-----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, QMpW8Gi0vaME4BQNrt/Q+E5MAn5ai6vpMngZtOnWjxMzidunRQXAVlcFYdvNpbKS MdEI6hdUlxscVYSE25LBGw== 0000795968-95-000006.txt : 19951124 0000795968-95-000006.hdr.sgml : 19951124 ACCESSION NUMBER: 0000795968-95-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951122 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: EDISON CONTROLS CORP CENTRAL INDEX KEY: 0000795968 STANDARD INDUSTRIAL CLASSIFICATION: INSTRUMENTS FOR MEAS & TESTING OF ELECTRICITY & ELEC SIGNALS [3825] IRS NUMBER: 222716367 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-14812 FILM NUMBER: 95595572 BUSINESS ADDRESS: STREET 1: 140 ETHEL RD WEST CITY: PISCATAWAY STATE: NJ ZIP: 08854 BUSINESS PHONE: 9088198800 MAIL ADDRESS: STREET 2: 140 WEST ETHEL ROAD CITY: PISCATAWAY STATE: NJ ZIP: 08854 10-Q 1 United States 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 period ended September 30, 1995. or ( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange of 1934 for the Transition Period from to Commission file number 0-14812 EDISON CONTROL CORPORATION (Exact name of registrant as specified in its charter) New Jersey 22-2716367 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 140 Ethel Road West Piscataway, N.J. 08854 (Address of principal offices) (Zip Code) (908) 819-8800 (Registrant's telephone number, including area code) Not applicable (Former name, former address and former fiscal year, if changed since last report) 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 periods 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 practical date. Common Stock, $.01 par value: 2,136,000 as of November 10, 1995. EDISON CONTROL CORPORATION BALANCE SHEETS September 30, 1995 and December 31, 1994 1995 1994 ASSETS --------- --------- (Unaudited) Current assets: Cash and cash equivalents $ 1,027,453 $ 821,901 Investments 284,000 284,000 Trading securities 11,445,186 7,629,450 Accounts receivable-trade 101,109 226,146 Prepaid income taxes 130,762 0 Inventories 219,713 249,457 Prepaid expenses and other current assets 58,405 47,281 ---------- ---------- Total current assets 13,266,628 9,258,235 Equipment and leasehold improvements at cost, net 74,480 65,618 ---------- ---------- $13,341,108 $ 9,323,853 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 25,376 $ 69,451 Accrued liabilities 53,497 37,378 Income taxes payable 689,522 167,674 Deferred income taxes 1,822,060 873,020 ---------- ---------- Total current liabilities 2,590,455 1,147,523 Stockholders' equity: Preferred Stock, $.01 par value: 1,000,000 shares authorized, none issued Common Stock, $.01 par value: 10,000,000 shares authorized, 2,136,000 shares issued and outstanding in 1995, 2,100,000 in 1994 21,360 21,000 Additional paid-in capital 6,143,334 6,026,694 Retained earnings 4,585,959 2,128,636 ---------- ---------- Total stockholders' equity 10,750,653 8,176,330 ---------- ---------- $13,341,108 $ 9,323,853 ========== ========== See Accompanying Notes. EDISON CONTROL CORPORATION STATEMENT OF OPERATIONS THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994 (Unaudited) Three months ended Nine months ended September 30, September 30, 1995 1994 1995 1994 ------------------ ----------------- Net sales $ 216,327 $ 346,604 $ 647,177 $1,160,980 Cost and expenses: Cost of sales 186,519 249,256 542,096 799,829 Selling, general and administrative 178,220 164,656 548,094 471,019 ----------- ---------- ---------- ----------- 364,739 413,912 1,090,190 1,270,848 ----------- ---------- ---------- ----------- Operating loss ( 148,412) ( 67,308) ( 443,013)( 109,868) Interest and dividends 19,143 24,878 83,003 153,719 Security fees and commission( 13,485) 0 ( 62,592) 0 Realized gains and (losses) on trading securities ( 14,859) 156,869 2,145,885 149,600 Unrealized gains on trading securities 1,883,984 1,664,685 2,372,601 662,627 ----------- ---------- ---------- ---------- Income before cumulative effect of change in accounting principle and income tax 1,726,371 1,779,124 4,095,884 856,078 Provision for income taxes: Deferred expense ( 753,593) ( 402,940) ( 949,040)( 10,000) Current expense/benefit 62,836 ( 148,000) ( 689,522)(148,000) --------- ----------- ---------- ---------- Income before cumulative effect of change in accounting principle 1,035,614 1,228,184 2,457,322 698,078 Cumulative effect of change in accounting principle, less taxes of $962,635 0 0 0 1,447,567 ---------- ----------- ----------- ----------- Net income $ 1,035,614 $ 1,228,184 $ 2,457,322$ 2,145,645 =========== =========== =========== =========== Earnings per common share: Income (loss) before cumulative effect of change in accounting principle .46 .57 1.09 .99 Cumulative effect of change in accounting principle $ .00 $ .00 $ .00 $ .67 ---------- ----------- ----------- ----------- Net income $ .46 $ .57 $ 1.09 $ 1.66 =========== =========== =========== =========== Average common shares and common share equivalents 2,250,000 2,169,600 2,250,000 2,169,600 =========== =========== =========== =========== See Accompanying Notes. EDISON CONTROL CORPORATION STATEMENTS OF CASH FLOWS NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994 (Unaudited) 1995 1994 --------- --------- Cash flows from operating activities: Cash received from customers $ 790,625 $ 1,201,705 Cash paid to suppliers and employees ( 1,095,123) ( 1,408,861) Income