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, 1997
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, 1997
Common Stock, Par Value $1.00 Per Share 5,043,544
<PAGE>
ACME ELECTRIC CORPORATION
PART I - FINANCIAL INFORMATION
ITEM I - FINANCIAL STATEMENTS
BALANCE SHEET
Unaudited Audited
Sept. 27, 1997 June 30, 1997
(000's) (000's)
ASSETS
Current Assets:
Cash $ 165 $ 398
Accounts receivable, net 13,952 14,019
Inventories, net 13,158 13,540
Deferred income taxes 1,129 1,238
Other current assets 683 499
------ ------
Total current assets 29,087 29,694
------ ------
Property, plant and equipment, at cost 37,861 37,503
Less accumulated depreciation (22,035) (21,464)
------ ------
Total property, plant & equipment, net 15,826 16,039
------ ------
Other Assets 4,453 4,411
------ ------
Total Assets $49,366 $50,144
====== ======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 5,762 $ 6,495
Accrued compensation and other 3,257 3,918
Current portion of long-term debt 2,588 2,562
------ ------
Total current liabilities 11,607 12,975
Long-term debt 19,549 19,198
Other long-term liabilities 1,536 1,483
------ ------
Total Liabilities $32,692 $33,656
------ ------
Shareholders' Equity:
Common stock, Par Value $1.00
Authorized 8,000,000 shares
Issued 5,043,544 and 5,040,834 shares 5,044 5,040
Capital in excess of par value 19,026 19,014
Accumulated deficit (7,388) (7,558)
Less: Treasury stock at cost
(699 Shares) (8) (8)
------ ------
Total Shareholders' Equity 16,674 16,488
------ ------
Total Liabilities and Shareholders' Equity $49,366 $50,144
====== ======
See accompanying Notes to Financial Statements.<PAGE>
ACME ELECTRIC CORPORATION
STATEMENT OF OPERATIONS
(Unaudited)
13 Weeks Ended 13 Weeks Ended
Sept. 27, 1997 Sept. 27, 1996
(000's) (000's)
NET SALES $22,179 $23,223
------ ------
COSTS AND EXPENSES:
Cost of Sales 16,855 17,881
Research and Engineering Expenses 1,009 1,149
Selling and Administrative Expenses 3,631 3,686
Interest Expense 405 471
------ ------
TOTAL COSTS AND EXPENSES 21,900 23,187
------ ------
INCOME BEFORE TAXES 279 36
INCOME TAX EXPENSE 109 30
------ ------
NET INCOME $ 170 $ 6
====== ======
Weighted Average Number of
Shares Outstanding 5,052,498 4,957,548
NET INCOME PER COMMON SHARE $ .03 $ .00
------ ------
See accompanying Notes to Financial Statements
<PAGE>
ACME ELECTRIC CORPORATION
STATEMENT OF CASH FLOWS
(Unaudited)
13 Weeks Ended 13 Weeks Ended
Sept. 27, 1997 Sept. 27, 1996
(000's) (000's)
Cash flows from operating activities:
Net Income $ 170 $ 6
Adjustments to reconcile net income
to net cash flows from operating activities:
Loss from joint-venture -- 42
Depreciation and amortization 610 499
Change in assets and liabilities:
Accounts receivable, net 67 219
Inventories, net 382 (985)
Other assets (226) 51
Prepaid and accrued income taxes 109 30
Accounts payable (733) 2,032
Accrued compensation and other (608) (434)
------ ------
Net cash provided from (used in)
operating activities (229) 1,460
------ ------
Cash flows from investing activities:
Additions to property, plant and equipment (397 (1,058)
------- ------
Net cash used in investing activities (397) (1,058)
------- ------
Cash flows from financing activities:
Increase of borrowings, net 377 180
Proceeds from employee stock purchase, stock
option and dividend reinvestment plans 16 64
------ ------
Net cash provided by financing
activities 393 244
------ ------
Net increase (decrease) in cash (233) 646
Cash at beginning of period 398 828
------ ------
Cash at end of period $ 165 $ 1,474
====== ======
See accompanying Notes to Financial Statements.
