-----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, BKFPh4GI2kGTLvotlTagsAszk+iOBHr6Lql7QimdPtDVDmb6/X5fkKrC+odoCVCa 5PXjMM5oZIZIPff3y1nQxA== 0000741556-96-000038.txt : 19960802 0000741556-96-000038.hdr.sgml : 19960802 ACCESSION NUMBER: 0000741556-96-000038 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960801 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: 96602620 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, 1996 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, 1996 ____________________________ ____________________________ Common stock, $.51 par value 5,318,902 TECHNOLOGY RESEARCH CORPORATION INDEX Part I - Financial Information Page Condensed Balance Sheets--June 30, 1996 and March 31, 1996......... 1 Condensed Statements of Income--Three months ended June 30, 1996 and June 30, 1995............................... 2 Condensed Statements of Cash Flows--Three months ended June 30, 1996 and June 30, 1995............................... 3 Notes to Condensed 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 - 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 1996 1996 ----------- --------- ASSETS (unaudited) * Current assets: Cash and cash equivalents $ 323,437 341,601 Short term investments 4,109,982 4,084,698 Accounts receivable, net 2,027,574 2,607,152 Inventories: Raw material 3,437,995 3,423,236 Work in process 915,398 945,795 Finished goods 859,241 857,731 ---------- ---------- Total inventories 5,212,634 5,226,762 Prepaid expenses 202,082 94,205 Deferred income taxes 445,000 445,000 ---------- ---------- Total current assets 12,320,709 12,799,418 ---------- ---------- Property, plant, and equipment 6,157,849 6,120,341 Less accumulated depreciation (3,816,602) (3,698,692) ---------- ---------- Net property, plant, and equipment 2,341,247 2,421,649 ---------- ---------- Deferred income taxes 145,000 159,000 Other assets 423 523 ---------- ---------- $ 14,807,379 15,380,590 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current installments of long-term debt $ 75,000 75,000 Accounts payable 912,931 1,236,591 Accrued expenses 232,552 219,044 Dividends payable 340,841 336,052 Income taxes payable - 991 ---------- ---------- Total current liabilities 1,561,324 1,867,678 Long-term debt, excluding current installments 262,600 281,350 ---------- ---------- Total liabilities 1,823,924 2,149,028 ---------- ---------- Stockholders' equity: Common stock 2,712,234 2,712,437 Additional paid-in capital 7,410,957 7,410,754 Retained earnings 2,860,264 3,108,371 ---------- ---------- Total stockholders' equity 12,983,455 13,231,562 ---------- ---------- $ 14,807,379 15,380,590 ========== ========== * The balance sheet as of March 31, 1996 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 1996 1995 ---------- ---------- Operating revenues: Net sales $ 3,279,337 4,244,029 Royalties 98,130 171,961 ---------- ---------- 3,377,467 4,415,990 ---------- ---------- Operating expenses: Cost of sales 2,304,931 2,596,028 Selling, general, and administrative 735,862 638,721 Research, development and engineering 278,133 230,240 ---------- ---------- 3,318,926 3,464,989 ---------- ---------- Operating income 58,541 951,001 ---------- ---------- Other income (deductions): Interest and sundry income 55,462 69,565 Interest expense (8,976) (10,896) ---------- ---------- 46,486 58,669 ---------- ---------- Income before income taxes 105,027 1,009,670 Income taxes 34,000 379,814 ---------- ---------- Net income $ 71,027 629,856 ========== ========== Earnings per share $ 0.01 0.12 ========== ========== Weighted average number of common and equivalent shares outstanding 5,448,954 5,395,474 ========== ========== 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 1996 1995 ---------- ---------- Cash flows from operating activities: Net income $ 71,027 629,856 Adjustments to reconcile net income to net cash provided by operating activities: Accretion of interest (51,943) (48,524) Depreciation 117,910 115,604 Decrease in accounts receivable 579,578 405,580 Decrease(increase) in inventories 14,128 (76,164) Increase in prepaid expenses (107,877) (24,011) Decrease in deferred income taxes 14,000 16,000 Decrease in other assets 100 52,812 Decrease in accounts payable (323,660) (698,386) Increase in accrued expenses 13,508 37,881 Increase(decrease) in income taxes payable (991) 306,500 ---------- ---------- Net cash provided by operating activities 325,780 717,148 ---------- ---------- Cash flows from investing activities: Maturities of short-term investments 1,027,000 803,000 Purchase of short-term investments (1,000,341) (1,958,025) Capital expenditures (37,508) (182,838) ---------- ---------- Net cash used in investing activities (10,849) (1,337,863) ---------- ---------- Cash flows from financing activities: Principal payments on long-term debt (18,750) (18,750) Proceeds from exercise of stock options - 45,100 Dividends paid (314,345) - ---------- ---------- Net cash provided by(used in) financing activities (333,095) 26,350 ---------- ---------- Decrease in cash and cash equivalents (18,164) (594,365) Cash and cash equivalents at beginning of period 341,601 1,707,930 ---------- ---------- Cash and cash equivalents at end of period $ 323,437 1,113,565 ========== ========== 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, 1996, are not necessarily indicative of the results to be expected for the full year. 2. Short-term investments consist of U.S. Treasury Bills with a purchased maturity of greater than three months. 