SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
(Mark one)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (NO FEE REQUIRED)
For the fiscal year ended June 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
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 corporate offices) (Zip Code)
716/655-3800
(Telephone Number)
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock - Par Value $1.00 per share New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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 and (2) has been subject to such filing
requirements for the past 90 days. YES X NO ____
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [X]
State the aggregate market value of the voting stock held by non-affiliates of
the Registrant as of September 10, 1999.
Common Stock, Par Value $1 Per Share, $35,211,172
Indicate the number of shares outstanding of each of the Registrant's classes
of common stock as of September 10, 1999.
Common Stock, Par Value $1 Per Share, 5,073,656 shares
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Shareholders for the fiscal year
ended June 30, 1999, are incorporated by reference into Parts I and II.
Portions of the Registrant's definitive proxy statement for the annual meeting
of shareholders to be held on October 29, 1999, are incorporated by reference
into Part III.
PART I
ITEM 1 - BUSINESS
Business
- --------
The Registrant was duly organized and incorporated under the laws of the
State of New York on April 26, 1946, as successor to a business founded in
1917. Its sole line of business is the design, manufacture and marketing of
power conversion equipment for electronic and electrical systems. Principal
markets encompass the computer, test equipment, information systems,
military, aerospace and telecommunications and a variety of industrial,
commercial and residential fields for applications that require conversion
of electrical energy from one useable state to another. Products are
distributed to customers through the Registrant's sales force, independent
sales representatives and wholesale distributors. The business of the
Registrant is not seasonal in nature.
Competition
- -----------
Competitive conditions within the power conversion industry are intense.
The Registrant competes with many other companies, some of which have far
greater resources than the Registrant. The principal methods of competition
within the industry are price, service and product performance. To meet
this competition, the Registrant attempts to maintain high standards of
engineering, manufacturing and customer service. Due to the number and
variety of competitors, reliable data relative to the Registrant's
competitive position within the power conversion industry would be difficult
to develop and is not known nor believed to exist.
Customers
- ---------
Power conversation equipment sales encompass markets wherein the demands of
any one customer may vary greatly due to changes in technology and market
strategy. No customer of the Company accounted for more than 10% of sales
in fiscal year 1999. One customer of the Company accounted for 17.2% and
16.2% of fiscal 1998 and 1997 sales, respectively. No customer accounted
for greater than 10% of the Company's accounts receivable balance of June
30, 1999 or 1998.
Backlog
- -------
The backlog of orders believed to be firm totaled approximately $13,826,000
at June 30, 1999, compared with approximately $15,502,000 at June 30, 1998.
The lower backlog at June 30, 1999, compared with the backlog at June 30,
1998, reflects a reduced backlog of orders in the Registrant's aerospace
business, as improved production capabilities supported a return to on-time
deliveries on several delinquent customer programs, thereby reducing the end
of the year cumulative backlog.
Backlog orders at June 30, 1999, are generally expected to be filled during
the current fiscal year.
Raw Materials
- -------------
The Registrant purchases materials in a semi-finished state from other
manufacturers and distributors. Availability of materials is considered
adequate to maintain current production levels.
Patents
- -------
The Registrant holds several technical patents and trademarks and is a party
to certain patent applications. The extent of the effect of such patents
and trademarks is, however, in the opinion of management, not material at
this time.
Licenses
- --------
The Registrant is a party to several license agreements. The only
significant license, providing for the sale and manufacture of a proprietary
fiber nickel cadmium battery (FNC), is an agreement with Hoppecke Batterie
Systeme GmbH (formerly, Daug-Hoppecke Gesellschaft Fur Batteriesysteme mbH
("DAHO")) of Brilon, Germany. The Company recorded an impairment loss write-
off as of June 30, 1994, assigning zero value to the FNC license agreement.
Employees
- ---------
As of June 30, 1999, approximately 570 persons were employed by the
Registrant.
Research and Development
- ------------------------
Approximately 7% of the Registrant's employees are engaged in engineering
design and product development. New products are continuously designed to
satisfy specific customer requirements, and the cost of such development is
expensed as incurred. Since satisfaction of many customers' needs requires
advancing applicable technology, applied research is an integral part of
engineering-design and product-development activities. The cost of such
activities during the fiscal years ended June 30, 1999, 1998 and 1997, was
$3,638,000, $4,136,000 and $4,552,000, respectively.
Environmental Matters
- ---------------------
On June 27, 1997, the Registrant settled the claim by the New York State
Department of Environmental Conservation (DEC) for contribution toward the
costs of remediation of a municipal waste landfill site upon payment of
$725,000. In July 1999, the Registrant did receive a $350,000 settlement
from its insurance carrier related to this matter. These proceeds will be
included in the reported results of the first quarter of fiscal year 2000.
ITEM 2 - PROPERTIES
The Registrant owns one plant in Lumberton, North Carolina. The Registrant
also leases two facilities, one in Cuba, New York, with a purchase option
for a nominal amount. The Cuba facility is subject to three mortgages
securing indebtedness, aggregating approximately $3,700,000 as of June 30,
1999, and is also subject to an additional mortgage securing a bond issued
by the owner of the facility (an industrial development agency) to the
County of Allegany in the outstanding amount of approximately $500,000, for
which the Registrant is not personally liable, but which is being paid in
installments through the application thereto of payments in lieu of taxes
being made periodically by the Registrant. The second leased facility is
located in Tempe, Arizona. The Registrant further leases facility space at
a second location in Cuba, New York, and a warehouse in Tempe, Arizona.
Square Footage Square Footage Lease Ex-
Location Owned Leased piration Date
Cuba, NY (New Plant) -- 91,000 April 2017
Cuba, NY (Old Plant) -- 72,000 August 1999*
East Aurora, NY -- 10,000 April 2004
(Exec. Offices)
Lumberton, NC 128,170 -- N/A
Tempe, AZ -- 40,260 March 2005
*Registrant continues to lease this facility on a hold-over basis and
believes that it can secure suitable renewal terms at market rates.
ITEM 3 - LEGAL PROCEEDINGS
The Registrant is involved in ordinary routine litigation incidental to its
business, but none is expected to have a material impact upon the financial
condition of the Registrant.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted during the fourth quarter of the fiscal year covered
by this report to a vote of security holders through the solicitation of
proxies or otherwise.
