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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
/X/QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: July 4, 1998
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OF 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to _________
Commission File Number 1-4817
BOWMAR INSTRUMENT CORPORATION
(Exact name of registrant as specified in its charter)
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<CAPTION>
INDIANA 35-0905052
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(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
3601 E. UNIVERSITY DRIVE
PHOENIX, ARIZONA 85034
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
602/437-1520
</TABLE>
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 August 6, 1998, 6,674,492 shares of the Registrant's Common Stock, and
119,906 shares of the Registrant's Preferred Stock were outstanding.
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BOWMAR INSTRUMENT CORPORATION
AND
SUBSIDIARIES
Index
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<CAPTION>
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PART I FINANCIAL INFORMATION...............................................................2-7
Item 1. Financial Statements
Consolidated Balance Sheets (Unaudited)..........................................................2
July 4, 1998 and September 27, 1997
Consolidated Statements of Income (Unaudited)....................................................3
Third quarter and Nine months Ended
July 4, 1998 and June 28, 1997
Consolidated Statements of Cash Flows (Unaudited)................................................4
Nine months Ended July 4, 1998 and
June 28, 1997
Notes to Consolidated Financial................................................................5-7
Statements (Unaudited)
Item 2. Management's Discussion and Analysis...............................................7-10
of Financial Condition and Results
of Operations
PART II OTHER INFORMATION...........................................................11
Item 5 Other............................................................................. 11
Item 6. Exhibits and Reports on Form 8-K......................................... 11-12
</TABLE>
1
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BOWMAR INSTRUMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In thousands of dollars)
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<CAPTION>
July 4, 1998 September 27, 1997
- -----------------------------------------------------------------------------------------------------
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ASSETS
Current Assets
Cash $ 88 $ 1,218
Accounts receivable, less allowance
for doubtful accounts of $43 and $43 4,164 4,476
Inventories 6,225 8,158
Prepaid expenses 423 539
Deferred income taxes 2,054 2,782
- -----------------------------------------------------------------------------------------------------
Total Current Assets 12,954 17,173
Property, Plant and Equipment, net 2,525 2,642
Deferred Income Taxes 440 492
Other Assets, net 99 1,202
- -----------------------------------------------------------------------------------------------------
Total Assets $ 16,018 $ 21,509
=====================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt $ 766 $ 1,608
Accounts payable 977 1,987
Accrued salaries and benefits 1,071 1,953
Accrued expenses 463 503
Reserve for loss on discontinued operation 0 1,300
- -----------------------------------------------------------------------------------------------------
Total Current Liabilities 3,277 7,351
Long-Term Debt 2,774 4,546
Other Long-Term Liabilities 339 339
- -----------------------------------------------------------------------------------------------------
Total Liabilities 6,390 12,236
- -----------------------------------------------------------------------------------------------------
Shareholders' Equity 9,628 9,273
- -----------------------------------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $ 16,018 $ 21,509
=====================================================================================================
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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)
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<CAPTION>
=================================================================================================================================
Third Quarter First Nine Months
------------------- ---------------------
1998 1997 1998 1997
=================================================================================================================================
<S> <C> <C> <C> <C>
Sales $ 7,198 $ 6,989 $ 22,996 $ 20,175
Cost of sales 5,648 4,319 16,076 12,311
- ----------------------------------------------------------------------------------------------------------------------------------
Gross margin 1,550 2,670 6,920 7,864
- ----------------------------------------------------------------------------------------------------------------------------------
Expenses:
Selling, general and administrative 1,387 1,836 5,372 5,452
Product development 113 175 530 453
Interest expense 138 102 442 305
Merger expense 504 0 504 0
Other (income)/expense, net 2 (4) (158) (283)
- ----------------------------------------------------------------------------------------------------------------------------------
Total expenses 2,144 2,109 6,690 5,927
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Income (loss) from continuing operations
before income taxes (594) 561 230 1,937
Income tax expense 65 209 386 760
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Income (loss) from continuing operations (659) 352 (156) 1,177
- ----------------------------------------------------------------------------------------------------------------------------------
Discontinued Operations - Electromechanical segment income on disposition of
discontinued operations including reclassification relating to the provision
for for future operating losses, net of income
tax expense of $352, $0, $520, $0 518 0 780 0
- ----------------------------------------------------------------------------------------------------------------------------------
Net (loss) income (141) 352 624 1,177
- ----------------------------------------------------------------------------------------------------------------------------------
Earnings per share basic:
Continuing operations $ (0.11) $ 0.04 $ (0.06) $ 0.14
Discontinued operations $ 0.08 $ 0.00 $ 0.11 $ 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
Net (loss) income per common share-basic: $ (0.03) $ 0.04 $ 0.05 $ 0.14
==================================================================================================================================
</TABLE>
Note 1-Diluted earnings per share is considered to be the same as basic net
income per share since the effect of the potentially dilutive convertible
preferred stock is currently antidilutive. Additionally, the effect of the other
potentially dilutive securities does not cause diluted earnings per share to
differ from basic earnings per share.
