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 September 29, 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 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 September 29, 1995
Common Stock, Par Value $1.00 Per Share 5,003,946
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ACME ELECTRIC CORPORATION
PART I - FINANCIAL INFORMATION
ITEM I - FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET
Unaudited Audited
September 29, 1995 June 30, 1995
(000's) (000's)
------------------ -------------
<S> <C> <C>
ASSETS
Current Assets:
Cash $ 21 $ 386
Accounts receivable, net 18,134 17,253
Inventories, net 18,762 17,352
Income taxes receivable 47 325
Deferred income taxes 1,581 1,303
Other current assets 2,992 2,818
------ ------
Total current assets 41,537 39,437
Property, plant and equipment, at cost 31,518 31,143
Less accumulated depreciation (18,018) (17,467)
Facilities held for sale, net 981 981
------ ------
Total property, plant & equipment, net 14,481 14,657
------ ------
Intangible assets, net 226 226
------ ------
Other Assets 1,309 1,858
------ ------
Total Assets $57,553 $56,178
====== =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 7,307 $ 9,307
Accrued compensation and other 3,971 3,700
Current portion of long-term debt 1,441 1,440
------ ------
Total current liabilities 12,719 14,447
Long-term debt 27,196 24,419
Other long-term liabilities 1,450 1,463
Total Liabilities $41,365 $40,329
Shareholders' Equity:
Common stock, Par Value $1.00
Authorized 8,000,000 shares
Issued 5,003,946 and 5,002,977 shar 5,004 5,003
Capital in excess of par value 18,817 18,807
Accumulated deficit (6,739) (7,072)
Less: Treasury stock at cost
(80,699 and 80,551 Shares) (894) (889)
------ ------
Total shareholders' equity 16,188 15,849
------ ------
Total Liabilities and Shareholders' Equity $57,553 $56,178
====== ======
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See accompanying Notes to Consolidated Financial Statements.
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ACME ELECTRIC CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
13 Weeks Ended 13 Weeks Ended
September 29, 1995 September 30, 1994
(000's) (000's)
------------------ ------------------
<S> <C> <C>
NET SALES $25,931 $20,934
------ ------
COSTS AND EXPENSES:
Cost of Sales 19,760 14,395
Research and Engineering Expense 1,147 1,232
Selling and Administrative Expense 3,866 3,729
Interest Expense 585 354
TOTAL COSTS AND EXPENSES 25,358 19,710
------ ------
INCOME BEFORE TAXES 573 1,224
INCOME TAX EXPENSE 240 471
NET INCOME $ 333 $ 753
======= =======
Weighted Average Number of
Shares Outstanding 4,961,196 4,881,611
NET INCOME PER COMMON SHARE $ .07 $ .15
====== ======
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See accompanying Notes to Consolidated Financial Statements
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ACME ELECTRIC CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
13 Weeks Ended 13 Weeks Ended
September 29, 1995 September 30, 1994
(000's) (000's)
------------------ ------------------
<S> <C> <C>
Cash flows from operating activities:
Net Income $ 333 $ 753
Adjustments to reconcile net income
to net cash provided from
operating activities:
Depreciation and amortization 551 488
Loss on sale/retirement of
fixed assets - 7
Change in assets and liabilities:
Accounts receivable, net (881) (1,322)
Inventories, net (1,410) (1,824)
Other assets (134) (244)
Prepaid and deferred income taxes 509 626
Accounts payable (2,000) 959
Reserves for restructuring, net - (755)
Accrued compensation and other 258 (453)
------ ------
Net cash used in operating activities (2,774) (1,765)
------ ------
Cash flows from investing activities:
Additions to property, plant and
equipment (375) (1,052)
----- ------
Net cash used in investing activities (375) (1,052)
----- ------
Cash flows from financing activities:
Increase of borrowings, net 2,777 2,594
Proceeds from employee stock purchase,
stock option and dividend reinvest-
ment plans 12 65
Purchase of treasury stock (5) -
------ ------
Net cash provided by financing
activities 2,784 2,659
------ ------
Net decrease in cash (365) (158)
Cash at beginning of period 386 160
------ ------
Cash at end of period $ 21 $ 2
====== ======
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See accompanying Notes to Consolidated Financial Statements.
