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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 SEPTEMBER 30, 1994 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: 1-5260
Z E R O C o r p o r a t i o n
(Exact name of registrant as set forth in its charter)
Delaware 95-1718077
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
444 South Flower Street, Suite #2100, Los Angeles, CA 90071-2922
(Address of principal executive offices) (Zip Code)
(213)629-7000
(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 [ ]
Common stock outstanding as of October 31, 1994 -- 15,941,916 shares.
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PART I - FINANCIAL INFORMATION
Corporation for which information is given:
This report is filed for ZERO Corporation and its subsidiaries (hereafter
"Registrant" or "Company") for the quarterly period ended September 30, 1994.
Item 1. Financial Statements.
a. The Statements of Consolidated Income required by Rule 10-01
of Regulation S-X are herewith filed as Exhibit Ia and are
incorporated herein by reference.
The Consolidated Balance Sheets required by Rule 10-01 of
Regulation S-X are herewith filed as Exhibit Ib and are
incorporated herein by reference.
The Statements of Consolidated Cash Flows required by Rule 10-01
of Regulation S-X are as follows:
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<CAPTION>
For The Six Months Ended
September 30,
1994 1993
<S> <C> <C>
OPERATING ACTIVITIES:
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 9,682,000 $ 4,243,000
INVESTING ACTIVITIES:
INCREASE IN SHORT-TERM INVESTMENTS (5,073,000) (1,954,000)
EXPENDITURES FOR PROPERTY, PLANT AND EQUIPMENT (1,945,000) (1,971,000)
OTHER 9,000 (1,954,000)
NET CASH REQUIRED BY INVESTING ACTIVITIES (7,009,000) (5,879,000)
FINANCING ACTIVITIES:
DIVIDENDS PAID (3,184,000) (3,160,000)
NET PAYMENTS ON LONG-TERM DEBT --- (197,000)
OTHER (INCLUDING EFFECT OF EXCHANGE RATE CHANGES) 520,000 323,000
NET CASH REQUIRED BY FINANCING ACTIVITIES (2,664,000) (3,034,000)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENT 9,000 (4,670,000)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 14,843,000 9,546,000
CASH AND CASH EQUIVALENTS AT END OF PERIOD * $14,852,000 $ 4,876,000
These Statements of Consolidated Cash Flows for the six months ended
September 30, 1994 and 1993 are unaudited but, in the opinion of
management, reflect all adjustments (consisting of normal recurring
adjustments) necessary to present fairly the results for the periods.
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* Cash and Cash Equivalents include liquid investments purchased with
maturities of three months or less. At September 30, 1994 and 1993
short-term investments with maturities longer than three months
totaled $23,598,000 and $22,819,000, respectively.
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Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operation.
The following should be read in conjunction with the financial statements
included or incorporated herein by reference.
Results of Operation
Net sales for the three and six months ended September 30, 1994 increased 5%
and 6%, respectively, when compared to the prior year periods due primarily to
increased orders within the communication/instrumentation and data processing/
peripherals markets partially offset by weakness in the government/military
and airline/air cargo markets.
Cost of sales, as a percent of net sales, decreased in the three and six months
ended September 30, 1994 when compared to the same periods in the prior year
primarily as a result of higher sales, product mix and cost containment efforts.
Selling and administrative expenses increased in amount and as a percent of
net sales in fiscal 1995 when compared to fiscal 1994 as a result of higher
volumes and expenditures related to environmental matters and a facility
reorganization.
Financial Condition
Net cash provided by operating activities for the six months ended
September 30, 1994 increased $5,439,000 when compared to the prior year.
The increase was primarily attributable to increased net income and higher
levels of accounts payable and accrued liabilities, including long-term
liabilities for deferred compensation benefits.
The Company's working capital increased to $71,779,000 from $66,980,000 at
March 31, 1994. Management believes that cash from operations, together with
the Company's short-term investments and ability to obtain financing, will
provide sufficient funds to finance current and forecasted operations,
including potential acquisitions. The Company will continue to invest its
available funds in liquid, low-risk investments.
Exhibit Ia - The Company's Statements of Consolidated Income for the
Three and Six Months Ended September 30, 1994 and 1993.
Exhibit Ib - The Company's Consolidated Balance Sheets as of
September 30, 1994 and March 31, 1994.
