-----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, Ohp6O8mVtlny5XFtYarDGKQ0+m9nGiDWdWh8V0lUPqpsMj/t4S275s2Yf4hg+eVQ 5S4tVmR3EP8JGDQTc4Ui4w== 0000741556-97-000017.txt : 19970808 0000741556-97-000017.hdr.sgml : 19970808 ACCESSION NUMBER: 0000741556-97-000017 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970807 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: TECHNOLOGY RESEARCH CORP CENTRAL INDEX KEY: 0000741556 STANDARD INDUSTRIAL CLASSIFICATION: SWITCHGEAR & SWITCHBOARD APPARATUS [3613] IRS NUMBER: 592095002 STATE OF INCORPORATION: FL FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-13763 FILM NUMBER: 97652705 BUSINESS ADDRESS: STREET 1: 5250 140TH AVE NORTH CITY: CLEARWATER STATE: FL ZIP: 34620 BUSINESS PHONE: 8135350572 MAIL ADDRESS: STREET 1: 5250 140TH AVENUE NORTH CITY: CLEARWATER STATE: FL ZIP: 34620 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1997 Commission File Number: 0-13763 TECHNOLOGY RESEARCH CORPORATION _______________________________ (Exact name of registrant as specified in its charter) Florida 59-2095002 _______________________________ ________________ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No,) 5250 140th Avenue North, Clearwater, Florida 34620 ____________________________________________________________________________ (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (813) 535-0572 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 a 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 each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at July 31, 1997 ____________________________ ____________________________ Common stock, $.51 par value 5,332,571 TECHNOLOGY RESEARCH CORPORATION INDEX Part I - Financial Information Page Condensed Consolidate Balance Sheets - June 30, 1997 and March 31, 1997............................ 1 Condensed Consolidate Statements of Income - Three months ended June 30, 1997 and June 30, 1996.......... 2 Condensed Consolidated Statements of Cash Flows - Three months ended June 30, 1997 and June 30, 1996.......... 3 Notes to Condensed Consolidated Financial Statements............... 4 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations....................... 5 Part II - Other Information Item 1 - Legal Proceedings......................................... 7 Item 2 - Changes in Securities..................................... 7 Item 3 - Defaults Upon Senior Securities........................... 7 Item 4 - Submission of Matters to a vote of Shareholders............7 Item 5 - Other Information......................................... 7 Item 6 - Exhibits and Reports on Form 8-K...........................7 Signatures......................................................... 8 PART I - FINANCIAL INFORMATION Item 1. Financial Statements TECHNOLOGY RESEARCH CORPORATION CONDENSED BALANCE SHEETS
June 30 March 31 1997 1997 ----------- --------- ASSETS (unaudited) * Current assets: Cash and cash equivalents $ 2,348,662 1,307,567 Short term investments 2,013,980 3,031,013 Accounts receivable, net 2,594,797 2,304,449 Income tax receivable - 178,130 Inventories: Raw material 3,789,302 3,138,639 Work in process 695,461 1,309,312 Finished goods 905,231 694,817 ---------- ---------- Total inventories 5,389,994 5,226,762 Prepaid expenses 189,990 178,972 Deferred income taxes 396,150 411,400 ---------- ---------- Total current assets 12,959,394 12,554,299 ---------- ---------- Property, plant, and equipment 7,558,021 6,817,411 Less accumulated depreciation (4,030,048) (3,859,909) ---------- ---------- Net property, plant, and equipment 3,527,973 2,957,502 ---------- ---------- Deferred income taxes 102,120 102,120 Other assets 61,164 24,028 ---------- ---------- $ 16,624,830 15,637,949 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current installments of long-term debt $ 1,075,100 652,999 Accounts payable 2,013,131 1,607,116 Accrued expenses 339,443 296,549 Dividends payable 351,347 346,490 Income taxes payable 123,303 - ---------- ---------- Total current liabilities 3,902,324 2,903,154 Long-term debt, excluding current installments 187,600 206,250 ---------- ---------- Total liabilities 4,089,924 3,109,404 ---------- ---------- Stockholders' equity: Common stock 2,719,611 2,719,611 Additional paid-in capital 7,411,581 7,411,581 Retained earnings 2,403,714 2,397,353 ---------- ---------- Total stockholders' equity 12,534,906 12,528,545 ---------- ---------- $ 16,624,830 15,637,949 ========== ========== * The balance sheet as of March 31, 1997 has been summarized from the Company's audited balance sheet as of that date. See accompanying notes to condensed financial statements.
