SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended October 28, 1995
Commission File Number 2-37706
Bowles Fluidics Corporation
(exact name of registrant as specified in its charter)
Maryland 52-0741762
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6625 Dobbin Road, Columbia, Maryland 21045
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (410) 381-0400
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
None
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 and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
The aggregate market value of the registrant's voting stock
held by non-affiliate persons and entities as of December 31,
1995, computed by reference to the closing price for such
stock on the composite reporting system on such date, was
$1,438,791 based on 2,557,850 shares.
The number of shares of the registrant's common stock
outstanding as of December 31, 1995, was 12,610,011.
<PAGE>
PART I
Item 1. BUSINESS
Bowles Fluidics Corporation was incorporated under
Maryland law in 1961 (originally as Bowles Engineering
Corporation) for the purpose of advancing and exploiting the
technology of fluidics. For about ten years the principal
business of the Company was research and development
primarily under contracts to agencies of the U.S.
Government. From 1972 to 1979 its principal income was
derived from the sale of consumer products it had developed
based upon fluid oscillators, including massaging showers
and oral irrigation devices. These consumer products have
since been discontinued. Since 1979 its principal product
has been windshield and rear window washer nozzles for the
automotive industry. Since late in FY 1989, the Company has
extended the automotive product line to include shipments of
fluidic defroster nozzles. The Company also provides its
automotive customers with tooling and application engi-
neering services related to its products.
The Company continues to pursue its purpose of advancing
the technology of fluidics (see Research and Development
below). Such efforts are directed toward the development of
products for which, in the opinion of management,
substantial markets exist.
Principal Products and Markets
The Company is the leading designer, manufacturer and
supplier of windshield and rear window washer nozzles for
passenger cars and light trucks in North America. Defroster
nozzles for a limited number of these same light vehicles
are also being manufactured and sold.
The Company's market for its fluidic nozzles, both wind
shield washer and defroster, consists of the "Big Three"
U.S. automotive manufacturers and foreign transplants. The
Company believes that it supplies about 75% of the total
windshield washer nozzle requirements for light vehicles
(cars and light trucks) manufactured in the United States,
Canada and Mexico. The defroster nozzle is currently being
supplied to six car lines in this market.
Over 90% of the Company's production of nozzles is
incorporated in vehicles produced by General Motors, Ford
and Chrysler, each of whom typically represents over 10% of
the Company's sales volume. The Company is, therefore,
dependent upon the requirements of the U.S. industry
producing cars and light trucks. Although the Company
enters into agreements with its customers to meet 100% of
their production requirements, notice of firm shipping
requirements for the coming week generally takes place
weekly from the assembly plants and at somewhat longer
intervals from the first-tier suppliers.
The Company's fiscal year, beginning in November and
ending in the following October, follows closely the length
and timing of the model
(2)
<PAGE>
year for automobiles. The Company's sales follow the seasonal
pattern dictated by the model year of its customers.
Sales also include technical services, primarily tooling
and prototyping services, all related to the production of
fluidic nozzles for automotive customers. The requirements
of the customers are for designs and tools to meet the needs
of forthcoming car models or changes in existing models, as
well as for prototypes of new products desired for testing.
These sales are, for the most part, undertaken as a service
to the customers, and the Company contracts these services
and tools so as to recover projected direct costs.
Patents and Competitive Products
The Company has engaged, since its inception, in research
and development in the fields of fluidics and fluid effect
devices, encompassing both gases and liquids. Over the past
18 years, 44 U.S. patents have been granted to the Company's
employees and assigned to the Company. Three applications
are presently in process for U.S. patents. Foreign patents
have also been granted, in countries in which the Company
has an interest, for most of the art covered by the U.S.
patents. Although these patents embody new and novel
technology or product, there is available competitive
technology and alternative product. The extent to which the
expiration of an individual patent may affect the Company's
competitive position is difficult to determine.
In the past, U.S. patents were granted for a period of 17
years from the date of issue. However, beginning in June
1995, those granted in the past can be for a period of
either 17 years from date of issue or 20 years from date of
filing the application, whichever expiration date is later.
Those granted on applications filed after June 1995 are for
a period of 20 years from date of filing.
The Company's fluidic windshield washer and defroster
nozzles, which are covered by issued U.S. and foreign
patents, are in direct competition with conventional nozzles
of traditional design. The Company believes that its
products have advantages both in performance and in economy
of assembly to the vehicle by the car manufacturers.
The Company is of the opinion that, in the long run, a
history of service, delivery, quality and economic supply is
the most important factor in binding its customers to it.
Customers of the Company place a great deal of emphasis on
quality. The Company has maintained Ford's preferred
supplier rating (Q1 award) since 1985, has been rated an
excellent status in a supplier assessment by General Motors,
has been a self-certified supplier for Chrysler since
1991, and has achieved a Quality Excellence Award from
Chrysler with a 98% rating in 1995. The Company's material
testing laboratory has been accredited by General Motors
since 1992. In addition, the Company's customers have
mandated that the Company put into place a QS-9000 compliant
quality system to be assessed and, if qualified, registered
by an independent organization. Chrysler requires
registration by July 1997 and General Motors by
(3)
<PAGE>
December 1997. The Company's present plans call for independent
assessment of the Company's system during August 1996.
The Company does not grant North American licenses for
its own patents in which it has an interest in marketing a
product. The Company does pursue interests expressed by
others in the Company's technology in an attempt to broaden
its use. To the extent that there may be additional uses in
markets not related to those of primary interest to the
Company, efforts are made to license the patents for such
use.
Foreign Affiliates and Licensing
The Company has no foreign affiliates. The Company has
licensing agreements with foreign companies with respect to
certain of its foreign patents. Income from such agreements
was $21,770 in FY 1995, down from $26,949 in FY 1994.
Raw Material Sources and Availability
Raw materials, primarily plastic resin, are sourced
within the United States. Although the market tightened
during the first six months of this past year, it softened
later in the year and adequate supply is expected to be
available in the coming year. The resins purchased are
restricted to those approved by our customers.
Working Capital Requirements
The Company's standard credit terms for receivables is
net 30 days. Adequate levels of inventories are normally
maintained in order to ensure compliance with the responsive
delivery requirements of our customers.
The design and acquisition of production tools, which
represent the major portion of technical services sales,
normally take several months to complete, during which
period the Company has to advance progress funding which is
included in work-in-process inventories. Billings for these
tools and services are rendered only after completion and
customers' acceptance of qualified products produced by the
tools.
