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 27, 1996
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 27, 1996
Common Stock, Par Value $1.00 Per Share 5,030,535
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ACME ELECTRIC CORPORATION
PART I - FINANCIAL INFORMATION
ITEM I - FINANCIAL STATEMENTS
BALANCE SHEET
Unaudited Audited
Sept. 27, 1996 June 30, 1996
(000's) (000's)
-------------- -------------
<S> <C> <C>
ASSETS
Current Assets:
Cash $ 1,474 $ 828
Accounts receivable, net 15,226 15,445
Inventories, net 15,993 15,008
Deferred income taxes 1,063 1,093
Other current assets 3,062 2,997
------ ------
Total current assets 36,818 35,371
------ ------
Property, plant and equipment, at cost 36,041 34,983
Less accumulated depreciation (19,994) (19,495)
Facilities held for sale, net 981 981
------ ------
Total property, plant & equipment, net 17,028 16,469
------ ------
Other Assets 2,146 2,304
------ ------
Total Assets $55,992 $54,144
====== ======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 8,077 $ 6,045
Accrued compensation and other 4,457 4,763
Current portion of long-term debt 2,253 2,206
------ ------
Total current liabilities 14,787 13,014
Long-term debt 24,527 24,394
Other long-term liabilities 924 1,052
------ ------
Total Liabilities $40,238 $38,460
------ ------
Shareholders' Equity:
Common stock, Par Value $1.00
Authorized 8,000,000 shares
Issued 5,030,535 and 5,020,153 shares 5,031 5,020
Capital in excess of par value 18,963 18,910
Accumulated deficit (7,346) (7,352)
Less: Treasury stock at cost
(80,699 and 80,699 Shares) (894) (894)
------ ------
Total shareholders' equity 15,754 15,684
------ ------
Total Liabilities and Shareholders' Equity $55,992 $54,144
====== ======
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See accompanying Notes to Financial Statements.<PAGE>
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ACME ELECTRIC CORPORATION
STATEMENT OF OPERATIONS
(Unaudited)
13 Weeks Ended 13 Weeks Ended
September 27, 1996 September 29, 1995
(000's) (000's)
------------------ ------------------
<S> <C> <C>
NET SALES $23,223 $25,931
------ ------
COSTS AND EXPENSES:
Cost of Sales 17,881 19,760
Research and Engineering
Expense 1,149 1,147
Selling and Administrative
Expense 3,686 3,866
Interest Expense 471 585
------ ------
TOTAL COSTS AND EXPENSES 23,187 25,358
------ ------
INCOME BEFORE TAXES 36 573
INCOME TAX EXPENSE 30 240
------ ------
NET INCOME $ 6 $ 333
====== ======
Weighted Average Number of
Shares Outstanding 4,957,548 4,961,196
NET INCOME PER COMMON SHARE $ .00 $ .07
====== ======
</TABLE>
See accompanying Notes to Financial Statements
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ACME ELECTRIC CORPORATION
STATEMENT OF CASH FLOWS
(Unaudited)
13 Weeks Ended 13 Weeks Ended
Sept. 27, 1996 Sept. 29, 1995
(000's) (000's)
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net Income $ 6 $ 333
Adjustments to reconcile net income
to net cash flows from operating activities:
Loss from joint-venture 42 51
Depreciation and amortization 499 551
Change in assets and liabilities:
Accounts receivable, net 219 (881)
Inventories, net (985) (1,410)
Other assets 51 (185)
Prepaid and accrued income taxes 30 509
Accounts payable 2,032 (2,000)
Accrued compensation and othe (434) 258
------ ------
Net cash provided from (used in)
operating activities 1,460 (2,774)
------ ------
Cash flows from investing activities:
Additions to property, plant and equipment (1,058) (375)
------ ------
Net cash used in investing activities (1,058) (375)
------ ------
Cash flows from financing activities:
Increase of borrowings, net 180 2,777
Proceeds from employee stock purchase, stock
option and dividend reinvestment plans 64 12
Purchase of treasury stock -- (5)
------ ------
Net cash provided by financing
activities 244 2,784
------ ------
Net increase (decrease) in cash 646 (365)
Cash at beginning of period 828 386
------ ------
Cash at end of period $ 1,474 $ 21
====== ======
</TABLE>
See accompanying Notes to Financial Statements.