PART II
ITEM 5 - MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
Information relating to the market and market prices of the Registrant's
common stock and the approximate number of Registrant's shareholders and its
dividend history for the past two fiscal years appears on page 25 of the
Registrant's Annual Report to Shareholders for the fiscal year ended June
30, 1999, submitted herewith as an exhibit and such information is
incorporated by reference herein.
Information relating to long-term debt for the past two fiscal years appears
on page 19 of the Registrant's Annual Report to Shareholders for the fiscal
year ended June 30, 1999, submitted herewith as an exhibit and such
information is incorporated by reference. The Registrant suspended its
quarterly cash dividend effective the third quarter of fiscal 1991. The
loss in fiscal 1991 resulted in a deficit of retained earnings. As the
Company continues to have a deficit of retained earnings, it does not expect
to reinstate dividends in the foreseeable future.
ITEM 6 - SELECTED FINANCIAL DATA
A five-year summary of certain financial information relating to the finan
cial condition and results of operations of the Registrant appears on page
13 of the Registrant's Annual Report to Shareholders for the fiscal year
ended June 30, 1999, submitted herewith as an exhibit and such summary is
incorporated by reference herein.
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Management's discussion and analysis of financial condition and results of
operations appears on pages 10 through 13 of the Registrant's Annual Report
to Shareholders for the fiscal year ended June 30, 1999, submitted herewith
as an exhibit and such management's discussion and analysis is incorporated
by reference herein.
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following financial statements of the Registrant and its subsidiaries,
appearing on pages 14 through 24 of the Registrant's Annual Report to
Shareholders for the fiscal year ended June 30, 1999, submitted herewith as
an exhibit, are incorporated by reference herein:
Statements of Operations - Years Ended June 30, 1999, 1998, 1997
Balance Sheets - June 30, 1999 and 1998
Statements of Cash Flows - Years Ended June 30, 1999, 1998, 1997
Statements of Shareholders' Equity - Years Ended June 30, 1999, 1998,
1997
Notes to Financial Statements
ITEM 9 - DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
There have been no disagreements with accountants on accounting and
financial disclosure matters.
PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Identification of Directors
- ---------------------------
Information on directors of the Registrant is contained under the caption
"Election of Directors," presented in the Registrant's Definitive Proxy
Statement filed pursuant to Regulation 14A and used in conjunction with the
Registrant's 1999 Annual Meeting of Shareholders to be held on October 29,
1999, and is incorporated by reference herein.
Identification of Executive Officers
- ------------------------------------
Summary of Business Experience
Name, Age and Position Over the Last Five Years
- ---------------------- -----------------------------------
Robert J. McKenna, 51, Chairman, Prior to assuming the position currently
President and Chief held in October 1994, served as President
Executive Officer and Chief Executive Officer since October
1993.
John B. Drenning, Esq., 62 Partner, Phillips, Lytle, Hitchcock,
Secretary Blaine,& Huber LLP since 1990.
Michael A. Simon, 42 Prior to assuming the position currently
Corporate Controller and held in August 1997, served as Controller
Assistant Secretary since 1992.
Daniel K. Corwin, 52, Prior to assuming the position currently
Vice President and General held in April 1997, served as Vice
Manager, Electronics Division President and Chief Financial Officer
Treasurer since August 1994.
Nicola T. Arena, 50 Prior to assuming the position currently
Vice President and General held in February 1996, served as Director
Manager, Power Distribution of Sales and Marketing for Aeroquip Cor-
Products Division poration since 1991.
John E. Gleason, 52, Prior to assuming the position currently
Vice President and General held in April 1997, served as Acting
Manager, Aerospace Division Manager of the Aerospace Division and
Vice President and General Manager of
the Electronics Division since August
1996. Prior thereto, served as Vice
President and General Manager of the
Electronics Division since May 1993.
ITEM 11 - EXECUTIVE COMPENSATION
The information required is incorporated by reference to "Report of the
Compensation Committee of the Board of Directors," "Summary Compensation
Table," "Option Grants in Last Fiscal Year," Aggregated Option Exercises in
Last Fiscal Year and F/Y-End Option Values," "Total Shareholder Returns,"
"Employment and Change-in Control Arrangements," "1989 Stock Option Plan,"
"1996 Directors' Stock Option Plan," "1998 Stock Option Plan," and "Pension
Plan" in the Registrant's definitive Proxy Statement for its 1999 Annual
Meeting of Shareholders to be held on October 29, 1999.
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information relating to security ownership of certain beneficial owners and
management is contained under the captions "Voting Securities and Principal
Holders Thereof," "Nominees For Election As Directors," and "Supplemental
Requirement Information: Shares of Common Stock Beneficially Owned" in the
Registrant's definitive proxy statement filed pursuant to Regulation 14A and
used in conjunction with the Registrant's 1999 Annual Meeting of
Shareholders to be held on October 29, 1999, and is incorporated by
reference herein.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain transactions have been referenced under Item 11. There are no other
applicable relationships or related transactions.
PART IV
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. Financial Statements
See the accompanying Index to Financial Statements and Financial
Statement Schedules on page F-1 of this report.
2. Financial Statement Schedules
See the accompanying Index to Financial Statements and Financial
Statement Schedules on page F-1 of this report.
3. Exhibits Page Number or Incorporation
by Reference
-----------------------------
3a Certificate of Incorporation, Exhibit (3a) to Report on
as amended to date Form 10-K for fiscal year
ended June 30, 1989.
3b Bylaws, as amended to date Exhibit (3b) to Report on
Form 10-K for fiscal year
ended June 30, 1990.
4 Rights Agreement between Exhibit 1 to Registration
Acme Electric Corporation and Statement on Form 8-A filed
American Stock Transfer and November 15, 1993.
Trust Company dated as of
November 9, 1993.
10a Acme Electric Corporation Definitive Proxy Statement
1989 Stock Option Plan* filed under Schedule 14A,
September 18, 1989.
10b Acme Electric Corporation Definitive Proxy Statement
1996 Directors' Stock Option filed under Schedule 14A,
Plan* September 18, 1996.
10c Acme Electric Corporation Definitive Proxy Statement
1998 Stock Option Plan* filed under Schedule 14A,
September 16, 1998.