Note 2-Earnings per share is restated for the quarter and nine months ended June
28, 1997, to reflect the adoption of SFAS 128.
See Notes to Consolidated Financial Statements
3
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BOWMAR INSTRUMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands of dollars)
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<CAPTION>
========================================================================================
FIRST NINE MONTHS
------------------------
JULY 4, JUNE 28,
1998 1997
========================================================================================
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OPERATING ACTIVITIES:
Net income $ 624 $1,177
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 479 394
Allowance for doubtful accounts 0 (58)
Reserve for excess and obsolete inventory (464) 32
Reserve for loss on discontinued operations (1,300) 0
Deferred income tax expense 780 641
Net changes in balance sheet accounts:
Accounts receivable 312 (230)
Inventories 2,397 (1,054)
Prepaid expenses 116 4
Accounts payable (1,010) 667
Accrued salaries & expenses (922) (278)
Other assets (354) 7
- ----------------------------------------------------------------------------------------
Net cash provided by operating activities 658 1,302
- ----------------------------------------------------------------------------------------
INVESTING ACTIVITIES:
Purchases of property, plant and equipment (362) (616)
Proceeds from sale of land and buildings 1,457 0
- ----------------------------------------------------------------------------------------
Net cash provided by/(used in) investing activities 1,095 (616)
- ----------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
Payments on line of credit (2,129) 0
Borrowings of long term debt 1,207 117
Retirement of long term debt (1,692) (414)
Payment of dividends on preferred stock (270) (270)
Issuance of common stock 1 268
Other 0 (6)
- ----------------------------------------------------------------------------------------
Net cash used in financing activities (2,883) (305)
- ----------------------------------------------------------------------------------------
Net change in cash (1,130) 381
Cash at beginning of period 1,218 108
- ----------------------------------------------------------------------------------------
Cash at end of period $ 88 $ 489
========================================================================================
- ----------------------------------------------------------------------------------------
</TABLE>
4
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BOWMAR INSTRUMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. CONSOLIDATED FINANCIAL STATEMENTS
The consolidated balance sheets as of July 4, 1998 and September 27, 1997, the
consolidated statements of income for the third quarter and nine months ended
July 4, 1998 and June 28, 1997, and the consolidated statements of cash flows
for the first nine months ended July 4, 1998 and June 28, 1997, have been
prepared by the Company 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 consolidated financial statements and notes
thereto included in the Company's Annual Report on Form 10-K for the fiscal year
ended September 27, 1997. The results of operations for the above noted periods
ended are not necessarily indicative of the operating results for the full year.
2. INVENTORIES
Inventories consist of the following (in thousands):
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July 4, 1998 September 27, 1997
- ------------------------------------------------------------------------------
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Raw Materials $1,382 $3,277
Work-in-process 4,098 4,258
Finished Goods 745 623
------ ------
$6,225 $8,158
====== ======
- ------------------------------------------------------------------------------
</TABLE>
In the third quarter, the Company recorded an additional $500,000 inventory
reserve as a result of the slow moving parts related to the lower than
anticipated business in Asia and the continuing slow down in military memory
sales.
