<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------
FORM 10-QA-1
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED SEPTEMBER 30, 1996
COMMISSION FILE NUMBER 0-16182
-------
AXSYS TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 11-1962029
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
645 MADISON AVENUE
NEW YORK, NEW YORK 10022
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 593-7900
VERNITRON CORPORATION
(former name, if changed since last report)
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
--- ---
2,568,940 SHARES OF COMMON STOCK, $.01 PAR VALUE, WERE OUTSTANDING AS OF
DECEMBER 20, 1996.
<PAGE>
VERNITRON CORPORATION
INDEX
On December 11, 1996, the Registrant sold its wholly-owned subsidiary, L&S
Machine Co., Inc., which was acquired as part of its acquisition of Precision
Aerotech, Inc., on April 25, 1996. Since the acquisition, the Registrant has
included in its consolidated results of operations through September 30, 1996,
sales, operating income and interest expense attributable to L&S of $5,955,000,
$293,000 and $676,000, respectively. The Registrant is filing this amendment to
its Quarterly Report on Form 10-Q for the period ended September 30, 1996 to
report L&S as an asset held for disposal as of April 26, 1996. Accordingly, no
gain will be recorded in connection with the sale of L&S. Earnings per share
applicable to the Registrant's Common Stock, as originally reported, were $.08
and $.28 for the quarter and nine-month periods ended September 30, 1996,
respectively. After giving effect to the amendment, earnings per share for the
quarter and nine-month periods ended September 30, 1996 will be $.14 and $.38,
respectively.
PAGE
----
PART I. FINANCIAL INFORMATION
- ------------------------------
Item 1. Financial Statements (Unaudited):
Condensed Consolidated Statements of Operations -
Quarter Ended September 30, 1996 and 1995 3
Condensed Consolidated Statements of Operations -
Nine Months Ended September 30, 1996 and 1995 4
Condensed Consolidated Balance Sheets -
September 30, 1996 and December 31, 1995 5
Condensed Consolidated Statements of Cash Flows-
Nine Months Ended September 30, 1996 and 1995 6
Notes to Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
PART II. OTHER INFORMATION
- ---------------------------
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 14
- ----------
2
<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM I. Financial Statements
VERNITRON CORPORATION
Condensed Consolidated Statements of Operations
(Unaudited, dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Quarter Ended September 30,
------------------------------
1996 1995
------------- --------------
<S> <C> <C>
Net Sales $ 24,233 $ 15,633
Cost of sales 18,121 11,806
Selling, general and administrative expenses 4,430 2,848
Amortization of intangible assets 55 53
------------- -------------
Operating income 1,627 926
Interest expense 615 497
Other (income) expense 9 234
------------- -------------
Income before taxes 1,003 195
Charge in lieu of taxes 396 76
------------- -------------
Net income 607 119
Preferred stock dividends 221 159
------------- -------------
Net income (loss) applicable to common shareholders $ 386 $ (40)
============= =============
Earnings (loss) per share $ 0.14 $ (0.02)
============= =============
Weighted average common shares outstanding 2,757,746 2,508,155
============= =============
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
VERNITRON CORPORATION
Condensed Consolidated Statements of Operations
(Unaudited, dollars in thousands, except per share data)
Nine Months Ended September 30,
-------------------------------
1996 1995
------------- ------------
<S> <C> <C>
Net Sales $ 64,778 $ 49,383
Cost of sales 48,011 36,230
Selling, general and administrative expenses 11,932 9,973
Amortization of intangible assets 157 157
------------- -------------
Operating income 4,678 3,023
Interest expense 1,657 1,534
Other (income) expense (4) 249
------------- -------------
Income before taxes and extraordinary item 3,025 1,240
Charge in lieu of taxes 1,216 484
------------- -------------
Income before extraordinary item 1,809 756
Extraordinary loss on early extinguishment
of debt, net of tax benefit (173) -
------------- -------------
Net income 1,636 756
Preferred stock dividends 626 417
------------- -------------
Net income applicable to common shareholders $ 1,010 $ 339