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ACME ELECTRIC CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. The Balance Sheet of Acme Electric Corporation ("Registrant") at
September 27, 1996, the Statement of Operations for the
thirteen-week periods ended September 27, 1996, and September
29, 1995, and the Statement of Cash Flows for the thirteen-week
periods ended September 27, 1996, and September 29, 1995,
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 1996 Annual
Report filed on Form 10-K.
2. Inventories included in the Consolidated Balance Sheet are as
follows:
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<CAPTION>
September 27, 1996 June 30, 1996
(000's) (000's)
------------------ -------------
<S> <C> <C>
Raw Material $ 7,576 $ 6,733
Work-In-Process 4,116 3,876
Finished Goods 4,301 4,399
------ ------
$15,993 $15,008
====== ======
</TABLE>
Inventories are reported net of reserves for obsolescence of
$421,000 and $399,000 at September 27 and June 30, respectively.
3. Accounts receivables included in the Consolidated Balance Sheet
are as follows:
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<CAPTION>
September 27, 1996 June 30, 1996
(000's) (000's)
------------------ -------------
<S> <C> <C>
Billed $14,778 $14,938
Unbilled 881 896
------ ------
Subtotal 15,659 15,834
Less allowance for
doubtful accounts (433) (389)
------ ------
$15,226 $15,445
====== ======
</TABLE>
Unbilled receivables are comprised of revenue amounts on 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. In 1994, the Company recognized a pre-tax charge of $7,475,000
against earnings to establish reserves and record the impairment
of assets associated with the restructuring of its aerospace
business, to include the closing of the Acme-URDC, Inc. facility
in West Jordan, Utah, and the consolidation of operations into
the facility in Tempe, Arizona.
The only remaining restructuring related reserve at September
27, 1996, is the reserve for the URDC plant write-down of
$399,000. The Company continues to actively market, for sale or
lease, the idle 23,000-square-foot facility in West Jordan,
Utah.
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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 financial statements.
A summary of the period-to-period change in the principal items
included in the balance sheets and which affect financial condition
follows:
<TABLE>
<CAPTION>
Comparison of Balance Sheets at
September 27, 1996
and
June 30, 1996
-------------------------------
Increase (Decrease)
(000's)
<S> <C>
Current Assets $ 1,447
Property, Plant & Equipment Net 559
Other Assets (158)
------
$ 1,848
======
Current Liabilities $ 1,773
Long-Term Debt and Other Liabilities 5
Shareholders' Equity 70
------
$ 1,848
======
</TABLE>
Current assets at September 27, 1996, increased $1,447,000, or
4.1%, over June 30, 1996, levels due primarily to higher inventories
($985,000) and cash on-hand cutoff balances ($646,000). Raw
materials and in-process inventories increased as a result of the
Company's production output falling short of forecast due to
interruptions incurred during the quarter related to labor force
realignment activities in the Company's Cuba, NY, plant, as well as
manufacturing product flow realignments initiated in the Lumberton,
NC, plant as a part of the ongoing Demand Flow Technology (DFT)
implementation program. Raw stock was further impacted by material
purchases incurred in support of first time production builds for
two new customer programs in the Electronics business. The increase
in the reported cash balance is the product of timing between the
period-end reporting cut-off and the last day of the period lock box
receipts, pending the daily transfer to be applied against the
working capital line of credit. Receivables balance declined
$219,000 from the June 30 balance, as sales for the first quarter of
fiscal 1997 were slightly lower than the quarter ended June 30,
1996.
The net increase in property, plant and equipment of $559,000
represents general equipment expenditures of $526,000 combined with
$532,000 of new business system capital costs, partially offset
against depreciation for the quarter of $499,000.
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<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Cont'd)
Other assets decreased approximately $158,000, or 5.3%, due
primarily to the amortization of deferred costs.