- 1 - TECHNOLOGY RESEARCH CORPORATION CONDENSED STATEMENTS OF OPERATIONS (unaudited)
Three Months Ended June 30 1997 1996 ---------- ---------- Operating revenues: Net sales $ 4,640,053 3,279,337 Royalties 171,532 98,130 ---------- ---------- 4,811,585 3,377,467 ---------- ---------- Operating expenses: Cost of sales 3,151,806 2,304,931 Selling, general, and administrative 923,011 735,862 Research, development and engineering 269,274 278,133 ---------- ---------- 4,344,091 3,318,926 ---------- ---------- Operating income 467,494 58,541 ---------- ---------- Other income (deductions): Interest and sundry income 45,521 55,462 Interest expense (6,666) (8,976) ---------- ---------- 38,969 46,486 ---------- ---------- Income before income taxes 506,463 105,027 Income taxes 180,148 34,000 ---------- ---------- Net income $ 326,315 71,027 ========== ========== Earnings per share $ 0.06 0.01 ========== ========== Weighted average number of common and equivalent shares outstanding 5,433,320 5,448,954 ========== ========== Dividends paid $ 0.06 0.06 ========== ========== See accompanying notes to condensed financial statements.
- 2 - TECHNOLOGY RESEARCH CORPORATION CONDENSED STATEMENTS OF CASH FLOWS (unaudited)
Three Months Ended June 30 1997 1996 ---------- ---------- Cash flows from operating activities: Net income $ 326,315 71,027 Adjustments to reconcile net income to net cash provided by operating activities: Accretion of interest (38,967) (51,943) Depreciation 170,139 117,910 Decrease(increase) in accounts receivable (290,348) 579,578 Decrease(increase) in inventories (247,226) 14,128 Increase in prepaid expenses (11,018) (107,877) Decrease in income taxes receivable 178,130 - Decrease in deferred income taxes 15,250 14,000 Increase(decrease) in other assets (37,136) 100 Increase(decrease) in accounts payable 406,015 (323,660) Increase in accrued expenses 42,894 13,508 Increase(decrease) in income taxes payable 123,303 (991) ---------- ---------- Net cash provided by operating activities 637,351 325,780 ---------- ---------- Cash flows from investing activities: Maturities of short-term investments 1,056,000 1,027,000 Purchase of short-term investments - (1,000,341) Capital expenditures (740,610) (37,508) ---------- ---------- Net cash provided by(used in) investing activities 315,390 (10,849) ---------- ---------- Cash flows from financing activities: Net borrowings under line-of-credit agreement 422,101 - Principal payments on long-term debt (18,650) (18,750) Dividends paid (315,097 (314,345) ---------- ---------- Net cash provided by(used in) financing activities 88,354 (333,095) ---------- ---------- Increase(decrease) in cash and cash equivalents 1,041,095 (18,164) Cash and cash equivalents at beginning of period 1,307,567 341,601 ---------- ---------- Cash and cash equivalents at end of period $ 2,348,662 323,437 ========== ========== See accompanying notes to condensed financial statements.
- 3 - TECHNOLOGY RESEARCH CORPORATION NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited) 1. The financial information included herein is unaudited; however, such information reflects all adjustments (consisting solely of normal recurring adjustments) which are, in the opinion of management, necessary for the fair statement of results for the interim period. The results of operations for the three month period ended June 30, 1997, are not necessarily indicative of the results to be expected for the full year. 2. The Company considers all of its investment securities (U.S. Treasury Bills) to be held-to-maturity. These securities are all classified in short-term investments on the consolidated balance sheets and mature within one year. 3. Earnings per share has been computed by dividing net income by the weighted average number of common and equivalent shares outstanding. Common share equivalents included in the computation represent shares issuable upon exercise of stock options which would have a dilutive effect in years where there are earnings. - 4 - Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF OPERATIONS The following is management's discussion and analysis of certain significant factors which have affected the Company's financial position and operating results during the periods included in the accompanying condensed consolidated financial statements. Current Three Months Ended June 30, 1997 versus Three Months Ended June 30, 1996 Operating revenues (net sales and royalties) for the first quarter ended June 30, 1997 were $4,811,585, compared to $3,377,467 reported in the same quarter of the prior year, an increase of approximately 42%. Net income for the current quarter was $326,315, compared to $71,027, for the prior year's quarter, an increase of approximately 359%. The earnings per share for the current period were $.06 per share as compared to $.01 for the comparable period last year, an increase of approximately 500%. Higher revenues were due to commercial sales increasing by $413,507, military sales increasing by $947,209 and royalty income increasing by $73,402 over the prior fiscal period. The increase in commercial sales was mainly due to the level of business with the Company's OEM customers. Sales to Xerox Corporation and its suppliers remained steady while sales to the sprayer/washer market showed a slight increase. The Company expects commercial sales to follow this trend throughout Fiscal Year 1998 with sales to Xerox remaining under price pressure. The increase in Military sales was mainly due to the Company now being in full production of the products related to the Tactical Quiet Generator Systems program. Royalty income was up due to royalties of $100,000 from Windmere Corporation and a licensing fee of $50,000 from Yaskawa Control Company of Japan. Although the Company will not receive further royalties from Windmere, the Company does expect to receive additional licensing fees from Yaskawa, which will partially offset the loss of royalty income from Windmere. Total marketing expenses for "Fire Shield" and consumer marketing were $79,806 and $114,039, respectively. No significant sales have