Research and Development
The Company's research and development costs, all
Company-funded, were:
FY 1995 $636,970
FY 1994 $842,332
FY 1993 $898,887
(4)
<PAGE>
In FY 1993, 1994, and 1995, the Company's research and
development efforts were primarily directed toward the
improvement of the characteristics of natural gas and
propane burners utilizing fluidic devices. The applications
are primarily for residential water heaters, furnaces, and
barbecue grills. Continuing development of these
applications will be dependent upon the Company's ability to
overcome both marketing and technical problems. During
these years, efforts were also directed toward various
product development, product improvement, and process
improvement projects related to the automotive industry.
In addition, in FY 1994 significant efforts were made
toward the application of fluidic technology to fuel
metering in small engines. A prototype has been developed
to test its feasibility, but additional engineering work
still needs to be carried out.
Potential sales of products still in the development
stage cannot be predicted until ready for market.
Employees
The Company averaged approximately 194 employees during
FY 1995 and employed 223 people on a full-time basis on
October 28, 1995. The increase from the 180 employed on
October 29, 1994, was primarily in the manufacturing
departments in response to the labor intensive activities
associated with the new higher value products with painted
caps, hoses, pads, etc., as well as higher volume of
deliveries.
Compliance with Environmental Regulations
The Company believes it is in compliance with all known
environmental regulations and has no plans for significant
expenditures to meet these requirements in the future.
Item 2. PROPERTIES
During 1984, the Company entered into a ten-year lease on
a major portion of a new building in Columbia, Maryland, for
62,600 sq. ft. of space. In September 1993, the Company
entered into an amendment to the original lease agreement at
reduced rental rates per square foot and provided for the
Company's occupancy of the premises until April 16, 2004.
The Company added in September 1993 14,226 sq. ft. and in
February 1994 12,000 sq. ft. to the original space leased.
The Company is now the sole occupant of the premises. In an
added agreement to the lease, the landlord agreed to make
certain improvements to the premises financed by a
supplement to the rent. The lease amendment further pro-
vides an option to continue the lease for an additional ten
years and to purchase the premises at 94% of fair market
value at the first termination of the lease.
(5)
<PAGE>
The facility, which now totals 88,826 sq. ft., provides
for the Company's needs for manufacturing windshield washer
and defroster nozzles at levels adequate to meet near-term
projected customer needs. In addition to the capacity for
supporting more manufacturing equipment, the enlarged
premises allow for larger engineering facilities.
The facilities are utilized as follows:
Manufacturing, Materials, Quality Control 64,826 sq. ft.
Administration and Sales 13,000 sq. ft.
Laboratories and Engineering 11,000 sq. ft.
Total Area 88,826 sq. ft.
Additional capacity was added to the plastic injection
molding department during FY 1995.
In its production operations, the Company utilizes tools
purchased for the account of its customers and used for
their unique requirements. The Company has also designed
and built for its own account specialized assembly and test
equipment to meet quality assurance and economic performance
requirements.
Item 3. LEGAL PROCEEDINGS
During FY 1994, the Company discovered in the market a
windshield washer nozzle which infringed upon its windshield
washer patents. As a result, the Company filed a suit for
patent infringement in the United States District Court for
the District of Maryland. Under the settlement agreement in
June 1995, the parties involved agreed not to infringe the
Company's patents and not to purchase or sell windshield
washer nozzles unless obtained from a source authorized by
the Company.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
Item 5.
5a. STOCK PRICE AND MARKETS
The Common Stock of the Company is traded in the "over-
the-counter" market, while the Preferred Stock is
unregistered and is not publicly traded.
The high and low bid and asked prices of the Common Stock
over the last two fiscal years are listed below:
(6)
<PAGE>
Bid Asked
FY High Low High Low
1995 1st Quarter 3/8 1/4 7/8 3/4
2nd Quarter 7/8 1/4 1-3/8 3/4
3rd Quarter 3/4 1/2 1-3/8 1
4th Quarter 3/4 1/2 1-3/8 1
1994 1st Quarter 1/2 1/4 1-1/8 7/8
2nd Quarter 3/8 3/8 7/8 7/8
3rd Quarter 3/8 3/8 7/8 7/8
4th Quarter 3/8 1/4 7/8 3/4
Note: The above quotes represent prices between dealers
and do not include retail mark-up, mark-down or
commissions. They do not represent actual transactions.
5b. APPROXIMATE NUMBER OF EQUITY SECURITY HOLDERS
Approximate Number of
Record Holders
Title of Class (as of October 28, 1995)
Common Stock
$.10 Par Value 442
Preferred Stock
8% Cumulative 34
Included in the number of stockholders of record are
shares held in "Nominee" or "Street" name.
5c. DIVIDENDS
The Company has never paid cash dividends on its Common
Stock. Payment of dividends on Common Stock is within the
discretion of the Company's Board of Directors and will
depend, among other factors, on earnings, capital
requirements and the operating financial condition of the
Company.
For information concerning dividends on Preferred Stock,
see Note 5 of Notes to Consolidated Financial Statements.
(7)
<PAGE>
Item 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
For the Years Ended
October 28, October 29, October 30, October 31, October 26,
1995 1994 1993 1992 1991(1)
<S> <C> <C> <C> <C> <C>
Net Sales $16,972,876 $15,111,829 $12,299,037 $9,996,970 $8,503,475
Net Income (loss) 1,783,875 1,727,020 1,076,040 1,040,637 (1,126,109)
Primary earnings (loss)
per share .13 .13 .08 .08 (.09)
Fully diluted earnings
(loss) per share .11 .11 .07 .08 (.09)
Working capital 4,296,368 3,126,959 1,791,192 1,315,788 705,657
Total assets 9,292,446 8,478,227 6,231,132 4,880,510 4,425,445
Long-term debt 202,811 512,831 584,612 1,028,293 1,475,423
Stockholders' equity $ 6,629,891 $ 4,907,664 $ 3,246,590 $2,242,198 $1,046,201
</TABLE>
(1) In December 1991, the Company settled a lawsuit against the Company. The
fiscal 1991 net loss includes $1,854,138 of charges related to this
litigation. However, the fiscal 1991 amounts do not include the proceeds
from the issuance of $250,000 of the Company's preferred stock on December
30, 1991.
(8)
<PAGE>
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Results of Operations
FY 1995 vs FY 1994
Total sales in FY 1995 improved 12% over FY 1994,
reaching another new record for the Company of $16,972,876
compared with $15,111,829 in FY 1994. Income before taxes
increased 22% from FY 1994 to FY 1995. Net income in FY
1995 improved 3% to $1,783,875 from $1,727,020 for FY 1994.
