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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 JUNE 30, 1997 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 June 30, 1997 -- 12,288,605 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 June 30, 1997.
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>
ZERO CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
(UNAUDITED)
For The Three Months Ended
June 30,
1997 1996
<S> <C> <C>
OPERATING ACTIVITIES:
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 8,212,000 $ 8,734,000
INVESTING ACTIVITIES:
EXPENDITURES FOR PROPERTY, PLANT AND EQUIPMENT (2,661,000) (3,679,000)
PURCHASE OF NON-CASH ASSETS OF ACQUIRED BUSINESSES - (1,152,000)
PROCEEDS FROM SALE OF ASSETS - 1,258,000
OTHER 9,000 210,000
NET CASH USED IN INVESTING ACTIVITIES (2,652,000) (3,363,000)
FINANCING ACTIVITIES:
DIVIDENDS PAID (367,000) (363,000)
OTHER (INCLUDING EFFECT OF EXCHANGE RATE CHANGES) 117,000 144,000
NET CASH USED IN FINANCING ACTIVITIES (250,000) (219,000)
NET INCREASE IN CASH AND CASH EQUIVALENTS 5,310,000 5,152,000
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 16,201,000 7,018,000
CASH AND CASH EQUIVALENTS AT END OF PERIOD* $21,511,000 $12,170,000
These Statements of Consolidated Cash Flows for the three months ended
June 30, 1997 and 1996 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.
<F01>
* Cash and Cash Equivalents include investments purchased with
maturities of three months or less. At June 30, 1997, there are no
short-term investments with maturities longer than three months. At June 30,
1996, short-term investments with maturities longer than three months
totaled $965,000.
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Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
The following should be read in conjunction with the financial statements
included or incorporated herein by reference.
Results of Operations
Net sales for the three months ended June 30, 1997 increased 18.1%
when compared to the comparable period in the prior year due primarily to
increased orders within the telecommunications, instrumentation and data
processing markets.
Operating income as a percent of net sales for the three months ended
June 30, 1997 increased to 13.5% from 12.4% for the same period in the prior
year primarily due to a decrease in selling and administrative expenses as a
percent of net sales.
Financial Condition and Liquidity
The Company's working capital increased to $73,341,000 at June 30, 1997
when compared to $70,341,000 at March 31, 1997, primarily due to an increase
in cash and short-term investments of $5,310,000 from March 31, 1997 to
June 30, 1997.
Management believes that cash from operations, together with the ability to
obtain financing, will provide sufficient funds to finance current and
forecasted operations, including potential acquisitions, for the next twelve
month period. The Company will continue to invest its available funds in
liquid, low-risk investments.
ALL FORWARD-LOOKING STATEMENTS ARE NOT FACT. THEY ARE BASED UPON ASSUMPTIONS
INCLUDING THE CONTINUING STRENGTH OF THE MARKETS WE SERVE, STABILITY OF
GENERAL ECONOMIC CONDITIONS, COMPETITOR PRICING, MAINTENANCE OF OUR CURRENT
MOMENTUM AND OTHER FACTORS.
Exhibit Ia - The Company's Statements of Consolidated Income (Unaudited) for
the Three Months Ended June 30, 1997 and 1996.
Exhibit Ib - The Company's Consolidated Balance Sheets (Unaudited) as of
June 30, 1997 and March 31, 1997.
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PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
a. On July 23, 1997, the Company held its Annual Meeting of Stockholders.
Of the 12,257,434 shares eligible to vote at the meeting, 10,102,133
shares were represented in person or by proxy.
b. At the meeting, nominees John B. Gilbert, Wilford D. Godbold, Jr. and
Howard W. Hill were elected to serve as Directors for three year
terms. Gary M. Cusumano, Bruce J. DeBever, Bernard B. Heiler and
Whitney A. McFarlin will continue their terms of office as Directors.
c. Of the 10,102,133 shares represented at the meeting, nominees John B.
Gilbert, Wilford D. Godbold, Jr. and Howard W. Hill received
9,825,417, 9,803,580 and 9,832,734 shares voted in favor,
respectively, and 260,545, 282,382 and 253,228 shares withheld,
respectively, and 16,171 abstentions.
A proposal to amend the 1994 Stock Option Plan increasing the number
of shares available for grant of options by 500,000 received
9,344,813 shares voted in favor, 408,074 shares voted against, and
349,246 abstentions.
The stockholder who submitted a proposal for inclusion in the proxy
statement to declassify the Board of Directors of the Company was
not present at the Annual Meeting of Stockholders to introduce the
proposal. Also, a non-stockholder at the meeting, who claimed to
represent the stockholder, did not hold a valid proxy and was not
eligible to introduce the proposal. No other stockholder, or holder
of proxy, present at the meeting offered to introduce the proposal.
Therefore, the proposal was not introduced and no vote was taken.
Based on the tally of proxy instructions received, the proposal would
not have passed.
Item 6. Exhibits and Reports on Form 8-K.
a. Exhibit - 27. Financial Data Schedule
b. Reports on Form 8-K. Form 8-K reporting execution of an option
agreement for the sale of property dated June 30, 1997.
