-----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, ELkcWaB8CYdic/eoQg6edbwigDoHhU2ftjsX1+Q5RpgMGHObK9aKBuLuHSVoXTe0 bssWA8/MVud7ikSUx/txRQ== 0000825411-97-000005.txt : 19970729 0000825411-97-000005.hdr.sgml : 19970729 ACCESSION NUMBER: 0000825411-97-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970628 FILED AS OF DATE: 19970728 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: TECH OPS SEVCON INC CENTRAL INDEX KEY: 0000825411 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRICAL INDUSTRIAL APPARATUS [3620] IRS NUMBER: 042985631 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09789 FILM NUMBER: 97646518 BUSINESS ADDRESS: STREET 1: ONE BEACON ST CITY: BOSTON STATE: MA ZIP: 02108 BUSINESS PHONE: 6175232030 MAIL ADDRESS: STREET 2: 1 BEACON ST CITY: BOSTON STATE: MA ZIP: 02108 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 28, 1997 ------------- / / 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 1-9789 ------ TECH/OPS SEVCON, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 04-2985631 - ------------------------------- -------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) One Beacon Street, Boston, Massachusetts, 02108 ---------------------------------------------------- (Address of principal executive offices and zip code) (617) 523-2030 --------------------------------------------------- (Registrant's telephone number, including area code:) 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 --- --- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at July 25, 1997 - ----------------------------- ------------------------------- Common stock, par value $.10 3,093,232 1 TECH/OPS SEVCON, INC. PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets ASSETS (in thousands)
June 28, Sept 30, 1997 1996 --------- ------------ (unaudited) (derived from audited statements) Current assets: Cash and cash equivalents $ 2,509 $ 2,886 Accounts receivable, less allowances of $157 at 6/28/97 and $150 at 9/30/96 5,547 5,386 Inventories: Raw materials 1,735 1,706 Work-in-process 1,015 1,060 Finished goods 658 862 ----- ----- 3,408 3,628 ----- ----- Total current assets 11,464 11,900 ----- ------ Property, plant and equipment, at cost 5,996 4,154 Less: Accumulated depreciation and amortization 3,303 2,861 ----- ----- Net property, plant and equipment 2,693 1,293 ----- ----- Cost of purchased businesses in excess of net assets acquired 1,435 1,435 Other assets 5 17 ----- - ------ $15,597 $14,645 ====== ======
The accompanying notes are an integral part of these financial statements. 2 TECH/OPS SEVCON, INC. Consolidated Balance Sheets LIABILITIES AND STOCKHOLDERS' INVESTMENT (in thousands)
June 28, Sept 30, 1997 1996 -------- ------------ (unaudited) (derived from audited statements) Current liabilities: Current portion of long-term debt $ 237 $ - Accounts payable 2,226 1,821 Dividend payable 463 463 Accrued expenses 2,418 2,288 Accrued taxes on income 647 801 ----- ----- Total current liabilities 5,991 5,373 ----- ----- Long-term debt, less current portion 347 - Deferred taxes on income 174 161 ----- ----- Stockholders' investment (Note 2) Preferred stock - - Common stock 310 310 Treasury stock, at cost ( 85) (122) Premium paid in on common stock 3,713 3,716 Retained earnings 5,651 5,787 Cumulative translation adjustment (504) (580) ------ ------ Total stockholders' investment $ 9,085 $ 9,111 ------ ------ $15,597 $14,645 ====== ======
The accompanying notes are an integral part of these financial statements. 3 TECH/OPS SEVCON, INC. Consolidated Statement of Income (Unaudited) (in thousands except per share data)
Three Months Ended Nine Months Ended ------------------ ----------------- June 28 June 30 June 28 June 30 1997 1996 1997 1996 ------- ------ ------- ------ Net sales $ 6,842 $ 7,692 $20,172 $20,971 Costs and expenses: Cost of sales 4,830 4,579 13,193 12,450 Selling, general and administrative 1,661 1,677 4,935 4,753 ----- ----- ------ ------ 6,491 6,256 18,128 17,203 ----- ----- ------ ------ Operating income 351 1,436 2,044 3,768 Other income/(expense), net ( 34) ( 19) ( 64) ( 19) ---- ----- ----- ----- Income before income taxes 317 1,417 1,980 3,749 Income taxes 112 469 689 1,241 --- --- ----- ----- Net income $ 205 $ 948 $1,291 $2,508 === === ===== ===== Net income per share $ .07 $ .30 $ .42 $ .80 === === === === Average common and common equivalent shares outstanding 3,090 3,145 3,090 3,143 ===== ===== ===== ===== Cash dividends per share $ .15 $ .125 $ .45 $ .375 === === === ===