10d Employment Agreement Exhibit 10.1 to Report on
effective February 1, 1999, Form 10-Q for Quarter Ended
between Robert J. McKenna January 2, 1999.
and Acme Electric Corporation*
10e Employment Agreement Exhibit 10.2 to Report on
effective February 1, 1999, Form 10-Q for Quarter Ended
between Daniel K. Corwin January 2, 1999.
and Acme Electric Corporation*
10f Employment Agreement Exhibit 10.3 to Report on
effective February 1, 1999, Form 10-Q for Quarter Ended
between Nicola T. Arena January 2, 1999.
and Acme Electric Corporation*
10g Employment Agreement Exhibit 10.4 to Report on
effective February 1, 1999, Form 10-Q for Quarter Ended
between John E. Gleason January 2, 1999.
and Acme Electric Corporation*
10h Employment Agreement Exhibit 10.5 to Report on
effective February 1, 1999, Form 10-Q for Quarter Ended
between Michael A. Simon January 2, 1999.
and Acme Electric Corporation*
11 Statement re. computation of Note (8) to Financial
per share earnings Statements at page 21 of
1999 Annual Report to
Shareholders.
13 Acme Electric Corporation 1999
Annual Report to Shareholders See Exhibit 13 attached.
23 Consent of Independent Pages F-4 through F-5 on
Accountants Report on Form 10-K for
fiscal year ended June 30,
1999.
27 Financial Data Schedule See Exhibit 27 attached.
99 Additional Exhibits -
News Release, August 5, 1999,
announcing fourth quarter
and year-end results. See Exhibit 99-1 attached.
News Release, August 11, 1999,
announcing the opening of
Mexican subsidiary. See Exhibit 99-2 attached.
News Release, August 17, 1999,
announcing selection as sole
supplier to Powerware. See Exhibit 99-3 attached.
News Release, September 2, 1999,
announcing selection as primary
supplier to Coca-Cola. See Exhibit 99-4 attached.
News Release, September 21, 1999,
announcing the Company's move See Exhibit 99-5 attached.
to NASDAQ National Market.
(b) Reports on Form 8-K
There were no reports filed on Form 8-K during the fourth quarter
ended June 30, 1999. Subsequent to the end of the fourth quarter, a
report on Form 8-K was filed on September 21, 1999.
*Management contract or compensatory plan or arrangement.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
By: /s/ Date: 09/28/99
Robert J. McKenna
Chairman, President and
Chief Executive Officer
(Principal Executive Officer)
By: /s/ Date: 09/28/99
Michael A. Simon
Corporate Controller and
Assistant Secretary
(Principal Financial Officer)
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature and Title Date
/s/ 09/28/99
Robert D. Batting Director
/s/ 09/28/99
Robert T. Brady Director
/s/ 09/28/99
Randall L. Clark Director
/s/ 09/28/99
Terry M. Manon Director
/s/ 09/28/99
Robert J. McKenna Director
<PAGE>
ACME ELECTRIC CORPORATION
INDEX TO FINANCIAL STATEMENTS
The financial statements together with the report thereon of
PricewaterhouseCoopers LLP dated August 5, 1999, appearing on pages 14 through
25 of the accompanying 1999 Annual Report to Shareholders, are incorporated by
reference in this Form 10-K Annual Report. With the exception of the
aforementioned information and the information incorporated in Items 5, 6, 7, 8
and 14 of this Form 10-K, the 1999 Annual Report to Shareholders is not to be
deemed filed as part of this report. The following financial statement
schedules should be read in conjunction with the financial statements in such
1999 Annual Report to Shareholders. Financial statement schedules not included
in this Form 10-K Annual Report have been omitted because they are not
applicable or the required information is shown in the financial statements or
notes thereto.
FINANCIAL STATEMENT SCHEDULES
1999, 1998 AND 1997
Page
----
Report of independent accountants F-2
Valuation and qualifying accounts and F-3
reserves (Schedule VIII)
Consents of independent accountants F-4 and F-5
<PAGE>
Report of Independent Accountants
on Financial Statement Schedule
To the Board of Directors of
Acme Electric Corporation
Our audits of the financial statements referred to in our report dated August
5, 1999 appearing on page 25 of the 1999 Annual Report to Shareholders of Acme
Electric Corporation (which report and financial statements are incorporated in
this Annual Report on Form 10-K) also included an audit of the Financial
Statement Schedule listed in the Index to Financial Statements and Financial
Statement Schedules which appears on page F-1 of this Form 10-K. In our
opinion, this Financial Statement Schedule presents fairly, in all material
respects, the information set forth therein when read in conjunction with the
related financial statements.
/s/
PRICEWATERHOUSECOOPERS LLP
Buffalo, New York
August 5, 1999
F-2
<PAGE>
<TABLE>
ACME ELECTRIC CORPORATION
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(000's Omitted)
<CAPTION>
Additions Additions
Balance At (Deductions) (Deductions)
Deductions Balance
Beginning Cost and Other
From At End
Of Year Expense Accounts
Reserves Of Year
<S> <C> <C> <C>
<C> <C>
Fiscal year ended June 30, 1999
Reserve deducted from assets:
Allowance for doubtful accounts $ 466 $ (145) $ - $
150 $ 171
Inventory obsolescence and
impairment reserve $ 781 $ 502 $ - $
66 $1,217
Fiscal year ended June 30, 1998
Reserve deducted from assets:
Allowance for doubtful accounts $ 523 $ 70 $ - $
127 $ 466
Inventory obsolescence and
impairment reserve $ 546 $ 582 $ - $
347 $ 781
Fiscal year ended June 30, 1997
Reserve deducted from assets:
Allowance for doubtful accounts $ 389 $ 464 $ - $
330 $ 523
Inventory obsolescence and
impairment reserve $ 399 $ 147 $ - $
- - $ 546
Restructuring Cost Reserves $ 399 $ - $ - $
399 $ -
</TABLE>
F-3
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Forms S-8 (No. 2-45985, No. 33-79488, No. 33-59521, No. 33-59523,
No. 333-27243 and No. 333-87129) of Acme Electric Corporation of our report
dated August 5, 1999 appearing on page 25 of the 1999 Annual Report to
Shareholders which is incorporated in this Annual Report on Form 10-K. We also
consent to the incorporation by reference of our report on the Financial
Statement Schedule, which appears on page F-2 of this Form 10-K.
