-----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, Fi8TZ8nKWnxnNYFGpWFYPpa1G2b/7gdXel1feIN7FA4i0shoBvAxwjwzvmPq4INA 0xRq3D7ZDCBgKwAyfOiqdA== /in/edgar/work/20000614/0000950129-00-003073/0000950129-00-003073.txt : 20000919 0000950129-00-003073.hdr.sgml : 20000919 ACCESSION NUMBER: 0000950129-00-003073 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000430 FILED AS OF DATE: 20000614 FILER: COMPANY DATA: COMPANY CONFORMED NAME: POWELL INDUSTRIES INC CENTRAL INDEX KEY: 0000080420 STANDARD INDUSTRIAL CLASSIFICATION: [3613 ] IRS NUMBER: 880106100 STATE OF INCORPORATION: NV FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-12488 FILM NUMBER: 654570 BUSINESS ADDRESS: STREET 1: 8550 MOSLEY DR STREET 2: POST OFFICE BOX 12818 CITY: HOUSTON STATE: TX ZIP: 77075 BUSINESS PHONE: 7139446900 MAIL ADDRESS: STREET 1: 8550 MOSLEY DRIVE P O BOX 12818 STREET 2: 8550 MOSLEY DRIVE P O BOX 12818 CITY: HOUSTON STATE: TX ZIP: 77075 FORMER COMPANY: FORMER CONFORMED NAME: PROCESS SYSTEMS INC DATE OF NAME CHANGE: 19780926 10-Q 1 0001.txt POWELL INDUSTRIES, INC. - DATED APRIL 30, 2000 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON D.C. 20549 FORM 10-Q (Mark one) [X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended April 30, 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 0-6050 POWELL INDUSTRIES, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) NEVADA 88-0106100 - ------------------------------------------------------------------- ------------------------------------ (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 8550 Mosley Drive, Houston, Texas 77075-1180 - ------------------------------------------------------------------- ------------------------------------ (Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (713) 944-6900 Indicate by "X" 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 --- Common Stock, par value $.01 per share; 10,367,000 shares outstanding on April 30, 2000. 2 Powell Industries, Inc. and Subsidiaries Part I - Financial Information Item 1. Condensed Consolidated Financial Statements..................3-9 Item 2. Management's Discussion and Analysis of Financial Condition and Quarterly Results of Operations...................................10-12 Item 3. Quantitative and Qualitative Disclosures About Market Risk..........................................13 Part II - Other Information and Signatures.................................14-16 2 3 POWELL INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT PER SHARE DATA)
APRIL 30, OCTOBER 31, 2000 1999 -------- -------- ASSETS Current Assets: Cash and cash equivalents................................................................... $ 4,686 $ 10,646 Accounts receivable, less allowance for doubtful accounts of $969 and $852, respectively............................................................. 46,087 43,003 Costs and estimated earnings in excess of billings.......................................... 18,615 16,191 Inventories ............................................................................... 16,273 15,173 Deferred income taxes....................................................................... 469 1,028 Prepaid expenses and other current assets................................................... 2,608 1,795 -------- -------- Total Current Assets.................................................................... 88,738 87,836 Property, plant and equipment, net............................................................... 32,583 33,286 Deferred income taxes............................................................................ 1,293 1,316 Other assets ............................................................................... 5,307 5,093 -------- -------- Total Assets............................................................................ $127,921 $127,531 ======== ======== Liabilities and Stockholders' Equity Current Liabilities: Current maturities of long-term debt........................................................ $ 1,429 $ 2,429 Accounts and income taxes payable........................................................... 11,415 9,911 Accrued salaries, bonuses and commissions................................................... 5,494 5,447 Accrued product warranty.................................................................... 1,347 1,335 Other accrued expenses...................................................................... 4,834 4,727 Billings in excess of costs and estimated earnings.......................................... 4,815 4,205 -------- -------- Total Current Liabilities............................................................... 29,334 28,054 Long-term debt, net of current maturities ....................................................... 6,428 7,143 Deferred compensation expense.................................................................... 1,199 1,127 Postretirement benefits liability................................................................ 