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ACME ELECTRIC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. The Consolidated Balance Sheet of Acme Electric Corporation
("Registrant") at September 29, 1995, the Consolidated Statement of
Operations for the thirteen-week periods ended September 29, 1995, and
September 30, 1994, and the Consolidated Statement of Cash Flows for the
thirteen-week periods ended September 29, 1995, and September 30, 1994,
include all adjustments necessary 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 1995 Annual Report filed on Form 10-K.
2. Inventories included in the Consolidated Balance Sheet are as follows:
September 29, 1995 June 30, 1995
(000's) (000's)
Raw Material $ 6,456 $ 6,990
Work-In-Process 5,933 4,819
Finished Goods 6,373 5,543
------ ------
$18,762 $17,352
====== ======
Inventories are reported net of reserves for obsolescence of $584,000 and
$566,000 at September 28 and June 30, respectively.
3. Accounts receivables included in the Consolidated Balance Sheet are as
follows:
September 29, 1995 June 30, 1995
(000's) (000's)
Billed $17,013 $16,439
Unbilled 1,639 1,265
------ ------
Subtotal 18,652 17,704
Less allowance for
doubtful accounts (518) (451)
------ ------
$18,134 $17,253
====== ======
Unbilled receivables are comprised of revenue amounts in long-term
contracts, which have been earned, but not yet billed. Management
anticipates that all unbilled receivables will be invoiced and collected
within a twelve-month period.
4. The Company had recorded in fiscal 1994 (April 1, 1994) a one-time
charge to pre-tax earnings of $7,475,000. Included in this prior-year
charge was an asset impairment write down of $2,400,000 of intangible
assets and $3,184,000 of FNC facility and equipment costs. The Company had
further accrued restructuring reserves of another $1,891,000, related to
its aerospace business. As of September 29, 1995, $702,000 of reserve
associated with impaired inventory ($303,000) and the idle URDC facility
($399,000) remained on the balance sheet.
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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
September 29, 1995
and
June 30, 1995
-------------------------------
Increase (Decrease)
(000's)
Current Assets $ 2,100
Property, Plant & Equipment Net (176)
Intangibles and Other Assets (549)
-----
$ 1,375
=====
Current Liabilities $(1,728)
Long-Term Debt and Other Liabilities 2,764
Shareholders' Equity 339
-----
$1,375
=====
Current assets at September 29, 1995, reflect a net increase of
approximately $2,100,000, or 5.3%, over the June 30, 1995, level, as a
result of increases in accounts receivable and inventories. The increase
in accounts receivable ($881,000) is reflective of the strong sales
performance for the two most recent months ended September 29, which
produced a record sales quarter. Approximately $490,000 of the $881,000
additional receivables relates to an increase in the unbilled receivables
account of the aerospace business, reflecting increased engineering
contract work containing milestone provisions as billing prerequisites.
Inventory levels increased $1,410,000 from June 30 levels as a result of
increased production volume in support of record sales, combined with
planned safety stocks to support the production interruption anticipated to
be incurred during the Demand Flow Technology (DFT) implementation.
The net decrease in property, plant and equipment of approximately
$176,000, or 1.2%, is the result of depreciation expense for the quarter of
$551,000, in part, offset by current year capital expenditures of $375,000.
Other assets decreased approximately $549,000, or 26.4%, due primarily to
the utilization of a portion of the deferred tax asset, offset against the
income tax expense recorded in the quarter of $240,000, along with
corporate tax refunds received of $278,000.
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Management's Discussion and Analysis of
Financial Condition and Results of Operations (Cont'd)
Current liabilities decreased approximately $1,728,000, or 12.0%, as a
result of a decrease in the balance sheet accounts payable, which are
subject to timing fluctuations due to reporting period-end cut-offs and
decrease days payable outstanding.
