-----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, Qj62pe97cpvy5JCzOm9xlrD0iRk/fyozD8/uoFuO9n6avdo8RgUqHAtSs93GFvWT C/ufKqjC7NFgm1QLcA8oiQ== 0000897069-98-000605.txt : 19981208 0000897069-98-000605.hdr.sgml : 19981208 ACCESSION NUMBER: 0000897069-98-000605 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981031 FILED AS OF DATE: 19981207 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: 0131 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-14812 FILM NUMBER: 98764715 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 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 October 31, 1998 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) (414) 268-6800 (Registrant's telephone number, including area code) W60 N151 Cardinal Avenue PO Box 326 Cedarburg, WI 53012-0326 (414) 377-6565 (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: 2,346,933 as of October 31, 1998 - --------------------------------------------------------------- EDISON CONTROL CORPORATION AND SUBSIDIARIES INDEX Page Number Part I Financial Information Item 1 Financial Statements Consolidated Balance Sheets Pages 2 & 3 October 31, 1998 (Unaudited) and January 31, 1998 Consolidated Statements of Operations Page 4 Three and nine months ended October 31, 1998 and 1997 (Unaudited) Consolidated Statements of Cash Flows Pages 5 & 6 Nine months ended October 31, 1998 and 1997 (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 Part II Other Information Item 6 Exhibits and Reports on Form 8-K Page 12 and - ------ Exhibit Index 1 PART I. Item 1 Financial Statements EDISON CONTROL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS October 31, 1998 and January 31, 1998 October 31, January 31, 1998 1998 ---- ---- (Unaudited) ASSETS Current Assets: Cash and cash equivalents $ 1,163,004 $ 1,037,288 Investments 190,000 190,000 Trading securities 2,770,817 3,653,763 Trade accounts receivable, net 3,587,641 2,995,637 Receivable from affiliates 130,377 103,482 Inventories, net 6,907,677 5,974,302 Prepaid expenses and other assets 78,131 193,099 Refundable income taxes 9,789 81,182 Deferred income taxes 205,000 0 Deferred financing costs 635,070 983,333 ------- ------- Total current assets 15,677,506 15,212,086 Investment in and advances to affiliate 422,427 433,150 Other Assets: Prepaid pension 202,134 283,134 Deferred income taxes 40,000 0 Deferred financing costs 0 389,236 - ------- Total other assets 242,134 672,370 Property, plant and equipment, net 8,544,673 6,945,103 Goodwill (net of amortization) 8,748,382 8,922,576 Organizational/finance costs (net of amortization) 105,928 170,672 ------- ------- TOTAL ASSETS $33,741,050 $32,355,957 =========== =========== (Continued) See Accompanying Notes. 2 EDISON CONTROL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS October 31, 1998 and January 31, 1998 (Continued) October 31, January 31, 1998 1998 (Unaudited) LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Trade accounts payable $ 1,436,340 $ 1,261,244 Accrued compensation 732,050 781,566 Taxes other than income taxes 42,283 29,985 Other accrued expenses 483,801 555,045 Deferred income taxes 0 115,000 Deferred compensation 754,250 754,250 Current maturities on long-term debt 701,151 841,664 ---------- --------- Total current liabilities 4,149,875 4,338,754 Long-term debt, less current maturities 13,822,375 13,181,678 Deferred income taxes 0 245,000 -- --------- TOTAL LIABILITIES 17,972,250 17,765,432 Stockholders' Equity: Preferred stock, $.01 par value: 1,000,000 shares authorized, none issued 0 0 Common stock, $.01 par value: 20,000,000 and 10,000,000 shares authorized, respectively, issued and outstanding 2,346,933 and 2,275,933 shares, respectively 23,469 22,759 Additional paid-in capital 10,193,225 10,016,435 Retained earnings 5,447,892 4,558,493 Accumulated other comprehensive income 104,214 (7,162) ---------- ----------- TOTAL STOCKHOLDERS' EQUITY 15,768,800 14,590,525 ------------ ---------- TOTAL LIABILITIES AND EQUITY $ 33,741,050 $ 32,355,957 ============= ========== See Accompanying Notes. 3 EDISON CONTROL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS THREE AND NINE MONTHS ENDED OCTOBER 31, 1998 AND 1997 (Unaudited) Three Months Ended Nine Months Ended October 31, October 31,
1998 1997 1998 1997 ---- ---- ---- ---- NET SALES $6,498,890 $7,048,009 $20,106,180 $18,126,002 COST OF GOODS SOLD 4,134,410 4,264,589 12,815,869 11,320,989 --------- --------- ---------- ---------- 2. GROSS PROFIT 2,364,480 2,783,420 7,290,311 6,805,013 OTHER OPERATING EXPENSES: Selling, engineering and administrative expenses 1,137,889 1,045,597 3,464,185 3,214,046 Stock option amortization 0 0 0 298,558 Goodwill and organizational/ finance cost amortization 79,646 79,635 238,938 238,905 ------ ------ ------- ------- Total other operating expenses 1,217,535 1,125,232 3,703,123 3,751,509 --------- --------- --------- --------- 3. OPERATING INCOME 1,146,945 1,658,188 3,587,188 3,053,504 OTHER EXPENSE (INCOME): Interest expense 219,798 274,859 725,883 867,738 Realized losses (gains) on trading securities 91,219 (96,022) (134,852) (319,163) Unrealized losses on trading securities 803,614 407,178 823,360 51,119 Stock warrant amortization 245,833 245,833 737,500 737,500 Miscellaneous income (38,883) (76,273) (140,440) (114,850) -------- -------- --------- --------- Total other expense 1,321,581 755,575 2,011,451 1,222,344 --------- ------- --------- --------- (LOSS) INCOME BEFORE 4. INCOME TAXES (CREDIT) (174,636) 902,613 1,575,737 1,831,160 INCOME TAXES (CREDIT) (52,138) 392,397 686,338 785,225 -------- ------- ------- ------- NET (LOSS) INCOME $(122,498) $510,216 $889,399 $1,045,935 ========== ======== ======== ========== Net (loss) income per share-basic ($.05) $.22 $.38 $.46 Net (loss) income per share-diluted ($.05) $.19 $.31 $.39
