<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 The Quarter Ended December 30, 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 February 13, 1996, 6,454,904 shares of the Registrant's Common Stock, and
119,990 shares of the Registrant's Preferred Stock were outstanding.
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BOWMAR INSTRUMENT CORPORATION
AND
SUBSIDIARIES
INDEX
<TABLE>
<S> <C> <C>
PART I FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-7
Item 1. Financial Statements
Consolidated Balance Sheets (Unaudited)
December 30, 1995 and September 30, 1995 . . . . . . . . . . . . . 2
Consolidated Statements of Income (Unaudited)
First Quarter Ended
December 30, 1995 and December 31, 1994 . . . . . . . . . . . . . 3
Consolidated Statements of Cash Flows (Unaudited)
First Quarter Ended December 30, 1995 and
December 31, 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
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BOWMAR INSTRUMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands of dollars)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
December 30, 1995 September 30, 1995
- -----------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current Assets
Cash $ 519 $ 739
Accounts receivable, net 3,938 3,882
Inventories 5,501 5,420
Prepaid expenses 459 457
Deferred income taxes 1,698 1,698
- ---------------------------------------------------------------------------------
Total Current Assets 12,115 12,196
Property, Plant and Equipment, net 1,267 1,335
Deferred Income Taxes 2,063 2,167
Other Assets, net 1,716 1,734
- ---------------------------------------------------------------------------------
Total Assets $17,161 $17,432
=================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt $ 665 $ 661
Accounts payable 1,126 1,453
Accrued salaries and benefits 785 2,092
Other accrued expenses 1,255 1,101
- ---------------------------------------------------------------------------------
Total Current Liabilities 3,831 5,307
Long-Term Debt 5,083 3,992
Other Long-Term Liabilities 339 338
- ---------------------------------------------------------------------------------
Total Liabilities 9,253 9,637
- ---------------------------------------------------------------------------------
Shareholders' Equity 7,908 7,795
- ---------------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $17,161 $17,432
=================================================================================
</TABLE>
See Notes to Consolidated Financial Statements
2
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BOWMAR INSTRUMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(in thousands of dollars, except share data)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
QUARTER ENDED
DECEMBER 30, 1995 DECEMBER 31, 1994
- -----------------------------------------------------------------------------
<S> <C> <C>
Net sales $5,979 $6,021
Cost of sales 3,856 3,712
- -----------------------------------------------------------------------------
Gross margin 2,123 2,309
- -----------------------------------------------------------------------------
Expenses:
Selling, general and
administrative 1,617 1,573
Product development 153 167
Interest expense 139 173
Other (income), net (126) (118)
- -----------------------------------------------------------------------------
Total expenses 1,783 1,795
- -----------------------------------------------------------------------------
Income before income taxes 340 514
Provision for income taxes 136 52
- -----------------------------------------------------------------------------
Net Income $ 204 $ 462
============================================================================
Net income per common share $ 0.02 $ 0.06
============================================================================
Weighted average number of
common shares and equivalents 6,633,813 6,566,760
- ----------------------------------------------------------------------------
</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>
- -----------------------------------------------------------------------------------------------
QUARTER ENDED
DECEMBER 30, DECEMBER 31,
1995 1994
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 204 $ 462
Adjustments to reconcile net income
to net cash provided (used) by operations:
Depreciation and amortization 134 152
Deferred income taxes 104 0
Net changes in balance sheet accounts:
Accounts receivable (56) 806
Inventories (81) (266)
Prepaid expenses (2) (4)
Accounts payable (327) (256)
Accrued expenses (1,152) (646)
Other 7 (63)
- ------------------------------------------------------------------------------------------------
Net cash provided (used) by operating activities (1,169) 185
- ------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES:
Purchases of property, plant and equipment (56) (150)
- ------------------------------------------------------------------------------------------------
Net cash (used) by investing activities (56) (150)
- ------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
Borrowings under notes payable 4,784 303
Retirement of debt (3,689) (140)
Payment of dividends on preferred stock (90) (90)
- ------------------------------------------------------------------------------------------------
Net cash provided by financing activities 1,005 73
- ------------------------------------------------------------------------------------------------
Net change in cash (220) 108
Cash at beginning of period 739 147
- ------------------------------------------------------------------------------------------------
Cash at end of period $ 519 $ 255
- ------------------------------------------------------------------------------------------------
SUPPLEMENTAL CASH FLOW INFORMATION:
Net cash paid during the period for:
Interest $ 137 $ 242
Income taxes $ 122 $ 41
- -----------------------------------------------------------------------------------------------
</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 December 30, 1995 and September 30,
1995, the consolidated statements of income for the first quarter ended
December 30, 1995 and December 31, 1994, and the consolidated statements
of cash flows for the first quarter ended December 30, 1995 and
December 31, 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 September 30, 1995. The
results of operations for the above noted quarter ended December 30, 1995,
are not necessarily indicative of the operating results for the full year.
