<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended OCTOBER 31, 1995
----------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from __________ to __________
Commission file number 0-4277
------
MAGNETIC TECHNOLOGIES CORPORATION
---------------------------------
(Exact name of small business issuer as specified in its charter)
DELAWARE 16-0961159
-------- ----------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
770 LINDEN AVENUE
ROCHESTER, NEW YORK 14625
-------------------------
(Address of principal executive offices)
(716) 385-8711
--------------
(Issuer's telephone number)
NONE
----
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes [ ] No [ ] N/A
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
2,786,642 SHARES OF THE ISSUER'S COMMON STOCK WERE OUTSTANDING AS OF
OCTOBER 31, 1995.
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MAGNETIC TECHNOLOGIES CORPORATION
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
AT OCTOBER 31, 1995 AND JULY 31, 1995
<TABLE>
<CAPTION>
ASSETS OCTOBER 31, 1995 JULY 31, 1995
---------------- -------------
<S> <C> <C>
Current assets:
Cash, including interest-bearing deposits of $733,070 and $490,445 at
October 31, 1995 and July 31, 1995, respectively $ 1,147,077 $ 746,434
Accounts receivable, less allowance for doubtful accounts of $29,500 and
$31,500 at October 31, 1995 and July 31, 1995, respectively 2,000,775 2,265,794
Inventories 3,874,214 4,182,773
Costs and estimated earnings in excess of billings on contracts in process 334,453 291,288
Deferred income taxes 187,500 181,400
Prepaid taxes, expenses and other current assets 168,805 109,613
------------ -------------
Current assets 7,712,824 7,777,302
Property, plant and equipment, net 3,735,061 3,877,951
Excess of cost over net assets acquired, net of accumulated amortization of
$129,505 and $127,154 at October 31, 1995 and July 31, 1995, respectively 54,087 56,438
Deferred income taxes 603,500 611,100
Other assets 512,288 482,517
------------ -------------
$12,617,760 $12,805,308
============ =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and other accrued expenses $ 3,785,210 $ 3,938,329
Note payable 826,108 826,108
Current portion of long-term debt and capital lease obligations 291,785 291,784
Billings in excess of costs and estimated earnings on contracts in process 197,215 171,497
Accrued income taxes 5,955 22,958
------------ ------------
Current liabilities 5,106,273 5,250,676
Long-term debt and capital lease obligations 2,461,848 2,533,666
------------ ------------
Total liabilities 7,568,121 7,784,342
------------ -------------
Stockholders' equity:
Common stock - $ .15 par value;
Authorized - 15,000,000 shares
Issued and outstanding - 2,786,642 and 2,786,675 shares at
October 31, 1995 and July 31, 1995, respectively 417,996 418,001
Stock warrants outstanding for 22,500 shares of common stock, valued at
$82,500, net of unamortized deferred expense of $42,060 and $47,115 at
October 31, 1995 and July 31, 1995, respectively 40,440 35,385
Additional paid-in capital 7,646,212 7,646,302
Cumulative translation adjustment 857 479
Accumulated deficit (3,055,866) (3,079,201)
------------ ------------
Total stockholders' equity 5,049,639 5,020,966
------------ ------------
$12,617,760 $12,805,308
============ ============
</TABLE>
See accompanying Notes to Consolidated Financial Statements (Unaudited).
2
<PAGE> 3
MAGNETIC TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
THREE MONTHS ENDED OCTOBER 31, 1995 AND OCTOBER 31, 1994
<TABLE>
<CAPTION>
THREE MONTHS ENDED THREE MONTHS ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
------------------ ------------------
<S> <C> <C>
Net sales $6,825,012 $5,439,145
Cost of sales 6,034,231 4,626,087
---------- ----------
Gross profit 790,781 813,058
Selling, general and administrative expenses 699,354 686,246
---------- ----------
Operating earnings 91,427 126,812
Interest expense 63,798 55,044
Other income and expenses, net (5,156) (1,746)
---------- ----------
Income before income taxes 32,785 73,514
Provision for income taxes 9,450 37,025
---------- ----------
Net income 23,335 36,489
Accumulated deficit beginning (3,079,201) (2,304,336)
---------- ----------
Accumulated deficit ending ($3,055,866) ($2,267,847)
========== ==========
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED THREE MONTHS ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
-------------------- ---------------------
FULLY FULLY
PRIMARY DILUTED PRIMARY DILUTED
------- ------- ------- -------
<S> <C> <C> <C> <C>
Earnings per share:
Net income per share $ .01 $ .01 $ .01 $ .01
============ =========== ============ ===========
Weighted average number of shares 2,921,924 2,923,500 2,894,172 2,904,824
============ =========== ============ ===========
</TABLE>
See accompanying Notes to Consolidated Financial Statements (Unaudited).
