-----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, Fqkn4jdTMmYGL8IwAWVLSlXC1YPRdl64cMfVZlFha+tQWAJYh6ZaONBL0plfkJqt +QEkq02ZH8YMMnBrHht9AA== 0000741556-96-000012.txt : 19960209 0000741556-96-000012.hdr.sgml : 19960209 ACCESSION NUMBER: 0000741556-96-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960208 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: 96512987 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 December 31, 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 January 31, 1996 ____________________________ _______________________________ Common stock, $.51 par value 5,293,170 TECHNOLOGY RESEARCH CORPORATION INDEX Part I. FINANCIAL INFORMATION Item 1. Financial Statements Condensed Balance Sheets--December 31, 1995 and March 31, 1995 Condensed Statements of Income--Three months and nine months ended December 31, 1995 and December 31, 1994 Condensed Statements of Cash Flows--Nine months ended December 31, 1995 and December 31, 1994 Notes to Condensed Financial Statements Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Part II. OTHER INFORMATION Item 1. Legal Proceedings Item 6. Exhibits and Reports on Form 8-K SIGNATURES PART I - FINANCIAL INFORMATION Item 1. Financial Statements TECHNOLOGY RESEARCH CORPORATION CONDENSED BALANCE SHEETS
December 31 March 31 1995 1995 __________ __________ (unaudited) * ASSETS ____________________________________ Current assets: Cash and cash equivalents $ 599,091 1,707,930 Short term investments 4,035,117 2,742,128 Accounts receivable, net 2,851,221 3,335,726 Inventories: Raw material 3,696,595 2,707,054 Work in process 484,231 654,520 Finished goods 748,103 584,451 __________ __________ Total inventories 4,928,929 3,946,025 Prepaid expenses 76,556 36,863 Deferred income taxes 392,000 440,000 __________ __________ Total current assets 12,882,914 12,208,672 __________ __________ Property, plant, and equipment 5,954,145 5,536,933 Less accumulated depreciation 3,562,597 3,213,002 __________ __________ Net property, plant, and equipment 2,391,548 2,323,931 __________ __________ Deferred income taxes 228,000 228,000 Other assets 523 53,335 __________ __________ $ 15,502,985 14,813,938 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY ____________________________________ Current liabilities: Current installments of long-term debt $ 75,000 75,000 Accounts payable 1,534,694 1,728,332 Dividends payable 322,263 - Accrued expenses 244,937 230,177 Income taxes payable 24,991 85,491 __________ __________ Total current liabilities 2,201,885 2,119,000 Long-term debt, excluding current installments 300,100 356,350 __________ __________ Total liabilities 2,501,985 2,475,350 __________ __________ Stockholders' equity: Common stock 2,699,517 2,675,398 Additional paid-in capital 7,363,067 7,322,923 Retained earnings 2,938,416 2,340,267 __________ __________ Total stockholders' equity 13,001,000 12,338,588 __________ __________ $ 15,502,985 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 Nine Months Ended December 31 December 31 1995 1994 1995 1994 __________ __________ __________ __________ Operating revenues: Net sales $ 4,136,934 5,257,624 12,552,751 16,584,582 Royalties 216,946 250,512 602,704 663,835 __________ __________ __________ __________ 4,353,880 5,508,136 13,155,455 17,248,417 __________ __________ __________ __________ Operating expenses: Cost of sales 2,756,469 4,207,556 8,132,547 12,357,733 Selling, general, and administrative 690,288 770,212 2,034,440 2,072,174 Research, development and engineering 233,581 279,415 718,849 794,727 __________ __________ __________ __________ 3,680,338 5,257,183 10,885,836 15,224,634 __________ __________ __________ __________ Operating income 673,542 250,953 2,269,619 2,023,783 __________ __________ __________ __________ Other income (deductions): Interest and sundry income 69,342 38,271 207,540 102,615 Interest expense (10,151) (11,453) (32,625) (39,838) __________ __________ __________ __________ 59,191 26,818 174,915 62,777 __________ __________ __________ __________ Income before income taxes 732,733 277,771 2,444,534 2,086,560 Income taxes 268,000 100,000 894,814 632,000 __________ __________ __________ __________ Net income $ 464,733 177,771 1,549,720 1,454,560 ========== ========== ========== ========== Earnings per share $ 0.09 0.03 0.29 0.27 ========== ========== ========== ========== Weighted average number of common and equivalent shares outstanding 5,405,639 5,392,333 5,407,725 5,392,659 ========== ========== ========== ========== Dividend declared per share $ 0.06 - 0.18 - ========== ========== ========== ========== See accompanying notes to condensed financial statements.
