-----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, J2v51rtMUJtfBKlL8Dxeb28cI/6qwmNhOEWkfJeeA374qbsdfRjRpFfim34bGCAn 1Qd/HGFOMHense6RKL+/xw== /in/edgar/work/20000905/0000897069-00-000447/0000897069-00-000447.txt : 20000922 0000897069-00-000447.hdr.sgml : 20000922 ACCESSION NUMBER: 0000897069-00-000447 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000731 FILED AS OF DATE: 20000905 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EDISON CONTROLS CORP CENTRAL INDEX KEY: 0000795968 STANDARD INDUSTRIAL CLASSIFICATION: [3825 ] IRS NUMBER: 222716367 STATE OF INCORPORATION: NJ FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-14812 FILM NUMBER: 716636 BUSINESS ADDRESS: STREET 1: W60 N151 CARDINAL AVENUE STREET 2: PO BOX 326 CITY: CEDARBURG STATE: WI ZIP: 53012 BUSINESS PHONE: (414) 377- MAIL ADDRESS: STREET 1: W60 N151 CARDINAL AVE. STREET 2: PO BOX 326 CITY: CEDARBURG STATE: WI ZIP: 53012 10-Q 1 0001.txt 10-Q QUARTERLY REPORT 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 July 31, 2000 ------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT 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 (IRS Employer incorporation or organization) Identification No.) 777 Maritime Drive PO Box 308 Port Washington, WI 53074-0308 ---------------------------------------- (Address of principal executive offices) (Zip Code) (262) 268-6800 ---------------------------------------------------- (Registrant's telephone number, including area code) (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 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 ------- ------- APPLICABLE ONLY TO CORPORATE ISSUERS Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock, $.01 par value: 2,351,308 as of July 31, 2000 - ----------------------------------------------------------- EDISON CONTROL CORPORATION AND SUBSIDIARIES INDEX Form 10-Q Page Number ----------- Part I Financial Information Item 1 Financial Statements - --------------------------- Consolidated Balance Sheets Pages 2-3 July 31, 2000 (Unaudited) and January 31, 2000 Consolidated Statements of Operations Page 4 Three and six months ended July 31, 2000 and 1999 (Unaudited) Consolidated Statements of Cash Flows Pages 5-6 Six months ended July 31, 2000 and 1999 (Unaudited) Notes to Consolidated Financial Statements Pages 7-9 (Unaudited) Item 2 Management's Discussion and Analysis of Pages 9-12 - ---------------------------------------------- Operations and Financial Condition ---------------------------------- Item 3 Quantitative and Qualitative Disclosures Page 12 - ----------------------------------------------- About Risk ---------- Part II Other Information Item 4 Submission of Matters to a Vote of Pages 13 - ------------------------------------------ Security Holders ---------------- Item 6 Exhibits Page 13 and - --------------- Exhibit Index 1 PART I. Item 1 Financial Statements - -------------------- EDISON CONTROL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS July 31, 2000 and January 31, 2000 July 31, January 31, 2000 2000 ---- ---- (Unaudited) ASSETS Current Assets: Cash and cash equivalents $ 460,900 $ 539,586 Investments 95,000 95,000 Trading securities 968,488 1,405,650 Trade accounts receivable, net 4,153,295 3,522,867 Receivable from affiliate 60,118 61,606 Inventories, net 6,591,452 7,110,888 Prepaid expenses and other assets 232,408 193,886 Taxes other than income 12,693 0 Refundable income taxes 18,103 0 Deferred income taxes 240,000 190,000 ----------- ----------- Total current assets 12,832,457 13,119,483 Investment in and advances to affiliate 518,108 478,108 Other Assets: Prepaid pension 0 25,193 Deferred income taxes 535,000 535,000 ----------- ----------- Total other assets 535,000 560,193 Property, plant and equipment, net 7,696,095 7,968,785 Goodwill (net of amortization) 8,341,929 8,458,059 Organizational/finance costs (net of amortization) 43,960 46,036 ----------- ----------- TOTAL ASSETS $29,967,549 $30,630,664 =========== =========== (Continued) See Accompanying Notes. 