-----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, Ly8f5scRAt7Is6ZZZdWIK0eXpipm/MWJyH+SHv/egVCaHEkcte4/l4PRKHM4K167 fKurfuicE0uJnVzBo6jHlw== 0000741556-95-000037.txt : 19951108 0000741556-95-000037.hdr.sgml : 19951108 ACCESSION NUMBER: 0000741556-95-000037 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951107 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: 95587851 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 September 30, 1995 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 October 31, 1995 ____________________________ _______________________________ Common stock, $.51 par value 5,284,836 TECHNOLOGY RESEARCH CORPORATION INDEX Part I - Financial Information Page Condensed Balance Sheets--September 30, 1995 and March 31, 1995......1 Condensed Statements of Income--Three months and six months ended September 30, 1995 and September 30, 1994......................2 Condensed Statements of Cash Flows--Six months ended September 30, 1995 and September 30, 1994......................3 Notes to Condensed Financial Statements..............................4 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations..........................5,6,7 Part II - Other Information Item 1 - Legal Proceedings...........................................7 Item 2 - Exhibits and Reports on Form 8-K............................7 Signatures...........................................................8 TECHNOLOGY RESEARCH CORPORATION CONDENSED BALANCE SHEETS
September 30 March 31 1995 1995 __________ __________ (unaudited) * ASSETS ____________________________________ Current assets: Cash and cash equivalents $ 810,573 1,707,930 Short term investments 4,002,009 2,742,128 Accounts receivable, net 2,662,668 3,335,726 Inventories: Raw material 3,485,437 2,707,054 Work in process 475,663 654,520 Finished goods 607,701 584,451 __________ __________ Total inventories 4,568,801 3,946,025 Prepaid expenses 97,360 36,863 Deferred income taxes 408,000 440,000 __________ __________ Total current assets 12,549,411 12,208,672 __________ __________ Property, plant, and equipment 15,891,754 5,536,933 Less accumulated depreciation 3,446,297 3,213,002 __________ _________ Net property, plant, and equipment 2,445,457 2,323,931 __________ __________ Deferred income taxes 228,000 228,000 Other assets 523 53,335 _________ __________ $ 5,223,391 14,813,938 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY ____________________________________ Current liabilities: Current installments of long-term debt $ 75,000 75,000 Accounts payable 1,389,771 1,728,332 Dividends payable 316,890 - Accrued expenses 275,073 230,177 Income taxes payable - 85,491 __________ __________ Total current liabilities 2,056,734 2,119,000 Long-term debt, excluding current installments 318,850 356,350 __________ __________ Total liabilities 2,375,584 2,475,350 __________ __________ Stockholders' equity: Common stock 2,695,267 2,675,398 Additional paid-in capital 7,361,067 7,322,923 Retained earnings 2,791,473 2,340,267 __________ ________ Total stockholders' equity 12,847,807 12,338,588 __________ __________ $ 15,223,391 14,813,938 ========== ========== *The balance sheet as of March 31, 1995, has been summarized from the Company's audited balance sheet as of that date. See accompanying notes to condensed financial statements.
TECHNOLOGY RESEARCH CORPORATION CONDENSED STATEMENTS OF OPERATIONS (unaudited)
Three Months Ended Six Months Ended September 30 September 30 1995 1994 1995 1994 __________ __________ __________ __________ Operating revenues: Net sales $ 4,171,788 5,788,335 8,415,818 11,326,958 Royalties 213,797 224,323 385,757 413,323 __________ __________ __________ __________ 4,385,585 6,012,658 8,801,575 11,740,281 __________ __________ __________ __________ Operating expenses: Cost of sales 2,780,050 4,268,478 5,376,077 8,150,178 Selling, general, and administrative 705,430 691,443 1,344,151 1,301,962 Research, development and engineering 255,029 276,170 485,270 515,311 __________ __________ __________ __________ 3,740,509 5,236,091 7,205,498 9,967,451 __________ __________ __________ __________ Operating income 645,076 776,567 1,596,077 1,772,830 __________ __________ __________ __________ Other income (deductions): Interest and sundry income 68,633 37,295 138,197 64,344 Interest expense (11,578) (12,029) (22,473) (28,385) __________ __________ __________ __________ 57,055 25,266 115,724 35,959 __________ __________ __________ __________ Income before income taxes 702,131 801,833 1,711,801 1,808,789 Income taxes 247,000 171,000 626,814 532,000 __________ __________ __________ __________ Net income $ 455,131 630,833 1,084,987 1,276,789 ========== ========== ========== ========== Earnings per share $ 0.08 0.12 0.20 0.24 ========== ========== =========== ========= Weighted average number of common and equivalent shares outstanding 5,432,392 5,392,499 5,418,696 5,383,817 ========== ========== ========== ========== Dividend declared per share $ 0.06 - 0.12 - ========== ========== ========== ==========- See accompanying notes to condensed financial statements.