Net income increased at a lower rate than income before
taxes as the result of the higher effective income tax rate
at 39% in FY 1995 as compared with 28% in FY 1994.
Sales of component products rose 19% to $15,960,301 in FY
1995 from $13,365,761 in FY 1994. As a result of the
addition and enhancement of windshield washer products and
new defroster nozzle products, the Company's increase in
shipments of component products was greater than the zero
growth in total North American vehicle production experi-
enced by our customers during the fiscal year 1995. The
gross profit on sales of component products declined to 43%
in FY 1995 from 47% in FY 1994 as engineering activities
related to customizing new washer nozzle products expanded
and various manufacturing expenses increased.
Technical services sales in FY 1995 decreased 42% to
$1,012,575 from FY 1994's $1,746,068. The shipments of
tools for future automotive products declined in FY 1995,
reflecting the culmination of fewer tooling programs for new
windshield washer and defroster nozzles. In addition, the
FY 1994 sales included $250,000 of revenue from a specific
application engineering customer contract. The loss in this
segment of the business at the gross profit level increased
to $704,656 from the prior year's loss of $372,000. This
deterioration occurred primarily as a result of the lack of
last year's $250,000 of revenue referred to above, costs of
which were incurred in prior years. Also, higher costs were
incurred in FY 1995 from extra tool work necessary to
achieve operational capability as well as additional time
required for customer approval of the tools for use in parts
production.
Selling, general and administrative expenses remained the
same as the prior year and as a percentage of sales were
15.4% in FY 1995 versus 17.2% in FY 1994. Sales and
marketing expenses rose due to higher commissions as a
result of the increase in component sales. However, general
and administrative expenses were lower than last year as a
result of decreases in U.S. and foreign patent costs.
The Company in FY 1995 continued to invest in research
and development projects, although the dollar amount was 24%
less than FY 1994. Emphasis was placed on applying fluidic
technology to natural gas burner nozzles as well as various
other improvements to the Company's present products and
manufacturing systems.
(9)
<PAGE>
Interest expense was lower in FY 1995 as a result of
lower debt levels. Other income was higher due to an
increase in interest income from larger investments of
available cash and higher interest rates.
In FY 1995, the provision for income taxes was
$1,148,902, resulting in an effective tax rate of 39%,
approximately the statutory rate. In FY 1994, after the re-
maining available research and development and investment
tax credit carryovers from prior years were utilized, the
Company's effective tax rate was 28%. (See Note 6 of the
Notes to the Consolidated Financial Statements.)
FY 1994 vs FY 1993
Total sales in FY 1994 improved 23% over FY 1993,
reaching a new record for the Company of $15,111,829
compared with $12,299,037 in FY 1993. Income before taxes
increased 86% from FY 1993 to FY 1994. Net income in FY
1994 improved 60% to $1,727,020 from $1,076,040 for FY 1993.
Net income increased at a lower percentage than income
before taxes from the impact of the higher effective income
tax rate of 28% in FY 1994 versus 17% in FY 1993.
Sales of component products rose 19% to $13,365,761 in FY
1994 from $11,213,431 in FY 1993. As a result of the
addition of new products, in particular defroster nozzles,
the Company's increase in shipments of component products
was greater than the 10% increase in total North American
vehicle production experienced by our customers. The gross
profit on sales of component products, which had improved
from 41% of sales in FY 1992 to 44% in FY 1993, improved
further to 47% in FY 1994 as manufacturing capacity was
again added and capacity utilization continued at a high
rate with three shifts running in the plastic injection
molding department most of the year to meet increasing
customer requirements.
Technical services sales in FY 1994 rose to $1,746,068
from FY 1993's $1,085,606. The FY 1994 sales included
$250,000 of revenue from a specific application engineering
customer contract and increased also from a substantial gain
in the shipments of tools for future automotive products.
The loss in this segment of the business at the gross profit
level increased to $372,000 from the prior year's loss of
$308,000. This deterioration occurred as a result of the
higher costs incurred in FY 1994 from significant extra tool
work necessary to achieve operational capability as well as
additional time required for customer approval of the tools
for use in parts production. The $250,000 of revenue
referred to above, costs of which were incurred in prior
years, had the impact of reducing the FY 1994 technical
services loss.
Selling, general and administrative expenses increased
14.3% from the prior year and as a percentage of sales were
17.2% versus 18.5% in FY 1993. Sales and marketing expenses
rose due to higher commissions as a result of the increase
in component sales and due to the costs of marketing efforts
related to new products. General and administrative
(10)
<PAGE>
expenses were higher than last year as a result of increases
in personnel and patent costs which were not fully offset by
a reduction in costs of retirement programs adopted for
certain former officers.
The Company in FY 1994 continued to invest in research
and development projects, although the dollar amount was 6%
less than FY 1993. Emphasis was placed on applying fluidic
technology to natural gas burner nozzles and fuel metering
as well as various other substantial improvements to the
Company's present products and manufacturing systems.
In FY 1994, the provision for income taxes was $679,506
after the remaining available research and development and
investment tax credit carryovers from prior years were
utilized, resulting in an effective tax rate of 28%. In FY
1993, after the remaining net operating loss carryforwards
and similar available tax credits were utilized, the
Company's effective tax rate was 17%. (See Note 6 of the
Notes to the Consolidated Financial Statements.)
Liquidity and Capital Resources
Current assets at 1995 fiscal year end were $6,324,208
compared with $5,814,936 at the 1994 fiscal year end.
Liquidity of these assets improved as cash and cash
equivalents, short-term investments, and receivables rose to
$4,117,888 from $3,958,922.
Accounts receivable increased 44% over the prior year-end
balance as a result of the timing of cash receipts from a
major customer. Inventories rose 12% to meet projected
requirements for sales of components. The tooling work in
process decreased compared to the prior year, as there were
fewer tools being built for future products.
Current liabilities declined 25%, reflecting the payment
of the prior and current years' income tax accruals and the
remaining balances of certain notes payable.
The current ratio of 3.12:1 at 1995 fiscal year end
compares favorably with the 2.16:1 at 1994 fiscal year end
and the 1.86:1 at 1993 fiscal year end.
Cash provided by operating activities in the amount of
$851,210 in FY 1995 resulted principally from net income of
$1,783,875, plus non-cash charges for depreciation and
amortization of $661,024, less investments in operating
capital of $1,540,797. Accounts receivable and inventories
increased in support of higher sales and production activi
ties, and the prior and current years' income tax accruals
were paid.