2 EDISON CONTROL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS July 31, 2000 and January 31, 2000 (Continued) July 31, January 31, 2000 2000 ---- ---- (Unaudited) LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Trade accounts payable $ 1,289,904 $ 989,595 Accrued compensation 658,160 791,528 Taxes other than income taxes 0 24,780 Other accrued expenses 575,653 653,077 Income taxes payable 0 151,104 Deferred compensation 754,250 754,250 Current maturities on long-term debt 933,784 933,784 ----------- ----------- Total current liabilities 4,211,751 4,298,118 Accrued pension expenses 46,795 0 Long-term debt, less current maturities 6,149,277 8,029,358 ----------- ----------- Total Liabilities 10,407,823 12,327,476 Shareholders' Equity: Preferred stock, $.01 par value: 1,000,000 shares authorized, none issued 0 0 Common stock, $.01 par value: 20,000,000 shares authorized, 2,351,308 shares issued and outstanding 23,513 23,513 Additional paid-in capital 10,344,868 10,344,868 Retained earnings 9,312,583 7,917,695 Accumulated other comprehensive (loss) income (121,238) 17,112 ----------- ----------- Total Shareholders' Equity 19,559,726 18,303,188 ----------- ----------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $29,967,549 $30,630,664 =========== =========== See Accompanying Notes. 3 EDISON CONTROL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME THREE AND SIX MONTHS ENDED JULY 31, 2000 AND 1999 (Unaudited)
Three Months Ended Six Months Ended -------------------- ---------------- July 31, July 31, -------- -------- 2000 1999 2000 1999 ---- ---- ---- ---- NET SALES $7,210,022 $6,932,566 $14,164,174 $13,050,099 COST OF GOODS SOLD 4,562,187 4,383,457 8,840,403 8,381,054 ---------- ---------- ----------- ----------- GROSS PROFIT 2,647,835 2,549,109 5,323,771 4,669,045 OTHER OPERATING EXPENSES: Selling, engineering and administrative expenses 1,132,482 1,107,684 2,632,938 2,312,324 Goodwill and organizational/ finance cost amortization 59,103 72,800 118,206 152,450 ---------- ---------- ----------- ----------- Total other operating expenses 1,191,585 1,180,484 2,751,144 2,464,774 ---------- ---------- ----------- ----------- OPERATING INCOME 1,456,250 1,368,625 2,572,627 2,204,271 OTHER EXPENSE (INCOME): Interest expense 141,336 207,418 318,018 458,827 Realized losses (gains) on trading securities 2,151 4,500 (122,371) (256,453) Unrealized losses (gains) on trading securities 146,461 (11,176) 126,475 181,641 Stock warrant amortization 0 0 0 389,236 Write down of assets for sale to net realizable value 0 110,000 0 110,000 Miscellaneous income (34,762) (16,932) (56,094) (45,818) ---------- ---------- ----------- ----------- Total other expense 255,186 293,810 266,028 837,433 ---------- ---------- ----------- ----------- INCOME BEFORE INCOME TAXES 1,201,064 1,074,815 2,306,599 1,366,838 INCOME TAXES 457,686 425,420 911,711 556,596 ---------- ---------- ----------- ----------- NET INCOME 743,378 649,395 1,394,888 810,242 OTHER COMPREHENSIVE (LOSS) INCOME - Foreign currency translation adjustment (67,794) 3,926 (138,350) (18,988) ---------- ---------- ----------- ----------- COMPREHENSIVE INCOME $675,584 $653,321 $1,256,538 $791,254 ========== ========== =========== =========== Net income per share-basic $.32 $.28 $.59 $.35 Net income per share-diluted $.25 $.22 $.48 $.28
See Accompanying Notes. 4 EDISON CONTROL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS SIX MONTHS ENDED JULY 31, 2000 AND 1999 (Unaudited) 2000 1999 ---- ---- Net income $1,394,888 $ 810,242 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 585,845 994,458 Provision for doubtful accounts 114,636 61,691 Write down of asset held for sale to net realizable value 0 110,000 Realized gain on sales of trading securities (122,371) (256,453) Unrealized loss on trading securities 126,475 181,641 Purchases of trading securities (80,783) (77,875) Proceeds from the sale of trading securities 513,841 2,633,788 Equity in earnings of affiliate (40,000) (35,000) Changes in assets and liabilities: Accounts receivable (745,064) (686,928) Receivable from affiliate 1,488 (25,261) Inventories 519,436 958,162 Prepaid expenses and other assets (13,329) (66,022) Trade accounts payable 300,309 (847,903) Accrued compensation (133,368) (167,419) Taxes other than income taxes (37,473) 41,044 Other accrued expenses (30,629) (2,587) Deferred income taxes (50,000) (148,000) Income taxes payable (169,207) 175,563 ---------- ---------- Total adjustments 739,806 2,842,899 ---------- ---------- NET CASH PROVIDED BY OPERATING ACTIVITIES 2,134,694 3,653,141 ---------- ---------- Cash flows from investing activities: Additions to plant and equipment (194,949) (174,919) Maturity of certificate of deposit 0 95,000 ---------- ---------- NET CASH USED IN INVESTING ACTIVITIES (194,949) (79,919) ---------- ---------- (Continued) See Accompanying Notes. 