350 435 -------- -------- Commitments and contingencies Stockholders' Equity: Preferred stock, par value $.01; 5,000 shares authorized; none issued Common stock, par value $.01; 30,000 shares authorized; 10,744 and 10,675 shares issued.................................................................... 107 107 Additional paid-in capital.................................................................. 6,464 6,043 Retained earnings........................................................................... 90,096 87,364 Treasury stock (377 shares at cost)......................................................... (3,424) --- Deferred compensation-ESOP.................................................................. (2,633) (2,742) -------- -------- Total Stockholders' Equity.............................................................. 90,610 90,772 -------- -------- Total Liabilities and Stockholders' Equity.............................................. $127,921 $127,531 ======== ========
The accompanying notes are an integral part of these condensed consolidated financial statements. 3 4 POWELL INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED APRIL 30, 2000 1999 ------- ------- Revenues............................................................................ $56,409 $56,331 Cost of goods sold.................................................................. 46,905 46,093 ------- ------- Gross profit........................................................................ 9,504 10,238 Selling, general and administrative expenses........................................ 7,373 7,497 ------- ------- Earnings before interest and income taxes........................................... 2,131 2,741 Interest expense (income), net...................................................... (14) 137 ------- ------- Earnings before income taxes........................................................ 2,145 2,604 Income tax provision................................................................ 716 784 ------- ------- Net earnings........................................................................ $ 1,429 $ 1,820 ======= ======= Net earnings per common share: Basic............................................................................ $ 0.14 $ 0.17 Diluted.......................................................................... 0.14 0.17 Weighted average number of common shares outstanding................................ 10,447 10,661 ======= ======= Weighted average number of common and common equivalent shares outstanding.......... 10,542 10,720 ======= =======
The accompanying notes are an integral part of these condensed consolidated financial statements. 4 5 POWELL INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE DATA)
SIX MONTHS ENDED APRIL 30, 2000 1999 -------- -------- Revenues............................................................................ $105,900 $110,465 Cost of goods sold.................................................................. 87,354 89,295 -------- -------- Gross profit........................................................................ 18,546 21,170 Selling, general and administrative expenses........................................ 14,500 15,008 -------- -------- Earnings before interest and income taxes........................................... 4,046 6,162 Interest expense (income), net...................................................... (71) 273 -------- -------- Earnings before income taxes........................................................ 4,117 5,889 Income tax provision................................................................ 1,384 1,891 -------- -------- Net earnings........................................................................ $ 2,733 $ 3,998 ======== ======== Net earnings per common share: Basic............................................................................ $ .26 $ .38 Diluted.......................................................................... .26 .37 Weighted average number of common shares outstanding................................ 10,554 10,660 ======== ======== Weighted average number of common and common equivalent shares outstanding.......... 10,648 10,744 ======== ========
The accompanying notes are an integral part of these condensed consolidated financial statements. 5 6 POWELL INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (IN THOUSANDS)
SIX MONTHS ENDED APRIL 30, 2000 1999 ------- ------- Operating Activities: Net earnings ....................................................................... $ 2,733 $ 3,998 Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: Depreciation and amortization................................................... 2,266 2,185 Deferred income tax provision................................................... 582 (51) Postretirement benefits liability............................................... (85) (84) Changes in operating assets and liabilities: Accounts receivable, net................................................... (3,084) (9,215) Costs and estimated earnings in excess of billings......................... (2,424) 2,480 Inventories................................................................ (1,100) (668) Prepaid expenses and other current assets.................................. (516) (905) Other assets............................................................... (304) (463) Accounts payable and income taxes payable or receivable.................... 1,206 1,035 Accrued liabilities........................................................ 166 (2,749) Billings in excess of costs and estimated earnings......................... 610 3,157 Deferred compensation expense.............................................. 180 82 ------- ------- Net cash provided by (used in) operating activities.................... 230 (1,198) Investing Activities: Purchases of property, plant and equipment.......................................... (1,473) (3,743) ------- ------- Net cash used in investing activities........................................... (1,473) (3,743) ------- ------- Financing Activities: Borrowings of long-term debt........................................................ -- 17,500 Repayments of long-term debt........................................................ (1,714) (12,713) Payments to reacquire common stock.................................................. (3,424) -- Exercise of stock options........................................................... 421 31 ------- ------- Net cash provided by (used in) financing activities............................. (4,717) 4,818 ------- ------- Net decrease in cash and cash equivalents................................................ (5,960) (123) Cash and cash equivalents at beginning of period......................................... 10,646 601 ------- ------- Cash and cash equivalents at end of period............................................... $ 4,686 $ 478 ======= ======= Supplemental disclosure of cash flow information (in thousands): Cash paid during the period for: Interest ....................................................................... $ 298 $ 570 ======= ======= Income taxes.................................................................... $ 1,250 -- ======= =======
The accompanying notes are an integral part of these condensed consolidated financial statements. 6 7 Part I Item 1 POWELL INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS A. BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, in the opinion of management, reflect all adjustments which are of a normal recurring nature necessary for a fair presentation of financial position, results of operations, and cash flows. These financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's October 31, 1999 annual report on Form 10-K. In June 1998 the Financial Accounting Standards Board (FASB) issued SFAS No. 133 - "Accounting for Derivative Instruments and Hedging Activities". In June 1999 the FASB issued SFAS No. 137, which amended the effective adoption date of SFAS No. 133. This statement establishes accounting and reporting standards for derivative instruments, including derivative instruments embedded in other contracts, and for hedging activities. The statement, as amended and which is to be applied prospectively, is effective for the Company's quarter ending January 31, 2001. The Company is currently evaluating the impact of SFAS No. 133 on its future results of operations and financial position. On December 3, 1999, the United States Securities and Exchange Commission released Staff Accounting Bulletin (SAB) No. 101, Revenue Recognition, to provide guidance on the recognition, presentation and disclosure of revenue in financial statements. The Company reviewed its revenue recognition procedures and is satisfied that it is in compliance with SAB No. 101. B. INVENTORIES
April 30, October 31, 2000 1999 ------- ------- (Unaudited) The components of inventories are summarized below (in thousands): Raw materials and subassemblies............................................ $10,414 $ 9,058 Work-in-process............................................................ 5,859 6,115 ------- ------- Total inventories.......................................................... $16,273 $15,173 ======= =======
C. PROPERTY, PLANT AND EQUIPMENT
April 30, October 31, 2000 1999 ------ ------- (Unaudited) Property, plant and equipment is summarized below (in thousands): Land....................................................................... $ 3,193 $ 3,193 Buildings and improvements................................................. 28,643 30,638 Machinery and equipment.................................................... 33,371 30,409 Furniture & fixtures....................................................... 3,923 4,464 Construction in process.................................................... 1,337 1,035 ------- ------- 70,467 69,739 Less-accumulated depreciation.............................................. (37,884) (36,453) ------- ------- Total property, plant and equipment, net................................... $32,583 $33,286 ======= =======
