<PAGE> 1
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 August 31, 1995 or
------------------
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
------------------ -----------------
Commission file number 2-29697
------------
THE TRANZONIC COMPANIES
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Ohio 34-0664235
- --------------------------------- --------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
30195 Chagrin Blvd., Pepper Pike, Ohio 44124
- ---------------------------------------- ------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 216/831-5757
------------
Indicate by check mark whether the registrant (1) has filed all annual,
quarterly, and other reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months and (2) has been
subject to the filing requirements for at least the past 90 days.
Yes X No
----- -----
Number of Class A Common Shares Outstanding at October 6, 1995 2,186,023
---------
Number of Class B Common Shares Outstanding at October 6, 1995 1,316,865
---------
<PAGE> 2
<TABLE>
PART I: FINANCIAL INFORMATION
------------------------------
Item 1. Financial Statements
-----------------------------
THE TRANZONIC COMPANIES
Condensed Consolidated Balance Sheets
August 31, 1995 and February 28, 1995
<CAPTION>
August 31, February 28,
Assets 1995 1995
------ ---------- ----------
(unaudited)
<S> <C> <C>
Current assets
Cash (including cash equivalents of $2,448,000 at
August 31, 1995 and $349,600 at February 28, 1995) $ 3,918,699 2,387,540
Receivables, net 19,697,387 16,995,651
Inventories
Raw materials 13,288,481 13,318,921
Finished goods 9,832,161 9,854,683
Deferred income taxes 1,350,868 1,285,533
Prepaid expenses and other current assets 1,875,668 2,046,517
---------- ----------
Total current assets 49,963,264 45,888,845
Property, plant and equipment, net 22,329,187 23,102,181
Other noncurrent assets 2,478,257 2,416,958
Intangible assets 10,886,128 8,871,482
---------- ----------
$85,656,836 80,279,466
========== ==========
</TABLE>
(Continued)
<PAGE> 3
<TABLE>
THE TRANZONIC COMPANIES
Condensed Consolidated Balance Sheets
August 31, 1995 and February 28, 1995
<CAPTION>
August 31, February 28,
Liabilities and Shareholders' Equity 1995 1995
------------------------------------ ---------- ----------
(unaudited)
<S> <C> <C>
Current liabilities
Trade accounts payable $ 8,269,873 9,657,007
Accrued compensation 2,678,820 2,981,782
Other payables and accrued expenses 3,557,662 2,922,604
---------- ----------
Total current liabilities 14,506,355 15,561,393
Long-term debt 12,000,000 7,600,000
Deferred gain 1,992,030 2,071,830
Deferred income taxes 1,825,802 1,878,728
Other noncurrent liabilities 1,110,380 931,168
Shareholders' equity
Serial preferred shares without par value; authorized 200,000,
no shares issued - -
Class A common shares, no par value; authorized 4,000,000,
issued 2,658,869 at August 31, 1995 and 2,660,404 at
February 28, 1995 664,717 665,101
Class B common shares, no par value; authorized 8,000,000,
issued 1,334,870 at August 31, 1995 and 1,316,385 at
February 28, 1995 333,718 329,096
Additional paid-in capital 5,751,391 5,643,705
Retained earnings 51,569,186 49,780,163
---------- ----------
58,319,012 56,418,065
Less cost of common shares held in treasury
472,846 Class A common and 19,305 Class B common
shares at August 31, 1995 and 483,146 Class A common
and 19,305 Class B common shares at February 28, 1995 4,096,743 4,181,718
---------- ----------
Total shareholders' equity 54,222,269 52,236,347
---------- ----------
$85,656,836 80,279,466
========== ==========
<FN>
See accompanying notes to condensed consolidated financial statements.
</TABLE>
<PAGE> 4
<TABLE>
THE TRANZONIC COMPANIES
Condensed Consolidated Statements of Earnings
Six- and three-month periods ended August 31, 1995 and 1994
(Unaudited)
<CAPTION>
Six Months Ended Three Months Ended
August 31, August 31,
-------------------- --------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Sales $81,999,832 75,587,542 42,729,955 38,939,766
Cost and expenses
Cost of goods sold 57,065,620 50,911,559 30,080,950 26,375,217
Selling, general, and
administrative expenses 21,171,311 19,967,411 10,609,293 9,991,497
---------- ---------- ---------- ----------
78,236,931 70,878,970 40,690,243 36,366,714
---------- ---------- ---------- ----------
Operating earnings 3,762,901 4,708,572 2,039,712 2,573,052
Interest income 33,348 35,402 12,775 16,248
Interest expense (372,381) (205,472) (187,392) (104,461)
---------- ---------- ---------- ----------
Earnings before
income taxes 3,423,868 4,538,502 1,865,095 2,484,839
Income taxes 1,202,000 1,788,000 684,000 995,000
---------- ---------- ---------- ----------
Net earnings $ 2,221,868 2,750,502 1,181,095 1,489,839
========== ========== ========== ==========
Net earnings per common share $ .63 .79 .33 .43
=== === === ===
Dividends per Class A common share $ .095 .09 .05 .045
==== === === ====
Dividends per Class B common share $ .175 .17 .09 .085
==== === === ====
Average common and common
equivalent shares outstanding 3,524,136 3,483,269 3,525,344 3,492,491
========== ========== ========== ==========
Shares outstanding at end of period 3,501,388 3,452,038 3,501,388 3,452,038
========== ========== ========== ==========
<FN>
See accompanying notes to condensed consolidated financial statements.
