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 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 December 27, 1997
Common Stock, Par Value $1.00 Per Share 5,046,214
<PAGE>
ACME ELECTRIC CORPORATION
PART I - FINANCIAL INFORMATION
ITEM I - FINANCIAL STATEMENTS
BALANCE SHEET
Unaudited Audited
December 27, 1997 June 30, 1997
(000's) (000's)
----------------- -------------
ASSETS
- ------
Current Assets:
Cash $ 86 $ 398
Accounts receivable, net 13,865 14,019
Inventories, net 13,656 13,540
Deferred income taxes 800 1,238
Other current assets 810 499
------- -------
Total current assets 29,217 29,694
------- -------
Property, plant and equipment,
at cost 38,026 37,503
Less accumulated depreciation (22,568) (21,464)
------ ------
Total property, plant &
equipment, net 15,458 16,039
------- -------
Other assets 4,490 4,411
------- -------
Total Assets $49,165 $50,144
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current Liabilities:
Accounts payable $ 5,086 $ 6,495
Accrued compensation
and other 3,660 3,918
Current portion of
long-term debt 2,664 2,562
------- -------
Total current liabilities 11,410 12,975
Long-term debt 19,015 19,198
Other long-term liabilities 1,553 1,483
------- -------
Total Liabilities $31,978 $33,656
------- -------
Shareholders' Equity:
Common stock, Par Value $1.00
Authorized 8,000,000 shares
Issued 5,046,214 and 5,040,834 5,046 5,040
Capital in excess of par value 19,039 19,014
Accumulated deficit (6,890) (7,558)
Less: Treasury stock at cost
(699 Shares) (8) (8)
------- -------
Total shareholders' equity 17,187 16,488
------- -------
Total Liabilities and
Shareholders' Equity $49,165 $50,144
======= =======
See accompanying Notes to Financial Statements.<PAGE>
ACME ELECTRIC CORPORATION
STATEMENT OF OPERATIONS
(Unaudited)
13 Weeks 13 Weeks 26 Weeks 26 Weeks
Ended Ended Ended Ended
12/27/97 12/27/96 12/27/97 12/27/96
(000's) (000's) (000's) (000's)
NET SALES $22,752 $23,478 $44,931 $46,701
COSTS AND EXPENSES:
Cost of Sales 16,570 17,973 33,425 35,854
Research and Engineering
Expense 1,030 1,142 2,039 2,291
Selling and Administrative
Expense 3,891 3,728 7,522 7,414
Interest Expense 426 499 831 970
------- ------- ------- -------
TOTAL COSTS AND EXPENSES 21,917 23,342 43,817 46,529
------- ------- ------- -------
INCOME BEFORE TAXES 835 136 1,114 172
INCOME TAX EXPENSE 337 52 446 82
NET INCOME $ 498 $ 84 $ 668 $ 90
Weighted Average Number of
Shares Outstanding Used
to Compute Net Income per
Common Share:
Basic 5,044,323 4,952,961 5,043,173 4,948,928
Incremental shares from
assumed conversion of
stock options 15,057 12,417 14,946 12,535
--------- --------- --------- ---------
Diluted 5,059,380 4,965,378 5,058,119 4,961,463
NET INCOME PER COMMON SHARE
(Basic & Diluted) $ .10 $ .02 $ .13 $ .02
See accompanying Notes to Financial Statements
<PAGE>
ACME ELECTRIC CORPORATION
STATEMENT OF CASH FLOWS
(Unaudited)
26 Weeks Ended 26 Weeks Ended
December 27, 1997 December 27, 1996
(000's) (000's)
----------------- -----------------
Cash flows from operating activities:
Net income $ 668 $ 90
Adjustments to reconcile net income
to net cash flows from operating activities:
Depreciation and amortization 1,221 998
Change in assets and liabilities:
Accounts receivable, net 154 690
Inventories, net (116) 142
Prepaid and deferred income taxes 438 76
Other assets (390) 297
Accounts payable (1,409) 196
Accrued compensation and other (188) (840)
------- -------
Net cash provided from
operating activities 378 1,649
------- -------
Cash flows from investing activities:
Additions to property,
plant and equipment (639) (1,547)
------- -------
Net cash used in investing
activities (639) (1,547)
------- -------
Cash flows from financing activities:
Increase (Decrease) in borrowings, net (81) 282
Proceeds from employee stock
purchase, stock option and
dividend reinvestment plans 30 89
------- -------
Net cash provided by (used in)
financing activities (51) 371
------- -------
Net increase (decrease) in cash (312) 473
Cash at beginning of period 398 828
------- -------
Cash at end of period $ 86 $ 1,301
======= =======
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
December 27, 1997, the Statement of Operations for the thirteen- and
twenty-six-week periods ended December 27, 1997, and December 27,
1996, and the Statement of Cash Flows for the twenty-six weeks ended
December 27, 1997, and December 26, 1996, 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 1997 Annual Report filed on Form 10-K.