/s/
PRICEWATERHOUSECOOPERS LLP
Buffalo, New York
September 28, 1999
F-4
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-3 (No. 2-89587) of
Acme Electric Corporation of our report dated August 5, 1999 appearing on page
25 of the 1999 Annual Report to Shareholders which is incorporated in this
Annual Report on Form 10-K. We also consent to the incorporation by reference
of our report on the Financial Statement Schedule, which appears on page F-2 of
this Form 10-K.
/s/
PRICEWATERHOUSECOOPERS LLP
Buffalo, New York
September 28, 1999
F-5
EXHIBIT 13
PORTIONS OF THE REGISTRANT'S ANNUAL REPORT TO SHAREHOLDERS
FOR THE FISCAL YEAR ENDED JUNE 30, 1999.
<PAGE>
PAGES 10-11 OF ANNUAL REPORT
FINANCIAL CONDITION
Capital Resources and Liquidity
The Company has financed its working capital requirements and capital
spending with cash from operating revenues. Total outstanding debt,
including capital lease obligations, was reduced by approximately
$7,342,000 in 1999. Debt reduction was achieved as a result of strong cash
flows generated from improved operational performances, including margin
improvements throughout the Company's businesses. Further contributing to
the positive cash flows were reduced inventory positions and receivable
balances, as a result of improved manufacturing processes (Demand Flow
Technology) and lower working capital requirements in the Company's
Electronics business. The Company's working capital was reduced 20% from
the prior year-end while sales declined 12%.
The Company received performance incentive payments in the amount of
$915,000 during the year as a result of meeting delivery schedules on one
of its Aerospace customer programs. Approximately $600,000 of these
payments remain on the June 30, 1999, balance sheet as deferred revenue.
Income of $620,000 was recognized within the fiscal year, associated with
this performance incentive program. No further incentive payments are due
from this customer, however, price negotiations have commenced for the
supply of product for periods beyond the current contract schedule.
The Company utilized its remaining federal tax-loss carry-overs of
approximately $412,000 to reduce the current year tax return liabilities by
approximately $140,000.
Dollars in thousands
Years ended June 30 1999 1998 1997
Working Capital $12,188 $15,242 $16,719
Average Working Capital,
as a percent of sales 17.2% 17.6% 20.0%
Cash provided from Operations $ 8,163 $ 7,585 $ 5,748
Current Ratio 2.2 2.3 2.3
Long-Term Debt to Equity .3 .7 1.2
Capital expenditures were $1,345,000, $1,255,000 and $2,531,000 for 1999,
1998 and 1997, respectively. Fiscal year 1997 capital expenditures
included $1,200,000 of new business system costs, compared to none in 1999
and less than $125,000 in 1998. The Company anticipates that fiscal 2000
capital expenditures will approximate $3,000,000, including new and
refurbished equipment to be used in its recently established Monterrey,
Mexico, operation.
The Company expects that operating activities in 2000 will generate the
required cash to fund these capital expenditures with ample credit facility
to support any additional working capital needs.
The Company currently has a secured credit agreement which provides for
two secured term loans, with a combined outstanding balance at June 30,
1999, of $1,845,000 with interest terms of the lower of prime plus .5% to
1.0% range, or the London Interbank Eurodollar rate plus 2.1% to 2.6%
range, as determined by a debt-to-worth threshold measure. Further
included is a secured line of credit allowing for revolving loans and
letters of credit up to $21,000,000, with interest at the lower of prime
plus .25% to .75% range, or the London Interbank Eurodollar rate plus 1.8%
to 2.4% range, with an outstanding balance at June 30, 1999, of $1,500,000.
The credit agreement provides for a maturity date on the line of credit of
December 31, 2000, while the $1,012,000 and $833,000 term loans have
principal payments due through January 2, 2000, and July 1, 2001,
respectively. The credit agreement contains certain restrictive covenants,
including, but not limited to, interest coverage and debt-to-worth ratios
and an annual capital expenditure threshold. At June 30, 1999, the Company
was in compliance with the covenants under the credit agreement.
Management believes that the current financing arrangement provides
adequate liquidity for the immediate future, with plans to negotiate a new
credit facility within the next six months.
Expectation for Year 2000 Compliance
- ------------------------------------
The Company is reliant on systems which utilize time-based mechanisms for
asset and information management, and management recognizes that such
systems may encounter problems affecting the capability thereof due to the
year 2000 (Y2K) date change. The Company also has business relationships
with vendors, product purchasers and financial institutions, among others,
who are reliant on such systems. It is possible that, given problems
encountered by the Company or these parties, the Company could send or
receive improper billings, produce products which are unaccounted for,
experience production shortages or delays, encounter collection delays, or
report inaccurate data, among other things.
The Company organized its Year 2000 Task Group during the third quarter
of fiscal 1998, with member participation from all operating units, as well
as the corporate office. Assessment programs were developed and
implemented at each of the locations. The assessment, which included an
inventory and identification of the Company's mission critical information
technology (IT) systems as well as non-IT systems (i.e. equipment
microcontrollers), is complete.
The most significant mission critical elements associated with the IT
system area included the necessity to: (1) transition from the AIX
operating system version 4.1 to 4.2 and Oracle business application and
data-base software version 10.6.1 and 7.1 to the year 2000 compliant Oracle
versions 10.7.1 and 7.3, respectively; and (2) receive and install third-
party software upgrades used in support of certain manufacturing routines,
to include inventory management areas. The Company completed the
installation of its new client-server based business information system in
April 1998. This system, which runs vendor-provided off-the-shelf business
enterprise software (Oracle) in a client-server environment, was installed
by the Company as an enhancement to the business, replacing the legacy
mainframe system. This system provided the basis for a relatively
inexpensive transition to the Y2K-compliant business system through vendor-
provided software upgrades. Other third-party-provided customized software
critical to the business operation was identified and upgraded with vendor
provided year 2000 compliant modifications.
The Company has completed the implementation of Y2K compliant operating
systems and Oracle software upgrades. All such costs were expensed as
incurred.