7 8 D. PRODUCTION CONTRACTS For contracts for which the percentage-of-completion method is used, costs and estimated earnings in excess of billings are shown as a current asset and billings in excess of costs and estimated earnings are shown as a current liability. The components of these contracts are as follows (in thousands):
April 30, October 31, 2000 1999 ------- ------- (unaudited) Costs and estimated earnings............................................... $95,011 $79,723 Progress billing........................................................... (76,396) (63,532) ------- ------- Total costs and estimated earnings in excess of billings................... $18,615 $16,191 ======= ======= Progress billings.......................................................... $83,126 $89,146 Costs and estimated earnings............................................... (78,311) (84,941) ------- ------- Total billings in excess of costs and estimated earnings................... $ 4,815 $ 4,205 ======= =======
E. EARNINGS PER SHARE The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share data):
Three Months Ended April 30, Six Months Ended April 30, 2000 1999 2000 1999 ------- ------- ------- ------- (unaudited) (unaudited) Numerator: Numerator for basic and diluted earnings per share-earnings from operations available to common stockholders..................... $ 1,429 $ 1,820 $ 2,733 $ 3,998 ======= ======= ======= ======= Denominator: Denominator for basic earnings per share- weighted average shares............................... 10,447 10,661 10,554 10,660 Effect of dilutive securities-Employee stock options... 95 59 94 84 ------- ------- ------- ------- Denominator for diluted earnings per share- adjusted weighted-average shares with assumed conversions.......................................... 10,542 10,720 10,648 10,744 ======= ======= ======= ======= Basic earnings per share................................... $0.14 $0.17 $0.26 $0.38 ===== ===== ===== ===== Diluted earnings per share................................. $0.14 $0.17 $0.26 $0.37 ===== ===== ===== =====
8 9 F. BUSINESS SEGMENTS The Company has three reportable segments: 1. Switchgear and related equipment and service (Switchgear) for distribution, control and management of electrical energy, 2. Bus duct products (Bus Duct) for distribution of electric power, and 3. Process Control Systems, which consists principally of instrumentation, computer control, communications and data management system for the control of dynamic processes. The tables below reflect certain information relating to the Company's operations by segment. Substantially all revenues represent sales to unaffiliated customers. The accounting policies of the segments are the same as those described in the summary of significant accounting policies as discussed in the Company's annual report on Form 10-K for year ended October 31, 1999. For purposes of this presentation, all general corporate expenses have not been allocated between operating segments. In addition, the corporate assets are mainly cash and cash equivalents transferred to the corporate office from the segments. The interest charges and credits to the segments from the corporate office are based on use of funds. The required disclosures for the business segments are set forth below (in thousands):
Three Months Ended April 30, Six Months Ended April 30, 2000 1999 2000 1999 ------- ------- -------- -------- (unaudited) (unaudited) Revenues: Switchgear............................................. $41,313 $40,374 $ 76,698 $ 81,901 Bus Duct............................................... 7,948 7,517 14,775 13,757 Process Control Systems................................ 7,148 8,440 14,427 14,807 ------- ------- ------- -------- Total Revenues............................................ $56,409 $56,331 $105,900 $110,465 ======= ======= ======== ======== Earnings from operations before income taxes: Switchgear............................................. $ 2,026 $ 1,999 $ 2,817 $ 5,051 Bus Duct............................................... 1,529 1,386 2,524 2,474 Process Control Systems................................ (681) 301 (525) 549 Corporate.............................................. (729) (1,082) (699) (2,185) ------- ------- ------- ------- Total earnings from operations before income taxes........ $ 2,145 $ 2,604 $ 4,117 $ 5,889 ======= ======= ======== ========
April 30, October 31, 2000 1999 -------- -------- (unaudited) Assets Switchgear.......................................................... $91,008 $ 85,157 Bus Duct............................................................ 14,297 14,764 Process Control Systems............................................. 11,709 10,997 Corporate........................................................... 10,907 16,613 -------- -------- Total Assets........................................................... $127,921 $127,531 ======== ========
9 10 Part I Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND QUARTERLY RESULTS OF OPERATIONS RESULTS OF OPERATIONS The following table sets forth, as a percentage of revenues, certain items from the Condensed Consolidated Statements of Operations.
