FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended December 30, 1994
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 1-8277
ACME ELECTRIC CORPORATION
(Exact name of registrant as specified in its charter)
STATE OF NEW YORK 16-0324980
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
400 Quaker Road, East Aurora, New York 14052
(Address of principal executive offices)
716/655-3800
(Telephone Number)
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.
(1) YES x NO ____
(2) YES x NO ____
Indicate the number of shares outstanding of each of the registrant's classes
of common stock, as of the latest practicable date.
Class Outstanding at December 30, 1994
Common Stock, Par Value $1.00 Per Share 4,951,177
<PAGE>
ACME ELECTRIC CORPORATION
<TABLE>
PART I - FINANCIAL INFORMATION
ITEM I - FINANCIAL STATEMENTS
<CAPTION>
CONSOLIDATED CONDENSED BALANCE SHEET
Unaudited Audited
December 30, 1994 June 30, 1994
(000's) (000's)
<S> <C> <C>
ASSETS
Current Assets:
Cash $ 4 $ 160
Accounts receivable, net 13,244 12,999
Inventories 16,242 12,739
Income taxes receivable 67 223
Deferred income taxes-current portion 1,774 1,618
Other current assets 3,138 2,799
Total current assets 34,469 30,538
Intangible assets, net 326 327
Other assets 3,442 4,020
Property, plant and equipment, at cost 29,965 27,257
Less accumulated depreciation (16,534) (15,569)
Idle facilities held for sale, net 981 981
Total property, plant & equipment, net 14,412 12,669
Total Assets $52,649 $47,554
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 1,461 $ 1,457
Accounts payable 4,686 4,232
Accrued expenses 3,633 3,511
Accrued restructuring -- 873
Total current liabilities 9,780 10,073
Long-term debt 24,447 19,590
Other long-term liabilities 1,563 2,276
Deferred income taxes 1,049 1,049
Total Liabilities $36,839 $32,988
Shareholders' Equity:
Common stock, Par Value $1.00
Authorized 8,000,000 shares
Issued 4,951,177 and 4,876,491 4,951 4,876
Capital in excess of par value 18,546 18,161
Accumulated deficit (6,972) (8,064)
Less: Treasury stock at cost
(71,783 and 45,716 Shares) (715) (407)
Total shareholders' equity 15,810 14,566
Total Liabilities and Shareholders' Equity $52,649 $47,554
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements.<PAGE>
ACME ELECTRIC CORPORATION
<TABLE>
<CAPTION>
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
Unaudited)
13 Weeks 13 Weeks 26 Weeks 26 Weeks
Ended Ended Ended Ended
12/30/94 12/31/93 12/30/94 12/31/93
(000's) (000's) (000's) (000's)
<S> <C> <C> <C> <C>
NET SALES $21,320 $19,118 $42,254 $38,362
COSTS AND EXPENSES:
Cost of Goods Sold 15,475 13,417 29,870 27,439
Research and Engineering
Expense 1,320 1,398 2,552 2,941
Selling and Administrative
Expense 3,535 3,902 7,264 7,522
Interest Expense 439 549 793 1,083
TOTAL COSTS AND EXPENSES 20,769 19,266 40,479 38,985
INCOME (LOSS) BEFORE TAXES 551 (148) 1,775 (623)
INCOME TAXES (BENEFIT) 212 (55) 683 (231)
NET INCOME (LOSS) $ 339 $ (93) $ 1,092 $ (392)
Weighted Average Number of
Shares Outstanding 4,920,669 4,864,438 4,901,140 4,850,203
NET INCOME (LOSS) PER SHARE $ .07 $ (.02) $ .22 $ (.08)
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements
<PAGE>
ACME ELECTRIC CORPORATION
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
26 Weeks Ended 26 Weeks Ended
December 30, 1994 December 31, 1993
(000's) (000's)
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 1,092 $ (392)
Adjustments to reconcile net income
(loss) to net cash provided from
operating activities:
Depreciation and amortization 977 1,352
Gain on sale/retirement of
fixed assets 7 (239)
Change in assets and liabilities:
Accounts receivable, net (245) 1,372
Inventories (3,503) 1,002
Prepaid and deferred income taxes 490 (278)
Other assets (286) (59)
Restructuring costs (899) (61)
Accounts payable 454 (180)
Accrued compensation and other 176 (152)
Other long-term liabilities (706) --
Net cash provided by (used in)
operating activities (2,443) 2,365
Cash flows from investing activities:
Proceeds from dispositions of fixed assets -- 1,580
Intangibles acquired -- (1,550)
Additions to property, plant and equipment (2,726) (2,497)
Net cash used in investing activities (2,726) (2,467)
Cash flows from financing activities:
Net increase of borrowings 4,861 1,001
Proceeds from employee stock purchase, stock
option and dividend reinvestment plans 460 118
Purchase of treasury stock (308) 38
Net cash provided by financing
activities 5,013 1,081
Net increase (decrease) in cash (156) 979
Cash at beginning of period 160 231
Cash at end of period $ 4 $ 1,210
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements.
