<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended April 1, 1995
Commission File No. 1-4817
BOWMAR INSTRUMENT CORPORATION
(Exact name of Registrant as specified in its charter)
INDIANA 35-0905052
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5080 NORTH 40TH STREET, SUITE 475
PHOENIX, ARIZONA 85018
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 602/957-0271
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
----- -----
At May 12, 1995, 6,462,596 shares of the Registrant's Common Stock, and 119,990
shares of the Registrant's Preferred Stock were outstanding.
<PAGE> 2
BOWMAR INSTRUMENT CORPORATION
AND
SUBSIDIARIES
INDEX
<TABLE>
<S> <C> <C>
PART I FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-7
Item 1. Financial Statements
Consolidated Balance Sheets (Unaudited)
April 1, 1995 and October 1, 1994 . . . . . . . . . . . . . . . 2
Consolidated Statements of Income (Unaudited)
Second Quarter and Six Months Ended
April 1, 1995 and April 2, 1994 . . . . . . . . . . . . . . . . 3
Consolidated Statements of Cash Flows (Unaudited)
Six Months Ended April 1, 1995 and
April 2, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . 4
Notes to Consolidated Financial
Statements (Unaudited) . . . . . . . . . . . . . . . . . . . . . 5
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations . . . . . . . . . . . . . . . . . . . . . . . . . 6
PART II OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . 7
</TABLE>
1
<PAGE> 3
BOWMAR INSTRUMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
- - - - - - -----------------------------------------------------------------------------------------------------------------
APRIL 1, 1995 OCTOBER 1, 1994
- - - - - - -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current Assets
Cash $ 595 $ 147
Accounts receivable, net 4,242 4,834
Inventories 5,975 4,866
Prepaid expenses 663 478
- - - - - - ------------------------------------------------------------------------------------------------------------
Total Current Assets 11,475 10,325
Property, Plant and Equipment, net 1,506 1,446
Other Assets, net 1,978 2,012
- - - - - - ------------------------------------------------------------------------------------------------------------
Total Assets $ 14,959 $ 13,783
============================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Notes payable $ 1,687 $ 1,135
Current portion of long-term debt 4,409 639
Accounts payable 1,298 1,036
Accrued expenses 1,987 2,306
- - - - - - ------------------------------------------------------------------------------------------------------------
Total Current Liabilities 9,381 5,116
Long-Term Debt 548 4,617
- - - - - - ------------------------------------------------------------------------------------------------------------
Total Liabilities 9,929 9,733
- - - - - - ------------------------------------------------------------------------------------------------------------
Shareholders' Equity 5,030 4,050
- - - - - - ------------------------------------------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $ 14,959 $ 13,783
============================================================================================================
</TABLE>
See Notes to Consolidated Financial Statements
2
<PAGE> 4
BOWMAR INSTRUMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
- - - - - - ----------------------------------------------------------------------------------------------------------------
SECOND QUARTER FIRST SIX MONTHS
1995 1994 1995 1994
- - - - - - ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales $ 6,609 $ 6,830 $12,630 $13,720
Cost of sales 3,750 4,049 7,355 8,402
- - - - - - ----------------------------------------------------------------------------------------------------------------
Gross margin 2,859 2,781 5,275 5,318
- - - - - - ----------------------------------------------------------------------------------------------------------------
Expenses:
Selling, general and 1,891 1,734 3,581 3,447
administrative
Product development 212 229 369 296
Interest expense 198 184 371 377
Other (income), net (165) (86) (283) (133)
- - - - - - ----------------------------------------------------------------------------------------------------------------
Total expenses 2,136 2,061 4,038 3,987
- - - - - - ----------------------------------------------------------------------------------------------------------------
Income before income taxes 723 720 1,237 1,331
Provision for income taxes 36 79 88 143
NET INCOME $ 687 $ 641 $ 1,149 $ 1,188
================================================================================================================
NET INCOME PER COMMON SHARE:
PRIMARY $ 0.09 $ 0.08 $ 0.15 $ 0.15
Fully diluted $ 0.08 N/A $ 0.14 N/A
================================================================================================================