<PAGE>
ACME ELECTRIC CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. The Balance Sheet of Acme Electric Corporation ("Registrant") at
September 27, 1997, the Statement of Operations for the thirteen-week
periods ended September 27, 1997, and September 27, 1996, and the
Statement of Cash Flows for the thirteen-week periods ended September
27, 1997, and September 27, 1996, 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 Financial Statements) contained in the
Registrant's 1997 Annual Report filed on Form 10-K.
2. Accounts receivables included in the Balance Sheet are as follows:
Sept. 27, 1997 June 30, 1997
(000's) (000's)
Billed $14,067 $14,291
Unbilled 281 251
------ ------
Subtotal 14,348 14,542
Less allowance for
doubtful accounts 396 523
------ ------
$13,952 $14,019
====== ======
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 substantially
invoiced and collected within a twelve-month period.
3. Inventories included in the Balance Sheet are as follows:
Sept. 27, 1997 June 30, 1997
(000's) (000's)
Raw Material $ 7,442 $ 7,144
Work-In-Process 2,427 2,365
Finished Goods 3,289 4,031
------ ------
$13,158 $13,540
====== ======
Inventories are reported net of reserves for obsolescence of $674,000
and $546,000 at September 27 and June 30, respectively.
<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 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:
Comparison of Balance Sheets at
September 27, 1997
and
June 30, 1997
Increase (Decrease)
(000's)
Current Assets $ (607)
Property, Plant & Equipment Net (213)
Other Assets 42
------
$ (778)
======
Current Liabilities $(1,368)
Long-Term Debt and Other Liabilities 404
Shareholders' Equity 186
------
$ (778)
======
Current assets at September 27, 1997, decreased $607,000, or 2.0%,
from June 30, 1997, levels due primarily to reduced inventories ($382,000)
and lower cash on-hand balances ($233,000). Inventories were slightly
lower as a result of stronger than expected shipments of OEM custom power
supplies in the quarter. The decrease in the reported cash balance is due
to timing between the period-end reporting cut-off and the transfer of
lockbox receipts applied against the working line of credit.
The net increase in property, plant and equipment of $213,000
represents equipment expenditures in the amount of $397,000 more than
offset by depreciation expense of approximately $610,000. The Company
anticipates that total capital expenditures will not exceed $2 million in
fiscal 1998.
Current liabilities decreased $1,368,000, or 10.5%, as a result of the
reduction made in outstanding trade payables in preparation of the new
business system conversion at the Company's Tempe, Arizona, location,
combined with performance incentive payouts made against fiscal 1997
accruals.
Long-term debt and other liabilities increased approximately $400,000
in support of the capital expenditures incurred in the quarter.
The increase in shareholders' equity of $186,000 is primarily due to
the net income earned in the period of $170,000.
The Company has financed its working capital requirements through
operations. The Company expects that operating activities for the
remainder of fiscal year 1998 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 $3,374,000 and
$1,533,000, and a secured revolving credit line, with a $21,000,000 limit
and a maturity date of December 31, 1998, against which the Company has
combined outstanding borrowings and letters of credit of approximately
$12,175,000. 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, 1997, the
Company's eligible (formula-based) unborrowed funds available on the line
of credit were approximately $5,528,000. 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.
Results of Operations:
Thirteen-week period ended September 27, 1997, compared with the
comparable thirteen-week period ended September 27, 1996
Consolidated sales for the thirteen-week period ended September 27,
1997, were $22,179,000, compared with $23,223,000 for the comparable period
of a year earlier, or a decrease of 4.5%. Net sales have declined from the
same period of the prior year, primarily due to the maturing of various OEM
power supply programs at a faster rate than the number of new programs
being commenced. A further contributing factor affecting the volume of
sales in the quarter has been the Company's efforts to grow sales in higher
return product, while phasing out lower-margin business.