============= =============
Earnings per share:
Earnings before extraordinary charge 0.44 0.14
Extraordinary charge $ (0.06) -
------------- -------------
$ 0.38 $ 0.14
============= =============
Weighted average common shares outstanding 2,662,650 2,507,789
============= =============
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE>
VERNITRON CORPORATION
Condensed Consolidated Balance Sheets
(Dollars in thousands)
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
------------- ------------
(Unaudited)
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash $ 5,677 $ 91
Accounts receivable - net 13,269 8,525
Inventories - net 23,533 16,544
Other current assets 710 651
----------- ----------
TOTAL CURRENT ASSETS 43,189 25,811
PROPERTY, PLANT AND EQUIPMENT - net 12,666 7,603
EXCESS OF COST OVER NET ASSETS ACQUIRED - net 6,466 6,624
NET ASSETS HELD FOR DISPOSAL 10,721
OTHER ASSETS 499 447
----------- ----------
TOTAL ASSETS $ 73,541 $ 40,485
=========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 7,303 $ 5,315
Accrued expenses and other liabilities 8,504 5,696
Current portion of long-term debt and capital lease obligations 3,889 466
----------- ----------
TOTAL CURRENT LIABILITIES 19,696 11,477
LONG-TERM DEBT & CAPITAL LEASES, less current portion 33,715 11,047
OTHER LONG-TERM LIABILITIES 2,314 2,697
DEFERRED INCOME 420 519
SHAREHOLDERS' EQUITY:
Preferred Stock, issued and outstanding 738,584
shares in 1996 and 781,642 shares in 1995 7 8
Common Stock, issued and outstanding 2,561,920
shares in 1996 and 2,520,821 shares in 1995 26 25
Capital in Excess of Par 15,817 14,712
Retained Earnings 1,546 -
----------- ----------
TOTAL SHAREHOLDERS' EQUITY 17,396 14,745
----------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 73,541 $ 40,485
=========== ==========
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE>
VERNITRON CORPORATION
Condensed Consolidated Statements of Cash Flows
(Unaudited, dollars in thousands)
<TABLE>
<CAPTION>
Nine Months
Ended September 30,
----------------------------------
1996 1995
-------------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,636 $ 756
Adjustments to reconcile net income to cash
provided by (used in) operating activities:
Extraordinary loss, net 173 -
Realization of net operating loss carryforward 877 436
Depreciation and amortization 1,961 1,179
Increase in current assets, other than cash (1,857) (1,085)
Decrease in current liabilities (928) (1,158)
Decrease in long-term liabilities (508) (615)
Other - net (641) (343)
------------ ------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 713 (830)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (1,141) (727)
Acquisition of business, net of cash acquired (4,728) -
Proceeds from sale of assets 206 2,929
------------ ------------
NET CASH PROVIDED BY (USED IN) INVESTING
ACTIVITIES (5,663) 2,202
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 62,786 51,831
Repayment of borrowings (51,830) (53,149)
Redemption of preferred stock odd lot shares (420) -
------------ ------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 10,536 (1,318)
------------ ------------
NET INCREASE IN CASH 5,586 54
CASH AT BEGINNING OF PERIOD 91 27
------------ ------------
CASH AT END OF PERIOD $ 5,677 $ 81
============ ============
</TABLE>
See notes to condensed consolidated financial statements.
6
<PAGE>
VERNITRON CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(Dollars in thousands)
NOTE 1 - BASIS OF PRESENTATION
- ------------------------------
The accompanying unaudited condensed consolidated financial statements include
Vernitron Corporation and its subsidiaries (the "Company"). These financial
statements have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to Form
10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments considered necessary for a fair presentation (consisting of normal
recurring accruals) have been included. Operating results for the quarter and
nine months ended September 30, 1996 are not necessarily indicative of the
results that may be expected for the year ending December 31, 1996. For further
information, refer to the financial statements and footnotes thereto included in
the Company's Annual Report on Form 10-K for the year ended December 31, 1995
and the Company's Current Reports on Form 8-K.
Certain reclassifications have been made to previously reported financial
statements to conform to current classifications.