Current liabilities increased $1,773,000, or 13.6%, as a result
of increased accounts payable, which was, in part, due to increased
raw material purchases coupled with the timing fluctuations inherent
with outstanding payable balances and period-end reporting cutoffs.
Long-term debt and other liabilities remained essentially
unchanged from June 30 levels, as the Company financed its capital
expenditures primarily through cash from operations.
The increase in shareholders' equity of $70,000 is primarily due
to proceeds from employee stock purchase programs received since
June 30, 1996.
The Company has financed its working capital requirements
through operations. The Company expects that operating activities
for the remainder of fiscal year 1997 will provide adequate cash
flow to support working capital requirements and remaining capital
expenditures through the end of the current fiscal year.
The Company has in place a credit agreement which provides for
two secured term loans, with current principal balances of
$4,386,000 and $1,933,000, and a secured revolving credit line, with
a $21,000,000 limit and a maturity date of December 1, 1997, against
which the Company has combined outstanding borrowings and letters of
credit of approximately $15,391,000. Outstanding borrowings against
the revolving credit facility are limited by formula to specified
amounts of accounts receivable and inventory, reduced by outstanding
term debt. As of September 27, 1996, the Company's eligible
(formula-based) unborrowed funds available on the line of credit
were approximately $4,200,000. Management believes that the current
financing arrangement will provide adequate liquidity in the near
term, with intentions to negotiate longer term facility commitments
for the future.
The Company has announced that it has entered into an agreement
to sell the assets of its Aerospace Division for approximately $6
million to Ultra Force Battery Company, Inc. The agreement also
provides for the license of Acme's battery-related technologies for
the electrical vehicle and other commercial markets. Subject to the
satisfaction of certain contingencies, the closing is expected to
occur by the end of January 1997.
Results of Operations:
Thirteen-week period ended September 27, 1996, compared with the
comparable thirteen-week period ended September 29, 1995
Consolidated sales for the thirteen-week period ended September
27, 1996, were $23,223,000, compared with $25,931,000 for the
comparable period of a year earlier, or a decrease of 10.4%. Net
sales have declined from the prior year same period as a result of
lower sales of uninterruptible power supply (UPS) product and the
maturing of certain OEM product programs in the Electronics
business, coupled with lower engineering program revenue earned in
the Aerospace operation. Aerospace sales were further impacted as
production efforts to meet delivery schedules continue to be a
source of concern to the Company.
<PAGE>
<PAGE>
Results of Operations (Cont'd)
Cost of sales as a percentage of sales for the thirteen-week
periods ended September 27, 1996, and September 29, 1995, were 77.0%
and 76.2%, respectively. This increase in the current quarter
compared with the same period a year ago reflects an increase in
relative labor costs incurred in the Electronics business, primarily
associated with the short-term production inefficiencies resulting
from the job layoffs incurred during the quarter. Material costs
were also higher for the quarter (compared with the same period of a
year ago) in the Electronics business as a number of small quantity
purchases with no lead time were incurred in support of several
customer program development efforts. The higher cost of sales
percentage is further reflective of the $2.7 million lower sales
achieved in the first quarter of fiscal '97, while certain fixed
costs included in the cost of sales remained constant from year to
year.
Research and engineering expenses as a percent of net sales for
the thirteen-week period ended September 27, 1996, increased to 4.9%
from 4.4% during the comparable period of the prior year. This
increase in percentage is due solely to the lower sales levels
achieved in the current year quarter and used in the percentage
calculation. Actual expenses in the quarter-to-quarter comparison
were unchanged.
Selling and administrative costs as a percent of net sales
increased to 15.9% for the thirteen-week period ended September 27,
1996, from 14.9% for the comparable period of the prior year. This
percentage comparison again reflects the lower sales levels achieved
in the current year quarter. Actual aggregate selling and
administrative costs were lower by $180,000 in the first quarter of
fiscal 1997, as a result of fewer commission-related UPS sales in
the quarter, an unfilled sales position at the Lumberton division,
and a slightly different sales mix between direct OEM customer
product and product sold through distribution.