Funds were used for capital expenditures in the amount of
$962,597 principally for a new information system, other
computer equipment, and additional production capacity. The
Company purchased $1,143,566 of U.S. Treasury bills and sold
$962,985 of such bills.
(11)
<PAGE>
The principal payment of debt during FY 1995 was
$525,102, reflect-ing primarily the remaining balances of
certain notes payable. The Company's $1,000,000 short-term
line of credit was not utilized during the fiscal year 1995
and had no balance outstanding at October 28, 1995. The
preferred stock dividend was declared and paid in December
1994.
The Company's credit facilities and financial position
should provide an adequate base for sales and production
resulting from forecasted production rates by the domestic
car manufacturers, additional market penetration, and near-
term requirements for potential new products resulting from
R & D efforts.
Fiscal Year 1996
Market forecasts for the period of the Company's 1996
fiscal year generally predict a slight decrease in
production by the Company's U.S. light vehicle customers.
Since retail inventories held by these automotive companies
are significantly above normal levels, it is expected that
their production levels will suffer from inventory adjust-
ment. The Company's operating plans assume that industry
production levels for the 1996 fiscal year as a whole will
be 4% less than the FY 1995 levels but that there will be
additional production requirements for certain new nozzles
expected to be added in the course of the fiscal year, re-
sulting in the Company's anticipating component sales
slightly above the 1995 fiscal year.
Present knowledge of customer plans indicates that the
Company's billings for technical services related to the
introduction of new or revised vehicle models will decrease
from the FY 1995 level, reflecting the culmination of fewer
tooling programs for new windshield washer nozzles.
The automotive parts industry has become more competitive
in general due to consolidation of suppliers, customers'
expectations of more service, and price pressures.
New management and quality information systems are being
implemented by the Company and are expected to be
essentially in place by the end of fiscal year 1996.
The Company's customers have mandated that the Company
develop a QS-9000 compliant quality system to be assessed
and, if qualified, registered by an independent
organization. Chrysler requires registration by July 1997
and General Motors by December 1997. QS-9000 is a quality
system that defines the minimum requirements for all sup-
pliers of production and service parts as determined by
Chrysler, Ford, and General Motors based on the ISO 9000
international standard. Management believes that this
system will be of benefit to the Company to develop and
produce competitive products for the global market. The
Company's technology coupled with a QS-9000 compliant
quality system should provide a solid platform for future
competitiveness and growth. Present plans
(12)
<PAGE>
call for independent assessment of the Company's quality system
during August 1996.
Additional expenses for these new systems will be
incurred in fiscal year 1996.
Research and development expenditures are planned to
increase in FY 1996 as greater efforts will be made in the
development of new product lines, in particular air
conditioning outlets for automobiles due to renewed interest
on the part of the Company's customers. R & D on this
product embodied in patents belonging to the Company was
carried out in prior years.
(13)
<PAGE>
Item 7 (continued) SCHEDULE A: RELATIONSHIP TO TOTAL REVENUES - OPERATIONS
<TABLE>
<CAPTION>
Percent Change of Dollars
Period to Period
Increase or (Decrease)
FY 1995 FY 1994 FY 1993 1994-1995 1993-1994
<S> <C> <C> <C> <C> <C>
Total revenues from operations 100.0% 100.0% 100.0% 12.3% 22.9%
Direct labor, material and other
product-related costs 63.9 60.9 62.5 18.0 19.7
Selling, general and administra-
tive 15.4 17.2 18.5 0.2 14.3
Research and development expense 3.8 5.6 7.3 (24.4) (6.3)
Operating income 16.9 16.3 11.7 16.6 71.4
Interest expense (0.2) (0.6) (1.5) (56.3) (50.7)
Other revenue and (expense) net 0.6 .2 .3 223.4 (16.0)
Net income before taxes 17.3% 15.9% 10.5% 21.9% 60.4%
===== ===== =====
</TABLE>
(14)
<PAGE>
Item 8
FINANCIAL STATEMENTS
BOWLES FLUIDICS CORPORATION
FOR THE YEAR ENDED OCTOBER 28, 1995
(15)
<PAGE>
BOWLES FLUIDICS CORPORATION
INDEX
FOR THE YEAR ENDED OCTOBER 28, 1995
Page
Report of Independent Accountants 16
Financial Statements:
Consolidated Statements of Income 17
Consolidated Balance Sheets 18
Consolidated Statements of Changes in Stockholders' Equity 20
Consolidated Statements of Cash Flows 21
Notes to Consolidated Financial Statements 22
(16)
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
__________
To the Board of Directors
and Stockholders,
Bowles Fluidics Corporation
We have audited the accompanying balance sheets of
Bowles Fluidics Corporation as of October 28, 1995 and October
29, 1994, and the related statements of income, changes in
shareholders' equity, and cash flows for each of the three fiscal
years in the period ended October 28, 1995. These financial
statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to
above present fairly, in all material respects, the financial
position of Bowles Fluidics Corporation as of October 28, 1995
and October 29, 1994, and the results of its operations and its
cash flows for each of the three fiscal years in the period ended
October 28, 1995, in conformity with generally accepted
accounting principles.
Coopers & Lybrand L.L.P.
Baltimore, Maryland
December 22, 1995
(17)
<PAGE>
BOWLES FLUIDICS CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
For The Years Ended
October 28, October 29, October 30,
1995 1994 1993
<S> <C> <C> <C>
Net Sales $16,972,876 $15,111,829 $12,299,037
Cost of Sales 10,852,940 9,200,976 7,683,509
Gross profit 6,119,936 5,910,853 4,615,528
Selling, general and
administrative expenses 2,609,911 2,603,491 2,278,321
Research and development
costs 636,970 842,332 898,887
Operating Income 2,873,055 2,465,030 1,438,320
Interest expense (38,871) (88,991) (180,569)
Other income, net 98,593 30,487 36,289
Income before taxes 2,932,777 2,406,526 1,294,040
Provision for income taxes 1,148,902 679,506 218,000
Net income 1,783,875 1,727,020 1,076,040
Preferred stock
dividends accrued (74,648) (74,646) (74,648)
Income applicable to
common shareholders $ 1,709,227 $ 1,652,374 $ 1,001,392
=========== =========== ===========
Primary earnings per share $ .13 $ .13 $ .08
===== ===== =====
Fully diluted earnings per share $ .11 $ .11 $ .07
===== ===== =====
</TABLE>
The accompanying notes are an integral part of these financial
statements.