Earnings per share data for the periods were computed by dividing net income
applicable to common shareholders by the weighted average number of shares of
common stock outstanding during such periods. The calculation of weighted
average number of shares assumes the conversion of those common stock
equivalents which have a dilutive effect on earnings for the period presented.
Common stock equivalents consist of warrants issued in connection with the
Company's new credit facility (see Note 5) and employee stock options.
Note 2 - Supplemental Cash Flow Information
- -------------------------------------------
Nine Months Ended September 30,
-------------------------------
1996 1995
--------- ---------
Cash paid for:
Interest $ 1,395 $ 1,446
========= =========
Income Taxes $ 441 $ 55
========= =========
Non-cash investing and financing activities:
Equipment acquired under capital leases $ 590 $ -
========= =========
NOTE 3 - ACQUISITION OF PRECISION AEROTECH, INC.
- ------------------------------------------------
On April 25, 1996, the Company completed its previously announced acquisition of
Precision Aerotech, Inc. ("PAI"). Pursuant to the Agreement and Plan of Merger
dated February 16, 1996, each outstanding share of common stock of PAI was
canceled and converted into the right to receive $5.00 per share in cash. Based
on 789,208 shares of PAI Common Stock outstanding immediately prior to the
acquisition, the aggregate consideration paid therefor was $3.9 million. In
addition, the Company repaid $12 million of borrowings under PAI term loans.
Precision Aerotech designs, manufactures and markets laser scanners, precision
metal optics, high performance air bearings and precision machined parts sold
predominantly in commercial markets.
7
<PAGE>
VERNITRON CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(Dollars in thousands)
The acquisition has been accounted for under the purchase method of accounting
and, accordingly, the results of operations of PAI have been included in the
accompanying consolidated financial statements since the date of acquisition.
The cost of the acquisition has been allocated on the basis of the estimated
fair market value of the assets acquired and liabilities assumed. During the
acquisition process, the Company determined that L&S Machine Company, Inc.,
("L&S") a wholly-owned subsidiary of PAI which manufactures structural
components for the aerospace industry, did not fit its long-term strategy and
would be subsequently sold. As a result, L&S has been accounted for as a net
asset held for disposal as of the PAI acquisition date. The portion of the PAI
acquisition cost allocated to this asset represents the net proceeds expected to
be realized upon sale, which includes an amount for estimated results of
operations of the L&S business during the holding period. Through September 30,
1996, L&S had sales and operating income of $5,955 and $293, respectively. In
addition, the amount of interest expense attributable to L&S through September
30, 1996 was $676.
Summarized below are the unaudited pro forma results of operations of the
Company as if PAI had been acquired at the beginning of the periods presented:
Pro Forma
Nine Months
Ended September 30,
---------------------------------
1996 1995
------------- -------------
Net sales $ 74,280 $ 69,029
Income before extraordinary item 1,830 1,137
Net income 1,657 1,137
Earnings per share:
Income before extraordinary item 0.45 0.29
Net income 0.39 0.29
The pro forma financial information presented above is not necessarily
indicative of either the results of operations that would have occurred had the
acquisition taken place at the beginning of the periods presented or the future
operating results of the combined companies. Pro forma income before
extraordinary item and net income for the nine months ended September 30, 1996
include certain special charges totaling approximately $400.
Note 4 - Inventories
- --------------------
Inventories have been determined generally by lower of cost (first-in, first-out
or average) or market.