See Accompanying Notes. 4 EDISON CONTROL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS NINE MONTHS ENDED OCTOBER 31, 1998 AND 1997 (Unaudited) 1998 1997 ---- ---- Net income $889,399 $1,045,935 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,503,921 1,782,027 Loss on sale of equipment 3,592 0 Provision for doubtful accounts 54,375 80,353 Realized gain on sales of trading securities (134,852) (319,163) Unrealized loss on trading securities 823,360 51,119 Purchases of trading securities (2,013,188) (3,608,474) Proceeds from the sale of trading securities 2,207,626 3,998,444 Equity in earnings of affiliate (80,000) (54,000) Changes in assets and liabilities: Accounts receivable (646,379) (1,439,958) Receivable from affiliate (26,895) 115,017 Inventories (933,375) (473,686) Prepaid expenses and other assets 195,968 128,386 Trade accounts payable 175,096 290,378 Accrued compensation (49,516) 59,930 Taxes other than income taxes 12,298 58,164 Accrued expenses (71,244) 200,001 Deferred income taxes (605,000) (449,000) Income taxes payable 71,393 306,640 ------ ------- Total adjustments 487,180 726,178 ------- ------- NET CASH PROVIDED BY OPERATING ACTIVITIES 1,376,579 1,772,113 --------- --------- Cash flows from investing activities: Additions to plant and equipment (2,141,913) (347,506) Proceeds from sale of equipment 11,267 0 Maturity of certificate of deposit 0 94,000 - ------ NET CASH USED IN INVESTING ACTIVITIES (2,130,646) (253,506) ----------- --------- (Continued) See Accompanying Notes. 5 EDISON CONTROL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS NINE MONTHS ENDED OCTOBER 31, 1998 AND 1997 (Unaudited) (Continued) 1998 1997 ---- ---- Cash flows from financing activities: Proceeds from issuance of long-term debt $1,775,000 $400,000 Principal payments on long-term debt (1,274,816) (1,764,831) Payments received from affiliates 90,723 0 Stock options exercised 177,500 0 ------- - NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 768,407 (1,364,831) ------- ----------- EFFECT OF EXCHANGE RATE CHANGES ON CASH 111,376 43,174 ------- ------ NET INCREASE IN CASH AND CASH EQUIVALENTS 125,716 196,950 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,037,288 772,008 --------- ------- CASH AND CASH EQUIVALENTS, END OF PERIOD $1,163,004 $968,958 ========== ========= Supplemental disclosure of cash flow information: Cash paid during the period for income taxes $1,219,945 $927,585 Cash paid during the year for interest 718,379 845,655 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 nine-month period ending October 31, 1998 are not necessarily indicative of the results that may be expected for other interim periods or the year ended January 31, 1999. 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, 1998. 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 above operations. 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 accumulated other comprehensive income in the equity section of the accompanying consolidated balance sheets. Accounting Pronouncements - Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based Compensation" was issued in 1995. The Company has elected to continue to account for stock-based compensation under Accounting Principles Board Opinion No. 25 as allowed by SFAS No. 123. In June 1997, the Financial Accounting Standards Board issued SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information." The Statement is effective for fiscal 1998. The Company is in the process of evaluating the disclosure requirements. The adoption of SFAS No. 131 will not have an impact on the Company's consolidated financial statements. Net income (loss) per share - Effective for 1997, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 128 "Earnings Per Share," which established new standards for the calculation of net income (loss) per share effective for interim and annual periods ending after December 1997. Net income (loss) per share for the three and nine-month periods ended October 31, 1997 has been restated to comply with SFAS No. 128. Reconciliation of the numerator and denominator of the basic and diluted per share computations for the three and nine-month periods ended October 31, 1998 and 1997 are summarized as follows: The stock options and warrants were antidilutive for the three months ended October 31, 1998.