<PAGE>
ACME ELECTRIC CORPORATION
NOTES TO CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS
(Unaudited)
1. The Consolidated Condensed Balance Sheet of Acme Electric Corporation
("Registrant") at December 30, 1994, the Consolidated Condensed Statement
of Operations for the thirteen- and twenty-six-week periods ended
December 30, 1994, and December 31, 1993, and the Consolidated Statement
of Cash Flows for the twenty-six weeks ended December 30, 1994, and
December 31, 1993, include all adjustments for a fair representation of
the results for such periods.
The unaudited financial data included herein was compiled in accordance
with the "Summary of Significant Accounting Principles and Practices"
(Note 1 of Notes to Consolidated Financial Statements) contained in the
Registrant's 1994 Annual Report filed on Form 10-K.
2. Inventories included in the Consolidated Condensed Balance Sheet are as
follows:
December 30, 1994 June 30, 1994
(000's) (000's)
Raw Material $ 5,666 $ 3,765
Work-In-Process 5,653 5,190
Finished Goods 4,923 3,784
______ ______
$16,242 $12,739
<PAGE>
ACME ELECTRIC CORPORATION
Item 2
Management's Discussion and Analysis of
Financial Condition and Results of Operations
The following is Management's discussion and analysis of certain significant
factors which have affected the Registrant's financial condition and results of
operations during the periods included in the accompanying consolidated
financial statements.
A summary of the period-to-period change in the principal items included in
the consolidated balance sheets and which affect financial condition follows:
Comparison of Balance Sheets at
December 30, 1994
and
June 30, 1994
Increase (Decrease)
(000's)
Current Assets $3,931
Property, Plant & Equipment Net 1,743
Other Assets (579)
_____
$5,095
Current Liabilities $ (293)
Long-Term Debt 4,857
Other Liabilities (713)
Shareholders' Equity 1,244
_____
$5,095
Current assets at December 30, 1994, reflect a net increase of approximately
$3,931,000, or 12.9%, over the June 30, 1994, level, primarily due to increased
inventories ($3,503,000). Inventory buildups ($1,679,000 in the quarter,
$3,503,000 fiscal year-to-date) have been incurred, in part, in support of
increased production and sales activity year-to-date, coupled with planned
safety stocks to support the continued interruption of production associated
with the ongoing Electronics Division's move into the new plant in Cuba, NY.
Raw stock levels have further increased because certain materials are
on allocation by vendors due to high demand, thus forcing larger buy
quantities to provide increased safety stock levels. The remaining increase
in current assets is due to slight increases in receivables and other assets,
in support of the increased F/Y '95 year-to-date business over the same period
of the prior year.
The net increase in property, plant and equipment of $1,743,000, or 13.8%, is
the combined result of current year capital expenditures, including leased
and purchased machinery ($1,803,000), and construction in progress
($923,000), in part offset by depreciation expense of $976,000.
Intangibles and other assets decreased $580,000, or 13.3%, primarily due to
the reduction or utilization of a portion of the deferred tax asset against the
income tax expense recorded for the quarter.
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Cont'd)
Current liabilities have decreased $293,000 (2.9%) from the June 30, 1994,
level as a result of a combination of factors, including a net reduction
($746,000 cash payments) in accrued liabilities, primarily attributable
to relocation (both of equipment and employees) and severance costs
associated with consolidation of the aerospace business. This reduction in
accrued liabilities was partially offset by an increase in accounts payable
($454,000) as a result of increased production activity and inventory levels.