5 EDISON CONTROL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS SIX MONTHS ENDED JULY 31, 2000 AND 1999 (Unaudited) (Continued) 2000 1999 ---- ---- Cash flows from financing activities: Proceeds from issuance of long-term debt $ 600,000 $ 5,157,183 Principal payments on long-term debt (2,480,081) (8,631,380) ----------- ----------- NET CASH USED IN FINANCING ACTIVITIES (1,880,081) (3,474,197) ----------- ----------- EFFECT OF EXCHANGE RATE CHANGES ON CASH (138,350) (18,988) ----------- ----------- NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (78,686) 80,037 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 539,586 468,072 ----------- ----------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 460,900 $ 548,109 =========== =========== Supplemental disclosure of cash flow information: Cash paid during the period for income taxes $1,130,918 $ 605,028 Cash paid during the period for interest 319,923 504,044 See Accompanying Notes. 6 EDISON CONTROL CORPORATION AND SUBSIDIARIES Notes to Consolidated 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, these statements 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 July 31, 2000 are not necessarily indicative of the results that may be expected for other interim periods or the year ended January 31, 2001. For further information, refer to the financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended January 31, 2000. Note 2 - Nature of Business and Accounting Policies Principles of Consolidation - The consolidated financial statements include the accounts of Edison Control Corporation ("Edison") and subsidiaries, all of which subsidiaries are wholly owned by Edison (collectively, the "Company"). All material intercompany accounts and transactions have been eliminated in consolidation. Nature of Operations - The Company is currently comprised of the following operations. Construction Forms ("ConForms") is a leading manufacturer and distributor of systems of pipes, couplings and hoses and other equipment used for the pumping of concrete. ConForms manufactures a wide variety of finished products which are used to create appropriate configurations of systems for various concrete pumps. Ultra Tech manufactures abrasion resistant piping systems for use in industries such as mining, pulp and paper, power and waste treatment. Gilco produces a line of concrete and plaster/mortar mixers. JABCO primarily leases property and equipment to the Company. Trading Securities - Debt and equity securities purchased and held principally for the purpose of sale in the near term are classified as "trading securities" and reported at fair value with unrealized gains and losses included in earnings. The cost of individual securities sold is based on the first-in, first-out method. Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates. 7 Translation of Foreign Currencies - Assets and liabilities of foreign operations are translated into United States dollars at current exchange rates. Income and expense accounts are translated into United States dollars at average rates of exchange prevailing during the year. Adjustments resulting from the translation of financial statements of the foreign operations are included as foreign currency translation adjustments in other comprehensive income. Net Income Per Share - Reconciliation of the numerator and denominator of the basic and diluted per share computations for the three and six-month periods ended July 31, 2000 and 1999 are summarized as follows: Three Months Ended Six Months Ended ------------------ ---------------- July 31, July 31, ------- ------- 2000 1999 2000 1999 ---- ---- ---- ---- Net income per share-basic: Net income (numerator) $ 743,378 $ 649,395 $1,394,888 $ 810,242 Weighted average shares outstanding (denominator) 2,351,308 2,346,933 2,351,308 2,346,933 Net income per share-basic $ .32 $ .28 $ .59 $ .35 Net income per share-diluted: Net income (numerator) $ 743,378 $ 649,395 $1,394,888 $ 810,242 Weighted average shares outstanding 2,351,308 2,346,933 2,351,308 2,346,933 Effect of dilutive securities: Stock options 175,387 189,873 180,382 184,382 Stock warrants 389,959 378,823 383,982 384,902 Weighted average shares outstanding (denominator) 2,916,654 2,915,629 2,915,672 2,916,217 Net income per share-diluted $ .25 $ .22 $ .48 $ .28 8 Note 3 - Segment Information The Company's operating segments are organized based on the nature of products and services provided. A description of the nature of the segments' operations and their accounting policies are contained in Note 2. Segment information for the three and six-month periods ended July 31, 2000 and 1999 