3
<PAGE> 4
MAGNETIC TECHNOLOGIES CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED OCTOBER 31, 1995 AND OCTOBER 31, 1994
<TABLE>
<CAPTION>
THREE MONTHS ENDED THREE MONTHS ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
------------------ ------------------
<S> <C> <C>
Net cash provided (used) by operating activities $ 579,357 ($ 53,345)
---------- -----------
Cash flows from investing activities:
Capital expenditures (100,957) (241,360)
---------- -----------
Net cash used by investing activities (100,957) (241,360)
---------- -----------
Cash flows from financing activities:
New borrowings 500,000
Principal payments on long-term borrowings and capital leases (76,008) (246,524)
Proceeds from exercise of stock options 112,500
Purchase and retirement of common stock (95) (26)
---------- -----------
Net cash (used) provided by financing activities (76,103) 365,950
---------- -----------
Effect of exchange rate changes on cash (1,654)
Net increase in cash 400,643 71,245
Cash and cash equivalents at the beginning of the period 746,434 399,861
----------- -----------
Cash and cash equivalents at the end of the period $1,147,077 $471,106
=========== ===========
</TABLE>
SUPPLEMENTAL DISCLOSURES TO CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
- --------------------------------------------------------------------------
THREE MONTHS ENDED OCTOBER 31, 1994
During the quarter ended October 31, 1994, the Company borrowed $500,000 on
its bank line of credit. Of this amount, $200,000 was repaid during the same
quarter.
See accompanying Notes to Consolidated Financial Statements (Unaudited).
4
<PAGE> 5
MAGNETIC TECHNOLOGIES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
OCTOBER 31, 1995
INTERIM ACCOUNTING POLICY
The unaudited consolidated financial statements herein have been prepared
in accordance with the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to these rules and
regulations.
The financial information included in this quarterly report should be read
in conjunction with the Company's most recent Form 10-KSB and annual report.
In the opinion of Management, the information furnished reflects all
adjustments necessary to present a fair statement of the financial condition,
results of operations and cash flows for the periods covered.
RECLASSIFICATIONS
Certain amounts in the prior year's financial statements have been
reclassified to conform to the current year presentation.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
for the periods presented and the accounts of its wholly-owned foreign
subsidiary, Magnetic Technologies Europe Limited (MTE), as of March 1, 1995.
(See acquisition disclosures following.) All significant intercompany
balances, transactions and profits are eliminated.
TRANSLATION OF FOREIGN CURRENCIES
Assets and liabilities of MTE are translated into U.S. dollars at currency
exchange rates in effect at the end of the balance sheet period. Revenues and
expenses are translated at average exchange rates in effect during the related
income statement periods. Gains and losses resulting from foreign currency
translations are included in the results of operations. Gains and losses
resulting from the translation of the foreign subsidiary balance sheet are
recorded directly to the accumulated translation adjustment, a component of
stockholders' equity.
REVENUE RECOGNITION
The Company accounts for contracts for the manufacture of precision plastic
molds and custom tooling using the percentage of completion method of
accounting. Revenue is recognized in the ratio that costs incurred bear to
total estimated costs of the contracts. Contract costs include direct material
and labor costs as well as indirect costs related to contract performance.
Losses expected to be incurred are charged to operations in the period such
losses are determined.