Long-term debt increased $4,143,000, or approximately 18.1%, from June 30,
1994. This net increase is reflective of funding of increased inventories,
accounts receivable, fixed asset additions, and payment of accrued restructuring
costs.
The increase in shareholders' equity of $1,244,000 is primarily due to year-
to-date net profit of $1,092,000, plus the net proceeds from stock-selling
programs received since June 30, 1994.
The Company has financed its working capital requirements, in part, through
operations, with the balance coming from increased bank borrowings. The new
plant construction costs ($923,000) and year-to-date capital expenditures
($1,803,000) have also been funded with increased borrowings against the line
of credit. The Company expects that operating activities for the remainder of
fiscal 1995 will produce cash to offset any increase in working capital caused
by increased sales, in addition to providing ample funds to support the
required remaining capital expenditures through the end of the current fiscal
year. Within this fiscal year (FYE 6/30/95), it is the Company's intention to
select and begin implementation of a new information system. The Company has
in place a financing agreement, which provides for a secured term loan of
$10,000,000 (current principal balance $6,748,000) and a $19,000,000 secured
revolving credit line, which it believes will provide sufficient liquidity for
the foreseeable future. The Company further anticipates, within the current
fiscal year, the receipt of in excess of $2,000,000 of deferred and low
interest loans and grants from governmental agencies, relating to the newly
constructed facility in Cuba, NY.
The Company has been informed by the New York State Department of
Environmental Conservation (DEC) that the Municipal Waste Landfill, Cuba, NY,
has been listed in the New York State Registry of Inactive Hazardous Waste
Disposal Sites, as a Class "2" site requiring remediation. Acme Electric
Corporation has been determined by the DEC to be a potentially responsible
party (PRP) by virtue of its disposal of wastes at the site. As a (PRP),
the Company will potentially be subject to liability for the cost of site
investigation and remediation. At this point in time, there is not enough
information available from which any reasonable estimate of cost can be
made. The Company did have insurance policies in effect during the
period that the waste was disposed of at the site, which the Company believes
provide coverage.
<PAGE>
RESULTS OF OPERATIONS:
Thirteen- and twenty-six-week periods ended December 30, 1994,
compared with the comparable thirteen- and twenty-six-week periods
ended December 31, 1993
Net sales for the thirteen- and twenty-six-week periods ended December 30,
1994, were $21,320,000 and $42,254,000, respectively, compared with $19,118,000
and $38,362,000 for the comparable periods of a year earlier, for an increase
over the prior year's same quarter of 11.5% and an increase of 10.1% year-to-
date from the comparable prior-year period. Net sales have increased over the
prior year due to increased sales for custom power supplies from several large
OEM customers participating in the communications and computer industries,
coupled with a general increase in market demand for transformer and standard
power supply products sold through distribution.
Cost of goods sold as a percentage of sales for the thirteen- and twenty-six-
week periods ended December 30, 1994, were 72.6% and 70.1%, respectively,
compared to 70.2% and 71.5% for the comparable periods of the prior year.
While the year-to-date cost percentage improved over the same period of a
year ago due to increased sales volumes of a mix of products with greater gross
margins, coupled with the lower overheads at the Aerospace Division as a result
of the fiscal 1994 restructuring, the most recent quarter cost percentage
increased over the similar quarter of last year. Cost of goods sold as a
percentage of sales increased in the most recent quarter due to the
significant raw material price increases associated with transformer
products, along with higher than planned manufacturing overheads in the
Electronics Division as a result of the ongoing transition (move) into the new
Cuba, NY, plant. Transformer price increases have been initiated, effective
February 1, to pass through the raw material cost increases.
Research and engineering expenses as a percent of net sales for the thirteen-
and twenty-six-week periods ended December 30, 1994, were 6.2% and 6.0%,
respectively, a decrease from the 7.3% and 7.7% experienced for the similar
periods of a year ago. This decrease is reflective of decreased costs due to
overhead reductions resultant from the Aerospace Division restructuring coupled
with an overall higher sales volume.