taxes paid ( 345,304) 0 Interest received 21,708 67,162 Dividends received 60,563 138,296 Interest and premium paid on investments ( 6,762) 0 Purchases of trading securities (12,321,750) ( 4,642,766) Proceeds from the sale of trading securities 13,024,500 5,846,800 ---------- ---------- Net cash provided by operating activities 128,457 1,202,336 ---------- ---------- Cash flows from investing activities: Capital expenditures ( 39,905) ( 14,633) Maturities of certificates of deposit 0 95,000 --------- --------- Net cash provided by (used in) investing activities ( 39,905) 80,367 --------- --------- Cash flows from financing activities: Stock options exercised 117,000 0 --------- --------- Net cash provided by financing activities 117,000 0 --------- --------- Net increase in cash and cash equivalents 205,552 1,282,703 Cash and cash equivalents, beginning of period 821,901 151,658 --------- --------- Cash and cash equivalents, end of period $ 1,027,453 $ 1,434,361 ========== ========== See Accompanying Notes. EDISON CONTROL CORPORATION RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994 (UNAUDITED) 1995 1994 -------- -------- Net income $ 2,457,322 2,145,645 Adjustments to reconcile net income to net cash (used in) operating activities: Depreciation and amortization 31,044 28,538 Realized (gain) on sales of trading securities ( 2,145,885) ( 149,600) Unrealized (gain) on trading securities ( 2,372,601) ( 662,627) Purchases of trading securities (12,321,750) ( 4,642,766) Proceeds from the sale of trading securities 13,024,500 5,846,800 Cumulative effect of a change in accounting principle 0 ( 2,410,202) Changes in assets and liabilities: Accounts receivable 125,037 ( 28,939) Prepaid income taxes ( 130,762) 0 Inventories 29,744 ( 5,000) Prepaid expenses and other current assets ( 11,124) 935 Accounts payable ( 44,075) ( 22,534) Accrued liabilities 16,119 ( 13,549) Deferred income taxes 949,040 967,635 Income taxes payable 521,848 148,000 --------- ---------- Total adjustments ( 2,328,865) ( 943,309) ---------- ---------- Net cash provided by operating activities $ 128,457 $ 1,202,336 ========== =========== See Accompanying Notes. EDISON CONTROL CORPORATION Notes to Financial Statements (unaudited) Note 1- Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine month period ending September 30, 1995 are not necessarily indicative of the results that may be expected for the year ended December 31, 1995. For further information, refer to the consolidated financial statements and footnotes thereto included in the Registrant Company's annual report on Form 10-K for the year ended December 31, 1994. Note 2- Trading Securities The Financial Accounting Standards Board has issued Statement of Financial Accounting Standards No. 115 ("Statement 115"), "Accounting for Certain Investments in Debt and Equity Securities," to record at market value securities held for investment. Statement 115 addresses the accounting and reporting for investments in equity securities that have readily determinable fair values and for all investments in debt securities. Debt and equity securities that are bought and held principally for the purpose of selling them in the near term would be classified as "trading securities" and reported at fair value, with unrealized gains and losses included in earnings. The impact of adopting Statement 115 as of January 1, 1994 was to increase income by approximately $1,448,000, net of taxes as of that date. The cost of securities sold is based on the first in, first out method. Item 2. Management's Discussion and Analysis of Operations and Financial Condition. Results of Operations. Net sales for the third quarter of fiscal year 1995 decreased $130,277, or 37.6%, compared with the comparable period of the prior year. For the first nine months of 1995, net sales decreased $513,803, or 44.3%, compared to the comparable period of 1994. The decrease for both periods in 1995 is attributable to the pending deregulation of the electric utilities industry and the continuing unstable economy in Mexico. In June of 1995, it appeared that bookings were beginning to increase, but it did not continue through this quarter. The Company now anticipates that sales of conventional faulted circuit indicators will remain flat well into next year. Unit production is down 54%; while the number of orders have more than doubled. This is an indication that the utilities are ordering for specific needs and are not putting Company product in inventory. As a percentage of net sales, gross profit margin for the 1995 third quarter decreased to 13.8% from 28.1%. The nine month period gross profit margin decreased to 16.2% from 31.1% for the comparable period in 1994. These decreases are primarily attributable to reduced unit volume and the allocation of overhead costs over the lower unit volume. Selling, general and administrative expenses for the third quarter and first nine months ended September 30, 1995 were $178,220 and $548,094, respectively, compared to $164,656 and $471,019, respectively, for the comparable periods of the prior year. Management believes selling, general and administrative expenses should be maintained at or near their present levels for the balance of fiscal 1995. The increase in general and administrative expenses is due to the opening of a New York City office for the Company's new President. The