Interest expense as a percent of net sales for the thirteen-week
period ended September 27, 1996, declined slightly to 2.0% from 2.3%
for the comparable period of the prior year. Interest expense for
the quarter to prior-year-quarter comparison decreased $114,000,
primarily due to reduced debt levels, as the Company has reduced its
working capital nearly $6,000,000 from September of 1995 to
September 1996.
Income taxes as a percent of income before taxes for the
thirteen-week period ended September 27, 1996, was 83.3%, compared
with 41.9% for the comparable period a year earlier. The variation
in the effective tax rate is due to the low pre-tax earnings and the
relative effect that certain book-to-tax differences (book expenses
not deductible for tax purposes) have on the calculated effective
rate. The effective tax rate applied against domestic earnings has
remained essentially unchanged at 38.5%.
Backlog at September 27, 1996, was $19,422,000, compared with
$20,393,000 at the end of the comparable period of the prior year.
<PAGE>
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PART II
OTHER INFORMATION
Item 5. Other Information
a. Exhibits
Interim Report dated
November 8, 1996, for the
quarter ended September 27,
1996. See Exhibit 13 attached.
Financial Data Schedule. See Exhibit 27 attached.
News Release of October 31,
1996, announcing first-quarter
results for fiscal year 1997. See Exhibit 99.1 attached.
News Release of November 4,
1996, announcing an agreement
to sell its Aerospace Division. See Exhibit 99.2 attached.
b. There were no reports filed on Form 8-K during the thirteen-
week period ended September 27, 1996.
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 14, 1996 /s/
Robert J. McKenna
Chairman, President and
Chief Executive Officer
Date: November 14, 1996 /s/
Daniel K. Corwin
Chief Financial Officer and
Senior Vice President
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> SEP-27-1996
<CASH> 1,474
<SECURITIES> 0
<RECEIVABLES> 15,659
<ALLOWANCES> 433
<INVENTORY> 15,993
<CURRENT-ASSETS> 36,818
<PP&E> 37,022
<DEPRECIATION> 19,994
<TOTAL-ASSETS> 55,992
<CURRENT-LIABILITIES> 14,787
<BONDS> 24,527
0
0
<COMMON> 23,994
<OTHER-SE> (8,240)
<TOTAL-LIABILITY-AND-EQUITY> 55,992
<SALES> 23,223
<TOTAL-REVENUES> 23,223
<CGS> 17,881
<TOTAL-COSTS> 22,716
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 471
<INCOME-PRETAX> 36
<INCOME-TAX> 30
<INCOME-CONTINUING> 6
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
ACME ELECTRIC CORPORATION
INTERIM REPORT 1
13 WEEKS ENDED SEPTEMBER 27, 1996
To Our Shareholders:
The first quarter resulted in net income of $6,000 on sales of
$23,223,000. This compares to net income of $333,000 on sales of
$25,931,000 in the same quarter of last year. Profits were depressed due
to continued losses in our Aerospace Division, lost production in our Power
Distribution Products Division caused by Hurricane Fran, and a temporary
lull in sales orders between major programs in our Electronics Division.
The Electronics Division is gearing up for several new OEM programs
scheduled to move into production shortly after the first of the year.
However, the decline in sales on a few older programs caused reduced
production output, resulting in the temporary layoff of 15% of the work
force.
This Division will be implementing the next phase of Demand Flow
Technology (DFT) in January. Once complete, we will realize even greater
product quality, significantly reduced production cycle times, and
inventory levels far less than needed today.
New orders remain strong at the Power Distribution Products Division
due to our improved service levels from DFT initiatives. Expansion in
Latin America continues with thirty-two new distributors signed on and many
new opportunities surfacing. The Division became ISO-9001 certified this
past quarter and is well positioned for further growth.
We have entered into an agreement to sell the assets of our Aerospace
Division for approximately $6 million to Ultra Force Battery Company, Inc.,
a newly formed subsidiary of Battery Automated Transportation, Inc. The
agreement also provides for the license of Acme's battery-related
technologies for the electric vehicle and other commercial markets.