</TABLE>
<PAGE> 5
<TABLE>
THE TRANZONIC COMPANIES
Condensed Consolidated Statements of Cash Flows
Six-month periods ended August 31, 1995 and 1994
(Unaudited)
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Cash flows from operating activities
Net earnings $2,221,868 2,750,502
Adjustments to reconcile net earnings to net cash provided
by operating activities
Depreciation and amortization 2,031,000 2,094,367
Deferred income taxes (118,261) 119,019
Changes in assets and liabilities, net of effects from purchase
of Plezall Wipers, Inc.
Receivables, net (2,195,726) (3,240,230)
Inventories 543,868 607,694
Prepaid expenses and other current assets 173,990 976,376
Trade accounts payable (1,538,766) 860,707
Accrued compensation (316,460) 266,330
Other payables and accrued expenses 618,121 818,507
Other, net (107,220) (125,284)
--------- ---------
Net cash provided by operating activities 1,312,414 5,127,988
Cash flows from financing activities
Proceeds from revolving credit 5,900,000 -
Repayment of long-term debt (1,500,000) (2,100,000)
Cash dividends (432,845) (410,618)
--------- ---------
Net cash provided by (used in) financing activities 3,967,155 (2,510,618)
Cash flows from investing activities
Payment for purchase of Plezall Wipers, Inc. (2,909,735) -
Restrictive covenants - (90,000)
Proceeds on exercise of share options 196,899 -
Purchases of property and equipment (1,035,574) (1,286,917)
--------- ---------
Net cash used in investing activities (3,748,410) (1,376,917)
--------- ---------
Cash
Increase during the period 1,531,159 1,240,453
Beginning balance 2,387,540 3,303,191
--------- ---------
Ending balance $3,918,699 4,543,644
========= =========
Supplemental disclosure of cash flow information
Income taxes paid $1,429,632 103,000
Interest paid $ 337,253 208,547
Supplemental schedule of noncash investing and financing activities
In conjunction with the acquisition of Plezall Wipers, Inc.,
liabilities were assumed as follows
Fair value of assets acquired $3,091,802 -
Cash paid 2,909,735 -
--------- ---------
$ 182,067 -
========= =========
<FN>
See accompanying notes to condensed consolidated financial statements.
</TABLE>
<PAGE> 6
THE TRANZONIC COMPANIES
Notes to Condensed Consolidated Financial Statements
Six- and three-month periods ended August 31, 1995 and 1994
Note A In the opinion of management, the accompanying unaudited
condensed consolidated financial statements contain such
adjustments (all of which are normal and recurring in
nature) necessary to present fairly the financial position
of The Tranzonic Companies (Company) at August 31, 1995
and the results of operations for the six- and three-month
periods ended August 31, 1995 and 1994. The statements
should be read in conjunction with the consolidated
financial statements and notes thereto included in the
Company's annual report for the fiscal year ended
February 28, 1995.
Note B Net earnings per share have been calculated based on the
weighted average Class A common and Class B common shares
outstanding during the periods plus the incremental shares
(calculated using the treasury share method) for those
outstanding share options which are considered equivalent
shares and have a dilutive impact on net earnings per
share.
The table below depicts the average Class A common and
Class B common shares used in the calculation of net
earnings per share for the reported periods:
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
August 31, August 31,
-------------------- --------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Class A common 2,194,192 2,202,064 2,195,250 2,202,903
Class B common 1,329,944 1,281,205 1,330,094 1,289,588
--------- --------- --------- ---------
3,524,136 3,483,269 3,525,344 3,492,491
========= ========= ========= =========
</TABLE>
The table below depicts the Class A common and Class B
common shares outstanding at the end of the periods
reported:
<TABLE>
<CAPTION>
August 31,
--------------------
1995 1994
---- ----
<S> <C> <C>
Class A common 2,185,823 2,183,958
Class B common 1,315,565 1,268,080
--------- ---------
3,501,388 3,452,038
========= =========
</TABLE>
Note C On March 1, 1995, the Company acquired substantially all
the assets and assumed certain liabilities of Plezall
Wipers, Inc., a Miami, Florida distributor of woven
textile wipers. The acquisition was accounted for under
the purchase method of accounting.
<PAGE> 7
PART I: FINANCIAL INFORMATION
-----------------------------
Item 2. Management's Discussion and Analysis of
------------------------------------------------
Financial Condition and Results of Operation
--------------------------------------------
The Company's financial position remains strong. The current
ratio at August 31, 1995 was 3.4:1 and current assets continue
to exceed total liabilities.
Revenues in the six-month period ended August 31, 1995
increased 8.5 percent to $81,999,800 from $75,587,500 recorded
a year ago. Second quarter revenues increased 9.7 percent to
$42,730,000 from $38,939,800 of the prior year like period.