operating loss was $443,013 for the first nine months compared to an operating loss of $109,868 for the comparable period of 1994. The Company recorded an operating loss in the three months ended September 30, 1995 of $148,412 compared to a loss of $67,308 in 1994. The increase in operating losses is due primarily to decreased level of sales in 1995 and the increase in general and administrative expenses. Interest and dividend income decreased by approximately 46% for the nine months ended September 30, primarily as a result of the shifting of the Company's investments into trading securities which resulted in increases in both realized and unrealized gains. In the three months ended September 30, 1995, the Company recorded a $14,859 realized loss in trading securities as compared to a gain of $156,869 in the comparable period of the prior year. This loss in mainly attributable to market fluctuation. The Company achieved a $2,145,885 realized gain in trading securities for the nine months ended September 30, 1995. Compared to the prior period gain of $149,600, the difference of $1,996,285 is primarily due to an increase in sales of securities. Unrealized gains were $2,372,601 for the first nine months compared to $662,627 for the comparable period of 1994. The increase of $1,709,974 can be attributed to a general upward market trend. The Company recorded a current and deferred tax expense of $1,638,562 and $690,757 for the nine months and quarter ended September 30, 1995 respectively, which represents the estimated annual effective rate of 40% applied to pre-tax book income. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial statement reporting purposes and the amounts used for income tax purposes. Net income of $1,035,614 or $.46 per share for the third quarter of 1995 decreased $192,570 compared to net income of $1,228,184 or $.57 per share for the comparable period of the prior year. Net income of $2,457,322 or $1.09 per share for the first nine months of 1995 increased $311,677 compared to net income of $2,145,645 or $1.66 per share for the comparable period of the prior year. The Company generated $128,457 in cash from operations during the first nine months of 1995 compared to $1,202,336 during the first nine months of 1994, a difference of $1,073,879 which is attributable to the reduction in sales, an increase in purchases over sales of trading securities and income taxes paid. The Company's cash usage from investing activities was $39,905 during the first nine months of 1995 compared to cash generated of $80,367 during the first nine months of 1994. The Company's financing activities provided $117,000 during the first nine months of 1995 compared to $0 in the first nine months of 1994. There was a net increase in cash and cash equivalents of $205,552 in 1995 compared to $1,282,703 in 1994. Management continues to analyze the discontinuance of the manufacture and sale of electronic fault indicators in light of the Company's operating losses. No decision regarding said discontinuance has been made. If the Company discontinued the manufacture and sale of electronic fault indicators, the Company would be left with assets consisting of cash and cash equivalents, investments and trading securities. Management continues to actively seek opportunities for the investment of its cash, investments and securities in areas which may not be related to its present operations. LIQUIDITY AND CAPITAL RESOURCES The Company believes that it can fund its proposed capital expenditures and its operational requirements from operations and its currently available cash, cash equivalents and investments. Proposed capital expenditures for the remainder of fiscal year 1995 are expected to total approximately $20,000. The Company has no long-term debt and does not anticipate a long-term need for capital to fund its present business. The Company may, however, need long-term capital to fund an acquisition in the event such acquisition requires funding greater than the Company's cash, cash equivalents, investments and trading securities. The Company has not sought to obtain such capital and will do so only in the event it is required to fund an acquisition. The source of such funding, if any, is unknown at this time. Additionally, at September 30, 1995 the working capital ratio (i.e., the ratio of total current assets to total current liabilities) was 5.1:1. At December 31, 1994, the working capital ratio was 8.1:1. Part 11 Other Information Item 5: Other Information The Annual Shareholder's Meeting was held on October 17, 1995. The following people were elected to the Board of Directors: Gerald B. Cramer John J. Delucca William B. Finneran Mary E. McCormack Jay J. Miller The Amendment to the 1986 Stock Option Plan was approved. Item 6: Exhibits and Reports on Form 8K None. 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. EDISON CONTROL CORPORATION Mary E. McCormack November 10, 1995 By: President and Chief Executive Officer Jack V. Miller November 10, 1995 By: Treasurer and Chief Financial Officer EX-27 2
5 9-MOS DEC-31-1995 SEP-30-1995 1,311,453 11,445,186 101,109 0 219,713 13,266,628 439,981 365,501 13,341,108 2,590,455 0 21,360 0 0 10,729,293 13,341,108 647,177 647,177 542,096 542,096 0 0 0 4,095,884 1,638,562 2,457,322 0 0 0 2,457,322 1.09 0
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