2. INVENTORIES
Inventories consist of the following (in thousands of dollars):
<TABLE>
<CAPTION>
DECEMBER 30, SEPTEMBER 30,
1995 1995
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Raw materials $2,284 $2,164
Work-in-process 2,887 2,891
Finished goods 330 365
- -------------------------------------------------------------------------------------------
$5,501 $5,420
===========================================================================================
</TABLE>
5
<PAGE> 7
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
RESULTS OF OPERATIONS
- ---------------------
Net Sales
Sales for the first quarter ended December 30, 1995, were $5,979,000 compared
to prior year sales for the first quarter of $6,021,000. Sales in the
microelectronic segment for the similar period of fiscal 1996 were up by
approximately $450,000 versus the same period in the prior year. The increase
was a result of a change in memory product sales strategy, which resulted in
broadened product offerings and increased sales. Sales in the
electromechanical segment for the first quarter of fiscal 1996 were down
by approximately $500,000 as a result of a shutdown of the Ft. Wayne facility
for the month of December. The shutdown was necessary to balance facility
capacity with demand. At the present time management does not anticipate any
additional extended shutdowns at that facility in this fiscal year.
The Company believes that changes in defense spending will not have
a material adverse affect on the Company's overall results. It appears that
the microelectronic segment could continue to experience growth because of the
increased demand resulting from upgrading existing systems. However, the
electromechanical segment has been negatively impacted.
GROSS MARGIN
Gross margins for the first quarter ended December 30, 1995, decreased by
$186,000 versus the similar period of fiscal 1995. The lower gross margin is
largely attributable to the electromechanical segment's lower gross margin for
the first quarter as compared to the same quarter in the prior year arising
from the December closing of the Ft. Wayne facility.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses for the first quarter ended
December 30, 1995, approximated the same period in fiscal 1995.
PRODUCT DEVELOPMENT EXPENSES
Product development expenses for the quarter ended December 30, 1995
approximated the same period in fiscal 1996. The lower costs in the
electromechanical segment related to the autoclave and dry heat sterilizer
products were offset by higher development costs in the microelectronics
segment associated with the development of new memory products.
INTEREST EXPENSE
Interest expense in the first quarter of fiscal 1996 decreased approximately
$30,000 compared to interest expense for the same period in fiscal 1995. The
decline was due to both the more favorable rates under the new Bank One loan
agreement and a decrease in the loan borrowings for fiscal 1996 as compared to
the same quarter last year.
6
<PAGE> 8
PROVISION FOR INCOME TAXES
The provision for income taxes increased by approximately $80,000 for the first
quarter of fiscal 1996 as compared to 1995. This was the result of a change in
accounting which began with the Company's adjustment of the valuation allowance
related to the Company's deferred tax assets in the third quarter of fiscal
1995. The change was in accordance with the provisions of Statement of
Financial Accounting Standards No. 109. The affect of this change is that the
Company's effective tax rate now approximates the statutory rate, resulting in
higher income tax expense in fiscal 1996 as compared to the same period in
1995.