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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: August 14, 1997 /s/ D. N. KAJIKAMI
D. N. Kajikami, Controller
and Chief Accounting Officer
Date: August 14, 1997 /s/ G. A. DANIELS
G. A. Daniels, Vice President
and Chief Financial Officer
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ZERO CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
June 30,
1997 1996
<S> <C> <C>
NET SALES $64,552,000 $54,664,000
COST OF SALES 42,974,000 35,910,000
SELLING AND ADMINISTRATIVE EXPENSES 12,827,000 11,972,000
OPERATING INCOME 8,751,000 6,782,000
OTHER INCOME 244,000 698,000
INTEREST INCOME 164,000 85,000
INTEREST EXPENSE 1,154,000 1,135,000
INCOME BEFORE INCOME TAXES 8,005,000 6,430,000
INCOME TAXES 3,202,000 2,630,000
NET INCOME $ 4,803,000 $ 3,800,000
PRIMARY EARNINGS PER SHARE $0.38 $0.31
DIVIDENDS DECLARED PER SHARE $0.03 $0.03
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 12,534,000 12,392,000
</TABLE>
These Statements of Consolidated Income for the Three Months Ended
June 30, 1997 and 1996 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.
Exhibit Ia
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ZERO CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
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<CAPTION>
June 30, March 31,
1997 1997
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS
CASH AND SHORT-TERM INVESTMENTS $ 21,511,000 $ 16,201,000
ACCOUNTS RECEIVABLE (LESS ALLOWANCE FOR
DOUBTFUL ACCOUNTS OF $653,000 AND $607,000,
RESPECTIVELY) 37,358,000 35,966,000
INVENTORIES
RAW MATERIALS AND SUPPLIES 21,008,000 21,504,000
WORK IN PROCESS 8,192,000 7,821,000
FINISHED GOODS 5,896,000 5,685,000
OTHER 3,658,000 4,172,000
TOTAL CURRENT ASSETS 97,623,000 91,349,000
PROPERTY, PLANT AND EQUIPMENT 99,607,000 97,241,000
LESS ACCUMULATED DEPRECIATION AND AMORTIZATION (54,291,000) (52,866,000)
NET PROPERTY, PLANT AND EQUIPMENT 45,316,000 44,375,000
GOODWILL 30,324,000 30,602,000
OTHER ASSETS 21,017,000 19,630,000
TOTAL ASSETS $194,280,000 $185,956,000
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
ACCOUNTS PAYABLE $ 9,541,000 $ 8,901,000
ACCRUED WAGES AND COMMISSIONS 6,145,000 6,579,000
ACCRUED INCOME AND OTHER TAXES 1,366,000 675,000
OTHER 7,230,000 4,853,000
TOTAL CURRENT LIABILITIES 24,282,000 21,008,000
OTHER NON-CURRENT LIABILITIES (INCLUDING
DEFERRED COMPENSATION OF $9,866,000 AND
$9,443,000, RESPECTIVELY) 12,705,000 12,192,000
NOTES PAYABLE 51,487,000 51,503,000
STOCKHOLDERS' EQUITY
PREFERRED STOCK $.01 PAR VALUE; NONE ISSUED
COMMON STOCK $.01 PAR VALUE;
ISSUED SHARES, 16,483,526 AND 16,445,332,
RESPECTIVELY;
OUTSTANDING SHARES, 12,288,605 AND
12,250,427, RESPECTIVELY 165,000 164,000
ADDITIONAL PAID-IN-CAPITAL 37,286,000 37,021,000
RETAINED EARNINGS 142,076,000 137,750,000
179,527,000 174,935,000
FOREIGN CURRENCY TRANSLATION ADJUSTMENT 95,000 132,000
TREASURY STOCK (4,194,921 AND 4,194,905 SHARES,
RESPECTIVELY), AT COST (73,816,000) (73,814,000)
TOTAL STOCKHOLDERS' EQUITY 105,806,000 101,253,000
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $194,280,000 $185,956,000
</TABLE>
The Consolidated Balance Sheet as of June 30, 1997 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
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND STATEMENTS OF CONSOLIDATED INCOME AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> JUN-30-1997
<CASH> 21,511
<SECURITIES> 0
<RECEIVABLES> 38,011
<ALLOWANCES> 653
<INVENTORY> 35,096
<CURRENT-ASSETS> 97,623
<PP&E> 99,607
<DEPRECIATION> 54,291
<TOTAL-ASSETS> 194,280
<CURRENT-LIABILITIES> 24,282
<BONDS> 0
<COMMON> 164
0
0
<OTHER-SE> 105,642
<TOTAL-LIABILITY-AND-EQUITY> 194,280
<SALES> 64,552
<TOTAL-REVENUES> 64,960
<CGS> 42,974
<TOTAL-COSTS> 42,974
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,154
<INCOME-PRETAX> 8,005
<INCOME-TAX> 3,202
<INCOME-CONTINUING> 4,803
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,803
<EPS-PRIMARY> 0.38
<EPS-DILUTED> 0.38
</TABLE>