(18)
<PAGE>
BOWLES FLUIDICS CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
October 28, October 29,
1995 1994
<S> <C> <C>
Assets
Current Assets
Cash and cash equivalents $ 676,981 $ 1,557,230
Investments 679,513 484,807
Accounts receivable 2,761,394 1,916,885
Inventories 1,899,346 1,696,500
Prepaid expenses 134,474 22,514
Deferred income taxes 172,500 137,000
Total current assets 6,324,208 5,814,936
Property and equipment
Production machinery and
equipment 4,047,602 3,609,068
Office furniture and equipment 1,580,026 1,137,859
Laboratory and machine shop equipment 1,159,087 1,148,911
Leasehold improvements 539,274 530,475
Total property and equipment 7,325,989 6,426,313
Less accumulated depreciation
and amortization (4,504,185) (3,926,055)
Net property and equipment 2,821,804 2,500,258
Other assets
Patents, net of amortization
to date of $397,962
and $349,232, respectively 119,596 135,770
Deposits 26,838 27,263
Total other assets 146,434 163,033
Total assets $ 9,292,446 $ 8,478,227
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial
statements.
(19)
<PAGE>
BOWLES FLUIDICS CORPORATION
CONSOLIDATED BALANCE SHEETS (continued)
<TABLE>
<CAPTION>
October 28, October 29,
1995 1994
<S> <C> <C>
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable - trade $ 995,421 $ 1,066,077
Accrued payroll and related expenses 777,473 720,159
Income taxes payable 111,441 543,156
Current portion of long-term debt 68,857 283,939
Accrued preferred stock dividends 74,648 74,646
Total current liabilities 2,027,840 2,687,977
Long-term debt 202,811 512,831
Other liabilities 282,904 219,755
Deferred income taxes 149,000 150,000
Total liabilities 2,662,555 3,570,563
Commitments and contingencies
Stockholders' Equity
8% convertible preferred stock -
authorized 3,000,000 shares,
par value $1.00 per share;
issued and outstanding 933,080
shares. 933,080 933,080
Common stock - authorized
17,000,000 shares - par value
$.10 per share; issued and out-
standing 12,610,011 shares and
12,590,001 shares, respectively. 1,261,001 1,259,001
Additional paid-in capital 2,726,583 2,715,583
Retained earnings (NOTE 5) 1,709,227 --
Total stockholders' equity 6,629,891 4,907,664
Total liabilities and
stockholders' equity $ 9,292,446 $ 8,478,227
============ ===========
</TABLE>
The accompanying notes are an integral part of these financial
statements.
(20)
<PAGE>
BOWLES FLUIDICS CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Preferred Stock Common Stock Additional Retained
Shares Shares Paid-in Earnings
Total (000's) Amount (000's) Amount Capital (Deficit)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance October 31, 1992 $2,242,198 933 $ 933,080 12,529 $1,252,881 $5,266,764 $(5,210,527)
Stock Options Exercised 3,000 20 2,000 1,000
Preferred Stock Dividends (74,648) (74,648)
Net Income 1,076,040 1,076,040
Balance October 30, 1993 $3,246,590 933 $ 933,080 12,549 $1,254,881 $5,193,116 $(4,134,487)
Stock Options Exercised 8,700 41 4,120 4,580
Preferred Stock Dividends (74,646) (74,646)
Net Income 1,727,020 1,727,020
Quasi-reorganization Effective
October 29, 1994 (NOTE 5) -- (2,407,467) 2,407,467
Balance October 29, 1994 $4,907,664 933 $ 933,080 12,590 $1,259,001 $2,715,583 $ --
Stock Options Exercised 13,000 20 2,000 11,000
Preferred Stock Dividends (74,648) (74,648)
Net Income 1,783,875 1,783,875
Balance October 28, 1995 $6,629,891 933 $ 933,080 12,610 $ 1,261,001 $2,726,583 $ 1,709,227
========== ==== ========= ====== =========== ========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
(21)
<PAGE>
BOWLES FLUIDICS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For The Years Ended
October 28, October 29, October 30,
1995 1994 1993
<S> <C> <C> <C>
Net Income $ 1,783,875 $ 1,727,020 $1,076,040
Adjustments to reconcile net income
provided by operating activities:
Depreciation and amortization 661,024 624,099 450,304
(Gain)/Loss on sale of assets (2,267) 8,496 3,738
Accretion of interest on investments (14,125) - -
Deferred income taxes (36,500) - 13,000
2,392,007 2,359,615 1,543,082
Change in operating accounts:
Accounts receivable (844,509) (204,165) (316,443)
Inventories (202,846) (365,409) (351,693)
Prepaid expenses (111,535) 42,927 30,104
Accounts payable (70,656) 152,015 445,257
Accrued expenses 57,314 152,382 250,465
Income taxes payable (431,715) 468,156 75,000
Other liabilities 63,150 27,124 184,805
Change in operating accounts (1,540,797) 273,030 317,495
Cash provided by operating activities 851,210 2,632,645 1,860,577
Investing activities:
Capital expenditures (962,597) (938,246) (836,740)
Purchase of investments (1,143,566) (484,807) -
Patents capitalized (32,556) - (12,414)
Proceeds from sale of equipment 31,025 - -
Proceeds from sale of investments 962,985 - -
Net cash used in investing activities (1,144,709) (1,423,053) (849,154)
Financing activities:
Principal payment of debt (525,102) (603,657) (713,378)
Proceeds from issuance of debt - 365,000 -
Preferred stock dividend (74,648) (74,646) (94,640)
Proceeds from issuance of common stock 13,000 8,700 3,000
Net cash used by financing activities (586,750) (304,603) (805,018)
Increase(Decrease) in cash and cash equivalents (880,249) 904,989 206,405
Cash and cash equivalents - beginning of period 1,557,230 652,241 445,836
Cash and cash equivalents - end of period $ 676,981 $ 1,557,230 $ 652,241
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
(22)
<PAGE>
BOWLES FLUIDICS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
General. The Company and its wholly owned subsidiary, Fluid
Effects Corporation, operate on a 52/53 week fiscal year which
ends on the last Saturday of October. All years presented are
52 weeks. Assets and liabilities, and revenues and expenses,
are recognized on the accrual basis of accounting.
Cash equivalents. Cash equivalents are highly liquid
investments with original maturities of 90 days or less.
Investments. Investments, which are held for sale, consist of
U.S. Treasury Bills with original maturities over 90 days, but
not greater than 365 days, and are carried at cost plus accrued
interest, which approximates market.