Subject to the satisfaction of certain contingencies, the closing is
expected to occur within 90 days.
Robert J. McKenna
Chairman and CEO
November 8, 1996
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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 27, 1996, and September 29, 1995 (in thousands, except for per share
data):
<CAPTION>
BALANCE SHEET
-------------
Sept. 27, 1996 Sept. 29, 1995 June 30, 1996
-------------- -------------- -------------
<C> <C> <C> <C>
Current Assets.................... $36,818 $41,437 $35,371
Fixed Assets and Other Net........ 19,174 16,016 18,773
------ ------ ------
Total........................... $55,992 $57,553 $54,144
====== ====== ======
Current Liabilities............... $14,787 $12,719 $13,014
Long-Term Debt.................... 25,451 28,646 25,446
Shareholders' Equity.............. 15,754 16,188 15,684
------ ------ ------
Total........................... $55,992 $57,553 $54,144
====== ====== ======
</TABLE>
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<CAPTION>
INCOME STATEMENT
----------------
13 Weeks 13 Weeks Fiscal Year
Ended Ended Ended
Sept. 27, 1996 Sept. 29, 1995 June 30, 1996
-------------- -------------- -------------
<S> <C> <C> <C>
Net Sales......................... $23,223 $25,931 $96,551
Net Income (Loss)................. 6 333 (280)
Net Income (Loss) Per Common Share $.00 $.07 $(.06)
Weighted Number of Shares
Outstanding Used to Compute
Income (Loss) Per Common Share.. 4,957,548 4,961,196 4,955,626
</TABLE>
Company news is available by FAX: dial 1-800-758-5804 and input extension
006675; or forINTERNET access go to: http://www.prnewswire.com/cnoc/exec/menu?
006675
ACME ELECTRIC CORPORATION
NEWS RELEASE
ANNOUNCES FIRST QUARTER RESULTS
FOR IMMEDIATE RELEASE
ACME ELECTRIC CORPORATION REPORTS FIRST QUARTER RESULTS
EAST AURORA, N.Y., October 31, 1996 -- Acme Electric Corporation
(NYSE: ACE) reported that the thirteen-week period ending September 27,
1996, resulted in sales of $23,223,000 and net income of $6,000, compared
to sales of $25,931,000 and net income of $333,000 for the comparable
period of last year.
Robert J. McKenna, Chairman and CEO, stated that, "Profits were
depressed due to continued losses in our Aerospace Division, lost
production in our Power Distribution Products Division caused by Hurricane
Fran, and a temporary lull in sales between major programs in our
Electronics Division. New orders remain strong at the Power Distribution
Products Division due to improved service levels from Demand Flow
Technology (DFT) initiatives, and expansion efforts in Latin America added
thirty-two new distributors."
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
----------------------
09/27/96 09/29/95
-------- --------
<S> <C> <C>
Net Sales $23,223 $25,931
Net Income 6 333
Net Income Per Common Share $.00 $.07
Weighted Number of Shares
Outstanding Used to Compute
Income (Loss) Per Common Share 4,957,548 4,961,196
</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
ACME ELECTRIC CORPORATION
NEWS RELEASE
ANNOUNCES AN AGREEMENT TO SELL ITS AEROSPACE DIVISION
FOR IMMEDIATE RELEASE
ACME ELECTRIC ANNOUNCES AGREEMENT
TO SELL ITS AEROSPACE DIVISION
EAST AURORA, N.Y., November 4, 1996 -- Acme Electric Corporation (NYSE:
ACE) today announced that it has entered into an agreement to sell the assets
of its Aerospace Division for approximately $6 million to Ultra Force Battery
Company, Inc., a newly formed subsidiary of B.A.T. International, Inc. The
agreement also provides for the license of Acme's battery-related
technologies for the electric vehicle and other commercial markets. Subject
to the satisfaction of certain contingencies, the closing is expected to
occur within 90 days.
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, military and aerospace
applications. Corporate headquarters are in East Aurora, N.Y., with
operations in Cuba, N.Y., Lumberton, N.C. and Tempe, Ariz.
# # # #