Inventories consist of:
September 30, December 31,
1996 1995
--------------- --------------
Raw materials $ 8,812 $ 7,203
Work-in-process 10,437 5,293
Finished goods 9,904 9,255
--------------- --------------
29,153 21,751
Less reserves 5,620 5,207
--------------- --------------
$ 23,533 $ 16,544
=============== ==============
8
<PAGE>
VERNITRON CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(Dollars in thousands)
NOTE 5 - LONG-TERM DEBT
- -----------------------
In order to obtain the funds necessary to finance the Company's acquisition of
PAI (see Note 3), to refinance PAI's and the Company's existing debt and pay the
fees and expenses related to the acquisition and refinancing, Vernitron entered
into a Credit Agreement, dated April 25, 1996 (and subsequently amended as of
September 25, 1996), between the Company, the various banks named therein and
Banque Paribas, as agent, providing for borrowings under a $37 million senior
secured credit facility (the "Credit Facility"). The Credit Facility is
comprised of (i) a term loan in the principal amount of $14 million maturing in
four years, (ii) a term loan in the principal amount of $12 million maturing in
six years and (iii) a revolving credit line in an aggregate principal amount of
up to the lesser of $11 million or the borrowing base in effect from time to
time, maturing in four years. The Credit Facility contains certain provisions
and covenants which, among other things, impose limitations with respect to the
incurrence of additional liens and indebtedness, mergers, consolidations and
specified sales of assets, and requires the Company to meet certain financial
tests including minimum levels of earnings and net worth and various other
financial ratios. In addition, the Credit Facility prohibits the payment of cash
dividends. The cumulative dividends in arrears on the Company's Preferred Stock
as of September 30, 1996 was $536.
In connection with the acquisition and financing and before giving effect to the
one-for-five reverse stock split (see Note 6), the Company granted to Banque
Paribas a warrant (the "Banque Paribas Warrant") to acquire up to 666,312 shares
of Common Stock at an exercise price of $.01 per share and a warrant to an
affiliate of Banque Paribas, Paribas Principal, Inc., (the "Paribas Principal
Warrant"), to acquire up to 776,388 shares of Common Stock at an exercise price
of $1.25 per share. In connection therewith, the parties entered into a Warrant
Purchase Agreement containing customary terms and conditions. The Company also
authorized the granting to an affiliate of Donaldson, Lufkin & Jenrette
Securities Corporation of a warrant (the "Donaldson Lufkin Jenrette Warrant") to
acquire up to 100,000 shares of Common Stock at an exercise price of $1.25 per
share. Adjusted to give effect to the reverse stock split, the Banque Paribas
Warrant entitles the holder thereof to acquire up to 133,263 shares of at an
exercise price of $.05 per share, the Paribas Principal Warrant entitles the
holder thereof to acquire up to 155,278 shares at an exercise price of $6.25 per
share and the Donaldson Lufkin & Jenrette Warrant entitles the holders thereof
to acquire up to 20,000 shares at an exercise price of $6.25 per share.
NOTE 6 - COMMON STOCK
- ---------------------
On July 25, 1996, the Company completed a one-for-five reverse stock split of
its $0.01 par value common stock following approval of the reverse stock split
by the Company's stockholders at the Company's 1996 Annual Meeting of
Stockholders. In conjunction with the split, the Company's Certificate of
Incorporation has been amended to reduce the number of shares of Common Stock
authorized for issuance to 4,000,000. The reverse stock split reduced the number
of shares of common stock outstanding from 12,758,737 to 2,552,195. The stated
par value of each share was not changed from $0.01. All earnings per share data
presented in this report has been restated to reflect the reverse stock split.
9
<PAGE>
VERNITRON CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(Dollars in thousands)
NOTE 7 - OTHER INFORMATION
- --------------------------
September 30, December 31,
1996 1995
------------- ------------
Allowance for doubtful accounts $ 394 $ 278
============= ============
Accumulated depreciation and amortization
of property, plant and equipment $ 6,802 $ 5,075
============= ============
Accumulated amortization of excess of cost
over net assets acquired $ 994 $ 836
============= ============
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (Dollars in thousands)
RESULTS OF OPERATIONS
On April 25, 1996, the Company completed its acquisition of PAI. The acquisition
has been accounted for under the purchase method of accounting and, accordingly,
the results of PAI's continuing product lines have been included in the
Condensed Consolidated Statements of Operations since the date of acquisition.
Net sales from the continuing PAI product lines are included in the Motion
Control product group.