The Company has tested its embedded systems used in the manufacture and
distribution of its products for year 2000 compliance. Equipment
manufacturers were contacted for verification and solutions for potential
Y2K issues where mission critical equipment utilizing microcontrollers had
been identified. The Company is unaware of any unresolved issues relative
to this process.
The Company has, and will continue to, assess the year 2000 readiness on
the part of its supply base, as well as customer base. Both vendor and
customer letters requesting responses and/or certifications to their year
2000 readiness were sent with high response rate received, documenting
their own efforts to be Y2K compliant. The Company has also contacted,
and, in certain instances, visited vendor locations in the endeavor to gain
assurance that its critical suppliers are preparing for year 2000.
The total costs directly associated with the Company's effort to be year
2000 ready, to date, has approximated $50,000.
The Company has not yet fully developed a year 2000 contingency plan.
The Company is currently reviewing the potential critical risk areas of the
business and will consider the appropriate contingency actions or
alternative solutions. It is anticipated that contingency plans will
include the ability to do temporary manual processing of customer orders
and increased safety stock purchases of identified critical parts and
materials prior to 2000.
While third parties (customers, suppliers and service providers) are
engaged in efforts intended to address and resolve their year 2000 issues
on a timely basis, it is possible that a series of failures by third
parties could have a material adverse effect on the Company's results of
operations in future periods.
Portions of the narrative set forth in this Financial Condition and
Results of Operations, which are not historical in nature, are forward-
looking statements, based upon current expectations, all of which are
subject to risk and uncertainties, and are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. One
can identify these forward-looking statements by their use of words such as
"anticipates," "believes," "intends," "budgeted," and other words of
similar meaning. The Company's actual performance may differ materially
from that contemplated by the forward-looking statements due to a variety
of factors, which include, among other things, inaccurate assumptions, the
condition of the economy, the condition of the markets that the Company
serves, and the success of the Company's strategic plans and contemplated
capital investments. The Company does not assume the obligation to update
any forward-looking statements, whether as a result of new information,
future events or otherwise.
<PAGE>
PAGES 12-13 OF ANNUAL REPORT
RESULTS OF OPERATIONS
Acme Electric Corporation reported net income of $2,707,000, or $.53 per
share, on net sales of $79,813,000 for the year ended June 30, 1999,
compared with net income of $2,529,000, or $.50 per share, and $136,000, or
$.03 per share on sales of $90,916,000 and $94,062,000 for 1998 and 1997,
respectively. Included in the 1999 net earnings is $437,000 (net of tax)
of pension income, compared to a pension expense in 1998 and 1997, of
$3,000 and $37,000, respectively.
Total net income for the fourth quarter 1999 was $1,021,000 on sales of
$19,232,000, or net income per share of $.20, compared with the results of
the prior year's quarter of $23,633,000 of sales, $1,276,000 net income,
and a net income per share of $.25. Sales were lower by $4,101,000 (17%)
when compared to the prior year fourth quarter, as a result of the void
created by the loss of the Cisco Systems program in the Electronics
business. The Company was able to minimize the overall impact on quarterly
earnings ($255,000 reduction) with a prompt response, which included
adjustments to the labor and overhead areas.
Quarterly Unaudited Financial Information
______________________________________________________________________
Dollars in thousands
______________________________________________________________________
Fiscal Year 1999 1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr.
______________________________________________________________________
Net Sales $22,378 $18,803 $19,100 $19,532
______________________________________________________________________
Net Income 522 402 762 1,021
______________________________________________________________________
The Company adopted SFAS No. 131, Disclosures About Segments of an
Enterprise and Related Information, which requires segment data to be
measured and analyzed on a basis that is consistent with how business
activities are reported internally to management. For additional
information, including a description of the business segments in which the
Company operates, see note 13.
Annual sales decreased $11,103,000, or 12.2%, from the previous year,
compared with a decrease of $3,146,000, or 3.3%, from 1997 to 1998. A
decrease in sales of $9,113,000, or 32%, from 1998 sales of $28,708,000 to
1999 sales of $19,595,000, was experienced in the Company's Electronics
business. Reduced sales were due to the loss of the Cisco program. Sales
in the Company's Aerospace business increased slightly ($119,000 or 1%)
from $11,190,000 in 1998 to $11,309,000 in 1999 due to increased customer
demand for Fiber Nickel Cadmium (FNC) batteries. Sales in the Company's
Power Distribution Products business were down $2,109,000, or 4%, generally
reflective of the overall non-residential electrical distributors market.
The Company's share in this market segment remained essentially unchanged.
Future sale trends will be largely dependent upon several factors,
including the Company's ability to continue to attract new original
equipment manufacture (OEM) accounts within its Power Distribution Products
business, as well as expand its international sales and manufacturing
efforts, with a first step being its entrance into Latin America. Sales
further will be affected by the degree of success achieved by its efforts
in the Aerospace business to secure new programs (engineering and
production), as well the extension of existing programs. Future sales can
be affected by the success of the business strategies introduced in the
Company's Electronics business, in an effort to rebuild its customer base.
Cost of sales as a percentage of sales was 71.4% in 1999, 72.5% in 1998,
and 76.2% in 1997. The gross margin percentage improved from 23.8% in 1997
to 27.5% in 1998 and to 28.6% in 1999. The margin improvement from 1998 to
1999 reflects the continued operational efficiency improvements experienced
in the Company's Aerospace business, where gross margins climbed from 20.6%
to 23.5%. Gross margins in the Company's Power Distribution Products
business remained essentially constant at 35.7% in 1999 and 35.8% in 1998.
Gross profit margins in the Company's Electronics business declined from
15.7% in 1998 to 13.8% in 1999. This occurred as a result of fewer sales
over which fixed operating costs could be allocated, combined with an
unusually large and significant expense accrual established for obsolete
inventory (in excess of $400,000 in 1999) associated with one end-of-life
customer program.
The significant improvement in gross margin percent from 1997 to 1998 was
primarily due to price increases, as well as significant manufacturing
overhead cost reductions made in the Company's Electronics business, where
the gross margin percent climbed from 10.3% in 1997 to 15.7% in 1998.