INVENTORIES
Inventories are stated at the lower of cost or market, cost being
determined on a first-in, first-out basis and are summarized as follows:
<TABLE>
<CAPTION>
OCTOBER 31, 1995 JULY 31, 1995
---------------- -------------
<S> <C> <C>
Raw material $2,180,887 $2,558,700
Work in process 1,479,112 1,271,105
Finished goods 214,215 352,968
---------- ----------
$3,874,214 $4,182,773
========== ==========
</TABLE>
5
<PAGE> 6
COSTS, ESTIMATED EARNINGS AND BILLINGS ON CONTRACTS IN PROCESS
The following is a summary of costs, estimated earnings and billings on
contracts in process:
<TABLE>
<CAPTION>
OCTOBER 31, 1995 JULY 31, 1995
---------------- -------------
<S> <C> <C>
Costs and estimated earnings $1,250,794 $1,136,537
LESS: Billings to date 1,113,556 1,016,746
---- ---------- ----------
$ 137,238 $ 119,791
========== ==========
</TABLE>
Costs, estimated earnings and billings are presented in the accompanying
balance sheets as:
<TABLE>
<CAPTION>
OCTOBER 31, 1995 JULY 31, 1995
---------------- -------------
<S> <C> <C>
Costs and estimated earnings in excess of billings on contracts in
process $334,453 $291,288
Billings in excess of costs and estimated earnings on contracts in
process (197,215) (171,497)
-------- --------
$137,238 $119,791
======== ========
</TABLE>
PROPERTY, PLANT AND EQUIPMENT
Major classifications of property, plant and equipment are as follows:
<TABLE>
<CAPTION>
OCTOBER 31, 1995 JULY 31, 1995
---------------- -------------
<S> <C> <C>
Equipment under capital lease $ 844,202 $ 844,202
Machinery and engineering equipment 4,936,595 4,887,098
Furniture and fixtures 1,451,908 1,393,874
Leasehold improvements 513,453 513,453
Vehicles 101,243 101,243
Construction in process 109,334 116,526
----------- -----------
7,956,735 7,856,396
LESS: Accumulated depreciation and amortization 4,221,674 3,978,445
---- ----------- -----------
$3,735,061 $3,877,951
=========== ===========
</TABLE>
ACQUISITION
In April 1993, the Company entered into an agreement with the
Cookson Group plc (Cookson) of London, England, in which the two corporations
formed a new company, Magnetic Technologies Europe Limited (MTE), to
manufacture and sell precision magnetic, electronic and mechanical devices in
Europe. Headquartered in Rochester, England, MTE was capitalized with
$1,000,000, of which $750,000 was contributed by Cookson for all of the voting
"A" shares of stock and $250,000 was contributed by the Company for all of the
non-voting "B" shares of stock, constituting a 25% interest in MTE. The
investment in MTE was accounted for under the cost method due to the Company's
inability to exercise any influence over the operating and financial policies
of MTE. The Company had no voting stock, no voting Board members, no
policy-making influence, and no interchange of personnel. Thus, Management
believes that the cost method of accounting for this transaction was
appropriate.
Concurrent with the formation of MTE, the Company sold Cookson and MTE a
license for the use of the Company's technology in connection with the
manufacture of products to be sold in Europe and the Near East. Cookson paid
the Company $1,250,000 for the technology and the Company agreed to discontinue
selling to the European market. (The Company's export sales in the immediately
preceding twelve month period had aggregated $2,200,000.) At the closing of
the transaction, Cookson also placed a $1,040,000 order on behalf of itself and
MTE for the Company to produce manufacturing machinery and related software to
be shipped to England.
6
<PAGE> 7
In March 1994, Cookson sold certain of its businesses to Calder Group
Limited (Calder) and Calder's subsidiary, Magnet Applications Limited, became
the owner of all of MTE's voting "A" shares of stock. A year later, Calder
decided to dispose of certain of its operations, including MTE. On March 31,
1995, the Company acquired all of the voting shares of stock of MTE from
Calder's subsidiary. The acquisition was effective as of February 28, 1995 and
the accounts of MTE are consolidated with those of the Company from March 1,
1995 forward. The purchase price of the acquisition of the remaining 75%
interest in MTE was $492,007 plus closing costs of $23,054, before cash
acquired of $3,340. In connection with the acquisition, the Company incurred a
note payable to Calder of $351,000, payable in equal monthly installments of
$9,750 over a thirty-six month period commencing May 1, 1995. The note payable
to Calder has no stated interest; therefore, interest was imputed at a rate of
9.25%. The balance of the note payable was $305,410 at acquisition and is
reflected in the Company's consolidated balance sheet at October 31, 1995 as
current portion of long-term debt of $94,761 and long-term debt of $165,491.