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PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
a. Exhibits - None.
b. Reports on Form 8-K - None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ZERO Corporation
Date: November 14, 1994
/s/ G. A. DANIELS
G. A. Daniels, Vice President
and Chief Financial Officer
/s/ E. A. SAND
E. A. Sand, Controller
and Chief Accounting Officer
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ZERO CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
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<CAPTION>
Three Months Ended Six Months Ended
September 30, September 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C> <C> <C> <C>
NET SALES $46,583,000 $44,406,000 $90,299,000 $85,165,000
INTEREST INCOME 392,000 199,000 760,000 480,000
OTHER INCOME 385,000 404,000 673,000 643,000
TOTAL 47,360,000 45,009,000 91,732,000 86,288,000
COST AND EXPENSES:
COST OF SALES 29,631,000 29,026,000 57,724,000 55,344,000
SELLING AND ADMIN. EXP. 9,848,000 8,973,000 19,415,000 17,796,000
DEPRECIATION 1,153,000 1,123,000 2,330,000 2,238,000
INTEREST EXPENSE 141,000 107,000 306,000 238,000
TOTAL 40,773,000 39,229,000 79,775,000 75,616,000
INCOME BEFORE TAXES 6,587,000 5,780,000 11,957,000 10,672,000
INCOME TAXES 2,559,000 2,334,000 4,651,000 4,220,000
NET INCOME $ 4,028,000 $ 3,446,000 $ 7,306,000 6,452,000
PRIMARY EARNINGS PER SHARE $0.25 $0.22 $0.46 $0.41
DIVIDENDS DECLARED PER SHARE $0.10 $0.10 $0.20 $0.20
AVERAGE NUMBER OF SHARES
OUTSTANDING 15,982,000 15,898,000 15,976,000 15,893,000
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These Statements of Consolidated Income for the Three and Six Months
Ended September 30, 1994 and 1993 are unaudited but, in the opinion of
management, reflect all adjustments (consisting of normal recurring
adjustments) necessary to present fairly the results for the periods.
The Company adopted a new statement on Accounting for Income Taxes effective
April 1, 1993 and elected not to restate prior years. The cumulative effect
of this accounting change was not material.
Exhibit Ia
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ZERO CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
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<CAPTION>
September 30, March 31,
1994 1994
<S> <C> <C>
ASSETS
CURRENT ASSETS
CASH AND SHORT-TERM INVESTMENTS $ 38,450,000 $ 33,368,000
ACCOUNTS RECEIVABLE (LESS ALLOWANCE FOR
DOUBTFUL ACCOUNTS OF $840,000 AND $829,000,
RESPECTIVELY) 24,871,000 24,487,000
INVENTORIES
RAW MATERIALS AND SUPPLIES 13,093,000 12,000,000
WORK IN PROCESS 6,267,000 6,589,000
FINISHED GOODS 3,164,000 3,253,000
OTHER 4,080,000 4,216,000
TOTAL CURRENT ASSETS 89,925,000 83,913,000
PROPERTY, PLANT AND EQUIPMENT 76,003,000 73,666,000
LESS ACCUMULATED DEPRECIATION AND AMORTIZATION (46,401,000) (43,803,000)
NET PROPERTY, PLANT AND EQUIPMENT 29,602,000 29,863,000
GOODWILL 30,185,000 30,649,000
OTHER ASSETS 15,584,000 14,309,000
TOTAL ASSETS $165,296,000 $158,734,000
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
ACCOUNTS PAYABLE $ 6,637,000 $ 6,039,000
ACCRUED WAGES AND COMMISSIONS 5,034,000 5,375,000
ACCRUED INCOME AND OTHER TAXES 1,381,000 852,000
OTHER 5,094,000 4,667,000
TOTAL CURRENT LIABILITIES 18,146,000 16,933,000
OTHER NON-CURRENT LIABILITIES (PRIMARILY
DEFERRED COMPENSATION) 6,112,000 5,324,000
STOCKHOLDERS' EQUITY
PREFERRED STOCK $.01 PAR VALUE; NONE ISSUED
COMMON STOCK $.01 PAR VALUE 161,000 161,000
ADDITIONAL PAID-IN-CAPITAL 30,831,000 30,605,000
RETAINED EARNINGS 111,576,000 107,509,000
142,568,000 138,275,000
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS 144,000 (124,000)
TREASURY STOCK (162,390 SHARES), AT COST (1,674,000) (1,674,000)
TOTAL STOCKHOLDERS' EQUITY 141,038,000 136,477,000
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $165,296,000 $158,734,000
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The Consolidated Balance Sheet as of September 30, 1994 is unaudited but, in
the opinion of management, reflects all adjustments (consisting of normal
recurring adjustments) necessary to present fairly the Company's financial
position.
Exhibit Ib