Further contributing to the improved profit margin in 1998 was the
increased sales volume in the Company's Aerospace business, allowing for
improved efficiencies and fixed cost economies. Gross margins in this
business moved from 16.1% in 1997 to 20.6% in 1998. The Power Distribution
Products segment also contributed to improved margins (34.2% in 1997 to
35.8% in 1998), as manufacturing process flows were realigned for
efficiency and a slightly more profitable mix of products were sold in the
period.
On a combined basis, research and engineering efforts were relatively
constant in the three-year comparison, as expenses as a percent of sales
were 4.6% in 1999, compared to 4.5% in 1998 and 4.8% in 1997. Actual 1999
expenditures were reduced approximately $500,000 from 1998 levels, and 1998
expenditures were lower by $400,000 from 1997, as a result of resizing of
the Electronics business, with focused engineering efforts correlated to
the business strategies employed. Engineering costs in the Company's
Aerospace and Power Distribution Products businesses were relatively
constant in the 1999 versus 1998, and 1998 versus 1997 comparisons, both as
a percent of sales and in absolute dollars spent.
Selling and administrative expenses as a percentage of sales were 17.4%
in 1999, compared with 16.8% in 1998 and 16.9% in 1997. Included within
the 1999 and 1998 selling and administrative expense is offsetting income
of $620,000 and $566,000, respectively, related to performance incentives
earned in the Company's Aerospace business, based upon meeting specified
customer delivery schedules. As a percent of sales, 1999 versus 1998
selling and administrative expense increased, however, actual selling and
administrative expenses incurred (exclusive of the performance incentive
offset) declined $1,313,000. The most significant portion of this
reduction is attributable to lower selling and administrative costs in the
Company's Power Distribution Products business (reduction of $960,000),
where lower shipping and commission costs were experienced due to a sales
mix that included more non-commissioned OEM direct sales, combined with
overall fewer sales in total. The business also incurred lower costs
associated with advertising literature, as well as experiencing a favorable
effect from bad debt recoveries. The Company realized additional cost
savings of nearly $300,000 related to its management information systems
area during 1999, as a result of the completion of the system conversion
(mainframe to client/server) in the prior year, thus avoiding the mainframe
system costs that were experienced in 1998. Selling and administrative
expenses in the Company's Aerospace and Electronics operations were similar
in amounts when comparing 1999 with 1998. Included in the 1997 expenses
are one-time charges of $725,000 and $237,000 associated with the municipal
landfill settlement in New York State and the MD-90 contract modification
charge, respectively. With the exclusion of these income and expense items
from the comparison, 1998 selling and administrative costs increased
approximately $950,000. The 1998 increase included additional depreciation
expense of approximately $400,000 associated with the new business system,
accrued incentives in excess of 1997 amounts of $200,000, higher shipping
costs in the Power Distribution Products business of $400,000, increased
commissions and royalties of $100,000 in its Aerospace business, all partly
offset by the Company's reduced corporate investment in international
business development.
Interest expense decreased $775,000 from 1998 to 1999 and $136,000 from
1997 to 1998. The lower interest expense reflects the significantly lower
average outstanding debt balances maintained during 1999 and 1998 as a
result of the strong operating cash flows and the lower average working
capital requirements. Debt has been reduced $18,355,000 since June 30,
1996. The Company's long-term debt originated from financing the Aerospace
business during its first ten years of operation.
Effective tax rates for the most recent three years were 39.5%, 38.2% and
44.6%, respectively. The fluctuations in the effective rates are generally
reflective of the year-to-year variations in the permanent book-to-tax
differences as a percent of pre-tax earnings and the Company's estimations
as to the probable realizations of certain deferred state tax assets and
minimum tax effects thereon.
The Financial Accounting Standards Board (FASB) has issued FAS 133 to be
effective for all fiscal quarters of fiscal years beginning after June 15,
1999. FAS 133 requires that an entity recognize all derivatives as either
assets or liabilities in the statement of financial position and measure
those instruments at fair value. The accounting for changes in the fair
value of a derivative will depend on the intended use of the derivative and
the resulting designation. The Company is currently evaluating the impact
of FAS 133.
The American Institute of Certified Public Accountants (AICPA) has issued
Statement of Position (SOP) 98-5, Reporting on the Costs of Start-up
Activities, to be effective for periods beginning after December 15, 1998.
SOP 98-5 provides guidance on accounting for costs incurred to open new
facilities, conduct business in new territories, or otherwise commence some
new operations. The application of SOP 98-5 is not expected to have a
material effect on the Company's consolidated financial statements.
<PAGE>
PAGE 13 OF ANNUAL REPORT
FIVE-YEAR COMPARISON OF SELECTED FINANCIAL DATA
Dollars in thousands (except per share and employee data)
Years ended June 30 1999 1998 1997 1996 1995
---- ---- ---- ---- ----
Net sales $79,813 $90,916 $94,062 $96,551 $91,127
Net income (loss) 2,707 2,529 136 (280) 992
Net income (loss) per
common share:
(Basic and Diluted) .53 .50 .03 (.06) .20
AT END OF YEAR
Total assets $41,388 $45,495 $50,144 $54,180 $56,178
Working capital 12,188 15,242 16,719 21,095 22,599
Average working capital,
as a percent of sales 17.2% 17.6% 20.0% 22.6% 23.0%
Ratio of current assets
to current liabilities 2.2 2.3 2.3 2.8 2.5
Investment in property,
plant and equipment--
net 14,252 15,115 16,039 16,469 14,657
Long-term debt 5,987 12,833 19,198 24,394 24,419
Total shareholders'
equity 21,876 19,075 16,488 15,684 15,849
Equity per common share 4.32 3.78 3.27 3.18 3.22
Weighted average number
of shares outstanding
used to compute income
(loss) per common share:
Basic 5,060 5,046 4,960 4,927 4,881
Diluted 5,091 5,060 4,974 4,927 4,928
Average number of
hourly employees 400 434 473 534 505
Average number of
salaried employees 198 211 229 248 251
Sales per full-time
employee equivalent
(000's) $133 $141 $134 $123 $120
<PAGE>
PAGE 14 OF ANNUAL REPORT
STATEMENT OF OPERATIONS
Dollars in thousands (except per share amounts)
Years ended June 30 1999 1998 1997
Net Sales $79,813 $90,916 $94,062
Costs and Expenses
Cost of sales 57,007 65,871 71,681
Research and engineering expenses 3,638 4,136 4,552
Selling and administrative expenses 13,896 15,263 15,896
Interest expense 797 1,552 1,688
Total Costs and Expenses 75,338 86,822 93,817
Income before income taxes 4,475 4,094 245
Income tax expense 1,768 1,565 109
Net Income 2,707 2,529 $ 136
Net Income per Common Share:
(Basic and Diluted) $ .53 $ .50 $ .03
The accompanying notes are an integral part of these financial statements.