FINANCIAL CONDITION AND LIQUIDITY
In the first quarter of fiscal 1996 working capital increased to $8,284,000
from $6,889,000, principally as a result of the Bank One refinancing which
increased long term debt.
Changes in the components of working capital are detailed in the Consolidated
Statements of Cash Flows.
The Company's operations used approximately $1,169,000 cash in the first
quarter of fiscal 1996. 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 6
EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
Exhibit 3(ii)(a) - Amendment to the Amended and Restated Code of Bylaws of
Bowmar Instrument Corporation
Exhibit 11 - Computation of Profit Per Common share
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 thereto duly authorized.
BOWMAR INSTRUMENT CORPORATION
/S/ Joseph G. Warren, Jr.
_______________________________
Joseph G. Warren, Jr.
Vice President Finance
Dated: February 13, 1996
7
<PAGE> 1
Exhibit 3(ii)(a)
BOWMAR INSTRUMENT CORPORATION AND SUBSIDIARIES
BYLAWS AMENDMENT
The Board of Directors approved the following resolution at their
meeting on February 2, 1996:
RESOLVED, that Section 1.04 of the Amended and Restated Code of Bylaws
of Bowmar Instrument Corporation shall be amended to read as follows:
SECTION 1.04 FISCAL YEAR. The fiscal year of the Corporation shall
begin at 12:01 a.m. Phoenix time on the Sunday, following the Saturday closest
to September 30 of each year and end at 12:00 midnight Phoenix time on Saturday
closest to September 30 of the next succeeding calendar year.
<PAGE> 1
Exhibit 11
BOWMAR INSTRUMENT CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
FIRST QUARTER
FISCAL FISCAL
1996 1995
- -----------------------------------------------------------------------
<S> <C> <C>
NET INCOME PER
COMMON SHARE - PRIMARY:
INCOME:
Net Income $ 204,000 $ 462,000
Less: Dividends on Preferred Stock 90,000 90,000
---------- ----------
Profit Applicable to Common Stock $ 114,000 $ 372,000
========== ==========
SHARES:
Weighted Average Number of Common
Shares Outstanding 6,452,904 6,413,478
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 180,909 153,282
---------- ----------
Weighted Average Number of Shares
and Common Stock Equivalents 6,633,813 6,566,760
========== ==========
NET INCOME PER
COMMON SHARE - PRIMARY $ 0.02 $ 0.06
========== ==========
=======================================================================
NET INCOME PER
COMMON SHARE - FULLY DILUTED:
INCOME:
Net Income $ 204,000 $ 462,000
========== ==========
SHARES:
Weighted Average Number of Shares
and Common Stock Equivalents 6,633,813 6,566,760
Number of Shares of Common Stock
Issued Upon Conversion of
Preferred Stock 1,599,467 1,599,467
---------- ----------
Weighted Average Number of Shares
and Common Stock Equivalents
Assuming Conversion of Preferred Stock 8,233,280 8,166,227
========== ==========
NET INCOME PER
COMMON SHARE - FULLY DILUTED $ 0.02 $ 0.06
========== ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-29-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> DEC-30-1995
<CASH> 519
<SECURITIES> 0
<RECEIVABLES> 3,938
<ALLOWANCES> 0
<INVENTORY> 5,501
<CURRENT-ASSETS> 12,115
<PP&E> 7,112
<DEPRECIATION> 5,845
<TOTAL-ASSETS> 17,161
<CURRENT-LIABILITIES> 3,831
<BONDS> 5,083
0
120
<COMMON> 646
<OTHER-SE> 7,142
<TOTAL-LIABILITY-AND-EQUITY> 17,161
<SALES> 5,979
<TOTAL-REVENUES> 5,979
<CGS> 3,856
<TOTAL-COSTS> 3,856
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 139
<INCOME-PRETAX> 340
<INCOME-TAX> 136
<INCOME-CONTINUING> 204
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 204
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
</TABLE>