Three Months Ended Nine Months Ended October 31, October 31, 1998 1997 1998 1997 ---- ---- ---- ---- Net (loss) income per share-basic: Net (loss) income (numerator) ($122,498) $ 510,216 $ 889,399 $ 1,045,935 Weighted average shares outstanding (denominator) 2,346,933 2,275,933 2,310,913 2,275,933 Net (loss) income per share-basic ($.05) $ .22 $ .38 $ .46 Net (loss) income per share-diluted: Net (loss) income (numerator) ($122,498) $ 510,216 $ 889,399 $1,045,935 Weighted average shares outstanding (denominator) 2,346,933 2,275,933 2,310,913 2,275,933 Effect of dilutive securities: Stock options 0 125,660 183,401 98,918 Stock warrants 0 326,802 391,270 314,858 Weighted average shares outstanding (denominator) 2,346,933 2,728,395 2,885,584 2,689,709 Net (loss) income per share-diluted ($.05) $ .19 $ .31 $ .39
8 Comprehensive Income- Effective February 1, 1998, the Company adopted SFAS No. 130, "Reporting Comprehensive Income." Statement 130 establishes new rules for the reporting and display of comprehensive income and its components. The adoption of this Statement had no impact on the Company's net income or shareholders' equity. Statement 130 requires the Company's foreign currency translation adjustments, which prior to adoption were reported separately in shareholders' equity, to be included in other comprehensive income. Prior year financial statements have been reclassified to conform with the requirements of Statement 130. Total comprehensive income (loss), which was comprised of net income (loss) and foreign currency translation adjustments, amounted to approximately ($19,000) and $491,000 for the three-month periods ended October 31, 1998 and 1997, respectively, and approximately $1,001,000 and 1,089,000 for the nine-month periods ended October 31, 1998 and 1997, respectively. Reclassifications - Certain reclassifications have been made to the prior periods' financial statements to conform with the current year presentation. 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 customer base 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 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 October 31, 1998 decreased $549,119 (7.8%) to $6,498,890 compared with $7,048,009 for the same period of the prior year. Large project sales to power and phosphate industry customers at Ultra Tech in the quarter ended October 31, 1997 accounted for the decrease. For the first nine months of the year, net sales increased $1,980,178 (10.9%) to $20,106,180 compared to $18,126,002 for the same period of the prior year. Strong domestic sales at ConForms and the inclusion of sales from the Company's Malaysian operation, which started in October 1997, accounted for the increase. 9 As a percentage of net sales, gross margin decreased to 36.4% and 36.3% for the three and nine-month periods ended October 31, 1998 compared to 39.5% and 37.5% for the three and nine-month periods ended October 31, 1997. This was due to product mix variations and the increase of lower margin foreign sales. Selling, engineering and administrative expenses for the quarter increased to $1,137,889 from $1,045,597. The increase was mainly due to increased sales and marketing expenses relating to foreign sales. Selling engineering and administrative expenses represented 17.2% and 17.7% of net sales for the nine-month periods ended October 31, 1998 and 1997, respectively. Interest expense was $219,798 and $725,883 for the three-and nine-month periods ended October 31, 1998 compared to $274,859 and $867,738 for the three and nine-month periods ended October 31, 1997. This change resulted from a reduction of the average outstanding debt from the same periods last year. The net loss on trading securities was $894,833 for the quarter ended October 31, 1998 compared to last year's net loss of $311,156. For the nine months ended October 31, 1998, the net loss was $688,508, compared to a net gain of $268,044 for the same period last year. A major reason for the decrease for the quarter ended October 31, 1998 was related to the decrease in the market value of the Company's holdings in Cendant and US Trust Corporation. A major reason for the decrease for the nine months ended October 31, 1998 was related to the decrease in the market value of the Company's holdings in Cendant, Glenayre Technologies and VIVUS, Inc. Trading securities at October 31, 1998 consisted of the following: Number of Market Name of Issuer/Title of Issue Shares Value Common Stocks: Cendant Corp. 20,000 $ 228,750 Equity One Inc. 9,500 86,687 Glenayre Technologies, Inc. 40,000 240,000 Panavision Inc. 304 4,845 Raytheon 2,812 157,472 Sun International Hotels 10,100 404,000 US Trust Corporation 25,000 1,592,188 VIVUS 20,000 56,875 --------- Total $ 2,770,817 =========== 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 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. 