Inventory Pricing. Inventories are carried at the lower of
cost (first-in, first-out) or market.
Property, Equipment and Depreciation. The cost of property and
equipment is depreciated over the estimated useful life of the
related assets. Depreciation is computed on the straight-line
method for all assets based on the following estimated lives:
Years
Production machinery and
equipment 3 - 10
Office furniture and equipment 5 - 7
Laboratory and machine shop
equipment 3 - 10
Leasehold improvements lease term
Depreciation expense for the fiscal years ended 1995, 1994,
and 1993, were $612,294, $577,811 and $404,005, respectively.
Patents. Costs associated with obtaining United States patents
are capitalized and amortized using the straight-line method
over the life of the patent beginning with the date of issue or
date of filing the application. The Company initially charges
all costs associated with the acquisition of U.S. and foreign
patents to expense, then capitalizes those costs related to
U.S. patents upon issuance of those patents.
Management reviews all of the patent costs and writes off
any patents which are considered to be of no foreseeable
economic benefit to the Company. The Company recognizes income
from patent licenses in accordance with the respective payment
terms of each license agreement.
Income Taxes. The Company accounts for income taxes under FASB
Statement No. 109. Under this liability method, deferred
income taxes are recognized for the tax consequences of
temporary differences by applying enacted statutory tax rates
applicable to future years to differences between the financial
statements carrying amounts and the tax bases of existing
assets and liabilities.
(23)
<PAGE>
BOWLES FLUIDICS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. Inventories
Inventories are comprised of:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Raw Material $ 703,864 $ 506,573
Work and tooling in process 416,090 515,590
Finished Goods 779,392 674,337
Total $1,899,346 $1,696,500
========== ==========
</TABLE>
3. Line of Credit
In May 1995, the Company reaffirmed its $1,000,000 line
of credit with Mercantile-Safe Deposit & Trust Company to
May 10, 1996, subject to reaffirmation each year by the Bank
at the Company's request. The interest rate is Mercantile's
prime rate, floating, which was 8-3/4% at October 28, 1995.
In addition, a 3/8% annual fee is assessed on the unused
portion of this credit facility. Advances on the line of
credit are limited to 85% of eligible accounts receivable
and 40% of finished goods inventory and are collateralized
by a first lien on accounts receivable and inventory, as
well as a lien on all corporate assets except for the
Company's patents, patent applications, processes, copy-
rights, trade secrets and other forms and types of
intellectual property. Furthermore, the bank has cross-
collateralized and cross-defaulted all its lending
agreements with the Company. No amount was outstanding on
this credit line at October 28, 1995, and October 29, 1994.
In addition to the maintenance of certain financial
ratios, the covenants of the amended master lending
agreement covering both the $1,000,000 line of credit above
and the term loan facility referred to in Note 4 require the
Company's tangible net worth to be not less than $2,000,000
as of the close of each fiscal year.
4. Debt
Balances as of October 28, 1995, and October 29, 1994, are
as follows:
1995 1994
(A) $ - $ 461,535
(B) 271,668 335,235
$ 271,668 $ 796,770
=========== ==========
(24)
<PAGE>
BOWLES FLUIDICS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. (continued)
Long-term debt will mature in the next four fiscal years as
follows:
Year End
October
1996 $ 68,857
1997 75,128
1998 81,970
1999 45,713
$ 271,668
===========
A. In 1991, the Company agreed to the settlement of a pending
lawsuit against the Company and agreed to pay the plaintiffs
$1,250,000. The remaining balance of $461,535 plus interest at
9% per annum was to be paid in two equal installments of
$262,368 in January 1995 and 1996. The Board of Directors
authorized management to pay the remaining balance prior to
December 31, 1994. Final payment of $503,073, including
interest of $41,538, was paid on December 29, 1994.
B. In June 1993, the Company entered into an amended agreement
with Mercantile-Safe Deposit & Trust Company for a term loan
facility for a period up to seven years in the maximum amount
of $1,100,000. Advances under this agreement shall be made for
the purchase of certain capital equipment and leasehold
improvements. This loan facility is cross-collateralized and
cross-defaulted with all other loans with the Mercantile-Safe
Deposit & Trust Company, and is subject to the same loan
covenants as shown in Note 3 for the line of credit. In
December 1993, the Company borrowed $365,000 under this
facility. During fiscal 1994, a fixed interest rate of 8-3/4%
was elected for borrowings under this agreement through April
1997.
Cash paid for interest during 1995, 1994 and 1993 was
$37,586, $91,079 and $140,323, respectively.
(25)
<PAGE>
BOWLES FLUIDICS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. Stockholders' Equity
The Company's preferred stock provides for an annual
dividend of $.08 per share from the net earnings of the Company
and is cumulative only for those years in which the Company has
earnings, and $1.00 per share in liquidation before any distri-
bution can be made to holders of common stock. If any divi-
dends payable on the preferred stock with respect to any fiscal
year of the Company are not paid for any reason, the rights of
the holders of the preferred stock to receive payment of such
dividends shall not lapse or terminate; but unpaid dividends
shall accumulate and shall be paid without interest to the
holders of the preferred stock when and as authorized by the
Board of Directors before any dividends shall be paid on any
other class of stock.
The Company's preferred stock may at the option of the
holder, at any time dividends are current, be converted into
common stock of the Company at the conversion rate of four
shares of common for each share of preferred. Additionally,
the preferred stock is redeemable at par in whole or in part at
the option of the Board of Directors at any time the dividends
are current after a period of 10 years subsequent to issue.
The common stock has one (1) vote per share and the preferred
stock has four (4) votes per share.
Reserved Shares. As of and for the three fiscal years in
the period ending October 28, 1995, there were 300,000 shares
of common stock reserved for issuance in connection with the
Company's stock option plans. None of the authorized shares of
common stock are reserved for conversion of pre-ferred stock.
Under the laws of the State of Maryland, the authorization of
the preferred stock in itself provides the authorization of
common stock necessary for conversion.
Stock Options. In May 1992, the Company adopted a new key
employee incentive stock option plan. This new plan replaced
the incentive stock option plan adopted in fiscal 1981, which
expired in 1992.
Activity in the Company's incentive stock option and other
stock option plans was as follows:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Options outstanding,
beginning of year 200,000 314,400 264,400
Options granted -- -- 70,000
Options exercised (20,000) (41,200) (20,000)
Options expired -- (73,200) --
Options outstanding,
end of year 180,000 200,000 314,400
======== ======== ========
</TABLE>
Options activities are at exercise prices ranging from $.15 to
$.65 per share.