Prior to the acquisition of the remaining 75% of the outstanding stock of
MTE in March 1995, the Company evaluated its investment in MTE by reviewing the
monthly operating performance to determine whether any permanent impairment in
the value of its investment had occurred. These reviews took into
consideration MTE's performance as compared to budgeted amounts, as well as the
start-up plan for the company. Based upon those evaluations, the Company had
determined that the value of the investment had not been impaired. Effective
March 1, 1995, the acquisition of MTE was then accounted for under the purchase
method. At acquisition, the Company incurred a $312,302 write-down of its
investment in MTE to account for an impairment in asset value. This impairment
in value primarily related to the write-off of previously recognized profit in
equipment manufactured by the Company and sold to MTE, as well as various
costs related to the acquisition.
MTE engages in the same business as the Company's traditional domestic
operations, namely, the design and manufacture of precision magnetic assemblies
for office equipment manufacturers. In the two years since its formation, MTE
has obtained business from the Company's prior customer in Europe, as well as
orders from new European customers. Management anticipates that MTE will reach
a break-even level by the end of fiscal 1996.
Subsequent to the closing of the acquisition agreement, MTE adopted a
revised Memorandum of Association and Articles of Association establishing a
single class of stock and containing provisions to facilitate the Company's
operating of the business from the United States. Gordon H. McNeil, President
and Chief Executive Officer of the Company, became MTE's sole Director and its
President. MTE has fewer than ten employees.
The following table presents unaudited pro forma results of operations as
if the acquisition of MTE had occurred at the beginning of each of the periods
presented, after giving effect to certain adjustments for intercompany
transactions, depreciation, interest and related income tax effects. These pro
forma results have been prepared for comparative purposes only and do not
purport to be indicative of what would have occurred had the acquisition been
made at the beginning of the periods presented or of results which may occur in
the future. The unaudited pro forma combined results should be read in
conjunction with the historical financial statements of the Company and with the
historical financial statements of MTE as filed with the Company's most recent
Form 8-K.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
OCTOBER 31, 1994
------------------
<S> <C>
Net sales $5,595,637
Net loss ($116,486)
NET LOSS PER SHARE:
------------------
Primary ($ .04)
Fully Diluted ($ .04)
WEIGHTED AVERAGE NUMBER OF SHARES:
----------------------------------
Primary 2,757,989
Fully Diluted 2,757,989
</TABLE>
7
<PAGE> 8
EARNINGS PER SHARE OF COMMON STOCK AND STOCKHOLDERS' EQUITY
Earnings per common share are based on the weighted average number of
shares outstanding during the period after consideration of the dilutive effect
of stock options and stock warrants. In November 1993, the Company issued
stock warrants for 22,500 shares of common stock to an investment securities
consultant. The warrants are exercisable at a price of $5.00 per share of
common stock and expire on December 31, 1997. The warrants were valued at
$82,500 utilizing the Black-Scholes method of securities valuation. The
deferred expense related to the issuance of the warrants is being amortized
ratably to expense over a period of forty-nine months. The unamortized
deferred expense was $42,060 at October 31, 1995. The value of the outstanding
warrants, net of unamortized deferred expense, or $40,440, is reflected in
stockholders' equity at October 31, 1995.
CAPITAL EXPENDITURES
Capital expenditures for the three month period ended October 31, 1995
amounted to $100,957. These expenditures were funded with working capital.
