0000795968-95-000005.txt : 19950915 0000795968-95-000005.hdr.sgml : 19950915 ACCESSION NUMBER: 0000795968-95-000005 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950914 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/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-14812 FILM NUMBER: 95573685 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/A 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 June 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 July 31, 1995. EDISON CONTROL CORPORATION BALANCE SHEETS June 30, 1995 and December 31, 1994 1995 1994 ASSETS --------- --------- (Unaudited) Current assets: Cash and cash equivalents $ 186,868 $ 831,901 Investments 284,000 284,000 Trading securities 10,538,961 7,629,450 Accounts receivable-trade 105,965 226,146 Prepaid income tax 90,662 0 Inventories 234,757 249,457 Prepaid expenses and other current assets 71,613 47,281 ---------- ---------- Total current assets 11,512,826 9,258,235 Equipment and leasehold improvements at cost, net 68,468 65,618 ---------- ---------- $11,581,294 $ 9,323,853 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 8,270 $ 69,451 Accrued liabilities 37,160 37,378 Income taxes payable 752,358 167,674 Deferred income tax 1,068,467 873,020 ---------- ---------- Total current liabilities 1,866,255 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 3,550,345 2,128,636 ---------- ---------- Total stockholders' equity 9,715,039 8,176,330 ----------- ---------- $11,581,294 $ 9,323,853 ========== ========== See Accompanying Notes. EDISON CONTROL CORPORATION STATEMENT OF OPERATIONS THREE AND SIX MONTHS ENDED JUNE 30, 1995 AND 1994 (Unaudited) Three months ended Six months ended June 30, June 30, 1995 1994 1995 1994 --------------------------- ----------------------- Net sales $ 160,662 $ 510,989 $ 430,850 $ 814,376 Cost and expenses: Cost of sales 153,658 329,295 355,577 550,573 Selling, general and administrative 175,790 167,770 369,874 306,363 ----------- ---------- ---------- ----------- 329,448 497,065 725,451 856,936 ----------- ---------- ---------- ----------- Operating income (loss) ( 168,786) 13,924 ( 294,601) ( 42,560) Interest and dividends 37,707 59,147 63,860 130,254 Security fees and commission ( 25,994) ( 1,413) ( 49,107) ( 1,413) Realized gains and (losses) on trading securities 1,152,147 6,043 2,160,744 ( 6,262) Unrealized gains and (losses) on trading securities 301,389 ( 62,989) 488,617 (1,003,065) ----------- ----------- ---------- ----------- Income (loss) before cumulative effect of change in accounting principle and income tax 1,296,463 14,712 2,369,513 ( 923,046) Provision for income taxes: Deferred expense ( 195,447) 0 ( 195,447) 392,940 Current expense ( 323,138) 0 ( 752,358) 0 ----------- ----------- ----------- ---------- Income (loss) before cumulative effect of change in accounting principle 777,878 14,712 1,421,708 ( 530,106) Cumulative effect of change in accounting principle, less taxes of $962,635 0 0 0 1,447,567 ----------- ----------- ----------- ----------- Net income $ 777,878 $ 14,712 $ 1,421,708 $ 917,461 =========== =========== =========== =========== Earnings per common share: Income (loss) before cumulative effect of change in accounting principle .36 .01 .65 ( .24) Cumulative effect of change in accounting principle $ .00 $ .00 $ .00 $ .66 ----------- ----------- ---------- ------------ Net income $ .36 $ .01 $ .65 $ .42 =========== ============ ========== ============ Average common shares and common share equivalents 2,172,800 2,175,831 2,171,200 2,175,831 =========== =========== =========== =========== See Accompanying Notes. EDISON CONTROL CORPORATION STATEMENTS OF CASH FLOWS SIX MONTHS ENDED JUNE 30, 1995 AND 1994 (Unaudited) 1995 1994 --------- --------- Cash flows from operating activities: Cash received from customers $ 562,493 $ 803,796 Cash paid to suppliers and employees ( 791,797) ( 931,551) Income taxes paid ( 305,204) ( 5,000) Interest received 13,281 37,707 Dividends received 51,850 93,907 Interest and premium paid on investments 545 0 Purchases of trading securities (10,652,250) ( 1,686,870) Proceeds from the sale of trading securities 10,392,100 1,774,532 ---------- ---------- Net cash provided by (used in) operating activities ( 728,982) 86,521 ---------- ---------- Cash flows from investing activities: Capital expenditures ( 23,051) ( 12,100) --------- --------- Net cash used in investing activities ( 23,051) ( 12,100) --------- --------- Cash flows from financing activities: Stock options exercised 117,000 0 --------- --------- Net cash provided by financing activities 117,000 0 --------- --------- Net increase (decrease) in cash and cash equivalents ( 635,033) 74,421 Cash and cash equivalents, beginning of period 821,901 151,658 --------- --------- Cash and cash equivalents, end of period$ 186,868 $ 226,079 ========== ========== See Accompanying Notes. EDISON CONTROL CORPORATION RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES SIX MONTHS ENDED JUNE 30, 1995 AND 1994 (UNAUDITED) 1995 1994 -------- -------- Net income $ 1,421,708 $ 917,461 Adjustments to reconcile net income to net cash (used in) operating activities: Depreciation and amortization 20,202 18,789 Realized (gain) loss on sales of trading securities ( 2,160,744) 6,262 Unrealized (gain) loss on trading securities ( 488,617) 1,003,065 Purchases of trading securities (10,652,250) ( 1,686,870) Proceeds from the sale of trading securities 10,392,100 1,774,532 Cumulative effect of a change in accounting principle 0 ( 2,410,202) Changes in assets and liabilities: Accounts receivable 120,181 ( 64,532) Prepaid income taxes ( 90,662) 0 Inventories 14,700 ( 19,259) Prepaid expenses and other current assets ( 24,332) ( 33,933) Accounts payable ( 61,181) 37,935 Accrued liabilities ( 218) ( 21,422) Deferred income taxes 195,447 564,695 Income taxes payable 584,684 0 --------- ---------- Total adjustments ( 2,150,690) ( 830,940) ---------- ---------- Net cash provided by (used in) operating activities $( 728,982) $ 86,521 ========== ========== 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 six month period ending June 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. 