In the second quarter of fiscal 1998, the Company adopted FASB 128.
This statement establishes standards for computing earnings per share
(EPS). It requires dual presentation of basic and diluted EPS. Basic
EPS is computed by dividing income by the weighted average of common
shares outstanding for the period. Diluted EPS reflects the potential
dilution that could occur if contracts to issue common stock were
exercised and resulted in the issuance of common stock that then
shared in the earnings of the Company.
2. Accounts receivable included in the Balance Sheet are as follows:
December 27, 1997 June 30, 1997
(000's) (000's)
----------------- -------------
Billed $14,040 $14,291
Unbilled 279 251
------- -------
Subtotal 14,319 14,542
Less allowance for
doubtful accounts 454 523
------- -------
$13,865 $14,019
======= =======
Unbilled receivables are comprised of revenue amounts on long-term
contracts, which have been earned, but not yet billed. Management
anticipates that unbilled receivables will be substantially billed and
collected within a twelve-month period.
3. Inventories included in the Balance Sheet are as follows:
December 27, 1997 June 30, 1997
(000's) (000's)
Raw Material $ 7,540 $ 7,144
Work-In-Process 1,967 2,365
Finished Goods 4,149 4,031
------- -------
$13,656 $13,540
======= =======
Inventories are reported net of reserves for obsolescence of $694,000
and $546,000 at December 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
December 27, 1997
and
June 30, 1997
-------------------------------
Increase (Decrease)
(000's)
Current Assets $ (477)
Property, Plant & Equipment Net (581)
Intangibles and Other Assets 79
-----
$ (979)
Current Liabilities $(1,565)
Long-Term Debt and Other Liabilities (113)
Shareholders' Equity $ 699
$ (979)
Current assets at December 27, 1997, reflect a net decrease of
approximately $477,000, or 1.6%, from the June 30, 1997, level, primarily
due to decreases in deferred taxes, accounts receivable, and cash. The
Company's outstanding receivables decreased from June 30 levels, due to
slightly lower sales volume. Deferred taxes have decreased due primarily
to the utilization of net operating loss carry-forwards used to offset
current-year taxable income.
The net decrease in property, plant and equipment of $581,000, or
3.6%, represents year-to-date equipment expenditures of $639,000, offset by
depreciation expense of $1,221,000.
Intangibles and other assets increased $79,000, or 1.8%, primarily due
to increase in prepaid pensions.
Current liabilities decreased $1,565,000, or 12.1%, as a result of a
decrease in accounts payable, combined with performance incentive payouts
made against fiscal 1997 accruals.
Long-term debt and other liabilities decreased approximately $113,000,
or approximately .5%, from June 30, 1997. This decrease reflects the
Company's favorable cash flows generated from operations year-to-date,
which were used to fund both working capital requirements and capital
expenditures.
The increase in shareholders' equity of $699,000 is due to the year-
to-date net income of $668,000 and the $31,000 proceeds from employee stock
purchase plans.
The Company has financed its working capital requirements, as well as
its year-to-date capital expenditures, through operations. The Company
expects that operating activities for the remainder of fiscal 1998 will
substantively provide the required cash flow to support working capital
requirements and remaining equipment expenditures through the end of the
current fiscal year.
The Company recently secured a new credit agreement which continues to
provide for two secured term loans, with current principal balances of
$3,036,000 and $1,433,000, respectively, and a secured revolving credit
line, with a $21,000,000 limit and a maturity date of December 31, 2000,
against which the Company has combined outstanding borrowings and letters
of credit of approximately $12,245,000 at December 27, 1997. Outstanding
borrowings against the revolving credit facility are limited by formula to
specified amounts of accounts receivable and inventory. As of December 27,
1997, the Company's eligible (formula-based) unborrowed funds available on
the line of credit were approximately $5,829,000. Management believes this
will provide adequate liquidity for the foreseeable future.
Results of Operations:
Thirteen- and twenty-six-week periods ended December 27, 1997,
compared with the comparable thirteen- and twenty-six-week periods
ended December 27, 1996
Consolidated sales for the thirteen- and twenty-six-week periods ended
December 27, 1997, were $22,752,000 and $44,931,000, respectively, compared
with $23,478,000 and $46,701,000 for the comparable periods of a year
earlier, or a decrease from the prior year's same quarter of 3.1% and a
decrease of 3.8% in the year-to-date comparison. Net sales declined in the
quarter-to-quarter and the year-to-date comparison due to the maturing of
OEM power supply programs at a faster rate than new programs being
commenced, accompanied with the Company's efforts to improve the mix of
product sold through distribution by displacing lower-margin (volume
related) product with higher-margin product programs.