Quasi-reorganization. Effective October 29, 1994, the Board
of Directors approved a quasi-reorganization which had the
impact of elimi-nating the retained earnings deficit as an
adjustment to additional paid-in capital.
(26)
<PAGE>
BOWLES FLUIDICS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. Income Taxes
The Company and its subsidiary file a consolidated federal
income tax return and separate state income tax returns. The
provision for income taxes consisted of the following:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Federal:
Current $1,019,525 $540,000 $130,000
Deferred (30,100) - 11,500
989,425 540,000 141,500
State:
Current 164,377 139,506 75,000
Deferred (4,900) - 1,500
159,477 139,506 76,500
$1,148,902 $679,506 $218,000
========== ======== ========
</TABLE>
The components of the deferred tax asset and liability for
1995 and 1994 were as follows:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Deferred tax asset:
Accrued vacation and retirement programs $167,800 $138,000
Non-deductible reserves 121,700 81,500
Total deferred tax asset 289,500 219,500
Deferred liability:
Tax depreciation in excess of book (266,000) (231,000)
Total deferred tax liability (266,000) (231,000)
Net deferred tax asset (liability) $ 23,500 $(11,500)
======== ========
</TABLE>
(27)
<PAGE>
BOWLES FLUIDICS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. (continued)
Reconciliations of the provisions for income taxes at the
U.S. federal statutory rate to the effective tax rates were as
follows:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
U.S. Statutory income tax $ 997,145 $818,219 $ 439,974
State tax, net of federal income tax
benefit 151,757 92,074 50,490
Utilization of net operating loss
carryforwards -- -- (131,480)
Utilization of investment and research
and development credit carryforwards -- (226,000) (52,000)
Reduction of valuation allowance -- -- (88,984)
Other -- (4,787) --
$1,148,902 $ 679,506 $ 218,000
========== ========= =========
</TABLE>
Cash paid for income taxes was $1,617,117, $118,090 and
$180,000 for 1995, 1994, and 1993, respectively.
7. Earnings per Share
Primary earnings per share are based on the weighted average
number of common shares and the effects of shares issuable
under stock options based on the treasury stock method. Fully
diluted earnings per share would assume that the preferred
stock is converted to common stock at the beginning of the
year.
The number of shares used for computing primary earnings per
share was 12,706,408, 12,672,647, and 12,544,411, in 1995,
1994, and 1993, respectively. The number of shares used in
computing fully diluted earnings per share was 16,445,005,
16,404,967, and 16,276,731, in 1995, 1994, and 1993,
respectively.
8. Commitments and Contingencies
The Company leases its facility under a non-cancelable
operating lease which expires in 2004. As of October 28, 1995,
minimum annual aggregate rentals are as follows:
Year Ended Amount
1996 $ 561,648
1997 561,648
1998 561,648
1999 561,648
2000 561,648
thereafter 1,965,768
Total minimum future rental payments $4,774,008
==========
(28)
<PAGE>
BOWLES FLUIDICS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. (continued)
Rent expense under all leases for 1995, 1994, and 1993 was
$622,671, $598,427, and $521,018, respectively.
Management is unaware of any pending legal proceedings
which would have a material adverse effect on the financial
statements of the Company.
9. Employee Benefit Plans
On November 1, 1990, the Company adopted a defined
contribution (401k) plan covering substantially all of its employees.
Contributions and costs were determined by matching 50% of
employee contributions up to 4% of each covered employee's
earnings. As of April 1, 1994, the Company increased
its matching contribution to 50% of the employee contributions
up to 6% of each covered employee's earnings. The Company's
contributions to the plan were $101,286, $76,892, and $48,713
in 1995, 1994 and 1993, respectively.
The Company has agreed to retirement programs for certain
former officers providing for the payment of certain retirement
benefits. The unfunded present value, at a discount rate of
7.5%, of these benefits accumulated as of October 28, 1995,
amounts to approximately $316,000, of which $282,904 is
included in other liabilities. Expenses related to these
programs were $102,000 in 1995, $62,000 in 1994, and $218,000
in 1993.
10. Major Customers
Over 90% of the Company's production of nozzles is
incorporated in vehicles produced by General Motors, Ford and
Chrysler, each of whom typically represents over 10% of the
Company's sales volume. The Company is, therefore,
substantially dependent upon the North American production
requirements of these three automotive companies. In addition,
the Com-pany's customers have mandated that the Company put in
place a QS-9000 compliant quality system to be assessed and, if
qualified, registered by an independent organization. Chrysler
requires registration by July 1997 and General Motors by
December 1997. The Company's present plans call for
independent assessment of the Company's quality system during
August 1996.
11. Recent Accounting Standard
In 1995, the Financial Accounting Standards Board issued
Statement No. 123, "Accounting for Stock Based Compensation". The
Company has determined that it will retain its current accounting for
stock options granted; therefore, the adoption of this new standard in
fiscal 1996 will not impact the Company's financial position or results
of operations.
(29)
<PAGE>
BOWLES FLUIDICS CORPORATION
Item 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None
(30)
<PAGE>
PART III
Item 10a.- 10c. DIRECTORS OF THE REGISTRANT INCLUDED IN PROXY
MATERIALS
Item 10b., d., e., & f. EXECUTIVE OFFICERS OF THE REGISTRANT:
b. Name, Age and Position e. Business Experience During Past
Five Years
William Ewing, Jr. Chairman since 1975. Responsible for
Chairman the formation of overall corporate
Age 83 policy and planning.
Ronald D. Stouffer President since March 9, 1994. Respon-
President sible for execution of the Company's
Chief Executive Officer policies and for the Company's operations.
Age 64 operations. Executive Vice President from
1982 to 1994.
Julian Lazrus Vice Chairman of the Board as of March 9,
Vice Chairman 1994. Responsible for assigned duties.
Age 76 President from 1973 to 1994.
Melvyn J. L. Clough Vice President, Operations, since November 6,
Vice President, 1995. Responsible for all manufacturing
Operations operations including Industrial Engineering
Age 48 and Tooling. Engineering Manager for A.
Raymond, Inc. 1992-1995. Various positions
with TRW Fastener Divison to Engineering
Manager 1982-1992.
Richard W. Hess Vice President, Engineering, since
Vice President, October 28, 1992. Responsible for the
Engineering Company's total engineering department,
Age 52 including R&D, applications and manufacturing
engineering. Director of Engineering with
Automated Packaging Systems, Inc., 1990-1992;
Vice President Research and Engineering,
DeVilbiss Company, 1982-1990.