Weighted average number of
common shares and equivalents:
Primary 6,563,753 6,590,840 6,563,817 6,535,732
Fully diluted 8,163,220 8,193,106 8,163,284 8,137,998
================================================================================================================
</TABLE>
See Notes to Consolidated Financial Statements
3
<PAGE> 5
BOWMAR INSTRUMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
- - - - - - ---------------------------------------------------------------------------------------------------------------------
FIRST SIX MONTHS
APRIL 1, APRIL 2,
1995 1994
- - - - - - ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 1,149 $ 1,188
Adjustments to reconcile net income
to net cash provided by operations:
Depreciation and amortization 256 245
Net changes in balance sheet accounts:
Accounts receivable 592 (900)
Inventories (1,109) (1,182)
Prepaid expenses (185) (152)
Accounts payable 262 260
Accrued expenses (319) 768
Other (19) 68
- - - - - - ---------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 627 295
- - - - - - ---------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES:
Purchases of property, plant and equipment (252) (209)
- - - - - - ---------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
Borrowings under notes payable 507 1,711
Retirement of debt (254) (1,624)
Payment of dividends on preferred stock (180) (180)
- - - - - - ---------------------------------------------------------------------------------------------------------------------
Net cash provided (used) by financing activities 73 (93)
- - - - - - ---------------------------------------------------------------------------------------------------------------------
Net change in cash 448 (7)
Cash at beginning of period 147 136
- - - - - - ---------------------------------------------------------------------------------------------------------------------
Cash at end of period $ 595 $ 129
- - - - - - ---------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL CASH FLOW INFORMATION:
Net cash paid during the period for:
Interest $ 371 $ 300
Income taxes $ 77 $ 94
- - - - - - ---------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Consolidated Financial Statements
4
<PAGE> 6
BOWMAR INSTRUMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. CONSOLIDATED FINANCIAL STATEMENTS
The consolidated balance sheets as of April 1, 1995 and October 1, 1994,
the consolidated statements of income for the second quarter and six
months ended April 1, 1995 and April 2, 1994, and the consolidated
statements of cash flows for the first six months ended April 1, 1995 and
April 2, 1994, have been prepared by the Registrant without audit. In the
opinion of management all adjustments which are of a normal recurring
nature necessary to present fairly such financial statements have been
made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been omitted. It is suggested that these
consolidated financial statements be read in conjunction with the
financial statements and notes thereto included in the Registrant's Annual
Report on Form 10-K for the fiscal year ended October 1, 1994. The
results of operations for the above noted periods ended April 1, 1995, are
not necessarily indicative of the operating results for the full year.
2. INVENTORIES
Inventories consist of the following ($ in thousands):
<TABLE>
<CAPTION>
APRIL 1, OCTOBER 1,
1995 1994
- - - - - - ------------------------------------------------------------------------------
<S> <C> <C>
Raw materials $ 2,526 $ 1,807
Work-in-process 2,788 2,718
Finished goods 661 341
- - - - - - ------------------------------------------------------------------------------
$ 5,975 $ 4,866
==============================================================================
</TABLE>
5
<PAGE> 7
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS RESULTS OF OPERATIONS
SALES
Sales for the second quarter ended April 1, 1995, were $6,609,000 compared to
prior year sales for the second quarter of $6,830,000. For the first six
months of fiscal 1995, sales were $12,630,000 compared to sales of $13,720,000
for the same period in fiscal 1994.
Sales in the electronic/microelectronic segment for the second quarter of
fiscal 1995 were down by approximately $100,000 versus the same period in the
prior year and for the first six months of fiscal 1995 were down by
approximately $700,000 versus the same period in fiscal 1994. The
electronic/microelectronic segment sales decreases for both the second quarter
and first six months were due to unusually high shipments of memory products on
the Abrams tank order in the second quarter and first six months of fiscal
1994. The current backlog for high density memories ensures that fiscal 1995
electronic/microelectronic sales will approximate last year's sales.