TECHNOLOGY RESEARCH CORPORATION CONDENSED STATEMENTS OF CASH FLOWS (unaudited)
Six Months Ended September 30 1995 1994 __________ __________ Cash flows from operating activities: Net income $ 1,084,987 1,276,789 Adjustments to reconcile net income to net cash provided by operating activities: Accretion of interest (104,998) (6,818) Depreciation 233,295 215,933 Decrease in accounts receivable 673,058 432,779 Increase in inventories (622,776) (25,856) Increase in prepaid expenses (60,497) (137,993) Decrease in deferred income taxes 32,000 - Decrease in other assets 52,812 7,095 Increase(decrease) in accounts payable (338,561) 549,630 Increase(decrease) in accrued expenses 44,896 (141,538) Increase in income taxes payable (85,491) (201,491) __________ __________ Net cash provided by operating activities 908,725 1,968,530 __________ __________ Cash flows from investing activities: Purchase of short-term investments (2,957,884) (2,305,771) Maturities of short-term investments 1,803,000 774,000 Capital expenditures (354,821) (296,382) __________ __________ Net cash used in investing activities (1,509,705) (1,828,153) __________ __________ Cash flows from financing activities: Principal payments on long-term debt (37,500) (437,500) Proceeds from exercise of stock options 58,013 49,303 Dividends paid (316,890) - __________ __________ Net cash provided by(used in) financing activities (296,377) (388,197) __________ __________ Decrease in cash and cash equivalents (897,357) (247,820) Cash and cash equivalents at beginning of period 1,707,930 2,096,626 __________ __________ Cash and cash equivalents at end of period $ 810,573 1,848,806 ========== ========== See accompanying notes to condensed financial statements.
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 six month period ended September 30, 1995, are not necessarily indicative of the results to be expected for the full year. 2. At March 31, 1995, the Company had net operating loss carryforwards for Federal income tax purposes of approximately $994,000, which are available to offset future taxable income through 2003. The Company also has available tax credit carryforwards for Federal income tax purposes of approximately $214,000, which are available to offset future Federal income taxes through 2002. As a result of an ownership change in 1989, the Internal Revenue Code limits the income tax benefit of net operating loss and tax credit carryforwards to approximately $65,000 each year. For financial reporting purposes, the tax benefit of these net operating loss and tax credit carryforwards was recorded during the year ended March 31, 1995. 3. Short-term investments consist of U.S. Treasury Bills with a purchased maturity of greater than three months. 4. 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. TECHNOLOGY RESEARCH CORPORATION 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 financial statements. Current Six Months Ended September 30, 1995 versus Six Months Ended September 30, 1994 Operating revenues for the Company's second fiscal quarter ended September 30, 1995 were $4,385,585, compared to $6,012,658 reported in the same quarter of the prior year, a decrease of approximately 27%. Net income for the current quarter was $455,131, or $.08 per share, compared to net income of $630,833 or $.12 per share, for the prior year's quarter. Operating revenues for the six month period ended September 30, 1995 were $8,801,575, compared to $11,740,281 reported in the same period in the prior year, a decrease of approximately 25%. Net income for the six month period was $1,084,987, or $.20 per share, compared to net income of $1,276,789, or $.24 per share, for the same period in the prior year. The lower revenues were primarily due to commercial sales being down $2,264,614 over the prior six month period, while military sales showed a decrease of $646,527. Royalty income was down by $27,565. Commercial sales were primarily impacted by a provision in the National Electric Code permitting the manufacturers of certain sprayer/washer products to use double-insulation instead of supplying a GFCI as part of their product. That provision has been eliminated in the National Electric Code, effective January 1996; however, the Company has no certainty that it will recover its previous revenue level in that market. Nevertheless, The Company will have the opportunity to recover revenues in this market as Underwriter's Laboratory(UL) enforces the change in the National Electric Code on the sprayer/washer manufacturers. UL has not commented on how long this process will take. In addition, revenues from Xerox were impacted as a TRC licensee increased its production to meet Xerox's European requirements; however, the Company received a royalty for the number of units shipped. The impact of the sprayer/washer market on commercial sales has been greater than expected, and the Company does not anticipate revenues to change significantly over the remainder of the Company's fiscal year. Military product shipments continue to be impacted by the transition period from the previous to the new Tactical Quiet Generator Systems Program contract. Assuming successful First Article testing by the prime contractor, the Company now expects to begin shipments of product under the new contract in the June 1996 time frame, rather than in the April 1996 time frame as previously reported. Because Xerox and its suppliers account for such a large percentage of the Company's revenue (approximately 35%), the