3. EARNINGS PER SHARE (EPS) DISCLOSURES:
The Company has adopted the provisions of the Statement of Financial Accounting
Standards No. 128, Earnings Per Share ("SFAS 128") effective January 3, 1998.
SFAS 128 requires the presentation of basic and diluted earnings per share.
Basic EPS is computed by dividing income available to common stockholders by the
weighted average number of common shares outstanding for the period. Diluted EPS
is computed giving effect to all dilutive potential common shares that were
outstanding during the period. Dilutive potential common shares consist of the
incremental common shares issuable upon exercise of stock options. All prior
period earnings per share amounts have been restated to comply with the SFAS
128.
In accordance with the disclosure requirements of SFAS 128, a reconciliation of
the numerator and denominator of basic and diluted EPS is provided as follows
(in thousands, except per share amounts):
5
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<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
THIRD QUARTER ENDED
FISCAL 1998 FISCAL 1997
- --------------------------------------------------------------------------------- --------------------------------------------
Per Per
Income Shares Share Income Shares Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
- --------------------------------------------------------------------------------- --------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Earnings from continuing
operations, net of tax $(659,000) $352,000
Less: preferred stock dividends 90,000 90,000
- --------------------------------------------------------------------------------- --------------------------------------------
BASIC EPS
Earnings applicable to
Continuing operations,
net of tax (749,000) 6,674,992 $(0.11) 262,000 6,666,910 $0.04
Earnings applicable to
Discontinued operations,
net of tax 518,000 6,674,992 $0.08
- --------------------------------------------------------------------------------- --------------------------------------------
Net Earnings (231,000) ($0.03) 262,000 $0.04
EFFECT OF DILUTIVE
SECURITIES
Common stock options 34,116 45,771
- --------------------------------------------------------------------------------- --------------------------------------------
Earnings from continuing
operations available
to common stockholders $(231,000) 6,709,108 ($0.03) $262,00 6,712,681 $0.04
- --------------------------------------------------------------------------------- --------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
FIRST NINE MONTHS
FISCAL 1998 FISCAL 1997
- --------------------------------------------------------------------------------- --------------------------------------------
Per Per
Income Shares Share Income Shares Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
- --------------------------------------------------------------------------------- --------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Earnings from continuing
operations, net of tax $(156,000) $1,177,000
Less: preferred stock dividends 270,000 270,000
- --------------------------------------------------------------------------------- --------------------------------------------
BASIC EPS
Earnings applicable to
continuing operations,
net of tax (426,000) 6,674,656 ($0.06) 907,000 6,629,532 $0.14
Earnings applicable to
discontinued operations,
net of tax 780,000 6,674,656 $0.11
- --------------------------------------------------------------------------------- --------------------------------------------
Net Earnings 354,000 $0.05 907,000 $0.14
EFFECT OF DILUTIVE SECURITIES
Common stock options 66,119 9,389
- --------------------------------------------------------------------------------- --------------------------------------------
Earnings from continuing
operations available
to common stockholders $354,000 6,740,775 $0.05 $907,000 6,638,921 $0.14
- --------------------------------------------------------------------------------- --------------------------------------------
</TABLE>
6
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The convertible preferred stock, which was convertible to 1,598,346 common
shares on July 4, 1998 and on June 28, 1997, which could potentially dilute
basic EPS in the future was not included in the computation of diluted EPS
because to do so would have been antidilutive for the periods presented.
Options to purchase 97,000 and 86,000 shares of common stock at prices ranging
from $2.06 to $3.56 per share and $2.19 to $3.56, respectively, were outstanding
during the third quarter and nine months of 1998, respectively, but were not
included in the computation of diluted EPS because the option exercise price was
greater than the average market price of the common shares. These options expire
at various times through February, 2008.