April 30, 2000 April 30, 1999 ------------------------- -------------------------- Three Months Six Months Three Months Six Months Ended Ended Ended Ended ------------ ---------- ------------ ---------- Revenues 100.0% 100.0% 100.0% 100.0% Gross profit 16.8 17.5 18.2 19.2 Selling, general and administrative expenses 13.1 13.7 13.3 13.6 Interest expense, net -- -- .2 .2 Earnings from operations before income taxes 3.8 3.9 4.6 5.3 Net earnings 2.5 2.6 3.2 3.6
Revenues for the quarter ended April 30, 2000, were up 0.1 percent to $56,409,000 from $56,331,000 in the second quarter of last year. Revenue increases in both the Switchgear and Bus Duct business segments were offset by a decline in revenues for the Process Control Systems segments. Revenues for the six-months ended April 30, 2000, were down 4.1 percent to $105,900,000 from $110,465,000 for the same six-month period of last year. The decrease in revenues was mainly in the international markets, primarily consisting of sales decreases from the Switchgear business segment, offset, in part, by an increase in the Bus Duct business segment. Gross profit, as a percentage of revenues, was 16.8 percent and 18.2 percent for the quarter ended April 30, 2000 and 1999, respectively. The decrease in the gross profit for the three-month period was due mainly to changes in scope in two major contracts in the Process Control Systems segment. Gross profit, as a percentage of revenues, was 17.5 percent and 19.2 percent for the six-months ended April 30, 2000 and 1999, respectively. The lower percentages in 2000 were mainly due to the decline in volume of the Switchgear business segment and lower prices from the domestic industrial markets and due to changes in scope in two major contracts in the Process Control Systems segment. Selling, general and administrative expenses as a percentage of revenues were 13.1 percent and 13.3 percent for the quarter ended April 30, 2000 and 1999, respectively. Selling, general and administrative expenses as a percentage of revenues were 13.7 percent and 13.6 percent for the six-months ended April 30, 2000 and 1999, respectively. The lower percentage related to the quarter was due to decreases in administrative and legal expenses. Interest expense (income), net The following schedule shows the amounts for interest expense and income:
April 30, 2000 April 30, 1999 Three Months Six Months Three Month Six Months Ended Ended Ended Ended ------------ ---------- ----------- ---------- Expense............................. $ 141 $ 298 $ 216 $ 429 Income.............................. (155) (369) (79) (156) ----- ----- ----- ----- Net................................. $ (14) $ (71) $ 137 $ 273 ===== ===== ===== =====
Sources of interest expense in fiscal year 2000 and 1999 were primarily related to bank notes payable at rates between 5.2% and 7.0%. Sources of interest income were related to notes receivable and short-term investment of available funds at various rates between 5.1% and 7.0%. 10 11 Income tax provision The effective tax rate on earnings was 33.4 percent and 30.1 percent for the quarter ended April 30, 2000 and 1999, respectively. The effective tax rate on earnings was 33.7 percent and 32.2 percent for the six-months ended April 30, 2000 and 1999, respectively. The increases were primarily due to lower estimated foreign sales corporation credits compared to the prior year. Net Earnings were $1,429,000 or $.14 per diluted share for the second quarter of fiscal 2000, a decrease from $1,820,000 or $.17 per diluted share for the same period last year. The decrease was mainly due to lower gross margins in the Process Control Systems business segment. Net Earnings were $2,733,000 or $.26 per diluted share for the first six-months of fiscal 2000, a decrease from $3,998,000 or $.37 per diluted share for the same period last year. The decrease was mainly due to lower gross margins in the Switchgear business segment and the cost of changes in scope in two major contracts in the Process Control System segment. Backlog at April 30, 2000 the backlog was $160,588,000 as compared to $165,273,000 and $156,143,000 at January 31, 2000 and October 31, 2000, respectively, a decrease of $4,685,000 for three months and an increase of $4,445,000 for six months. All business segments experienced decreases during the quarter with the exception of a slight increase in the Bus Duct segment. Backlog by product group at April 30, 2000, January 31, 2000, and October 31, 1999 was as follows (in thousands of dollars):
April January October 2000 2000 1999 -------- -------- -------- Switchgear.......................... $106,559 $108,334 $105,116 Bus Duct............................ 22,661 19,954 17,412 Process Control..................... 31,368 36,985 33,615 -------- -------- -------- Total............................... $160,588 $165,273 $156,143 ======== ======== ========