The accompanying notes are an integral part of these financial statements. 4 TECH/OPS SEVCON, INC. Consolidated Statement of Cash Flows (Unaudited)
Nine Months Ended --------------------- Jun 30, Jun 30, (in thousands) 1997 1996 -------- -------- Net cash flow from operating activities: Net income $1,291 $2,508 Adjustments to reconcile net income to net cash from operating activities: Depreciation and amortization 311 241 Deferred tax provision 13 ( 3) Increase (decrease) in cash resulting from changes in operating assets and liabilities: Receivables ( 161) (2,071) Inventories 220 ( 923) Accounts payable 405 520 Accrued compensation and expenses 130 419 Accrued and deferred taxes on income ( 154) 688 Other assets 12 15 ----- --- Net cash generated from operating activities 2,067 1,394 Cash flow used by investing activities: Acquisition of property, plant, and equipment, net (1,659) (188) ----- --- Cash flow used by financing activities: Long-term debt incurred on purchase of building 584 - Exercise of stock options 27 245 Purchase of common stock ( 31) ( 962) Dividends paid (1,390) (1,149) ----- ----- Net cash used by financing activities ( 810) (1,866) Effect of exchange rate changes on cash 25 ( 296) ----- ----- Net (decrease) in cash ( 377) ( 956) Opening balance - cash and cash equivalents 2,886 2,692 ----- ----- Ending balance - cash and cash equivalents $2,509 $1,736 ===== ===== Supplemental disclosure of cash flow information Cash paid for income taxes $ 876 $ 527 --- --- Supplemental disclosure of non-cash financing activity: Dividend declared $ 463 $ 384 === ===
The accompanying notes are an integral part of these financial statements. 5 TECH/OPS SEVCON, INC. Notes to Consolidated Financial Statements - June 28, 1997 (Unaudited) (1) Basis of Presentation In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of only normally recurring accruals) necessary to present fairly the financial position of Tech/Ops Sevcon as of June 28, 1997 and the results of operations and cash flows for the three months and nine months ended June 28, 1997 and June 30, 1996. The accounting policies followed by Tech/Ops Sevcon are set forth in Note 1 to the financial statements in the 1996 Tech/Ops Sevcon, Inc. Annual Report on Form 10-K. The results of operations for the three-month and nine-month periods June 28, 1997 and June 30, 1996 are not necessarily indicative of the results to be expected for the full year. (2) Cash Dividends On June 5, 1997, the Company declared a quarterly dividend of $.15 per share for the third quarter of fiscal 1997, which was paid on July 3, 1997 to stockholders of record on June 20, 1997. The Company has paid regular quarterly cash dividends since the first quarter of fiscal 1990. 6 TECH/OPS SEVCON, INC. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Three months ended June 28 Sales in the third fiscal quarter ended June 28, 1997 were $6,842,000, compared to $7,692,000 in the same quarter of the previous year, a decrease of 11%. Currency fluctuations caused a 2% increase in reported sales. Revenues in the US declined by 23% mainly due to slow conditions in the aerial lift and airport ground support markets. Sales volume in foreign markets decreased slightly. Under the direction of its new Chief Operating Officer, Matt Boyle, the Company has made a thorough review of its commitment to quality, and in the third quarter the company recorded a charge of $600,000, equal to $.13 per share, to reflect the costs of product improvement and changes in the organization. Over 95% of this charge was reflected in cost of sales in the third quarter, with the remainder being charged to operating expense. The $600,000 charge principally involves product modification costs and associated warranty expense. In addition, provision has been made for management changes in the manufacturing and quality control areas. The gross profit percentage was substantially lower than last year (29.4% compared to 40.5%) principally due to the charge to cost of sales of $588,000. Prior to this charge, the gross profit percentage was 38.0%, a 2.5% decrease compared to last year, mainly due to the negative impact of currency fluctuations on margins, adverse sales mix and lower volumes. Gross profit before the charge decreased by $513,000, or 16%. Operating