10 The amortization of goodwill, financing costs, stock options and stock warrants created a total non-cash charge of $976,438 for the nine months ended October 31, 1998 compared to $1,274,963 for the prior year. This reduction was due to the deferred compensation for stock options granted in connection with the ConForms' acquisition being fully amortized as of June 21, 1997. The total amortization of all these non-cash charges for the year ended January 31, 1999 is expected to approximate $1,300,000. The Company recorded tax expense of $686,338 for the nine months ended October 31, 1998, which represented the estimated annual effective rate of 43.6% 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 loss of $122,498, or $.05 per basic and diluted share, for the quarter ended October 31,1998 represented a decrease of $632,714 from net income of $510,216, or $.22 and $.19 per basic and diluted share, respectively, for the comparable period of the prior year. The decrease in net income of $632,714 for the quarter was due largely to the $583,677 net increase of trading securities losses to $894,833 for the quarter ended October 31, 1998 from $311,156 for the same period of the prior year. For the nine months ended October 31, 1998, net income was $889,399, or $.38 and $.31 per basic and diluted share, respectively, compared to net income of $1,045,935, or $.46 and $.39 per basic and diluted share, respectively, in the prior year. The reason for the decrease in net income for the nine month period ended October 31, 1998 was the unfavorable change in trading security performance of $956,552 which more than offset the 17.5% increase in operating earnings of $533,684. Liquidity and Capital Resources The Company generated $1,376,579 in cash from operations during the first nine months of 1998. The Company used $2,141,913 of cash to acquire capital equipment, mostly for the new building addition in Port Washington and the new enterprise resource planning (ERP) system, and received 500,184 in cash from net long-term debt activity. The Company also received $177,500 from the exercise of stock options during May 1998. The result was a net increase in cash and cash equivalents of $125,716 for the first nine months of 1998 compared to a net increase of $196,950 in the prior year's first nine months 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, 1999 are expected to total approximately $2,900,000 compared to $554,923 for fiscal 1997. The significant increase was due principally to the construction of an addition at the Company's Port Washington facility and the implementation of a new ERP system. The Company also intends to sell its Cedarburg facility. The Company's asking price for the facility is $1,350,000, although there can be no assurance as to when or if this facility may be sold. 11 The Company intends to continue to expand its businesses, both internally and through potential acquisitions. 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. Year 2000 Issues The Company is in the process of addressing the Year 2000 problem. The Company is currently engaged in a comprehensive project to implement the new ERP system that will properly recognize the Year 2000 problem. This project involves replacing certain hardware and software maintained by the Company. The Company expects to complete this project in early 1999. If problems arise in early 1999 in implimenting this system, then contingency plans will be developed in the first quarter of 1999. The Company estimates that the total cumulative cost of this project will be approximately $500,000, and will be funded through the Company's operating cash flows or its existing bank line of credit. Purchased ERP system hardware and software, approximately $350,000 of the total estimated cost, will be capitalized in accordance with normal policy. Personnel and all other costs related to the project are currently, and will continue to be, expensed as incurred. The Company has not formally communicated with all its customers and suppliers to determine the extent to which the Company is vulnerable to those third parties' failure to address Year 2000 issues. The Company does not anticipate any materially adverse affect on its business due to Year 2000 problems encountered by its customers or vendors; however, there can be no assurances that it's business will not be materialy adversely affected by such problems. PART II Item 6. Exhibits The Exhibits filed or incorporated by reference herein are as specified in the Exhibit Index. Reports on Form 8-K No reports on Form 8-K were filed by the Company during the quarter to which the report relates. 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: December 7, 1998 /s/ Jay R. Hanamann ----------------------- Jay R. Hanamann (Chief Financial Officer) 13 Edison Control Corporation Exhibit Index Exhibit No. Description 27. Financial Data Schedule. 14 EX-27 2 FDS --
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS OF EDISON CONTROL CORPORATION AS OF AND FOR THE 9 MONTHS ENDED OCTOBER 31, 1998 AND IS QUALIFIED IN ITS ENTIRITY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1 9-MOS JAN-31-1999 JAN-31-1998 OCT-31-1998 1,163,004 2,960,817 4,063,202 345,184 6,907,677 15,677,506 10,030,314 1,485,641 337,410,050 4,149,875 13,822,375 0 0 23,469 15,745,331 33,741,050 20,106,180 20,106,180 12,815,869 3,703,123 2,011,451 54,375 725,883 1,575,737 686,338 889,399 0 0 0 899,399 .38 .31
-----END PRIVACY-ENHANCED MESSAGE-----