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 financial statements. Current Three Months Ended June 30, 1996 versus Three Months Ended June 30, 1995 Operating revenues (net sales and royalties) for the Company's first quarter ended June 30, 1996 were $3,377,467, compared to $4,415,990 reported in the same quarter of the prior year, a decrease of approximately 24%. Net income for the current quarter was $71,027, compared to net income of $629,856, for the prior year's quarter, a decrease of approximately 89%. The earnings per share for the current period were $.01 as compared to $.12 for the comparable period last year. The lower revenues were due to commercial sales being down $561,533, military sales being down $403,159 and royalty income being down $73,831 over the prior fiscal period. The Company believes that its revenue and profit will increase in Fiscal Year 1997, compared to Fiscal Year 1996, thus the results of the first fiscal quarter are not expected to be indicative of the full year. The reduction in commercial sales was evenly distributed over sales to Xerox and to the sprayer/washer and OEM markets. The Company expects sales to Xerox and its OEM market to stabilize and increase as the fiscal year progresses, but the Company does not anticipate increased sales to the sprayer/washer market, as UL has not commented on when enforcement will begin for the change in the National Electric Code requiring attached GFCI protection for these products. Military product shipments continue to be impacted by the transition period from the previous to the new Tactical Quiet Generator Systems Program contract; however, First Article testing by the prime contractor is now complete, and the Company will begin shipments of product under the new contract in the second quarter of Fiscal Year 1997. The new contract covers approximately a two-year period with a total expected value of $4,900,000. Royalty income was down, as expected, due to less royalties from Windmere Corporation. Because Xerox and its suppliers account for such a large percentage of the Company's revenue (approximately 42% for the first fiscal quarter), the loss of Xerox as a customer would have a material adverse effect on the Company's business. The Company is actively promoting the "Fire Shield" line of appliance cords and extension cords to the market. This unique product helps prevent fires caused by damaged or aging appliance and extension cords. Numerous customer leads have been generated through the Company's product releases, direct mailings, sales calls and advertising with samples being shipped to customers for evaluation and qualification. The Company's proactive sales efforts are targeting the consumer appliance manufacturers directly, the insurance industry and the industry's regulating bodies; however, the Company does not expect such efforts to generate significant revenues for the Company in Fiscal Year 1997. - 5 - The Company continues to develop a direct consumer sales initiative through the use of independent distributors that specialize in selling products directly to the household consumer. The safety package that will be marketed through this facility will consist of several of the Company's products, including "Electra Shield", "Fire Shield" and "Shock Shield", among other safety products related to the home. The Company expects sales can be achieved through this marketing strategy beginning in the third and fourth quarters of Fiscal Year 1997. As noted in the Company's Form 10-K, the Company obtained an exclusive license to manufacture, market and sell products inherent to two U.S. Patents. The Company has named the line of products associated with these patents, "Drag Strip", as the product is designed to protect power cord connections from separation and damage. The Company expects, although with no assurances, the "Drag Strip" products to add approximately $1 million dollars to its annual sales each year. Cost of sales was approximately 70% of net sales for the current quarter and 61% of net sales for the same period last year. The difference was due primarily to the inefficiencies of maintaining direct labor for higher sales levels. Selling, general and administrative expenses for the current quarter were $735,862, compared to $638,721 in the same period last year, an increase of approximately 15%. Selling expenses were $512,106 for the current quarter, compared to $438,531 in the same period last year, an increase of approximately 17%, reflecting higher salary, advertising and commission expenses. General and administrative expenses were $223,756, compared to $200,190 in the same period last year, an increase of approximately 12% over comparable periods, reflecting higher salary and employee relation expenses. Research, development and engineering expenses for the current quarter were $278,133, compared to $230,239 for the same period in the prior year, an increase of approximately 21%, reflecting higher salary and UL expenses. Interest and sundry income, net of interest expense, for the current quarter was $46,486, compared to $58,669 for the same period last year, reflecting lower returns on the Company's short-term investments. Liquidity and Capital Resources As of June 30, 1996, the Company's cash and cash equivalents decreased to $323,437 from the March 31, 1996 total of $341,601, and short term investments increased to $4,109,982 from the March 31, 1996 total of $4,084,698. 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 June 30, 1996 was $337,600, compared to $356,350 at March 31, 1996. - 6 - The Company's working capital decreased by $172,355 to $10,759,385 at June 30, 1996, compared to $10,931,740 at March 31, 1996. The Company believes that its 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 first quarter dividend of $.06 per share was paid on July 17, 1996 to shareholders of record on June 30, 1996. Part II - Other Information Item 1. Legal Proceedings In March 1995, the Company, along with seven other defendants, was sued in Harris County, Texas. 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. 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. A trial date has been scheduled for September 30, 1996. 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 , 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 1ST QTR 10-Q
5 1 3-MOS Mar-31-1997 Apr-01-1996 Jun-30-1996 323437 4109982 2027574 0 5212634 12320709 6157849 3816602 14807379 1561324 0 2712234 0 0 10271221 14807379 3279337 3377467 2304931 2304931 278133 0 8976 105027 34000 71027 0 0 0 71027 .01 0
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