNINGS PER SHARE 1 EXHIBIT 11 GALILEO ELECTRO-OPTICS CORPORATION CALCULATION OF EARNINGS PER SHARE
Three Months Ended Six Months Ended ------------------ ---------------- Mar. 31, 1996 Mar. 31, 1995 Mar. 31, 1996 Mar. 31, 1995 ------------- ------------- ------------- ------------- Primary Average shares outstanding 6,523,381 6,473,654 6,508,439 6,473,654 Net effect of dilutive stock options- based on the treasury stock method using average market price 141,026 13,308 121,267 -- Total 6,664,407 6,486,962 6,629,706 6,473,654 Net income (loss) $1,261,000 $ 169,000 $2,349,000 $ (307,000) Per share amount $ .19 $ .03 $ .35 $ (.05) Fully Diluted Average shares outstanding 6,523,381 6,473,654 6,508,439 6,473,654 Net effect of dilutive stock options- based on the treasury stock method using the quarter end market price, if higher than average market price, 158,497 13,308 129,955 -- Total 6,681,878 6,486,962 6,638,394 6,473,654 Net income (loss) $1,261,000 $ 169,000 $2,349,000 $ (307,000) Per share amount $ .19 $ .03 $ .35 $ (.05)
14 EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF GALILEO ELECTRO-OPTICS CORP. FOR THE SIX MONTHS ENDED MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 U.S. DOLLARS 6-MOS SEP-30-1996 OCT-01-1995 MAR-31-1996 1 13,467 0 5,742 46 4,823 24,569 42,141 22,776 46,566 2,893 0 0 0 65 42,302 46,566 17,636 17,636 11,153 11,153 0 0 0 2,109 (82) 2,191 0 158 0 2,349 .35 .35
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