Eric W. Koehler Vice President, Marketing, since March 9,
Vice President, 1994. Responsible for Marketing and Sales
Marketing functions. Director of Marketing 1990-1994.
Age 33 Joined the Company in 1989.
(31)
<PAGE>
Item 10b., d., e., & f. (continued)
b. Name, Age and Position e. Business Experience During Past
Five Years
Eleanor M. Kupris Vice President, Administration, since 1982.
Secretary and Corporate Secretary since March 1992.
Vice President, Responsible for Purchasing, Personnel and
Administration Management Information Systems.
Age 54
David A. Quinn Vice President, Finance, since October 25,
Vice President, 1993. Responsible for Treasury, Accounting
Finance and Financial Planning functions. Previous-
Age 59 ly CFO for Bruning Paint Company, 1991-1993;
Group Vice President-Finance for The Black
& Decker Corporation, 1989-1991 and Emhart
Corporation, 1985-1989.
Dharapuram N. Srinath Vice President, Quality Assurance, since
Vice President, March 16, 1995. Responsible for Quality
Quality Assurance Assurance and Reliability functions.
Age 44 Director of Quality Assurance and Product
Reliability 1992-1995; Director of Tech-
nology 1990-1992; Chief Engineer 1987-1990.
Arlene M. Hardy Corporate Controller since 1990. Responsible
Corporate Controller for Accounting functions. Joined the Company
Age 48 in 1986.
(32)
<PAGE>
Item 10b., d., e., & f. (continued)
d. The names, ages and positions of all of the executive officers
of the Company are listed above, along with their business
experience during the past five years. Officers are appointed
annually by the Board of Directors at the annual meeting of
directors, immediately following the annual meeting of sharehold
ers. There are no family relationships among any of the officers
of the Company, nor any arrangements or understanding between any
such officers and another person pursuant to which they were
elected as officers.
Item 11 EXECUTIVE COMPENSATION INCLUDED IN PROXY MATERIALS.
Item 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
INCLUDED IN PROXY MATERIALS.
Item 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS INCLUDED IN
PROXY MATERIALS.
(33)
<PAGE>
PART IV
Item 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
(a) 1 Financial Statements
Included in Part II of this report:
Report of Independent Accountants
Consolidated Statements of Income for the three
years ended October 28, 1995, October 29, 1994, and
October 30, 1993
Consolidated Balance Sheets at October 28, 1995, and
October 29, 1994
Consolidated Statements of Changes in Stockholders'
Equity for the three years ended October 28, 1995,
October 29, 1994, and October 30, 1993
Consolidated Statements of Cash Flows for the three
years ended October 28, 1995, October 29, 1994, and
October 30, 1993
Notes to Consolidated Financial Statements
(a) 2 Financial Statements Schedules
Schedules are omitted because of the absence of conditions under
which they are required or because the required information
is given in the financial statements or notes thereto.
(a) 3 Exhibits
Exhibit 11 -
Schedule showing computations of earnings per share
for each of three years ended October 28, 1995,
October 29, 1994, and October 30, 1993.
(b) Reports on Form 8-K
None
(34)
<PAGE>
BOWLES FLUIDICS CORPORATION - EXHIBIT 11
CALCULATION OF EARNINGS PER SHARE
A. PRIMARY EARNINGS PER COMMON SHARE AND COMMON EQUIVALENT SHARES
For the Fiscal Year Ended
October 28, October 29, October 30,
1995 1994 1993
Calculation of Net Income:
Net income per books $ 1,783,875 $ 1,727,020 $ 1,076,040
Less: Dividends on
convertible
preferred stock 74,648 74,646 74,648
Net income
as adjusted $ 1,709,227 $ 1,652,374 $ 1,001,392
=========== =========== ===========
Calculation of
Outstanding Shares:
Weighted average of
common shares
outstanding 12,593,353 12,581,647 12,544,411
Add: Assumed exercise of
stock options 113,055 91,000 *
Number of common shares
outstanding adjusted 12,706,408 12,672,647 12,544,811
=========== =========== ===========
Primary earnings
per common share $ .13 $ .13 $ .08
=========== =========== ===========
* Under the treasury stock method, the assumed exercise of stock
options would be anti-dilutive; accordingly, such amounts are excluded
from the computation.
(35)
<PAGE>
BOWLES FLUIDICS CORPORATION - EXHIBIT 11
CALCULATION OF EARNINGS PER SHARE (continued)
B. FULLY DILUTED EARNINGS PER SHARE:
For the Fiscal Year Ended
October 28, October 29, October 30,
1995 1994 1993
Net income per books $ 1,783,875 $ 1,727,020 $ 1,076,040
=========== =========== ===========
Weighted average of
common shares
outstanding 12,593,353 12,581,647 12,544,411
Add: Assumed conversion of
of preferred stock 3,732,320 3,732,320 3,732,320
Assumed exercise of
stock options 119,332 91,000 *
Number of common shares
outstanding adjusted 16,445,005 16,404,967 16,276,731
=========== =========== ===========
Fully diluted earnings
per common share and
common stock equivalents $ .11 $ .11 $ .07
=========== =========== ===========
* Same as footnote on prior page.
(36)
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
BOWLES FLUIDICS CORPORATION
BY:
Chairman of
the Board and
Director
William Ewing, Jr. Date
President and
Director
Ronald D.Stouffer Date
Vice President
Finance
David A. Quinn Date
Corporate Controller
Arlene M. Hardy Date
Vice Chairman
of the Board
and Director
Julian Lazrus Date
Director
David C. Dressler Date
Director
William Ewing III Date
Director
John E. Searle, Jr. Date
(37)
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<S> <C>
<PERIOD-TYPE> Year
<FISCAL-YEAR-END> Oct-28-1995
<PERIOD-END> Oct-28-1995
<CASH> 676,981
<SECURITIES> 679,513
<RECEIVABLES> 2,761,394
<ALLOWANCES> 0
<INVENTORY> 1,899,346
<CURRENT-ASSETS> 6,324,208
<PP&E> 7,325,989
<DEPRECIATION> 4,504,185
<TOTAL-ASSETS> 9,292,446
<CURRENT-LIABILITIES> 2,027,840
<BONDS> 0
<COMMON> 1,261,001
0
933,080
<OTHER-SE> 4,435,810
<TOTAL-LIABILITY-AND-EQUITY> 9,292,446
<SALES> 16,972,876
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<EPS-PRIMARY> .13
<EPS-DILUTED> .11
</TABLE>