Net sales by product group were as follows:
<TABLE>
<CAPTION>
Quarter Ended September 30, Nine Months Ended September 30,
---------------------------- --------------------------------
1996 1995 1996 1995
------------ ----------- ----------- ------------
<S> <C> <C> <C> <C>
Motion Control $ 13,998 $ 5,634 $ 32,098 $ 18,681
Industrial Components 10,235 9,999 32,680 30,702
------------ ----------- ----------- ------------
Net Sales $ 24,233 $ 15,633 $ 64,778 $ 49,383
============ =========== =========== ============
</TABLE>
QUARTER ENDED SEPTEMBER 30, 1996 COMPARED TO THE QUARTER ENDED SEPTEMBER 30,
- ----------------------------------------------------------------------------
1995
- ----
Net sales for the third quarter of 1996 increased by $8.6 million or 55%,
compared to the same period in 1995. The acquisition of PAI accounted for $7.6
million of the increase.
The Motion Control Group's sales (electromagnetic components and subsystems,
laser scanners, precision metal optics and high performance air bearings)
increased in 1996 by $8.4 million, or 149%, as compared to 1995. The acquisition
of PAI accounted for $7.6 million of the increase. Bookings for the group were
$13.9 million in the third quarter of 1996, an increase of $9.2 million, or
196%, compared to the comparable quarter in 1995. The acquisition of PAI
resulted in an increase in bookings of $8.8 million. The nature of the Motion
Control group's bookings results in an uneven pattern from quarter to quarter
and does not necessarily reflect overall business trends. Backlog at September
30, 1996, was $38.3 million, compared to $16.1 million at December 31, 1995. Of
the $38.3 million backlog at September 30, 1996, $24.1 million relates to the
PAI product lines.
The Industrial Components group's sales (bearings and connectors) increased in
1996 by $.2 million, or 2%, compared to 1995. Bookings for the group were $10
million, a decrease of $.4 million, or 4%, compared to 1995, primarily as a
result of lower bookings in the bearing product line reflecting a softening of
orders from original equipment manufacturers. Backlog at September 30, 1996 was
$10.8 million, compared to $11.9 at December 31, 1995.
Operating income was $1.6 million in 1996, as compared to $.9 million in 1995,
representing a $.7 million increase. This increase was primarily due to the
higher sales volume. Gross margin on sales was 25.2% in 1996 as compared to
24.5% in 1995.
Selling, general and administrative expenses increased by $1.6 million in 1996
primarily due to the acquisition of PAI. Selling, general and administrative
expenses as a percentage of sales was 18% in both 1996 and 1995.
11
<PAGE>
Interest expense increased by $.1 million in 1996 as a result of higher average
borrowings due to the acquisition of PAI. The effect of the higher average
borrowings was substantially offset by the reduction of interest expense
attributed to net assets held for disposal (see Note 3 to the Condensed
Consolidated Financial Statements) and the effect of lower interest rates
resulting from a lower prime rate and more favorable terms under the Company's
new credit facility (see Note 5 to the Condensed Consolidated Financial
Statements).
NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO THE NINE MONTHS ENDED
- ----------------------------------------------------------------------
SEPTEMBER 30, 1995
- ------------------
Net sales for the first nine months of 1996 increased by $15.4 million, or 31%
compared to the same period in 1995. The acquisition of PAI accounted for $13.4
million of the increase.
The Motion Control group's sales (electromagnetic components and sub-systems,
laser scanners, precision metal optics and high performance air bearings)
increased in 1996 by $13.4 million, or 72%, as compared to 1995. The
acquisition of PAI accounted for substantially all of the increase in sales.
Bookings for the group were $31.4 million in 1996, an increase of $12.1
million or 63%, compared to 1995. The acquisition of PAI resulted in an
increase in bookings of $14.6 million while the remaining product lines in
the group had a decrease in bookings of $2.5 million. This decrease is
primarily due to lower European orders for industrial resolvers and lower
government spare parts orders for potentiometers. The nature of the Motion
Control group's bookings results in an uneven pattern from quarter to quarter
and does not necessarily reflect overall business trends.
The Industrial Components group's sales (bearings and connectors) increased in
1996 by $2 million, or 6%, compared to 1995. Sales of bearings were up by 13%,
reflecting increased business with original equipment manufacturers. Industrial
Component's bookings were $31.7 million, a decrease of $.3 million, or 1%,
compared to 1995.
Operating income was $4.7 million in 1996, as compared to $3 million in 1995,
representing a $1.7 million increase. This increase was primarily due to the
higher sales volume partially offset by an unfavorable sales mix of lower margin
products in the Motion Control group. Gross margin on sales was 25.9% in 1996,
as compared to 26.6% in 1995.