4. DISCONTINUED OPERATIONS
In December, 1997 the Board of Directors decided to sell its Technologies
division. As a result of this decision, the Company recorded in the fourth
quarter of fiscal 1997 a reserve of $1,300,000 for estimated future losses
related to the division.
On May 3, 1998, the Company reached a definitive agreement to merge with
Electronic Designs, Inc. Under the terms of the agreement, each share of EDI's
common stock will be exchanged for 1.375 shares of Bowmar common stock. One
division of EDI manufactures active matrix liquid crystals displays (AMLCD).
Subsequent to the execution of the merger agreement, the Bowmar Board concluded
there were potential synergies between the Technologies division and EDI's AMLCD
business. In addition, the Bowmar Board determined that it was beneficial to
account for the pending EDI merger as a pooling of interest. Accordingly, the
Bowmar Board reversed its prior decision to divest the Technologies division.
During the third quarter of fiscal 1998 income of approximately $518,000, after
tax was recognized based on the reversal of the remaining reserve for future
losses related to the disposal of the Technologies division.
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Except for the historical information contained herein, certain matters
discussed here contain forward-looking statements. The words "believe", "expect"
and "anticipate" identify forward-looking statements which speak only as of the
date the statement is made. These forward-looking statements are based largely
on the Company's expectations and are subject to a number of risks and
uncertainties, some of which cannot be predicted or quantified and are beyond
the Company's control. Potential risks and uncertainties include but are not
limited to such factors as the demand for the Company's products, the
instability of the Asian markets, the ability of the Company to penetrate
successfully the commercial market for microelectronic products, demand for
microelectronic products generally, industry competitiveness, reductions in
price and other risks of doing business generally. In addition, there is no
assurance that the Company will successfully complete the EDI merger and
integrate EDI's operations with Bowmar's. The failure to consummate the merger
could have a material adverse effect on the Company. In light of these risks and
uncertainties, there can be no assurance that the forward-looking information
contained in this document will in fact transpire or prove to be accurate.
Actual results may differ materially from those in the forward-looking
statements.
INTRODUCTION
As previously disclosed, in December, 1997, the Bowmar Board determined to
implement a series of actions expected to strategically reposition Bowmar,
reduce corporate overhead and realign management. First, the Bowmar Board
determined to close Bowmar's corporate headquarters in Phoenix, Arizona which
was accomplished by the end of January, 1998. Bowmar now operates exclusively
out of the White Microelectronics division facility also located in Phoenix,
Arizona. Second, effective January 2, 1998, Bowmar's President and Chief
Executive Officer, Thomas K. Lanin, submitted his resignation, and the
7
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Bowmar Board appointed Hamid Shokrgozar, the White Microelectronics division's
president, as President and CEO of Bowmar. Finally, the Bowmar Board made a
decision to sell the Technologies division. A $1.3 million reserve for
anticipated losses and the cost of disposition of the Technologies division was
recorded in fiscal 1997. In addition, in the first quarter of 1998, Bowmar
expensed approximately $400,000 associated with the closing of the corporate
office and related severance payments.
Also, as previously disclosed, on May 3, 1998 the Company entered into a merger
agreement with Electronic Designs, Inc. ("EDI"). Pursuant to the merger
agreement, each issued and outstanding share of EDI's common stock will be
converted into the right to receive 1.375 shares of the Company's common stock.
The Company will assume all outstanding options and warrants of EDI, amended to
take into account the exchange ratio of 1.375. The merger is subject to the
approval of the shareholders of each of the Company and EDI, as well as certain
regulatory approvals.
Subsequent to the execution of the merger agreement, the parties considered the
possibility of accounting for the merger as a pooling of interests. At the same
time, the Bowmar Board considered whether there were potential synergies between
EDI's active matrix liquid crystal display (AMLCD) business and the business of
the Technologies division. The Bowmar Board concluded that there were such
synergies and that to account for the merger as a pooling of interests the
divestiture of the Technologies division should be reversed. Accordingly, the
Company and EDI amended the merger agreement to facilitate a pooling of interest
accounting treatment and on June 1, 1998, the Bowmar Board reversed the decision
to divest the Technologies division. As required by EITF 90-16, Bowmar's
historical financial information has been reclassified to reflect the results of
the Technologies division in continuing operations.