Revenue gains in both periods were the result of the early
first quarter acquisition of Plezall Wipers, Inc. as well as
base revenue growth which was recorded at each of our
divisions.
Operating margins in the current fiscal six- and three-month
periods of 4.6 percent and 4.8 percent respectively, declined
relative to their respective prior year periods of 6.2 and 6.6
percent. Continued downward pressure on gross margins resulted
from significant increases in the cost of core raw materials,
such as wood pulp and paper products, and on-going price
competition.
Net interest costs in both the current fiscal six- and three-
month periods compare unfavorably to the same prior year
periods as a result of using a portion of our credit facility
to acquire Plezall Wipers, Inc., early in the first quarter of
the fiscal year, and to finance opportunistic raw material
inventory acquisitions.
Net earnings for the six-month period ended August 31, 1995
were $2,221,900 or 63 cents per share, down 19.2 percent from
the $2,750,500, or 79 cents per share, recorded in the prior
year like period. Net earnings for the current fiscal three-
month period were $1,181,100 or 33 cents per share, down 20.7
percent from the $1,489,800, or 43 cents per share, of the same
period a year ago.
<PAGE> 8
FORM 10-Q - PART II: OTHER INFORMATION
---------------------------------------
Items 1 through 5 are not applicable or the answer to such
items is negative; therefore, the items have been omitted and
no reference is required in this report.
ITEM 6. Exhibits and reports on Form 8-K
a) Exhibit
Number Exhibit
------ -------
27 Financial Data Schedule(1)
99 Independent Auditors' Review Report
b) No reports on Form 8-K have been filed during the quarter ended August 31,
1995.
SIGNATURE
---------
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.
THE TRANZONIC COMPANIES
(Registrant)
Date: October 10, 1995 By: /s/ Richard J. Pennza
------------------------------------
Richard J. Pennza
(Duly authorized officer and
Principal Accounting Officer)
(1)Filed only in electronic format pursuant to Item 601(b)(27) of Regulation
S-K.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Condensed Consolidated Balance Sheets at August 31, 1995 and February 28, 1995
and Condensed Consolidated Statements of Earnings for the six- and three-month
periods ended August 31, 1995 and 1994 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<RESTATED>
<CIK> 0000001761
<NAME> TRANZONIC
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-28-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> AUG-31-1995
<CASH> 3,918,699
<SECURITIES> 0
<RECEIVABLES> 19,697,387
<ALLOWANCES> 0
<INVENTORY> 23,120,642
<CURRENT-ASSETS> 49,963,264
<PP&E> 22,329,187
<DEPRECIATION> 0
<TOTAL-ASSETS> 85,656,836
<CURRENT-LIABILITIES> 14,506,355
<BONDS> 0
<COMMON> 998,435<F1>
0
0
<OTHER-SE> 57,320,577<F2>
<TOTAL-LIABILITY-AND-EQUITY> 85,656,836
<SALES> 81,999,832
<TOTAL-REVENUES> 81,999,832
<CGS> 57,065,620
<TOTAL-COSTS> 78,236,931
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 372,381
<INCOME-PRETAX> 3,423,868
<INCOME-TAX> 1,202,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,221,868
<EPS-PRIMARY> .63
<EPS-DILUTED> 0
<FN>
<F1>This Figure includes $664,717 Class A Common and $333,718 Class B Common
Shares
<F2>This Figure includes $5,751,391 in Additional Paid in Capital and $51,569,186
in Retained Earnings
</FN>
</TABLE>
<PAGE> 1
Form 10-Q, Part II
Item 6
Exhibit 99
INDEPENDENT AUDITORS' REVIEW REPORT
-----------------------------------
The Board of Directors
The Tranzonic Companies:
We have reviewed the condensed consolidated balance sheet of
The Tranzonic Companies as of August 31, 1995, and the related
condensed consolidated statements of earnings for the six- and
three-month periods ended August 31, 1995 and 1994, and cash
flows for the six-month periods ended August 31, 1995 and 1994.
These condensed consolidated financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards
established by the American Institute of Certified Public
Accountants. A review of interim financial information
consists principally of applying analytical review procedures
to financial data and making inquiries of persons responsible
for financial and accounting matters. It is substantially less
in scope than an audit conducted in accordance with generally
accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements
taken as a whole. Accordingly, we do not express such an
opinion.
Based on our review, we are not aware of any material
modifications that should be made to the condensed consolidated
financial statements referred to above for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally
accepted auditing standards, the consolidated balance sheet of
The Tranzonic Companies as of February 28, 1995, and the
related consolidated statements of earnings, shareholders'
equity, and cash flows for the year then ended (not presented
herein); and in our report dated March 31, 1995, we expressed
an unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in the
accompanying condensed consolidated balance sheet as of
February 28, 1995, is fairly presented, in all material
respects, in relation to the consolidated balance sheet from
which it has been derived.
KPMG Peat Marwick LLP
Cleveland, Ohio
September 27, 1995