Long-term debt and other liabilities increased approximately $2,764,000, or
approximately 11.3%, from June 30, 1995. This net increase is reflective
of the funding required for the increased inventories and receivables,
combined with a net paydown on trade payables. In the quarter, the Company
received $1,500,000 of governmental loan proceeds associated with the
recently completed Cuba facility. The Company further anticipates, within
the current fiscal year, the receipt of an additional $700,000 of low-
interest governmental loans and grants related to this same completed
facility.
The increase in shareholders' equity of $339,000 is primarily due to the
year-to-date net profit of $333,000 plus the net proceeds from stock-
selling programs received since June 30, 1995.
The Company has financed its working capital requirements, in part, through
operations, with the balance coming from increased borrowings. The Company
expects that operating activities for the remainder of fiscal year 1996
will produce cash to support working capital requirements and remaining
capital expenditures, exclusive of the new business system, through the end
of the current fiscal year. The Company anticipates expending
approximately $3,500,000 over the next eighteen months on a new business
information system. A third-party lease arrangement is in place to fund
this project. The Company, further, has in place a credit agreement which
provides for a secured term loan with a current principal balance of
$5,735,000 and a $21,000,000 secured revolving credit line, which it
believes will provide sufficient liquidity for the near term. The credit
agreement, as extended, provides for a maturity date on the line of credit
of December 1, 1996, with an option for a one-year extension, while the
term loan matures January 2, 2000. It is the Company's intent, within the
near future, to revisit its capital structure and pursue the appropriate
financial alternative that will provide a basis for continued growth in the
long term.
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RESULTS OF OPERATIONS:
THIRTEEN-WEEK PERIOD ENDED SEPTEMBER 29, 1995, COMPARED WITH THE
COMPARABLE THIRTEEN-WEEK PERIOD ENDED SEPTEMBER 30, 1994
Consolidated sales for the thirteen-week period ended September 29, 1995,
were $25,931,000, compared with $20,934,000 for the comparable period of a
year earlier, or an increase of 23.9%. This increase is attributable to
steady growth in sales of uninterruptible power supplies (UPS) to AT&T,
combined with increased volume of transformer product sales, primarily
associated with the Siemens original equipment manufacturer (OEM) account.
Improved sales occurred at the Aerospace Division as customer backlogs were
brought current.
Cost of sales as a percentage of sales for the thirteen-week periods ended
September 29, 1995, and September 30, 1994, were 76.2% and 68.8%,
respectively. This increase in the current quarter compared with the same
period a year ago reflects the impact of increased material prices not
recovered through sale price increases, a higher mix of products with lower
associated margins sold during the quarter, and manufacturing cost
inefficiencies experienced at the Aerospace Division,as efforts were
focused in bringing current the delinquent customer backlogs. The Company
has initiated sale price increases to recover the margin erosion caused by
the raw material cost increases, but it is anticipated that full recovery
may span a couple of years.
Research and engineering expenses as a percent of net sales for the
thirteen-week period ended September 29, 1995, decreased to 4.4% from 5.9%
during the comparable period of the prior year. This decline in percent is
primarily due to the increased sales level achieved in the current year
quarter. Actual costs decreased $85,000, in the aggregate, due to lower
agency, consulting and development fees.
Selling and administrative costs as a percent of net sales decreased to
14.9% for the thirteen-week period ended September 29, 1995, from 17.8% for
the comparable period of the prior year. This percentage comparison
decrease reflects the lower sales related costs associated with the mix of
products sold in the quarter, including for certain lower gross margin
products sold in the quarter.
Interest expense as a percent of net sales for the thirteen-week period
ended September 29, 1995, increased to 2.3% from 1.7% for the comparable
period of the
prior year. Interest expense for the quarter to prior-year-quarter
comparison increased $231,000, primarily due to higher debt levels
maintained to support the Company's working capital requirements. To a
much lesser extent, slightly higher interest rates also contributed to the
higher interest costs.