RESULTS OF OPERATION
Net Sales
Sales for the third quarter of Fiscal 1998 were $7,198,000 compared to prior
year sales for the third quarter of $6,989,000. Sales for the first nine months
of fiscal 1998 were $22,996,000 compared to $20,175,000 in the same period of
the prior year.
Sales in the microelectronic segment for the third quarter of fiscal 1998
decreased by approximately $918,000 versus the same period in fiscal 1997. Sales
for the first nine months of fiscal 1998 were up by approximately $162,000
versus the same period in fiscal 1997. Sales for the third quarter of 1998 were
adversely affected as a result of a general downturn in the industry as a whole.
Sales in the electromechanical segment for the third quarter of fiscal 1998 were
$1,127,000 higher versus the same period in fiscal 1997. Sales for the first
nine months of fiscal 1997 were up by approximately $2,659,000 versus the same
period in fiscal 1997. The increase in sales for the electromechanical segment
resulted principally from additional sales of new interface products.
The Company experienced a decline in bookings in the third quarter. Management
believes this is a result of the current Asian economic situation and the
continuing decline in military business. The Company believes that the
continuing decline and shift in military spending will have an adverse effect on
the Company's overall results. To address this, the Company is more aggressively
pursuing commercial business while emphasizing niche military markets where it
has a competitive advantage.
Gross Margin
Gross margins for the third quarter of fiscal 1998 decreased by $1,120,000
compared to the same period of fiscal 1997. Gross margins for the first nine
months of fiscal 1998 decreased by $944,000 from the same period in fiscal 1997.
The decreases are mainly due to the Company's $500,000 increase in the inventory
reserve in the microelectronics segment this quarter because of slow moving
parts related to the
8
<PAGE> 10
lower than anticipated business in Asia and the continuing slow down in military
memory sales. Electromechanical sales were a greater percentage of the total
sales for the first nine months of fiscal 1998 as compared to the previous year.
Because electromechanical margins are lower than the microelectronics margins,
the overall margins decreased.
Additionally, microelectronics margins were down as a result of increased
competition in the market place putting downward pressure on memory chip pricing
and lowering the Company's average sales price. The electromechanical margins
were lower for the quarter and nine months because of production problems
associated with the introduction of new products.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the third quarter of fiscal
1998 decreased $449,000 versus the same period in fiscal 1997. The decrease was
a result of the closing of the corporate office at the end of the 1998 first
quarter, and lower sales cost for the electromechanical segment as a result of a
reduction in expenses associated with the sales department. Selling expenses for
the quarter as compared to the same quarter in the prior year were lower for the
microelectronics division because of lower commissions as a result of the
decline in sales. For the first nine months of fiscal 1998 there was a decrease
of $80,000 in expenses as compared to the same period in fiscal 1997. The
savings in the third quarter were offset by the $400,000 charge taken in the
first quarter of 1998 for the reduction and relocation of the Company's
corporate headquarters.
Product Development Expenses
Product development expenses for the third quarter of fiscal 1998 were
approximately $62,000 lower than the same period of fiscal 1997, but were
$77,000 higher for the first nine months of fiscal 1998 as compared to the same
period of fiscal 1997. The decrease in the third quarter was due to a
microprocessor development project in the microelectronics division in the third
quarter of fiscal 1997 which was not in process during the same period of fiscal
1998. The overall increase as compared to the prior year for the first
nine-months was the result of a heavy emphasis on commercial product development
at the microelectronics division during the first six months of fiscal 1998.
Interest Expense
Interest expense for the third quarter and the first nine months in fiscal 1998
increased by $36,000 and $137,000, respectively, as compared to the same periods
of fiscal 1997. The increase is primarily a result of additional borrowings to
finance the Company's leasehold improvements for the microelectronics facility
and financing higher receivables which occurred in the first six months of 1998.