<PAGE>
PAGE 15 OF ANNUAL REPORT
BALANCE SHEET
Dollars in thousands
JUNE 30, 1999 JUNE 30, 1998
ASSETS
Current Assets
Cash $ 203 $ 629
Accounts receivable, net 11,304 12,552
Inventories, net 9,270 11,961
Deferred income taxes 1,311 1,269
Other current assets 652 695
Total Current Assets 22,740 27,106
Property, plant and equipment, at cost:
Land and buildings 10,775 10,406
Machinery and equipment 28,253 27,388
Total property, plant and equipment 39,028 37,794
Less accumulated depreciation
and amortization (24,776) (22,679)
Property, plant and equipment, net 14,252 15,115
Other assets 4,396 3,274
TOTAL ASSETS $41,388 $45,495
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $3,766 $ 4,734
Accrued compensation and other 4,528 4,376
Current portion of long-term debt 2,258 2,754
Total Current Liabilities 10,552 11,864
Long-term debt 5,987 12,833
Deferred income taxes 1,375 223
Other long-term liabilities 1,598 1,500
TOTAL LIABILITIES 19,512 26,420
SHAREHOLDERS' EQUITY
Common Stock, $1 par value authorized
8,000,000 shares, issued 5,071,658 and
5,051,444 shares 5,072 5,051
Capital in excess of par value 19,134 19,061
Accumulated deficit (2,322) (5,029)
Total capital and accumulated deficit 21,884 19,083
Less treasury stock, at cost:
699 shares (8) (8)
Total shareholders' equity 21,876 19,075
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $41,388 $45,495
The accompanying notes are an integral part of these financial statements.
<PAGE>
PAGE 16 OF ANNUAL REPORT
STATEMENT OF CASH FLOWS
Dollars in thousands
Years ended June 30 1999 1998 1997
Cash flows from operating activities:
Net income $2,707 $2,529 $136
Adjustments to reconcile net income
to net cash flows from operating activities:
Depreciation and amortization 2,169 2,158 1,979
Loss on sale/retirement of fixed assets 35 5 58
Deferred income taxes 1,110 1,332 93
Change in assets and liabilities:
Accounts receivable, net 1,248 1,467 1,426
Inventories, net 2,691 1,579 1,468
Other assets (1,079) (422) 189
Accounts payable (968) (1,761) 450
Accrued compensation and other 250 698 (51)
Net cash provided from
operating activities 8,163 7,585 5,748
Cash flows from investing activities:
Additions to property, plant and equipment (1,345) (1,255) (2,531)
Proceeds from dispositions of fixed assets 4 16 525
Net cash used in investing activities (1,341) (1,239) (2,006)
Cash flows from financing activities:
Increase of long-term debt 19,000 10,960 9,438
Reduction of long-term debt (26,342) (17,133) (14,278)
Proceeds from employee stock purchase
and stock option plans 94 58 124
Sale of treasury stock -- -- 544
Net cash used in financing activities (7,248) (6,115) (4,172)
Net (decrease) increase in cash (426) 231 (430)
Cash at beginning of year 629 398 828
Cash at end of year $203 $629 $398
Supplemental disclosures of cash flow information:
Cash paid (received) during the year for:
Interest $780 $1,586 $1,943
Income Taxes $801 $(220) $(14)
The accompanying notes are an integral part of these financial statements.
<PAGE>
PAGE 17 OF ANNUAL REPORT
STATEMENT OF SHAREHOLDERS' EQUITY
Dollars in thousands
Capital
Common in
stock excess Treasury
$1 par of par Accumulated stock,
value value deficit at cost
Balance June 30, 1996 $ 5,020 $18,910 $ (7,352) $ 894
Stock options exercised 7 23
Sale of treasury shares (342) (886)
Sales of authorized shares:
Employee Stock Purchase Plan 3 15
Employee Savings Plan (401[K]) 10 66
Net income 136
Balance June 30, 1997 $ 5,040 $19,014 $ (7,558) $ 8
Sales of authorized shares:
Employee Stock Purchase Plan 4 17
Employee Savings Plan (401[K]) 7 30
Net income 2,529
Balance June 30, 1998 $ 5,051 $19,061 $(5,029) $ 8
Stock options exercised 7 28
Sales of authorized shares:
Employee Stock Purchase Plan 4 13
Employee Savings Plan (401[K]) 10 32
Net income 2,707
Balance June 30, 1999 $ 5,072 $19,134 $(2,322) $ 8
None of the Company's authorized 500,000 shares of $10 par value preference
stock has been issued.
The accompany notes are an integral part of these financial statement.
<PAGE>
PAGES 18-24 OF ANNUAL REPORT
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING
PRINCIPLES AND PRACTICES:
Business
Acme Electric Corporation designs, manufactures and markets power
conversion equipment for electronic and electrical systems. Principal
markets encompass computers, test equipment, information systems, military,
aerospace, telecommunications, and a variety of industrial, commercial and
residential applications requiring conversion of electrical energy from one
useable state to another.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Certain prior year balances have been
reclassified to conform with the current year presentation.
The major areas in which the Company utilizes estimates include deferred
tax assets, reserves for insurance and legal claims, environmental
liabilities, customer receivable and inventory obsolescence reserves,
product warranty reserves, revenue recognition on long-term contracts, and
the net realizable value of certain assets. The amounts contained within
these financial statements represent management's best estimate of expected
outcomes based on available information. However, the Company realizes
that certain events could occur or fail to occur which would impact the
estimates by a material amount in the future.
Inventories
- -----------
Inventories are costed at the lower of cost or market and determined on a
FIFO (first in, first out) basis.