follows: Three Months Ended July 31, --------------------------- 2000 1999 ---- ---- Net Operating Net Operating Sales Income Sales Income ----- --------- ----- --------- ConForms $ 6,198,028 $ 1,574,247 $ 5,359,198 $ 1,346,667 Ultra Tech 523,023 (80,992) 1,027,101 135,627 Gilco 488,971 24,596 546,267 (17,354) Edison (61,601) (96,315) ----------- ----------- ----------- ----------- Total $ 7,210,022 $ 1,456,250 $ 6,932,566 $ 1,368,625 Six Months Ended July 31, ------------------------- 2000 1999 ---- ---- Net Operating Net Operating Sales Income Sales Income ----- --------- ----- --------- ConForms $11,999,866 $ 3,030,043 $10,442,099 $ 2,300,429 Ultra Tech 1,190,128 (4,791) 1,493,790 227,626 Gilco 974,180 (35,557) 1,114,210 (133,143) Edison (417,068) (190,641) ----------- ----------- ----------- ----------- Total $14,164,174 $ 2,572,627 $13,050,099 $ 2,204,271 Item 2. Management's Discussion and Analysis of Operations and Financial Condition - -------------------------------------------------------------------------- Certain matters discussed in this Quarterly Report on Form 10-Q are "forward-looking statements" intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified as such because the context of the statement will include words such as the Company "believes", "anticipates", "expects", or words of similar import. Similarly, statements that describe the Company's future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties, including, but not limited to, new product advancements by competition, significant changes in industry technology, economic or political conditions in the countries in which the Company does business, the continued availability of sources of supply, the availability and consummation of favorable acquisition opportunities, increasing competitive pressures on pricing and other contract terms, economic factors affecting the Company's customers and stock price variations affecting the Company's securities trading portfolio. These factors could cause actual results to differ materially from those anticipated as of the date of this report. Shareholders, potential investors and other readers are urged to consider these factors in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included herein 9 are only made as of the date of this report and the Company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances. Net sales for the quarter ended July 31, 2000 increased $277,456 (4.0%) to $7,210,022 compared with net sales for the same period of the prior year. For the first six months of this year, net sales increased $1,114,075 (8.5%) to $14,164,174 compared with net sales for the same period of the prior year. Increases in Conforms' domestic and foreign sales were partially offset by decreases in Gilco and Ultra Tech project sales. Ultra Tech's sales volume will continue to fluctuate based on its ability to attain large project sales in the industries it serves. As a percentage of net sales, gross margin for the quarter ended July 31, 2000 was 36.7% compared to 36.8% for the quarter ended July 31, 1999. Gross margin for the six months ended July 31, 2000 increased to 37.6% from 35.8% for the six months ended July 31, 1999 due to improved ConForms' domestic and foreign results and fewer lower margin Gilco sales. Selling, engineering and administrative expenses for the three and six-month periods ended July 31, 2000 increased by $24,798 (2.2%) and $320,614 (13.9%) from the same periods last year. The increases were largely due to legal and professional expenses during the quarter ended April 30, 2000 which related to discussions held with various parties interested in acquiring all of Edison's common stock. Interest expense decreased to $141,336 and $318,018 for the three and six-month periods ended July 31, 2000 compared to $207,418 and $458,827 for the same periods ended July 31, 1999 due to lower debt balances. Interest expense is expected to continue to decrease due to anticipated future principal reductions principally from utilizing excess operating cash flow. The Company had a $148,612 and $4,104 net loss on trading securities for the three and six-month periods ended July 31, 2000 compared to a net gain of $6,676 and $74,812 for the same periods of the prior year. Trading securities at July 31, 2000 consisted of the following: Number of Market Name of Issuer/Title of Issue Shares Value - ----------------------------- --------- ------ Common Stocks: Allied Capital Corp., New 3,000 $ 56,812 Compaq Computer Corp. 5,000 