Selling and administrative costs as a percent of net sales decreased from
20.4% and 19.6%, respectively, for the thirteen- and twenty-six-week periods
ended December 31, 1993, to 16.6% and 17.2%, for the current thirteen- and
twenty-six-week periods ended December 30, 1994. The decrease is primarily due
to the higher current year sales combined with the restructuring effects in
the Aerospace Division, where staff reductions were made in the third and
fourth quarters of fiscal 1994 as a result of resizing and consolidating the
business, along with termination of sales representatives and decreased
quarterly amortization expenses ($66,000) associated with the fiscal 1994
write-off of the FNC battery license asset. In addition, certain one-time
sales commissions in the Electronics' business were paid in the prior year's
first quarter and did not repeat in the current year.
Interest expense as a percent of net sales for the thirteen- and twenty-six-
week periods ended December 30, 1994, decreased to approximately 2.1% and 1.9%,
respectively, from 2.9% and 2.8%, respectively, for the comparable periods of
the prior year. This decrease is reflective of the termination of interest
collar contracts (in F/Y '94) offset by increases in borrowings and rates.
Collar interest costs were approximately $216,000 and $436,000 for the thirteen-
and twenty-six-week periods ended December 31, 1993.
Income taxes as a percent of income before taxes for the thirteen- and
twenty-six-week periods ended December 30, 1994, increased to approximately
38.5%, compared with 37.1% for the comparable period a year earlier. This
variation in the effective tax rate is primarily the result of the limiting
effect that minimum taxes have on the full recognition of tax benefit
associated with operating losses. Therefore, a lower effective tax rate
resulted in the prior period when recording tax benefit (asset) on the loss
incurred in that period.
Backlog at December 30, 1994, was $18,550,580, compared with $14,817,400 at
the end of the comparable period of the prior year.<PAGE>
PART II
OTHER INFORMATION
Item 5. Other Information
a. Exhibits- News Release dated February 2, 1995, announcing second-
quarter results for fiscal year 1995.
Interim Report dated February 10, 1995, for the second-
quarter ended December 30, 1994.
b. There were no reports filed on Form 8-K during the twenty-six-week
period ended December 30, 1994.
<PAGE>
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.
ACME ELECTRIC CORPORATION
(Registrant)
Date: February 10, 1995 Signature
Robert J. McKenna
Chairman, President and
Chief Executive Officer
Date: February 10, 1995 Signature
Daniel K. Corwin
Senior Vice President and
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> DEC-30-1994
<CASH> 4
<SECURITIES> 0
<RECEIVABLES> 13,563
<ALLOWANCES> 319
<INVENTORY> 16,242
<CURRENT-ASSETS> 34,469
<PP&E> 31,256
<DEPRECIATION> 16,844
<TOTAL-ASSETS> 52,649
<CURRENT-LIABILITIES> 9,780
<BONDS> 24,447
<COMMON> 23,497
0
0
<OTHER-SE> (7,687)
<TOTAL-LIABILITY-AND-EQUITY> 52,649
<SALES> 21,320
<TOTAL-REVENUES> 21,320
<CGS> 15,475
<TOTAL-COSTS> 15,475
<OTHER-EXPENSES> 4,855
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 439
<INCOME-PRETAX> 551
<INCOME-TAX> 212
<INCOME-CONTINUING> 339
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 339
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
Interim Report 2
26 Weeks Ended
December 30, 1994
Our economic results continued to improve in the second quarter with
sales of $21,320,000 and net income of $339,000, compared to sales of
$19,118,000 and a net loss of $93,000 for the comparable period of last year.
This fiscal year is progressing well with sales up 12 percent, and
profits totaling $1,092,000, compared with a net loss of $392,000 for the
first half of last year.
Our Electronics Division recently secured a power supply development
program from SONY America for a new mass-data storage device. This is a new
account and offers great long-term potential.
The Electronics Division also began shipping uninterruptible power
supplies to AT&T. We expect this business to show solid growth over the next
couple of years. While this program is currently North American based, the
possibility exists of it soon expanding globally.
The consolidation and restructuring of our Aerospace Division is taking
longer than we expected. We do, however, feel well positioned in the
aerospace market, having just received several important contracts including
the batteries and electronic charging system for the new Javelin anti-tank
missile launcher.
Acme Transformer Division obtained ISO-9002 certification this past
quarter. A great deal of effort went into achieving this. Having both of our
commercial divisions now certified to ISO-9000 standards supports our plans to
expand globally.