Cost of sales as a percentage of sales for the thirteen-week periods
ended September 27, 1997, and September 27, 1996, were 76.0% and 77.0%,
respectively. This improvement was achieved despite the nearly $1 million
decline in sales, as a result of stringent cost control efforts (labor and
overhead) within the Company's custom power supplies business, combined
with a growth in sales of higher-margin products sold through distribution.
Research and engineering expenses as a percent of net sales for the
thirteen-week period ended September 27, 1997, decreased slightly to 4.5%
from the 4.9% for the same period of the prior year. This reduction
($140,000) primarily reflects the reduced overhead structure implemented in
the Company's custom electronics business during the fourth quarter of
fiscal 1997.
Selling and administrative costs as a percent of net sales increased
to 16.4% for the thirteen-week period ended September 27, 1997, from 15.9%
for the comparable period of the prior year. Increased selling costs
(commissions and shipping costs) were experienced as more product with
higher gross margins were sold through distribution in the current year
quarter. Included within the selling and administrative expense line is an
offsetting income of approximately $192,000, related to performance
incentives earned by the Company at its aerospace operation, based upon
meeting specified delivery schedules with one customer.
Interest expense as a percent of net sales for the thirteen-week
period ended September 27, 1997, declined to 1.8% from 2.0% for the
comparable period of the prior year. Interest expense in the quarter to
prior-year-quarter comparison decreased $66,000, primarily due to reduced
debt levels, as the Company reduced its working capital in excess of
$2,000,000 from September of 1996 to September 1997.
Income taxes as a percent of income before taxes for the thirteen-week
period ended September 27, 1997, was 39.0%, compared with 83.3% for the
comparable period a year earlier. The variation in the effective tax rate
is due to the prior year's low pre-tax earnings and the relative effect
that certain book-to-tax differences (1997 book expenses not deductible for
tax purposes to include losses from the foreign joint venture) had on the
calculated effective rate. The effective tax rate as a percentage of
domestic earnings has remained relatively unchanged at 39.0%.
Backlog at September 27, 1997, was $19,908,000, compared with
$19,422,000 at the end of the comparable period of the prior year.
PART II
OTHER INFORMATION
Item 5. Other Information
a. Exhibits
Interim Report dated
November 7, 1997, for the
quarter ended September 27,
1997. See Exhibit 13 attached.
Financial Data Schedule. See Exhibit 27 attached.
News Release of October 31,
1997, announcing first-quarter
results for fiscal year 1998. See Exhibit 99 attached.
b. There were no reports filed on Form 8-K during the thirteen-
week period ended September 27, 1997.
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, 1997 /s/
Robert J. McKenna
Chairman, President and
Chief Executive Officer
Date: November 10, 1997 /s/
Michael A. Simon
Corporate Controller and
Assistant Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> SEP-27-1997
<CASH> 175
<SECURITIES> 0
<RECEIVABLES> 14,348
<ALLOWANCES> 396
<INVENTORY> 13,158
<CURRENT-ASSETS> 29,087
<PP&E> 37,861
<DEPRECIATION> 22,035
<TOTAL-ASSETS> 49,366
<CURRENT-LIABILITIES> 11,607
<BONDS> 19,549
0
0
<COMMON> 24,070
<OTHER-SE> (7,396)
<TOTAL-LIABILITY-AND-EQUITY> 49,366
<SALES> 22,179
<TOTAL-REVENUES> 22,179
<CGS> 16,855
<TOTAL-COSTS> 21,495
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 405
<INCOME-PRETAX> 279
<INCOME-TAX> 109
<INCOME-CONTINUING> 170
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 170
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
<PAGE>
EXHIBIT 13
FIRST QUARTER INTERIM REPORT
To Our Shareholders:
Net income for the first quarter was $170,000 on sales of $22,179,000.