LIQUIDITY AND CAPITAL RESOURCES In September 1998, the Company amended a revolving line of credit agreement with a major domestic bank. The amendment provided for a $10,000,000 term loan and a revolving line of credit of $20,000,000. In December 1999 the revolving line of credit was amended to reduce the line to $15,000,000 and to extend the maturity date to February 2002. The term of the loan was five years with four years remaining. The effective interest rate, after including an interest rate swap negotiated with the trust company of the same domestic bank, is 5.20 percent per annum plus a .75 to 1.25 percent fee based on financial performance ratios. As of April 30, 2000, the Company had no borrowings outstanding under this revolving line of credit. The Company's ability to satisfy its cash requirements is evaluated by analyzing key measures of liquidity applicable to the Company. The following table is a summary of the measures which are significant to management:
April 30, October 31, 2000 1999 ----------- ----------- Working Capital $59,404,000 $59,782,000 Current Ratio 3.03 to 1 3.13 to1 Long-term Debt to Capitalization .1 to 1 .1 to 1
Management believes that the Company continues to maintain a strong liquidity position. The decrease in working capital at April 30,, 2000, as compared to October 31, 1999, is due mainly to a decrease in cash and cash equivalents. Cash and cash equivalents decreased by $5,960,000 during the six months ended April 30, 2000. The primary use of cash during this period was due to the increases in costs and estimated earnings in excess of billings and inventories. The decrease in net borrowings for the quarter was the result of a quarterly payment on the bank loan. The Company has a stock repurchase plan under which the Company is authorized to spend up to $5,000,000 for purchases of its common stock. Pursuant to this plan, the Company repurchased 377,000 shares of its common stock at an aggregate cost of approximately $3,424,000 at April 30, 2000. Repurchased shares are added to treasury stock and are available for general corporate purposes including issuance under the Company's employee stock option plan. The Company's fiscal 2000 asset management program will continue to focus on the collection of receivables and reduction in inventories. The Company believes it will be able to satisfy its capital requirements and operating needs over the next twelve months primarily with funds available in cash and cash equivalents of $4,686,000 funds generated from operating activities and funds available under its existing revolving credit line. 11 12 The previous discussion should be read in conjunction with the consolidated financial statements. Year 2000 Readiness The Year 2000 readiness issue results from the historical use in computer software programs and operating systems of a two digit number to represent the year. Concerns arose as to whether certain software and hardware would fail to properly function when confronted with dates that contain "00" as a two-digit year. To address the potential risk for disruption of operations, each subsidiary of the Company developed a compliance plan and conducted numerous tests as to the effectiveness of applied solutions. The costs to the Company to achieve Year 2000 readiness were approximately $150,000. To date, the Company has not experienced any material problems relating to the Year 2000 readiness issue. However, the Company may not have yet experienced all factors that might have Year 2000 readiness implications. Any forward looking statements in the preceding paragraphs of this Form 10-Q are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward looking statements involve risks and uncertainty in that actual results may differ materially from those projected in the forward looking statements. These risks and uncertainties include, without limitation, difficulties which could arise in obtaining materials or components in sufficient quantities as needed for the Company's manufacturing and assembly operations, unforeseen political or economic problems in countries to which the Company exports its products in relation to the Company's principal competitors, any significant decrease in the Company's backlog of orders, any material employee relations problems, or any material litigation or claims made against the Company, as well as general market conditions, competition and pricing. 