Sales in the electromechanical segment for the second quarter of fiscal 1995
were down by approximately $100,000 versus the same period in the prior year
and sales for the first six months of fiscal 1994 were down by approximately
$400,000 versus the same period in fiscal 1994. Electromechanical segment
sales were lower in the mechanical products product line, partially offset by
increases in the interface, ordnance and rapid heat sterilizer product lines.
The increase in the ordnance product line was due to $435,000 in revenues
recognized from the settlement of a claim. The reduction in sales is related
to the overall decline in defense spending. The backlog for electromechanical
sales is lower than last year and is expected to result in lower sales than
last year in this segment throughout fiscal 1995.
The Company continues to believe that changes in defense spending will not have
a material adverse affect on the Company's overall results. However, it
appears that although the microelectronic/microelectronic segment of the
Company's business could continue to experience growth as a result of changes
in defense spending, the Company's electromechanical segment will be negatively
impacted. Accordingly the Company continues to pursue its goal of reduced
dependency on the defense industry. In the past year, among other things, the
electromechanical segment delivered three prototypes of a high-definition,
low-intensity dental x-ray machine for Panoramic Corporation, and acquired the
net assets and business of Cox Sterile Products which manufactured a dry heat
sterilizer for sale to the medical and dental markets. In addition, the
Company is continuing development of an instrument sterilizing autoclave for
sale to the medical and dental markets.
GROSS MARGIN
Gross margin dollars for the second quarter and first six months ended April 1,
1995, were approximately the same as those for the similar periods of fiscal
1994. The second quarter gross margin percentage in fiscal 1995 increased to
43.3% from 40.7% in fiscal 1994, and the gross margin percentages for the first
six months of fiscal 1995 increased to 41.8% from 38.8% in fiscal 1994. Gross
margin percentage in the electronic/microelectronic segment in the second
quarter and first six months of fiscal 1995 were 43.0% versus 41.4% and 41.3%
respectively in the same periods of the prior year due principally to
manufacturing efficiencies related to production of high density memory
products. The gross margin percentage in the electromechanical segment for the
second quarter and first six months of fiscal year 1995 were 42.8% and 37.6%,
respectively, versus 37.9% and 33.7%, respectively, in the same periods of the
prior year due principally to the effects of the claim settlement.
6
<PAGE> 8
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses for the second quarter and first
six months ended April 1, 1995, increased by $157,000 and $134,000,
respectively, compared to the same periods in fiscal 1994. The increase in
spending for both periods is a result of higher costs, principally selling
expense, in the electromechanical segment for the rapid heat sterilizer product
line.
PRODUCT DEVELOPMENT EXPENSES
Product development expenses were approximately the same for the second
quarters of both fiscal years 1995 and 1994 and increased by $73,000, for the
first six months of fiscal 1995 as compared to 1994. This was principally due
to higher costs in the electromechanical segment for product development
activities related to the autoclave and dry heat sterilizer products.
INTEREST EXPENSE
Interest expense in the second quarter and first six months of fiscal 1995 were
approximately the same as for these same periods in fiscal 1994. The effect of
higher interest rates was offset by decreased borrowing requirements during
fiscal 1995.
FINANCIAL CONDITION AND LIQUIDITY
In the first six months of fiscal 1995 working capital decreased to $2,094,000
from $5,209,000, due principally to the reclassification, during the first
quarter of fiscal 1995, of $2,477,000 of term debt which was classified as
long-term on October 2, 1994. The remaining balance of the Company's term loan
is due in November, 1995, and the remaining balance of the 13.5% convertible
debentures matures in December, 1995. Although the Company expects to
refinance the term debt, credit facility and debentures, they have been
classified as current since the refinancing is not yet complete.
Changes in the components of working capital are detailed in the Consolidated
Statements of Cash Flows.
The Company's operations generated cash in the first six months of fiscal 1995,
of $627,000. The Company projects positive cash flow for the remainder of the
year, which, when combined with the Company's revolving credit facility, should
be sufficient in Management's opinion to fund the Company's cash needs for the
foreseeable future.
ITEM 5
OTHER INFORMATION
None
ITEM 6
EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits.