This compares to net income of $6,000 on sales of $23,223,000 in the same
quarter of last year. Sales declined slightly, as we exited some lower-
margin business in anticipation of new business expected to yield higher
returns. Profits continue to improve, reflecting our gains in operational
effectiveness.
Our Electronics Division is about to enter production on a major new
program for McDATA Corporation. The Division has designed a custom AC/DC
switchmode power supply, which will be used in a fibre-optic switch
application with IBM mainframe computers. Under a sole-source agreement,
McDATA is IBM's exclusive supplier of ESCON Directors.
All production assembly areas of our Power Distribution Products
Division have been converted to Demand Flow Technology. The Division's
order-fill rates and response times now far exceed industry norms. Core
sales are increasing at twice the market rate, as customers respond to our
improved levels of service.
Our Aerospace Division received notice from the Boeing Company that we
have met their stringent quality standard, D1-9000A. This provides a
quality framework for current and future programs with Boeing.
The Aerospace Division successfully converted to an Oracle business
system this past quarter. Intense employee training will continue at this
location through December.
Overall, we are making steady progress and expect a good year.
Robert J. McKenna
Chairman and CEO
November 7, 1997
<PAGE>
<PAGE>
<TABLE>
ACME ELECTRIC CORPORATION
East Aurora, New York
The following tables set forth certain unaudited financial information for the
thirteen-week periods
ended September 27, 1997, and September 27, 1996 (in thousands, except for per
share data):
<CAPTION>
BALANCE SHEET
Sept. 27, 1997 Sept. 27, 1996
June 30, 1997
<S> <C> <C>
<C>
Current Assets.................... $29,087 $34,446
$29,694
Fixed Assets and Other Net........ 20,279 21,546
20,450
Total........................... $49,366 $55,992
$50,144
Current Liabilities............... $11,607 $14,787
$12,975
Long-Term Debt.................... 21,085 25,451
20,681
Shareholders' Equity.............. 16,674 15,754
16,488
Total........................... $49,366 $55,992
$50,144
</TABLE>
<TABLE>
<CAPTION>
INCOME STATEMENT
13 Weeks 13 Weeks
Fiscal Year
Ended Ended
Ended
Sept. 27, 1997 Sept. 27, 1996
June 30, 1997
<S> <C> <C>
<C>
Net Sales......................... $22,179 $23,223
$94,062
Net Income........................ 170 6
136
Net Income Per Common Share....... $.03 $.00
$.03
Weighted Average Number of Shares
Outstanding Used to Compute
Income Per Common Share......... 5,052,498 4,957,548
4,971,789
</TABLE>
Company news is available by FAX: dial 1-800-758-5804 and input extension
006675; or visit our web
site at acmeelec.com
<PAGE>
EXHIBIT 99 - PRESS RELEASE
FOR IMMEDIATE RELEASE
ACME ELECTRIC CORPORATION REPORTS FIRST QUARTER RESULTS
EAST AURORA, N.Y., October 31, 1997 -- Acme Electric Corporation
(NYSE: ACE) announced today that for the first quarter ended September 27,
1997, consolidated net sales were $22,179,000 with net income of $170,000,
compared with net sales of $23,223,000 and net income of $6,000, for the
comparable period in the prior year.
Robert J. McKenna, Chairman and CEO, stated that, "The nominal decline
in sales can be attributed to the Company's decision to gradually phase out
relatively lower-margin business, while aggressively pursuing other
business that provides a higher return to the Company." McKenna added
that, "The financial results for the quarter reflect improved operating
efficiencies, and that we remain optimistic about our long-term prospects."
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
Comparative Analysis
(in thousands, except per share data)
For the 13 Weeks Ended
09/27/97 09/27/96
Net Sales $22,179 $23,223
Net Income 170 6
Net Income Per Common Share $.03 $.00
Weighted Average Number of Shares
Outstanding Used to Compute
Income Per Common Share 5,052,000 4,958,000
Company news is available by FAX: dial 1-800-758-5804, and input extension
006675; or visit our web site at acmeelec.com