12 13 Part 1 Item 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company's financial instruments include cash and equivalents, accounts receivable, accounts payable, debt obligations and interest rate swaps. The book value of cash and cash equivalents, accounts receivable, the short-term note payable and accounts payable are considered to be representative of fair value because of the short maturity of these instruments. The Company believes that the carrying value of its borrowings under the credit agreement approximate their fair value as they bear interest at rates indexed to the Bank's IBOR. The Company's accounts receivable are not concentrated in one customer or one industry and are not viewed as an unusual credit risk. The Company had recorded an allowance for doubtful accounts of $969,000 at April 30, 2000 and $852,000 at October 31, 1999, respectively. The interest rate swap agreement, which is used by the Company in the management of interest rate exposure, is accounted for on the accrual basis. Income and expense resulting from this agreement is recorded in the same category as interest expense accrued on the related term loan. Amounts to be paid or received under the interest rate swap agreement are recognized as an adjustment to expense in the periods in which they occur. At April 30, 2000 the Company had $7,857,000 in borrowings subject to the interest rate swap at a rate of 5.20% through September 30, 2003. The 5.20% rate is currently approximately 1.17% below market and should represent approximately $84,000 of reduced interest expense for fiscal year 2000 assuming the current market interest rates do not change. The approximate fair value of the swap agreement at April 30, 2000 is $341,000. The fair value is the estimated amount the Company would receive to terminate the contract. The agreement requires that the Company pay the counterparty at the above fixed swap rate and requires the counterparty to pay the Company interest at the 90 day LIBOR rate. The closing 90 day LIBOR rate on April 30, 2000 was 6.37%. 13 14 Part II OTHER INFORMATION ITEM 1. Legal Proceedings The Company is a party to disputes arising in the ordinary course of business. Management does not believe that the ultimate outcome of these disputes will materially affect the financial position of results of operations of the Company. ITEM 2. Changes in Securities and Use of Proceeds None ITEM 3. Defaults Upon Senior Securities Not applicable ITEM 4. Submission of Matters to a Vote of Security Holders At the annual meeting of stockholders of the Company held on March 17, 2000, Stephen W. Seale, Jr. and Robert C. Tranchon were elected as directors of the Company with terms ending in 2003. The directors continuing in office after the meeting are Bonnie L. Powell, Thomas W. Powell, J. F. Ahart, Eugene L. Butler, Lawrence R. Tanner and Joseph L. Becherer. As to each nominee for director, the number of votes cast for or withheld, as well as the number of abstentions and broker non-votes, were as follows:
Nominee Votes Cast for Votes Cast Against Votes Withheld Abstentions Non-Votes ------- -------------- ------------------ -------------- ----------- --------- Stephen W. Seale, Jr. 8,679,486 23,886 45,558 -- 1,944,700 Robert C. Tranchon 8,679,486 23,886 46,088 -- 1,944,170
At the annual meeting, the stockholders also approved and ratified the actions of the directors and officers of the Company during fiscal 1999 as the acts of the Company. The number of votes cast for, against, or withheld, as well as the number of abstentions and broker non-votes, with respect to such matter was as follows:
Votes Cast For Votes Cast Against Abstentions Non-Votes -------------- ------------------ ----------- --------- 8,749,460 -- -- 1,944,170
ITEM 5. Other Information None ITEM 6. Exhibits and Reports on Form 8-K a. Exhibits 27.0 Financial Data Schedule b. Reports on Form 8-K None 14 15 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. POWELL INDUSTRIES, INC. Registrant June 14, 2000 - ------------- ----------------------------------------- Date Thomas W. Powell President and Chief Executive Officer (Principal Executive Officer) June 14, 2000 - ------------- ----------------------------------------- Date J.F. Ahart Vice President, Secretary-Treasurer Chief Financial Officer (Principal Financial and Accounting Officer) 15 16 EXHIBIT INDEX Exhibit Number Description ------- ----------- 27 Financial Data Schedule EX-27 2 0002.txt FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the Company's unaudited condensed consolidated financial statements for the quarter ended April 30, 2000 and is qualified in its entirety by reference to such financial statements. 1,000 3-MOS OCT-31-2000 APR-30-2000 4,686 0 47,056 969 16,273 88,738 70,467 37,884 127,921 29,334 6,428 107 0 0 90,503 127,921 56,409 56,409 46,905 46,905 7,373 0 (14) 2,145 716 1,429 0 0 0 1,429 0.14 0.14
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