Merger Expense
The Company expensed $504,000 for costs relating to the pending EDI merger,
primarily representing financial, legal and accounting service expenses. The
Company expects similar expenses in the fourth quarter of 1998 in connection
with the EDI merger.
Other Income
Other income for fiscal 1998 was $125,000 lower for the first nine months as
compared to the same period of fiscal 1997. The decline is due to the loss of
rental income as a result of the lease expiration on the Company's former
building in Acton, Massachusetts in February, 1997 combined with the additional
expenses incurred in fiscal 1998 to maintain and prepare the property for sale.
Additionally there was a
9
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gain from the sale of a stock investment in the third quarter of 1997. The
decline was partially offset by a tax settlement in fiscal 1998 that resulted in
income of $292,000.
Provision for Income Taxes
The income tax expense from continuing operations for the third quarter and
first nine months of fiscal 1998 decreased by approximately $144,000 and
$374,000, respectively, as compared to the same fiscal 1997 periods. The lower
income before income taxes caused the decrease in the third quarter and the
first nine months of fiscal 1998. The decrease was not as large as would have
been anticipated because of the merger expenses. Most of these expenses are not
deductible for taxes. As a result, the effective tax rate for the year increased
significantly as compared to fiscal 1997.
FINANCIAL CONDITION AND LIQUIDITY
As of July 4, 1998, working capital had decreased to $9,677,000 from $9,822,000
as of September 27, 1997, principally as a result of the decrease in
inventories. However, this was largely offset by an approximate 4,000,000
reduction in current liabilities.
Long term debt has declined $1,772,000 since the beginning of the fiscal year
primarily as a result of proceeds from the sale of the building in Massachusetts
which were used to retire long term debt. The current portion of long term debt
declined primarily as a result of the Company's decision to reduce their cash
balances.
Changes in the components of working capital are detailed in the Consolidated
Statements of Cash Flows.
The Company's operations provided approximately $658,000 cash in the first nine
months of fiscal 1998. The Company expects that revenues from operations, when
combined with the Company's available credit facilities, should be sufficient to
fund the Company's cash needs for the foreseeable future.
On April 30, 1998, the Company sold certain land and a building in Acton,
Massachusetts for approximately $1,200,000. No additional gain or loss was
realized on the sale. The proceeds were used to retire the Industrial Revenue
Bonds and repay $950,000 of the Bank One term loan.
Year 2000
Many computer systems experience problems handling dates beyond the year 1999.
Many existing computer programs only use two digits to identify a year in the
date field. Such systems and programs must be modified or replaced prior to
January 1, 2000 in order to remain functional. The Company has undertaken a
company-wide review of its Year 2000 exposure. The Company has surveyed its
supporting systems and has implemented a plan to make its systems Year 2000
compliant by March 1999. All Bowmar products are now Year 2000 compliant. The
Company also has been in contact with its major suppliers and vendors, each of
which is either year 2000 complaint or is completing system upgrades to become
compliant. The Company is currently responding to customer inquiries with
respect to the Year 2000 issue. If modifications and conversions to address the
Year 2000 issue are not completed on a timely basis or are not fully effective,
the Year 2000 problem may have a material adverse effect on the Company. The
Company expects to implement successfully the systems and programming changes
necessary to address the Year 2000 issue and does not believe the cost of such
actions will have a material adverse effect on the Company, its results of
operations or financial conditions.
10
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PART II OTHER INFORMATION
ITEM 5
Other
A stockholder of the company who wishes to submit a stockholder proposal
pursuant to SEC Rule 14a-8 promulgated under the Securities Exchange Act of
1934, as amended, for presentation to the Company's 1999 Annual Meeting of
Stockholders must submit the proposal to the Company at its principal office not
later than September 1, 1998 for inclusion, if appropriate, in the Company's
proxy statement and form of proxy relating to such meeting. A Company
stockholder who wishes to submit a proposal other than pursuant to Rule 14a-8
must do so by November 16, 1998 in order to be timely for purposes of Rule
14a-8.
ITEM 6
EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits.