Income taxes as a percent of income before taxes for the thirteen-week
period ended September 29, 1995, was 41.9%, compared with 38.5% for the
comparable period a year earlier. This variation in the effective tax rate
is primarily the result of year-to-year variations in certain book-to-tax
differences, relating to book expenses not deductible for tax calculation
purposes.
Backlog at September 29, 1995, was $20,393,281, compared with $17,909,288
at the end of the comparable period of the prior year.
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PART II
OTHER INFORMATION
Item 5. Other Information
a. Exhibits
Interim Report dated
November 3, 1995, for the
quarter ended September 29,
1995. See Exhibit 13 attached.
Financial Data Schedule. See Exhibit 27 attached.
News Release of October 13,
1995, announcing first-quarter
results for fiscal year 1996. See Exhibit 99 attached.
b. There were no reports filed on Form 8-K during the
thirteen-week period ended September 29, 1995.
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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: November 10, 1995 /s/
Robert J. McKenna
Chairman, President and
Chief Executive Officer
Date: November 10, 1995 /s/
Daniel K. Corwin
Chief Financial Officer and
Senior Vice President
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<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> SEP-29-1995
<CASH> 21
<SECURITIES> 0
<RECEIVABLES> 18,652
<ALLOWANCES> 518
<INVENTORY> 18,762
<CURRENT-ASSETS> 41,537
<PP&E> 32,809
<DEPRECIATION> 18,328
<TOTAL-ASSETS> 57,553
<CURRENT-LIABILITIES> 12,719
<BONDS> 27,196
<COMMON> 23,821
0
0
<OTHER-SE> (7,633)
<TOTAL-LIABILITY-AND-EQUITY> 57,553
<SALES> 25,931
<TOTAL-REVENUES> 25,931
<CGS> 19,760
<TOTAL-COSTS> 24,711
<OTHER-EXPENSES> 62
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 585
<INCOME-PRETAX> 573
<INCOME-TAX> 240
<INCOME-CONTINUING> 333
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 333
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
ACME ELECTRIC CORPORATION
INTERIM REPORT 1
NOVEMBER 3, 1995
To Our Shareholders:
First quarter sales were $25,931,000 for the third consecutive quarter of
record breaking performance. After a disappointing loss in the fourth
quarter of 1995, earnings rebounded to $333,000, or 7 cents per share.
Over the past twelve months, our business has grown 24%, while maintaining
engineering, sales and administrative costs at the same expenditure level.
Unfortunately, significant material cost increases have reduced our gross
margins. We have begun passing through these increases, but expect full
recovery to take a couple of years.
Our Aerospace Division has completed its consolidation initiative, and we
are once again shipping products on time to our customers. The Division is
now focused on gaining process efficiencies and reducing costs.
This past quarter, our Electronics Division signed an agreement with
Stratus Computer Inc. to design and manufacture custom electronic power
supplies. This agreement is expected to generate more than a million
dollars per year of new business.
Sales of uninterruptible power supplies (UPS) sold through AT&T are growing
steadily. We have received assurances from AT&T that this collaborative
initiative will continue to be an important piece of their overall
marketing strategy, and the splitting of their business will result in an
even more focused effort.
Our Power Distribution Products Division is beginning to have some success
with their Latin American market development initiative. Stocking orders
were recently received from distributors in three Latin American countries,
and there seems to be strong interest in our products throughout the
region.
Implementation of advanced manufacturing techniques will begin this coming
quarter and progress over the next two years. A great deal of effort
has gone into the planning and preparation of this significant change to
how we manufacture products. Improved quality, faster throughput times,
and reduced inventories will be the benefits from this effort.
In summary, our recovery is continuing, our businesses are growing, and
major steps are being taken to redesign manufacturing processes for greater
efficiency and effectiveness.