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 second quarter of fiscal year 1995 decreased $350,327, or 68.6%, compared with the comparable period of the prior year. For the first six months of 1995, net sales decreased $383,526, or 47.1%, compared to the comparable period of 1994. The decrease for both periods in 1995 is attributable to a combination of two factors: a) The pending deregulation of the electric utilities industry has created an unstable environment in which the utilities will have to compete to sell power to big customers. This is causing massive cutbacks in both personnel and the purchasing of materials used by the power producers. Sale of the Company's product is being impacted because they are not an essential material required in the distribution of electricity, a condition which management believes is temporary. As personnel continues to be reduced, the faulted circuit indicator should be a tool to expedite the restoration of service after an outage, b) The unstable financial problems incurred by Mexico; 16% of 1994 sales were exported to Mexico. There were no shipments to Mexico in the first six months of 1995, however, the Company is quoting a major project for Mexico Electric at this time. Quoting activity is generally picking up at this time. As a result, sales for the next quarter could return to more normal levels. As a percentage of net sales, gross profit margin for the 1995 second quarter decreased to 4.4% from 35.6%. The six month period gross profit margin decreased to 17.5% from 32.4% 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 second quarter and first six months ended June 30, 1995 were $175,790 and $369,874, respectively, compared to $167,770 and $306,363, 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 $294,601 for the first six months compared to an operating loss of $42,560 for the comparable period of 1994. The Company recorded operating loss in the three months ended June 30, 1995 of $168,786 compared to income of $13,924 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 51% for the six months ended June 30, as a result of the shifting of the Company's investments into trading securities which resulted in increases in both realized and unrealized gains. The Company achieved a $2,160,744 realized gain in trading securities for the six months ended June 30, 1995. Compared to the prior period loss of ($6,262), the difference of $2,167,0006 is primarily due to an increase in sales of securities. Unrealized gains were $488,617 for the first six months compared to unrealized losses of ($1,003,065) for the comparable period of 1994. The increase of $1,491,682 can be attributed to a general upward market trend. The Company recorded a current and deferred tax expense of $518,585 and $947,805 for the quarter and six months ended June 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 $777,878 or $.36 per share for the second quarter of 1995 increased $763,166 compared to net income of $14,712 or $.01 per share for the comparable period of the prior year. Net income of $1,421,708 or $.65 per share for the first six months of 1995 increased $504,247 compared to net income of $917,461 or $.42 per share for the comparable period of the prior year. The Company used $728,982 in cash from operations during the first six months of 1995 compared to a cash generation of $86,521 during the first six months of 1994, a difference of $815,503 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 $23,051 during the first six months of 1995 compared to $12,100 during the first six months of 1994. The Company's financing activities provided $117,000 during the first six months of 1995 compared to $0 in the first six months of 1994. There was a net decrease in cash and cash equivalents of $635,033 in 1995 compared to an increase of $74,421 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 June 30, 1995 the working capital ratio (i.e., the ratio of total current assets to total current liabilities) was 6.2:1. At December 31, 1994, the working capital ratio was 8.1:1. Part 11 Other Information Item 5: Other Information None. 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 July 31, 1995 By:Mary E. McCormack President and Chief Executive Officer July 31, 1995 By:Jack V. Miller Treasurer and Chief Financial Officer EX-27 2
5 6-MOS DEC-31-1995 JUN-30-1995 470,868 10,538,961 105,965 0 234,757 11,512,826 423,127 354,659 11,581,294 1,866,255 0 21,360 0 0 9,693,679 11,581,294 430,850 430,850 355,577 355,577 0 0 0 2,369,513 947,805 1,421,708 0 0 0 1,421,708 .65 .00