TECHNOLOGY RESEARCH CORPORATION CONDENSED STATEMENTS OF CASH FLOWS (unaudited)
Nine Months Ended December 31 1995 1994 __________ __________ Cash flows from operating activities: Net income $ 1,549,720 1,454,560 Adjustments to reconcile net income to net cash provided by operating activities: Accretion of interest (166,953) (73,742) Depreciation 349,595 334,788 Decrease in accounts receivable 484,505 152,015 Increase in inventories (982,904) (83,199) Increase in prepaid expenses (39,693) (52,082) Decrease in deferred income taxes 48,000 - Decrease in other assets 52,812 13,056 Increase(decrease) in accounts payable (193,638) 642,687 Increase(decrease) in accrued expenses 14,760 (123,278) Increase in income taxes payable (60,500) (201,491) __________ __________ Net cash provided by operating activities 1,055,704 2,063,314 __________ __________ Cash flows from investing activities: Purchase of short-term investments (4,958,036) (4,197,108) Maturities of short-term investments 3,832,000 1,557,000 Capital expenditures (417,212) (576,692) __________ __________ Net cash used in investing activities (1,543,248) (3,216,800) __________ __________ Cash flows from financing activities: Principal payments on long-term debt (56,250) (456,250) Proceeds from exercise of stock options 64,263 49,303 Dividends paid (629,308) - __________ __________ Net cash provided by(used in) financing activities (621,295) (406,947) __________ __________ Decrease in cash and cash equivalents (1,108,839) (1,560,433) Cash and cash equivalents at beginning of period 1,707,930 2,096,626 __________ __________ Cash and cash equivalents at end of period $ 599,091 536,193 ========== ========== 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 nine month period ended December 31, 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. 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 financial statements. Current Nine Months Ended December 31, 1995 versus Nine Months Ended December 31, 1994 Operating revenues for the third quarter ended December 31, 1995 were $4,353,880, compared to $5,508,136 reported in the same quarter of the prior year, a decrease of approximately 21%. Net income for the current quarter was $464,733, or $.09 per share, compared to net income of $177,771, or $.03 per share, for the prior year's quarter, an increase of approximately 161%. Operating revenues for the nine month period ended December 31, 1995 were $13,155,455, compared to $17,248,417 reported in the same period in the prior year, a decrease of approximately 24%. Net income for the nine month period was $1,549,720, or $.29 per share, compared to net income of $1,454,560, or $.27 per share, for the same period in the prior year, an increase of approximately 7%. The Company continues to control costs, the results of which are reflected in the Company's earnings. The lower revenues were primarily due to commercial sales being down $3,220,435 over the prior nine month period, while military sales showed a decrease of $811,396. Royalty income was down by $61,131. Commercial sales continue to be negatively impacted, as previously reported, by the sprayer/washer market and by sales to Xerox. 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 expects to begin shipments of product under the new contract in the June 1996 time frame. Because Xerox Corporation and its suppliers account for such a large percentage of the Company's revenue (approximately 30%), the loss of Xerox as a customer would have a material adverse effect on the Company's business. Royalties from Windmere Corporation may decline in Fiscal 1997, as a result of ongoing negotiations which Windmere has initiated in an effort to reduce the cost of their products due to competitive pressures. During the third quarter, the Company received UL approval to manufacture the first of several patented Fire Shield products, which offer protection against insulation aging and arcing faults caused by damage to appliance cords and extension cords, which can result in electrical fires. According to studies by the United States Consumer Products Safety Commission (CPSC), fires from these causes represent a major portion of electrical fires in the home, resulting in several hundred civilian deaths and over one billion dollars in property damage for the year studied. Effective December 31, 1995, H. Jay Hill resigned from the Company to pursue other interests, and Owen Jackson has been promoted to Vice President of Sales and Marketing. Mr. Jackson has been with the Company for ten years in various sales and marketing positions. 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% of net sales for the current quarter and approximately 65% of net sales for the nine month period ended December 31, 1995, compared to 80% and 75% in the same periods last year. 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 $690,288 for the current quarter and $2,034,440 for the nine month period ended December 31, 1995, compared to $770,212 and $2,072,174 in the same periods last year. Selling expenses were $410,523 for the current quarter and $1,281,659 for the nine month period, compared to $506,225 and $1,292,557 in the prior year, reflecting comparable expenses period to period. General administrative expenses were $279,765 for the current quarter and $752,781 for the nine month period, compared to $263,987 and $779,617 in the prior year. The general administrative expenses were higher in the current period because of expenses related to the Company's move from the NASDAQ Small Cap Market to the NASDAQ National Market. Research, development and engineering expenses for the current quarter were $233,581 and $718,849 for the nine month period ended December 31, 1995, compared to $279,415 and $794,727 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 $59,191 and $174,915 for the nine month period ended December 31, 1995, compared to $26,818 and $62,777 for the same periods last year, reflecting the Company's increased short term investments and reduced borrowings. Liquidity and Capital Resources As of December 31, 1995, the Company's cash and cash equivalents decreased to $599,091 from the March 31, 1995 total of $1,707,930, and short term investments increased to $4,035,117 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 December 31, 1995 was $375,100, compared to $431,350 at March 31, 1995, reflecting the year to date payments on principal. The Company's working capital increased by $591,357, over the first three periods of fiscal 1996, to $10,681,029, 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. The third quarter dividend of $.06 per share was paid on January 16, 1996 to shareholders of record on December 31, 1995. The Company has paid dividends of $.18 per share year to date. On November 3, 1995, NASDAQ approved the Company's application for listing on the National Market, 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) February 8, 1996 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 3RD QTR 10-Q
5 1 9-MOS Mar-31-1996 Apr-01-1995 Dec-31-1995 599091 4035117 2851221 0 4928929 12882914 5954145 3562597 15502985 2201885 0 2699517 0 0 10301483 15502985 12552751 13155455 8132547 8132547 718849 0 32625 2444534 894814 1549720 0 0 0 1549720 .29 0
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