been recorded to date for the Company's "Fire Shield" products or as a result of the Company's consumer marketing program. The Company continues to believe that the market for "Fire Shield" is large and that the consumer market for the Company's products provide significant opportunities for growth. The Company's wholly owned subsidiary, TRC Honduras, S.A. de C.V., is currently successfully producing several of the Company's Xerox products, and the remainder of the Xerox products and several other of the Company's high-volume products are scheduled to be produced in July and August, respectively. The Company recorded a $94,792 loss for its subsidiary's first reporting period ended June 30, 1997. The Company expects its subsidiary to break even in the second quarter and produce a profit for the remainder of Fiscal Year 1998. According to plan and as a result of the successful start-up of the Honduran plant, the Company will close down its operation in the Far East at the end of July 1997, leaving the Honduran plant responsible for the manufacturing of all of the Company's high-volume products. The Company's gross profit margin on net sales was 32% for the current quarter and 30% for the same period last year. The increase was due to the profit margins associated with the Company's increase in military sales. - 5 - Selling, general and administrative expenses for the current quarter were $923,011, compared to $735,862 in the same period last year, an increase of approximately 25%. Selling expenses were $608,526 for the current quarter, compared to $512,106 the same period last year, an increase of approximately 19%, reflecting higher salary, professional fees and travel expenses primarily associated with the "Fire Shield" and consumer marketing programs. General and administrative expenses were $314,485, compared to $223,756 in the same period last year, an increase of approximately 41% over comparable periods, of which 23% was associated with the administrative expenses of the Company's subsidiary and 18% was associated with higher temporary wages, professional fees and self-insured health costs of the parent company. Research, development and engineering expenses for the current quarter were $269,274, compared to $278,133 for the same period in the prior year, a decrease of approximately 3%, reflecting comparable expenses over the respective periods. Interest and sundry income, net of interest expense, for the current quarter was $38,969, compared to $46,486 for the same period last year, reflecting lower returns and average balances on the Company's short-term investments. Liquidity and Capital Resources As of June 30, 1997, the Company's cash and cash equivalents increased to $2,348,662 from the March 31, 1997 total of $1,307,567, and short term investments decreased to $2,013,980 from the March 31, 1997 total of $3,031,013. The short term investments are comprised of U.S. Treasury Bills. On August 15, 1997, the Company expects to renew its commercial line of credit, which is currently $2,500,000, with its institutional lender for another two years, maturing in August 1999. Currently, the Company has the option of borrowing at the lender's prime rate of interest or the 30-day London Interbank Offering Rate (L.I.B.O.R.) plus 200 basis points. The Company also has available a Banker's Acceptance agreement which gives the Company the option of borrowing up to $750,000 under the line of credit with the interest rate being determined by the lender's International Division at the time of borrowing. The Company began using its line of credit in the fourth quarter of Fiscal Year 1997 to fund the start-up of its Honduran subsidiary, expected to total $1,400,000, and as of June 30, 1997, the Company has drawn $1,000,000 on its bank line for this purpose. The Company will pay down its line of credit as cash is generated by higher inventory turns, which is an expected result of manufacturing product in Honduras. The mortgage payable to the Company's institutional lender as of June 30, 1997 was $262,600, compared to $281,250 at March 31, 1997, reflecting the Company's payments on principal for the first quarter. The Company's working capital decreased by $546,914 to $9,057,070 at June 30, 1997, compared to $9,603,984 at March 31, 1997. The decrease was a result of the Company funding its Honduran subsidiary with its line of credit, which is currently considered short-term debt since it expires in August 1997. Upon renewal, the line of credit will be considered long-term debt, thus improving the Company's working capital for the second quarter ended September 30, 1997. The Company believes cash flow from operations, the available bank line, and its short term investments and current cash position will be sufficient to meet its working capital requirements for the immediate future. - 6 - The first quarter dividend of $.06 per share was paid on July 15, 1997 to shareholders of record on June 30, 1997 Part II - Other Information Item 1. Legal Proceedings Not Applicable. Item 2. Changes in Securities Not Applicable. Item 3. Defaults Upon Senior Securities Not Applicable. Item 4. Submission of Matters to a Vote of Security Holders Not Applicable. Item 5. Other Information Not Applicable. Item 6. Exhibits and Reports on Form 8-K The Company filed no reports on Form 8-K during the quarter covered by this Report. - 7 - ___________________________________________ SIGNATURES Pursuant to the requirements of the Security Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. TECHNOLOGY RESEARCH CORPORATION (registrant) August 6, 1997 Scott J. Loucks ___________________________ __________________________________ Date Scott J. Loucks Chief Financial Officer, (principal financial, accounting and Duly Authorized Officer) - 8 - EX-27 2 ARTICLE 5 FDS FOR 1ST QTR 10-Q
5 1 3-MOS Mar-31-1998 Apr-01-1997 Jun-30-1997 2348662 2013980 2594797 0 5389994 12959394 7558021 4030048 16624830 3902324 0 2719611 0 0 9815295 16624830 4640053 4811585 3151806 3151806 269274 0 6666 506463 180148 326315 0 0 0 326315 .06 0
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