140,313 Entremed Inc. 1,500 45,563 Glenayre Technologies, Inc. 40,000 402,500 Intel Corp. 4,000 267,000 Liberty Digital Inc. 2,000 54,500 Sun International Hotels 100 1,800 -------- Total $968,488 ======== Although the Company has no established formal investment policies or practices for its trading securities portfolio, the Company generally pursues an aggressive trading strategy, focusing primarily on generating near-term capital appreciation from its investments in common equity securities. Securities held in the Company's 10 portfolio at the end of each period are reported at fair value, with unrealized gains and losses included in earnings for that period. These factors, combined with the relative size of the Company's trading portfolio, has led, and will likely continue to lead, to significant period-to-period earnings volatility depending upon the capital appreciation or depreciation of the Company's trading securities portfolio as of the end of each reporting period. The Company does not use or buy derivative securities. The amortization of goodwill, financing costs and stock warrants created a total non-cash charge of $118,206 for the six months ended July 31, 2000 compared to $541,686 for the prior year. The amortization decrease was due to the expensing in the six months ended July 31, 1999 of all remaining deferred financing costs that related to the warrant issued to the principal shareholder. The total amortization of all these non-cash charges for the year ended January 31, 2001 is expected to approximate $240,000 compared to $659,859 in fiscal 1999. During the second quarter of 1999, the Company accepted an offer from a third party to purchase the land and building the Company owned in Cedarburg, Wisconsin. Based on this offer, the Company decreased the value of this asset by $110,000 to an estimated realizable value. The Company completed this sale of the land and building during the third quarter of 1999. The sale resulted in a loss of $128,543. The proceeds from this sale were used to repay debt. The Company recorded tax expense of $911,711 for the six months ended July 31, 2000, which represents the estimated annual effective rate of 39.5% applied to pre-tax 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 $743,378, or $.32 and $.25 per share, basic and diluted, respectively, for the second quarter of fiscal 2000 was an increase of $93,983 (14.5%), from net income of $649,395, or $.28 and $.22 per share, basic and diluted, respectively, for the comparable period of the prior year. The change was principally due to improved sales in 2000 and the writedown of the Cedarburg building to net realizable value during the second quarter of 1999. For the six months ended July 31, 2000, net income increased 72.2% to $1,394,888, or $.59 and $.48 per basic and diluted share, respectively, compared to net income of $810,242, or $.35 and $.28 per basic and diluted share, respectively, in the comparable period of the prior year. Increases from improved sales and margins in 2000, the writedown of the Cedarburg building to net realizable value during the second quarter of 1999, and the decrease in amortization of the non-cash charges described above were partially offset by increased legal and professional expenses described above. Liquidity and Capital Resources The Company generated $2,134,694 in cash from operations during the first six months of 2000, compared to cash flow generated by operations of $3,653,141 for the same period last year. This reduced cash flow was due largely to the net proceeds of approximately $2,600,000 received from sales of trading securities during the first six months of 1999. The Company used $194,949 of cash to acquire capital equipment and $1,880,081 for net payments on long-term debt . The result was a net decrease in cash and cash equivalents of $78,686 for the first six months of fiscal 2000 compared to a net increase of $80,037 in the prior year's first six months. 11 The Company believes that it can fund proposed capital expenditures and operational requirements from operations and currently available cash and cash equivalents, investments, trading securities and existing bank credit lines. Proposed capital expenditures for the fiscal year ending January 31, 2001 are expected to total approximately $1,000,000, compared to $675,245 for fiscal 1999. The Company intends to continue to expand its businesses, both internally and through potential acquisitions and is also exploring other alternatives that would focus its efforts on its core business. The Company currently anticipates that any potential acquisitions would be financed primarily by internally generated funds or additional borrowings or the issuance of the Company's stock. Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK - ---------------------------------------------------------- The Company is exposed to interest rate risk, foreign currency risk and equity price risk. These risks include changes in U.S interest rates, changes in foreign currency exchange rates as measured against the U.S. dollar and changes in the prices of stocks traded on the U.S. markets. Interest Rate Risk - ------------------ The Company's debt obligations, which totaled $7,083,061 as of July 31, 2000, are subject to interest rate risk. Most of the borrowings float at either the prime rate or LIBOR plus a certain amount of basis points. Based on the July 31, 2000 balance, an increase of one percent in the interest rate on the Company's loans would cause an increase in interest expense of approximately $70,000, or $.01 per diluted share, net of taxes, on an annual basis. The Company currently does not use derivatives to fix variable rate interest obligations. Foreign Currency Risk - --------------------- The Company has foreign operations in the United Kingdom and Malaysia. Sales and purchases are typically denominated in the British pound, Malaysian ringgit, German mark, Singapore dollar or U.S. dollar, thereby creating exposures to changes in exchange rates. The changes in exchange rates may positively or negatively affect the Company's sales, gross margins and retained earnings. The Company does not enter into foreign exchange contracts but attempts to minimize currency exposure risk through working capital management. There can be no assurance that such an approach will be successful, especially in the event of a significant and sudden decline in the value of a currency. Equity Price Risk - ----------------- Approximately 3.2% of the Company's total assets as of July 31, 2000 are invested in trading securities of various domestic companies. The market value of these investments is subject to fluctuation. This factor, combined with the relative size of the Company's trading portfolio ($968,488 at July 31, 2000), has led and will likely continue to lead, to significant period-to-period earnings volatility depending upon the capital appreciation or depreciation of the Company's trading securities portfolio. A 10% decrease in the quoted market price of these trading securities would decrease the fair market value of these securities by approximately $100,000, or $.02 per diluted share, net of taxes, on an annual basis. 12 PART II. Item 4. Submission of Matters to a Vote of Security Holders - --------------------------------------------------- On June 29, 2000, the Company held its 2000 Annual Meeting of Shareholders. Of the 2,351,308 shares issued and outstanding, holders of 2,136,263 shares were present, represented in person or by proxy. One matter required vote by the security holders. Robert L. Cooney, John J. Delucca, Norman Eig, William B. Finneran, Alan J. Kastelic, Mary E. McCormack, and William C. Scott were elected to the Board of Directors (2,133,263 votes for each and 3,000 votes against). There were no broker non-votes to the Company's knowledge. Item 6. Exhibits - -------- The Exhibits filed or incorporated by reference herein are as specified in the Exhibit Index. Reports on Form 8-K - ------------------- The Company filed no reports on Form 8-K during the quarter to which the report relates. 13 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 (Registrant) Date: September 5, 2000 /s/ Jay R. Hanamann ----------------------------- Jay R. Hanamann (Chief Financial Officer) 14 Edison Control Corporation Exhibit Index Exhibit No. Description ----------- ----------- 27. Financial Data Schedule. 15 EX-27 2 0002.txt FDS -- EDISON CONTROL CORPORATION
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS OF EDISON CONTROL CORPORATION AS OF AND FOR THE PERIOD ENDING JULY 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000795968 EDISON CONTROL CORPORATION 1 6-MOS JAN-31-2001 JUL-31-2000 460,900 1,063,488 4,555,439 342,026 6,591,452 12,832,457 10,554,981 2,858,886 29,967,549 4,211,751 6,149,277 0 0 23,513 19,536,213 29,967,549 14,164,174 14,164,174 8,840,403 2,751,144 266,028 114,636 318,018 2,306,599 911,711 1,394,888 0 0 0 1,394,888 .59 .48
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