expenses for the quarter were 1% higher than 1996. Income before income taxes was $317,000, compared to $1,417,000 last year, an decrease of $1,100,000, or 78%. Lower sales accounted for one third of this decrease and the $600,000 charge accounted for a further 55%. The remaining 12% decrease was mainly due to currency fluctuations and adverse sales mix. Income taxes were 35% of pre-tax income in 1997 compared to 33% in 1996 mainly due to lower foreign tax credits. Primarily due to lower sales and the $600,000 charge, net income decreased by $743,000, or 78%, to $205,000. Income per share was $.07 compared to $.30 in the third quarter of fiscal 1996. The $600,000 charge resulted in a decrease of $.13 in net income for the quarter. 7 TECH/OPS SEVCON, INC. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) Nine months ended June 28 For the first nine months of fiscal 1997, sales were $20,172,000 compared to $20,971,000 last year, a decrease of $799,000, or 4%. Currency fluctuations caused a 2% increase in reported sales, therefore physical volume was 6% lower than last year. Revenues in the US declined by 18% mainly due to slow conditions in the aerial lift and airport ground support markets, volumes in foreign markets increased by 3%. The gross profit percentage was 6% lower than last year (34.6% compared to 40.6%), and gross profit was $1,542,000 lower than last year. The charge discussed above resulted in a 2.9% decrease in gross profit percentage. Foreign currency fluctuations accounted for 1.8% of the decrease in the gross profit percentage. This was mainly because most of the Company's products are manufactured in the UK and the UK pound has strengthened against the other currencies in which the Company's products are sold. Adverse sales mix also had a negative impact on gross profit. Operating expenses were 4% lower than last year mainly due to reductions in compensation expense. Operating income for the nine month period was $2,044,000, a decrease of 46% compared to the same period last year. The decrease in operating income was mainly due to the $600,000 charge in the third quarter and to lower gross profit. Other expense (net), mainly currency translation losses, was $64,000 compared to $19,000 in 1996. Income before income taxes was $1,980,000 compared to $3,749,000 in the same period last year, a decrease of 47%. Income taxes were 35% of pre-tax income, an increase of 2% compared to last year, mainly due to lower foreign tax credits. Principally as a result of the charge of $600,000 before tax and lower gross profit, net income was $1,291,000, compared to $2,508,000 last year, a decrease of 49%. Income per share was $.42 compared to $.80 last year. Financial Condition The Company has, since January 1990, maintained a program of regular cash dividends, which, for the most recent quarter, amounted to $463,000. Tech/Ops Sevcon's resources, in the opinion of management, are adequate for projected operations and capital spending programs, as well as continuation of the cash dividend. 8 TECH/OPS SEVCON, INC. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits filed with this report. (11) Calculation of Earnings Per Share (27) Financial Data Schedule (EDGAR Filing only) (b) Reports on Form 8-K - There were no reports on Form 8-K during the quarter for which this report is filed. 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. TECH/OPS SEVCON, INC. Date: July 28, 1997 By: /s/ Paul A. McPartlin --------------------- Paul A. McPartlin Chief Financial and Accounting Officer 9 EXHIBIT 11 TECH/OPS SEVCON, INC. Calculation of Earnings Per Share and Weighted Average Shares Outstanding (In thousands, except for per share amounts)
Three Months Ended Nine Months Ended ------------------ ----------------- Jun 28 Jun 30 Jun 28 Jun 30 Primary 1997 1996 1997 1996 ------ ------ ------ ------ Average shares outstanding 3,090 3,145 3,090 3,143 Net income $ 205 $ 948 $1,291 $2,508 Net income per share $ .07 $ .30 $ .42 $ .80
A calculation of fully diluted shares outstanding for the three month and nine months ended June 28, 1997 and June 30, 1996 indicates an immaterial difference. 10 EX-27 2
5 1000 9-MOS SEP-30-1997 JUN-28-1997 2,509 0 5,704 (157) 3,408 11,464 5,996 (3,303) 15,597 5,991 0 0 0 310 8,775 15,597 20,172 20,172 13,193 13,193 4,935 0 0 1,980 (689) 1,291 0 0 0 1,291 .42 .42
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