INCOME TAXES
Effective fiscal 1994, the Company adopted Statement of Financial
Accounting Standards No. 109 (SFAS 109), ACCOUNTING FOR INCOME TAXES. The
adoption of SFAS 109 changes the Company's method of accounting for income
taxes from the deferred method under Accounting Principles Board Opinion No. 11
(APB 11), ACCOUNTING FOR INCOME TAXES, to an asset and liability approach.
Previously, the Company deferred the past tax effects of timing differences
between financial reporting and taxable income. The asset and liability
approach requires the recognition of deferred tax liabilities and assets for
the expected future tax consequences of temporary differences between the
carrying amounts and the tax basis of assets and liabilities.
The following is a summary of current and long-term deferred tax assets and
the related valuation allowances:
<TABLE>
<CAPTION>
AT OCTOBER 31, 1995 AT JULY 31, 1995
------------------- ----------------
<S> <C> <C>
Current deferred tax assets:
Accrued expenses $53,800 $ 109,700
Inventory 17,500 44,800
Warranty reserves 104,300 15,100
Other deferred tax assets 11,900 11,800
----------- ------------
$187,500 $181,400
=========== ============
Long-term deferred tax assets:
Federal net operating loss carryforwards $281,400 $306,700
State net operating loss carryforwards 38,200 45,500
Federal investment tax credit carryforwards 72,300 96,300
State investment tax credit carryforwards 218,300 218,300
Federal alternative minimum tax credit carryforwards 52,900 51,000
State alternative minimum tax credit carryforwards 12,000 6,000
Depreciation 444,600 412,100
Other deferred tax assets 111,500 102,900
----------- ------------
1,231,200 1,238,800
LESS: Valuation allowances 627,700 627,700
---- ----------- ------------
$603,500 $611,100
=========== ============
</TABLE>
The realization of the deferred tax assets related to the net operating
loss and tax credit carryforwards is dependent upon future taxable income. In
addition, if certain substantial changes in the Company's ownership should
occur, there would be an annual limitation on the amount of net operating loss
and tax credit carryforwards which could be utilized.
8
<PAGE> 9
BORROWINGS
The Company had $423,892 of its $1,250,000 bank line of credit available
and $826,108 outstanding on the line at October 31, 1995. In addition, the
Company's $2,000,000 revolving loan had an available balance of $200,000 at
October 31, 1995. The line of credit and revolving loan require interest
payments at prime plus .25%.
LIQUIDITY AND CAPITAL RESOURCES
Even though the Company's debt increased by reason of the acquisition of
its Austro Mold Group in November 1992, and its acquisition of MTE in March
1995, its current cash flow position should be adequate to fund the
non-compete agreement payments related to the Austro Mold acquisition, as well
as the interest and principal on current long-term debt.
Operating cash flows increased $632,702 for the three month period ended
October 31, 1995 over the comparable period in fiscal 1995. The variance is
primarily the result of decreased accounts receivable and inventories
supporting higher volumes of sales activity in fiscal 1996.
Cash used for investing activities decreased $140,403 for the three month
period ended October 31, 1995 over the comparable period in fiscal 1995. The
variance is due to lower capital expenditures in the first quarter of fiscal
1996 over the prior year.
Financing cash flows decreased by $442,053 for the three month period ended
October 31, 1995 over the comparable period in the prior year. The variance
was primarily due to borrowings in the first quarter of fiscal 1995 and
proceeds from the exercise of stock options of $112,500 in the prior year.
9
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
MAGNETIC TECHNOLOGIES CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL RESULTS (UNAUDITED)
COMPARISON OF THE THREE MONTH PERIODS ENDED
OCTOBER 31, 1995 AND OCTOBER 31, 1994
RESULTS OF OPERATIONS
THREE MONTH PERIODS COMPARISON
The Company's consolidated net sales for the three months ended October 31,
1995 increased $1,385,867 over the comparable period last year. The increased
volumes included sales of $5,374,112 for the Magnetic Assembly Group, an
increase of $1,042,900 over the prior year, primarily with the Company's major
customer. The Company's European subsidiary, MTE, reported sales of $438,151
for the first quarter of fiscal 1996. (MTE's results have been included in the
consolidated financial statements since March 1, 1995). The Austro Mold Group
had a $95,184 sales decrease in the first quarter of fiscal 1996. The Austro
Mold plastics molding operation reported sales of $672,824, an increase of
$124,716 over the comparable period of the prior year, while its tooling
operation reported sales of $339,925, a decrease of $68,434 over the comparable
fiscal 1995 period. In addition, the first quarter of fiscal 1995 included
sales of $151,466 for the Austro Mold Florida tooling operation, which was
terminated during fiscal 1995. In aggregate, Austro Mold reported sales of
$1,012,749 for the quarter versus $1,107,933 for the comparable period of
fiscal 1995.