Cost of sales as a percentage of sales for the thirteen- and twenty-
six-week periods ended December 27, 1997, were 72.8% and 74.4%,
respectively, compared to 76.6% and 76.8% for the comparable periods of the
prior year. This improvement was achieved as a result of stringent cost
control efforts (labor and overhead) and sale price increases initiated
within the Company's custom power supply business. Continued productivity
improvement in the Company's aerospace manufacturing operation also
contributed favorably to the Company's profit margins.
Research and engineering expenses as a percent of net sales for the
thirteen-and twenty-six-week periods ended December 27, 1997, were 4.5%,
compared to 4.9% for the comparable periods of a year ago.
Selling and administrative costs as a percent of net sales were 17.1%
and 16.7% for the thirteen- and twenty-six-week periods ended December 27,
1997, compared to 15.9% for the comparable periods of a year earlier.
Administrative costs increased approximately $450,000 year-to-date over the
prior year same period, in part due to the new business system being placed
"in service" and the related operating costs (depreciation and maintenance
contracts) thereby incurred. Additionally, selling expenses within the
distribution business have increased due to new product introductions.
Included within the selling and administrative expense line is an
offsetting income of approximately $344,000, related to performance
incentives earned by the Company at its aerospace operation, based upon
meeting specified customer delivery schedules.
Interest expense as a percent of net sales for the thirteen- and
twenty-six-week periods ended December 27, 1997, decreased to 1.9% from
2.1% for the comparable periods of the prior year. Interest expense for
the thirteen- and twenty-six-week periods compared to the prior year same
periods decreased $73,000 and $139,000, respectively. Decrease in interest
expense is primarily due to reduced debt levels, as the Company reduced its
working capital by more than $4,000,000 from December 1996 to December
1997.
Income taxes as a percent of income before taxes were 40.4% and 40.0%,
respectively, for the thirteen- and twenty-six-week periods ended December
27, 1997, compared with 38.2% and 47.7%, respectively, for the comparable
periods of 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 (fiscal 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 approximately 40.0%.
Backlog at December 27, 1997, was $21,388,000, compared with
$18,239,000 at the end of the comparable period of the prior year.
PART II
OTHER INFORMATION
Item 5. Other Information
a. Exhibits
Interim Report dated
February 6, 1998, for the
quarter ended December 27,
1997. See Exhibit 13 attached.
Financial Data Schedule. See Exhibit 27 attached.
News release of January 23,
1998, announcing second-quarter
results for fiscal year 1998. See Exhibit 99 attached.
b. There were no reports filed on Form 8-K during the twenty-six-
week period ended December 27, 1997.
<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, 1998 _______________________________
Robert J. McKenna
Chairman, President and
Chief Executive Officer
Date: February 10, 1998 ________________________________
Michael A. Simon
Corporate Controller and
Assistant Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> DEC-27-1997
<CASH> 86
<SECURITIES> 0
<RECEIVABLES> 14,319
<ALLOWANCES> 454
<INVENTORY> 13,656
<CURRENT-ASSETS> 29,217
<PP&E> 38,026
<DEPRECIATION> 22,568
<TOTAL-ASSETS> 49,165
<CURRENT-LIABILITIES> 11,410
<BONDS> 19,015
0
0
<COMMON> 24,085
<OTHER-SE> (6,898)
<TOTAL-LIABILITY-AND-EQUITY> 49,165
<SALES> 22,752
<TOTAL-REVENUES> 22,752
<CGS> 16,570
<TOTAL-COSTS> 21,491
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 426
<INCOME-PRETAX> 835
<INCOME-TAX> 337
<INCOME-CONTINUING> 498
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 498
<EPS-PRIMARY> .10
<EPS-DILUTED> .10
</TABLE>
EXHIBIT 13
INTERIM REPORT FOR THE
PERIOD ENDED DECEMBER 27, 1997
To Our Shareholders:
Net income for the second quarter increased to $498,000, compared to
$84,000 in the same quarter last year. We continue to displace lower-
margin business with new business yielding higher returns, and so, although
sales remain level, we have made an improvement in overall product mix.
The Power Distribution Products Division completed the launch of their
new line of commercial-grade transformers to the distributors servicing the
new construction market. These new units are competitively priced and
feature several design changes allowing for easy installation.