Robert J. McKenna
Chairman and CEO
November 3, 1995
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ACME ELECTRIC CORPORATION
East Aurora, New York
The following tables set forth certain unaudited financial information for the thirteen-week periods
ended September 29, 1995, and September 30, 1994 (in thousands, except for per share data):
CONSOLIDATED BALANCE SHEET
SEPT. 29, 1995 SEPT. 30, 1994 JUNE 30, 1995
-------------- -------------- -------------
<S> <C> <C> <C>
Current Assets.................. $41,537 $33,800 $39,437
Fixed Assets and Other Net...... 16,016 17,081 16,741
------ ------ ------
Total......................... $57,553 $50,881 $56,178
====== ====== ======
Current Liabilities............. $12,719 $10,673 $14,447
Long-Term Debt.................. 28,646 24,824 25,882
Shareholders' Equity............ 16,188 15,384 15,849
------ ------
Total......................... $57,553 $50,881 $56,178
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CONSOLIDATED INCOME STATEMENT
13 WEEKS 13 WEEKS FISCAL YEAR
ENDED ENDED ENDED
SEPT. 29, 1995 SEPT. 30, 1994 JUNE 30, 1995
-------------- -------------- -------------
<S> <C> <C> <C>
Net Sales....................... $25,931 $20,934 $91,127
Net Income ..................... 333 753 992
Earnings per share.............. $.07 $.15 $.20
Weighted Number of Shares
Outstanding Used to Compute
Income Per Common Share 4,961,196 4,881,611 4,924,887
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Company news is available by FAX: dial 1-800-758-5804 and input extension
006675; or for INTERNET access go to:
http://www.prnewswire.com/cnoc/exec/menu?006675
ACME ELECTRIC CORPORATION
NEWS RELEASE
FIRST QUARTER RESULTS FOR FISCAL YEAR 1996
FOR IMMEDIATE RELEASE
ACME ELECTRIC CORPORATION REPORTS FIRST QUARTER RESULTS
EAST AURORA, N.Y., October 13, 1995 -- Acme Electric Corporation (NYSE:
ACE) reported that the thirteen-week period ending September 29, 1995,
produced record sales of $25,931,000. Net income for the quarter was
$333,000, or $.07 per share, compared to sales of $20,934,000 and net
income of $753,000, or $.15 per share, for the comparable period of last
year.
Robert J. McKenna, Chairman and CEO, stated that, "Sales for the quarter
represented the third consecutive quarter of record-breaking performance,
and earnings rebounded after a disappointing loss in the fourth quarter of
1995. Over the past twelve months, our business has grown 24%, while
maintaining engineering, sales and administrative costs at the same
expenditure level. Material cost increases continued to effect the
quarter, but the Company has begun to pass these increases through as the
market allows."
Mr. McKenna also reported that, "The Electronics Division signed an
agreement with Stratus Computer Inc. to design and manufacture custom
electronic power supplies, which is expected to generate more than a
million dollars per year of new business. Sales of uninterruptible power
supplies (UPS) sold through AT&T are growing steadily, and the recent
organizational changes announced by AT&T will result in an even more
focused effort. The Power Distribution Products Division is beginning to
have some success in Latin America and has received stocking orders from
distributors in three Latin American countries. The Aerospace Division has
completed its consolidation initiative and is, once again, shipping
products on time to its customers."
In summary, Mr. McKenna said, "Our businesses continue to experience record
growth, our profits are continuing to recover, and major steps are being
taken to redesign our manufacturing processes for greater efficiency and
reduced working capital."
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Acme Electric Corporation 2-2-2-2-2
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.
# # # #
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ACME ELECTRIC CORPORATION
COMPARATIVE ANALYSIS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
FOR THE 13 WEEKS ENDED
09/29/95 09/30/94
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<S> <C> <C>
Net Sales $25,931 $20,934
Net Income (Loss) 333 753
Earnings (Loss) per share $.07 $.15
Weighted Number of Shares
Outstanding Used to Compute
Income Per Common Share 4,961,196 4,881,611
</TABLE>
Company news is available by FAX: dial 1-800-758-5804, and input extension
006675; or for INTERNET access go to:
http://www.prnewswire.com/cnoc/exec/menu?006675