Exhibit 11 - Computation of Net Income Per Common Share
Exhibit 27 - Financial Data Schedule
b. Reports on Form 8-K.
None
7
<PAGE> 9
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 thereto duly authorized.
BOWMAR INSTRUMENT CORPORATION
/s/ Thomas K. Lanin
----------------------
Thomas K. Lanin
Vice President Finance
Dated: May 15, 1995
8
<PAGE> 10
EXHIBIT INDEX
<TABLE>
<CAPTION>
NO. DESCRIPTION
- - - - - - --- -----------
<S> <C>
11 Computation of Net Income per Common Share
27 Financial Data Schedule
</TABLE>
<PAGE> 1
Exhibit 11
BOWMAR INSTRUMENT CORPORATION
COMPUTATION OF NET INCOME PER COMMON SHARE
<TABLE>
<CAPTION>
- - - - - - -------------------------------------------------------------------------------------------------------------
SECOND QUARTER FIRST SIX MONTHS
FISCAL FISCAL FISCAL FISCAL
1995 1994 1995 1994
- - - - - - -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PRIMARY NET INCOME PER
COMMON SHARE:
NET INCOME:
Net Income $687,000 $641,000 $1,149,000 $1,188,000
Less: Dividends on Preferred Stock 90,000 90,000 180,000 180,000
-------- -------- ---------- ----------
Net Income Applicable to Common Stock $597,000 $551,000 $969,000 $1,008,000
======== ======== ========= ==========
SHARES:
Weighted Average Number of Common
Shares Outstanding 6,414,561 6,418,939 6,413,788 6,363,616
Number of Common Stock Equivalents
Assuming Exercise of Options Reduced
by the Number of Shares Which Could
Have Been Purchased With the Proceeds
From Exercise of Such Options 149,192 171,901 150,029 172,116
-------- --------- --------- ---------
Weighted Average Number of Shares
and Common Stock Equivalents 6,563,753 6,590,840 6,563,817 6,535,732
========= ========= ========= =========
PRIMARY NET INCOME PER
COMMON SHARE $0.09 $0.08 $0.15 $0.15
========= ========= ========= =========
FULLY DILUTED NET INCOME PER
COMMON SHARE:
NET INCOME:
Net Income $687,000 $641,000 $1,149,000 $1,188,000
========= ========= ========= =========
SHARES:
Weighted Average Number of Shares
and Common Stock Equivalents 6,563,753 6,590,840 6,563,817 6,535,732
Number of Shares of Common Stock
Issued Upon Conversion of
Preferred Stock 1,599,467 1,602,266 1,599,467 1,602,266
--------- --------- --------- ---------
Weighted Average Number of Shares
and Common Stock Equivalents
Assuming Conversion of Preferred Stock 8,163,220 8,193,106 8,163,284 8,137,998
========= ========= ========= =========
FULLY DILUTED NET INCOME PER
COMMON SHARE $0.08 $0.08 $0.14 $0.15
========= ========= ========= =========
</TABLE>
9
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM INCOME
STATEMENT AND BALANCE SHEET AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH 10-Q FOR THE QUARTER ENDED APRIL 1, 1995.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-02-1994
<PERIOD-END> APR-01-1995
<CASH> 595
<SECURITIES> 0
<RECEIVABLES> 4,242
<ALLOWANCES> 0
<INVENTORY> 5,975
<CURRENT-ASSETS> 11,475
<PP&E> 1,506
<DEPRECIATION> 0
<TOTAL-ASSETS> 14,959
<CURRENT-LIABILITIES> 9,381
<BONDS> 0
<COMMON> 642
0
120
<OTHER-SE> 4,268
<TOTAL-LIABILITY-AND-EQUITY> 14,959
<SALES> 12,630
<TOTAL-REVENUES> 12,630
<CGS> 7,355
<TOTAL-COSTS> 7,355
<OTHER-EXPENSES> 3,667
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 371
<INCOME-PRETAX> 1,237
<INCOME-TAX> 88
<INCOME-CONTINUING> 1,149
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,149
<EPS-PRIMARY> 0.15
<EPS-DILUTED> 0.14
</TABLE>