Sales efforts in Latin America and the Middle East are yielding new
growth opportunities and increased sales. New initiatives in the Pacific
Rim Region have slowed recently, due to economic factors affecting these
local economies. However, to date, this represents a very small percentage
of our business and should have little impact on divisional sales.
Production start-up this past quarter at our Electronics Division was
very smooth on a new power supply for McDATA Corporation. Based on this
early success, McDATA has awarded us two new programs which will go into
production next fall. These new units will see application in fiber-optic
switching equipment.
Our Aerospace Division received an award from Boeing in recognition of
their outstanding support on the Boeing 777 program. Our relationship with
Boeing continues to strengthen, and we are actively working with them on
several new programs.
We are encouraged by the progress that has been made on all fronts and
look forward to an improved year.
Robert J. McKenna
Chairman and CEO
February 6, 1998
<PAGE>
ACME ELECTRIC CORPORATION
East Aurora, New York
The following tables set forth certain unaudited financial information for
the twenty-six-week periods ended December 27, 1997, and December 27, 1996
(in thousands, except for per share data):
BALANCE SHEET
12/27/97 12/27/96 06/30/97
-------- -------- --------
Current Assets.................. $29,217 34,799 $29,694
Fixed Assets and Other - Net.... 19,948 19,162 20,450
------- ------- -------
Total......................... $49,165 $53,961 $50,144
======= ======= =======
Current Liabilities............. $11,410 $12,918 $12,975
Long-Term Liabilities........... 20,568 25,180 20,681
Shareholders' Equity............ 17,187 15,863 16,488
------ ------- -------
Total......................... $49,165 $53,961 $50,144
======= ======= =======
INCOME STATEMENT
13 Weeks 13 Weeks 26 Weeks 26 Weeks F/Y
Ended Ended Ended Ended Ended
12/27/97 12/27/96 12/27/97 12/27/96 06/30/97
-------- -------- -------- -------- --------
Net Sales............... $22,752 $23,478 $44,931 $46,701 $94,062
Net Income ............. 498 84 668 90 136
Net Income Per Common Share
(Basic and Diluted)... $.10 $.02 $.13 $.02 $.03
Weighted Number of Shares
Outstanding Used to Compute Net
Income per Common Share:
Basic............... 5,044,323 4,952,961 5,043,173 4,948,928 4,962,190
Diluted............. 5,059,380 4,965,378 5,058,119 4,961,463 4,971,789
Company news is available by FAX: dial 1-800-758-5804 and input extension
006675; or visit our web site at acmeelec.com
EXHIBIT 99
PRESS RELEASE
Contact:
Richard P. Becht
(716) 655-3800
FOR IMMEDIATE RELEASE
ACME ELECTRIC ANNOUNCES SECOND-QUARTER RESULTS
EAST AURORA, N.Y., January 23, 1998 -- Acme Electric Corporation
(NYSE:ACE) announced today that, for the second quarter of its 1998 fiscal
year ended December 27, 1997, net sales were $22,752,000, compared to
$23,478,000 for the comparable period of the previous year, with net income
of $498,000, or $.10 per share, compared to net income of $84,000, or $.02
per share the previous year. Net sales for the twenty-six-week period
ended December 27, 1997, were $44,931,000, compared with $46,701,000 for
the comparable period of the previous year. Net income for the twenty-six-
week period ended December 27, 1997, was $668,000, or $.13 per share,
compared with a net income of $90,000, or $.02 per share, for the
comparable period of the previous year.
Robert J. McKenna, Chairman and CEO, stated that, "We are continuing
our efforts to replace lower-margin business with new business yielding
higher returns, and so, although sales appear level, we have made an
improvement in the quality of the overall product mix." McKenna added
that, "We are encouraged by the progress being made on all fronts and look
forward to improved performance this year."
Founded in 1917, Acme Electric Corporation is a leader in the design
and manufacture of power conversion products 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. Company news is
available by FAX: dial 1-800-758-5804, and input extension 006675; or visit
our web site at acmeelec.com
# # # #<PAGE>
ACME ELECTRIC CORPORATION
Comparative Analysis
(in thousands, except for per share data)
13 Weeks 13 Weeks 26 Weeks 26 Weeks
Ended Ended Ended Ended
12/27/97 12/27/96 12/27/97 12/27/96
-------- -------- -------- --------
Net Sales $22,752 $23,478 $44,931 $46,701
Net Income 498 84 668 90
Net Income Per Common Share
(Basic and Diluted) $.10 $.02 $.13 $.02
Weighted Number of Shares
Outstanding Used to Compute Net
Income Per Common Share:
Basic 5,044,323 4,952,961 5,043,173 4,948,928
Diluted 5,059,380 4,965,378 5,058,119 4,961,463