Selling, general and administrative expenses increased by $2.0 million in 1996
primarily due to the acquisition of PAI. Selling, general and administrative
expenses as a percentage of sales decreased to 18% in 1996, compared to 20% in
1995.
Interest expense increased $.1 million in the first nine months of 1996 as a
result of higher average borrowings due to the acquisition of PAI. The effect of
the higher average borrowings was substantially offset by the reduction of
interest expense attributed to net assets held for disposal (see Note 3 to the
Condensed Consolidated Financial Statements) and the effect of lower interest
rates resulting from a lower prime rate and the more favorable terms under the
Company's new credit facility (see Note 5 to the Condensed Consolidated
Financial Statements).
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Cash provided by operations was $.7 million in 1996 as compared to cash used of
$.8 million in 1995. This improvement was primarily due to higher cash earnings
in the current year partially offset by an increased level of investment in
working capital.
Cash used in investing activities was $5.7 million in 1996 as compared to cash
provided of $2.2 million in 1995. During the second quarter of 1996 the company
acquired PAI (see Note 3 to the Condensed Consolidated Financial Statements).
During the first nine months of 1995, $2.9 million was generated from the sale
of assets of the Electronics Components business which was discontinued during
1994 and from the sale of its idle Deer Park, New York facility.
Cash provided by financing activities was $10.5 million in 1996 as compared to
cash used of $1.3 million in 1995. The increase is primarily due to the
borrowings used to fund the aforementioned acquisition of PAI (see Note 3 to the
Condensed Consolidated Financial Statements) and an unusually high cash balance
at the end of the quarter due to the timing of cash receipts and reductions of
borrowing under the Company's revolving credit line.
12
<PAGE>
The Company had no material commitments for capital expenditures as of September
30, 1996.
As discussed in Note 5 to the Condensed Consolidated Financial Statements, the
Company entered into a new $37 million senior secured credit facility in
connection with its acquisition of PAI. The Company believes this new credit
facility and cash generated from the combined operations will be sufficient to
meet the future capital expenditure and working capital requirements of the
combined companies and required debt amortization under its new credit facility.
13
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
Exhibit 3: Amendment to Articles of Incorporation
Exhibit 10: Amendment No. 1 to Bank Credit Agreement
Exhibit 27: Financial Data Schedule (for SEC use only).
Exhibit 99: Press release, dated October 7, 1996.
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 thereunto duly authorized.
Date: December 20, 1996 VERNITRON CORPORATION
By: /s/ Stephen W. Bershad
------------------------------------
Stephen W. Bershad
Chief Executive Officer
By: /s/ Raymond F. Kunzmann
------------------------------------
Raymond F. Kunzmann
Vice President - Finance, Controller
and Chief Financial Officer
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THE CONSOLIDATED BALANCE SHEET OF VERNITRON CORPORATION AS OF SEPTEMBER 30, 1996
AND THE RELATED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE QUARTERS ENDED AND
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 5,677
<SECURITIES> 0
<RECEIVABLES> 13,663
<ALLOWANCES> 394
<INVENTORY> 23,533
<CURRENT-ASSETS> 43,189
<PP&E> 19,468
<DEPRECIATION> 6,802
<TOTAL-ASSETS> 73,541
<CURRENT-LIABILITIES> 19,696
<BONDS> 0
0
7
<COMMON> 26
<OTHER-SE> 17,363
<TOTAL-LIABILITY-AND-EQUITY> 73,541
<SALES> 64,778
<TOTAL-REVENUES> 64,778
<CGS> 48,011
<TOTAL-COSTS> 48,011
<OTHER-EXPENSES> 12,089
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,657
<INCOME-PRETAX> 3,025
<INCOME-TAX> 1,216
<INCOME-CONTINUING> 1,809
<DISCONTINUED> 0
<EXTRAORDINARY> (173)
<CHANGES> 0
<NET-INCOME> 1,636
<EPS-PRIMARY> .38
<EPS-DILUTED> .38
</TABLE>