Orders from Siemens for new private-branded transformers are beginning to
roll in. We are excited about being a supplier to Siemens and anticipate this
business growing in the years ahead.
In summary, we are progressing on track and expect to report continued
improvement over the balance of this fiscal year.
FOR THE BOARD OF DIRECTORS
Robert J. McKenna
Chairman and CEO
February 10, 1995
East Aurora, New York
The following tables set forth certain unaudited financial information for
the twenty-six-week periods ended December 31, 1993, and December 30, 1994
(in thousands, except for per share data):
<TABLE>
CONSOLIDATED BALANCE SHEET
Dec. 31, 1993 Dec. 30, 1994 June 30, 1994
<S> <C> <C> <C>
Current Assets.................. $31,206 $34,469 $30,538
Fixed Assets and Other - Net.... 20,759 18,180 17,016
Total......................... $51,965 $52,649 $47,554
Current Liabilities............. $ 8,066 $ 9,780 $10,073
Long-Term Debt.................. 24,103 27,059 22,915
Shareholders' Equity............ 19,796 15,810 14,566
Total......................... $51,965 $52,649 $47,554
</TABLE>
<TABLE>
CONSOLIDATED INCOME STATEMENT
13 Weeks 13 Weeks 26 Weeks 26 Weeks F/Y
Ended Ended Ended Ended Ended
12/31/93 12/30/94 12/31/93 12/30/94 06/30/94
<S> <C> <C> <C> <C> <C>
Net Sales................... $19,118 $21,320 $38,362 $42,254 $76,233
Net Income (Loss)........... (93) 339 (392) 1,092 (5,659)
Earnings (Loss) per share... $(.02) $.07 $(.08) $.22 $(1.17)
Weighted Number of Shares
Outstanding Used to Compute
Income Per Common Share 4,864,438 4,920,669 4,850,203 4,901,140 4,854,061
</TABLE>
FOR IMMEDIATE RELEASE
ACME ELECTRIC CORPORATION
REPORTS CONTINUED IMPROVEMENT
EAST AURORA, N.Y., February 2, 1995 -- Acme Electric Corporation (NYSE:
ACE) reported today that, for its second quarter ending December 30, 1994, sales
improved to $21,320,000 and net income to $339,000, or $.07 per share, compared
to sales of $19,118,000 and a net loss of $93,000, or $.02 per share, for the
comparable period of the prior year.
Chairman and CEO, Robert J. McKenna, said that, "This fiscal year is
progressing well with sales up 12 percent compared with the first half of last
year. Our Electronics Division recently secured a power supply development
program from SONY America for a new mass data storage device and also began
shipments of uninterruptible power supplies to AT&T. While the AT&T program is
presently North American based, it may expand globally."
"Our Acme Transformer Division is now taking orders from Siemens for
private-labeled transformers, and our Aerospace Division has received several
important contracts, including the main battery system on the new Javelin anti-
tank missile launcher," Mr. McKenna stated.
"Although material price increases and costs associated with relocation of
our Electronics Division and consolidation of our Aerospace Division are of
concern, we are taking steps to address them and expect to report continued
improvement over the balance of the fiscal year," Mr. McKenna said.
Founded in 1917, Acme Electric Corporation is a leader in the design and
manufacture of power conversion equipment for electronic and electrical systems
for industrial, commercial, residential, and military and aerospace
applications. Corporate headquarters are in East Aurora, N.Y., with operations
in Cuba, N.Y., Lumberton, N.C., and Tempe, Ariz.
# # # #<PAGE>
ACME ELECTRIC CORPORATION
<TABLE>
<CAPTION>
Comparative Analysis
(in thousands, except for per share data)
13 Weeks 13 Weeks 26 Weeks 26 Weeks
Ended Ended Ended Ended
12/31/93 12/30/94 12/31/93 12/30/94
<S> <C> <C> <C> <C>
Net Sales $19,118 $21,320 $38,362 $42,254
Net Income (Loss) (93) 339 (392) 1,092
Earnings (Loss) per share $(.02) $.07 $(.08) $.22
Weighted Number of Shares
Outstanding Used to Compute
Income Per Common Share 4,864,438 4,920,669 4,850,203 4,901,140
</TABLE>