loss of Xerox as a customer would have a material adverse effect on the Company's business. The Company continued making progress in improving cost by moving two more of its high volume product lines to its Far East sub-contracting facility as well as designing and installing the first of two progressive assembly lines in its Clearwater facility. Although revenues were down, the Company continues to pay close attention to every aspect of cost, as reflected in the Company's earnings. Although the Company is tooled for its major products in both the U.S. and in the Far East, any major disruption to the subcontractor's facility in the Far East would have a material adverse effect on the Company's business. Cost of sales was approximately 67%, versus 74% for the current quarter and approximately 64%, versus 72% for the six month period ended September 30, 1995. The improvement was due primarily to better gross margins resulting from the additional products now being manufactured in the Far East and the cost control measures implemented at TRC's Clearwater facility. Selling, general and administrative expenses were $705,430 for the current quarter and $1,344,151 for the six month period ended September 30, 1995, compared to $691,443 and $1,301,962 in the same periods last year. Selling expenses were $432,604 for the current quarter, compared to $425,200 in the prior year, an increase of approximately 2%, primarily due to higher travel expense. General administrative expenses were $272,826, compared to $266,243 in the prior period, an increase of approximately 2%, primarily due to expense related to the reverse split of the Company's common stock that is discussed below. Research, development and engineering expenses for the current quarter were $255,029 and $485,270 for the six month period ended September 30, 1995, compared to $276,170 and $515,311 for the same periods in the prior year, reflecting a decrease primarily in salary expenses. Interest and sundry income, net of interest expense, for the current quarter was $57,055 and $115,724 for the six month period ended September 30, 1995, compared to $25,266 and $35,959 for the same periods last year, reflecting the Company's increased short term investments and reduced borrowings. Liquidity and Capital Resources As of September 30, 1995, the Company's cash and cash equivalents decreased to $810,573 from the March 31, 1995 total of $1,707,930, and short term investments increased to $4,002,009 from the March 31, 1995 total of $2,742,128. The short term investments are comprised of U.S. Treasury Bills. On August 22, 1995, the Company's institutional lender renewed its commercial line of credit at $2,500,000 and extended the maturity date to August 15, 1997. The lender continues to give the Company 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 lender also continues to make 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 did not use its line of credit in the current period, and the mortgage payable to the Company's institutional lender as of September 30, 1995 was $393,850, compared to $431,350 at March 31, 1995, reflecting the current quarter's payments. The Company's working capital increased by $403,005 to $10,492,677 over its first two periods of fiscal 1996, compared to $10,089,672 at March 31, 1995. The Company believes that the cash flow from operations, the available bank line, and its current cash position will be sufficient to meet its working capital requirements for the immediate future. On August 23, 1995, at TRC's annual meeting, the Company's shareholder's approved a one share for three share reverse stock split, by a majority vote of 82.24%. The record date for the reverse split was September 15, 1995, and all the Company's financial information now reflects the reverse split. In addition, the second quarterly dividend of $.06 per share was paid on October 17, 1995 to shareholders of record on September 30, 1995. On November 3, 1995, NASDAQ approved the Company's application for listing on the National Market, potentially giving the Company's common stock a greater market in which to trade. The Company has been listed on the NASDAQ Small Cap Market since 1984. Part II - Other Information Item 1. Legal Proceedings As reported in the Company's Form 10-K, the Company, along with seven other defendants, was sued in Harris County, Texas in March 1995. The suit claims, among other things, that the Company's GFCI product was defectively designed and manufactured and caused the death by electrocution of an individual. The suit seeks unspecified compensatory and exemplary damages in excess of $100,000. The Company has both liability and umbrella liability insurance. The case is in the discovery stage. Management believes the ultimate disposition of this matter will not have a material adverse effect on the Company's financial position, results of operations or liquidity. Item 6. Exhibits and Reports on Form 8-K a. Exhibits Exhibit 27. Financial Data Schedule b. Reports on Form 8-K The Company filed no reports on Form 8-K during the quarter covered by this Report. ___________________________________________ 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) November 3, 1995 /s/ Robert S. Wiggins ___________________________ __________________________________ Date Robert S. Wiggins, Chairman and Chief Executive Officer, Principal Financial Officer (Duly Authorized Officer) EX-27 2 ARTICLE 5 FDS FOR 2ND QTR 10-Q
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