2. Agreement and Plan of Merger, dated as of May 3, 1998, by and
among Bowmar Instrument Corporation, Bravo Acquisition
Subsidiary, Inc. and Electronic Designs, Inc. ("Merger
Agreement"). (Previously filed as Exhibit 2 to the Registrant's
Form 8-K filed May 6, 1998 and incorporated herein by this
reference).
2.1 Amendment to Merger Agreement dated June 10, 1998. (Previously filed as
exhibit 2.1A to the Registrant's form S-4 filed June 11, 1998, and
incorporated herein by this reference).
3.1 Amended and Restated Articles of Incorporation. (Previously filed as
Exhibit A to the Registrant's definitive Proxy Statement prepared in
connection with the 1993 Annual Meeting of Shareholders, which is
incorporated herein by this reference.)
3.2 Amended and Restated Code of By-laws, as further amended on July
28, 1995. (The former having been previously filed as Exhibit 3
to the Registrant's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1993, and the latter having been previously filed
as Exhibit 5(a) to the Current Report on Form 8-K dated October
16, 1995, both of which are incorporated herein by this
reference.)
4.1 Indenture, Bowmar Instrument Corporation 13-1/2% Convertible
Subordinated Debentures due December 15, 1995. (Previously filed as
Exhibit 4.4 to the Registration Statement of Form S-7, File No.
2-70025, on November 25, 1980, which is incorporated herein by this
reference.)
4.2 Amended and Restated Articles of Incorporation (See Exhibit 3.1,
above.)
4.3 Rights Agreement, dated as of December 6, 1996 between Bowmar
Instrument Corporation and American Stock Transfer and Trust
Corporation. (Previously filed as Exhibit 5C to the Form 8-K filed by
the Registrant on December 19, 1996.)
10.4.1 Executive Employment Agreement by and between Hamid Shokrgozar and
Bowmar Instrument Corporation. (Previously filed as Exhibit 10.3 to the
Registrant's Amendment No. 1 to Form S-4
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filed July 27, 1998 and incorporated herein by reference.)
10.4.2 Executive Employment Agreement by and between Joseph G. Warren, Jr. and
Bowmar Instrument Corporation. (Previously filed as Exhibit 10.4 to the
Registrant's Amendment No. 1 to Form S-4 filed July 27, 1998 and
incorporated herein by reference.)
27 Financial Data Schedule.
b. Reports on Form 8-K.
The Company filed a Form 8-K on May 6, 1998, reporting that on May 3, 1998, the
Company, Electronic Designs, Inc., and the Company's wholly owned subsidiary,
Bravo Acquisition Subsidiary, entered into an Agreement and Plan of Merger.
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: August 14, 1998
12
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<LEGEND>
This schedule contains summary financial information extracted from the balance
sheet and statement of operations for the period ending July 4, 1998 and is
qualified in its entirety by reference to such Form 10-Q quarterly report filed
pursuant to the Securities Exchange Act of 1934 for the period ended July 4,1
998.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-03-1998
<PERIOD-START> SEP-28-1998
<PERIOD-END> JUL-04-1998
<CASH> 88,000
<SECURITIES> 0
<RECEIVABLES> 4,207,000
<ALLOWANCES> 43,000
<INVENTORY> 6,225,000
<CURRENT-ASSETS> 12,954,000
<PP&E> 2,525,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 16,018,000
<CURRENT-LIABILITIES> 3,277,000
<BONDS> 3,113,000
0
120,000
<COMMON> 672,000
<OTHER-SE> 8,836,000
<TOTAL-LIABILITY-AND-EQUITY> 16,018,000
<SALES> 7,198,000
<TOTAL-REVENUES> 7,198,000
<CGS> 5,648,000
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,006,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 138,000
<INCOME-PRETAX> (594,000)
<INCOME-TAX> 65,000
<INCOME-CONTINUING> (659,000)
<DISCONTINUED> 518,000
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (141,000)
<EPS-PRIMARY> (0.03)
<EPS-DILUTED> (0.03)
</TABLE>