Consolidated gross profit of $790,781 for the quarter ended October 31,
1995, decreased $22,277 over the comparable period in the prior year, and the
consolidated gross margin decreased from 15% to 12%. The Magnetic Assembly
Group's gross margin for the first quarter of fiscal year 1996 was $827,770, or
15%, compared with 19% for the first quarter of fiscal 1995. The decrease was
a result of the addition of significant remanufacturing sales volume carrying
lower gross margins, as well as pricing pressure from the Company's major
customer. The Austro Mold Group experienced a negative gross margin of
$75,082, or a negative 7%, for the first quarter of fiscal 1996, versus a
positive 1% in the comparable period the prior year. The decrease is
partially attributable to training costs related to the addition of automated
equipment to establish unattended tool making capability. The purpose of
upgrading Austro Mold to a more automated manufacturing environment is to
reduce the overall dependence on labor, to add state-of-the-art capability, and
to assist in the goal of better containing manufacturing costs, with which
Austro Mold has experienced continuing difficulty. MTE reported a gross margin
of 9% for the first quarter ended October 31, 1995, which is consistent with
the Company's projections for that new operation.
Selling, general and administrative expenses remained relatively consistent
with the comparable period of the prior year, with an increase of $13,108 over
the fiscal 1995 quarter. The increase was the result of selling, general and
administrative expenses for MTE of $76,985, offset by savings in this category
of costs for the Austro Mold Group. For the most recent quarter, the
consolidated selling, general and administrative costs dropped to 10% from 13%
as a percentage of net sales from the comparable quarter a year ago. The
percentage variance was the result of the Company's continued cost management
efforts. Interest expense remained relatively consistent with the prior year
period.
The three month period ended October 31, 1995 resulted in consolidated net
income of $23,335, a decrease of $13,154 from the comparable period last year.
The Magnetic Assembly Group reported a profit before income taxes of $318,632
for the quarter, while the Austro Mold Group and MTE reported losses before
income taxes of $248,693 and $37,154, respectively.
10
<PAGE> 11
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a.) Exhibits
Exhibit 27 - Financial Data Schedule
b.) Reports on Form 8-K
None
11
<PAGE> 12
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
MAGNETIC TECHNOLOGIES CORPORATION
Date: December 14, 1995 By: /s/ Gordon H. McNeil
- --------------------------------- --------------------------------
Gordon H. McNeil, President and
Principal Executive Officer
12
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-01-1995
<PERIOD-END> OCT-31-1995
<CASH> 1,147,077
<SECURITIES> 0
<RECEIVABLES> 2,030,275
<ALLOWANCES> 29,500
<INVENTORY> 3,874,214
<CURRENT-ASSETS> 7,712,824
<PP&E> 7,956,735
<DEPRECIATION> 4,221,674
<TOTAL-ASSETS> 12,617,760
<CURRENT-LIABILITIES> 5,106,273
<BONDS> 2,461,848
<COMMON> 417,996
0
0
<OTHER-SE> 4,631,643
<TOTAL-LIABILITY-AND-EQUITY> 12,617,760
<SALES> 6,825,012
<TOTAL-REVENUES> 6,825,012
<CGS> 6,034,231
<TOTAL-COSTS> 6,034,231
<OTHER-EXPENSES> 694,198
<LOSS-PROVISION> 104
<INTEREST-EXPENSE> 63,798
<INCOME-PRETAX> 32,785
<INCOME-TAX> 9,450
<INCOME-CONTINUING> 23,335
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 23,335
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