Property and Depreciation
- -------------------------
Depreciation of property, plant and equipment is computed on the straight-
line and the sum-of-the-year's-digits methods over the estimated service
lives of the assets. At the time of retirement or other disposition of
properties, the cost and accumulated depreciation are removed from the
accounts and any gains or losses are reflected in income. Maintenance and
repairs are charged to expense as incurred; renewals and betterments are
capitalized. The range of lives used as a basis for calculating
depreciation is as follows:
Years
Buildings 20-45
Machinery and equipment 5-12
Furniture and fixtures 8-10
Computers and software 3-5
Revenue Recognition
- -------------------
The Company's operations generally recognize revenue for the sale of
their respective products in the period of delivery. The Company does,
however, utilize the percentage-of-completion method for long-term
contracts in its aerospace business. Revenues or long-term contracts
(primarily engineering or development contracts) are recognized on the
percentage-of-completion basis, measured by the percentage of material,
labor and overhead costs incurred to date to total estimated material,
labor and overhead costs for each long-term contract.
Income Taxes
- ------------
The Company follows the asset and liability approach in accounting for
income taxes. The asset and liability approach requires the recognition of
deferred tax liabilities and assets for the expected future tax
consequences of temporary differences between the financial carrying values
and the tax bases of the related assets and liabilities and operating loss
and tax credit carry forwards.
Earnings Per Share
- ------------------
Basic earnings per share (EPS) is computed by dividing income available
to common shareholders by the weighted average number of common shares
outstanding for the period. Diluted EPS reflects the potential dilution
that would occur if securities or other contracts to issue common stock
were exercised or converted into common stock or resulted in the issuance
of common stock that then shared in the earnings of the Company.
2. ACCOUNTS RECEIVABLE:
Dollars in thousands 1999 1998
Billed $11,475 $12,921
Unbilled -- 97
Subtotal $11,475 $13,018
Less allowance for doubtful accounts (171) (466)
Accounts receivable, net $11,304 $12,552
Unbilled receivables are comprised of revenue amounts on long-term
contracts which have been earned, but not yet billed.
3. INVENTORIES:
Dollars in thousands 1999 1998
Raw Material $5,029 $ 5,875
Work in Process 1,759 1,685
Finished Goods 2,482 4,401
Total Inventories $9,270 $11,961
Inventories are reported net of the reserves for obsolescence of
$1,217,000 and $781,000 in 1999 and 1998, respectively.
4. LONG-TERM DEBT:
Dollars in thousands 1999 1998
Secured revolving loan $1,500 $6,088
Secured term loan with quarterly
principal installments of $337,360
each, and interest paid monthly
at the lower of prime plus .5% -
1.0% range, or the Eurodollar
(London Interbank Eurodollar)
rate plus 2.1% - 2.6% range, as
determined by debt-to-worth
ratio thresholds, through January 2,
2000. 1,012 2,362
Secured term loan with monthly
principal installments of $33,333
each, and interest paid monthly
at the lower of prime plus .5% -
1.0% range, or the Eurodollar
(LIBOR) rate plus 2.1% - 2.6%
range, as determined by debt-to-
worth ratio thresholds, through
July 1, 2001. 833 1,233
Secured loan on the Cuba facility
payable over 20 years with
monthly payments for the first
four years of interest only of
$6,666, with monthly payments
of $14,120, consisting of
principal and interest at 4%,
commencing September 1, 1997,
and continuing over the remaining
16 years. 1,822 1,917
Secured loan on the Cuba facility
payable, with interest only, at
2% through September 30, 1998,
36 monthly principal and interest
payments of $10,146 at 4%,
commencing October 1, 1998, and 168
monthly principal and interest
payments of $12,193 at 7% due
through September 2015. 1,448 1,500
Capital lease secured by the business
information system equipment and a
$300,000 letter of credit, payable
in monthly installments of $42,662,
consisting of principal and
interest of 10.09%, due through
December 2001. 673 1,094
Capital lease obligation secured by
related building, machinery and
equipment at the Cuba facility,
payable in quarterly principal
installments of $5,208, with
interest paid monthly on the
unpaid balance at the rate of
prime plus 1.5% due through
April 1, 2017. 385 406
Capital lease secured by the business
information system equipment with
monthly installments of $20,546,
consisting of principal and interest
at 9.85%, due through November 1999. 81 307
Other debt 491 680
Total debt 8,245 15,587
Current portion (2,258) (2,754)
Long-term portion $5,987 $12,833
The Company has a credit agreement with a banking institution, which
provides for borrowings and letters of credit up to a maximum of
$22,845,000. This credit agreement is comprised of two secured term
loans in the amount of $1,012,000 and $833,000 and a $21,000,000
secured revolving loan. The revolving loan carries an interest rate
equal to the lower of prime plus .25% to .75% range, or the London
Interbank Eurodollar rate plus 1.8% to 2.4% range, determined by a debt-
to-worth ratio threshold, with a maturity date of December 31, 2000.
Outstanding borrowings against the revolving credit facility are
limited by formula to specified amounts of accounts receivable and
inventory, reduced by outstanding term debt. The Company pays a
maximum annual commitment fee of 1/5 of 1% per annum on the unused
portion. Under the terms of the credit agreement, the Company is
required to meet certain restrictive covenants with respect to interest
coverage and debt-to-worth ratios. The covenants further limit the
Company's annual capital expenditure to a maximum of $2,500,000. At
June 30, 1999, the Company was in compliance with the covenants under
the credit agreement.
During the next five years, long-term debt matures as follows: 2000 -
$2,258,000; 2001 - $857,000; 2002 - $264,000; 2003 - $223,000; and 2004
- - $231,000. These amounts do not include any maturities relating to
the revolving loan.
5. STOCK OPTION PLANS:
Upon approval by the Company's shareholders at their Annual
Shareholder Meeting on October 30, 1998, the 1998 Stock Option Plan
became effective retroactive to August 28, 1998. Options are granted
at the fair market value on the date of grant and become exercisable in
whole, or in such installments, and at such times as may be determined
by the Board of Directors. A total of 500,000 shares are available for
grant under the Plan.
The 1996 Directors' Stock Option Plan was adopted on April 29, 1996,
by the Company's Board of Directors and approved by the Company's
shareholders on October 31, 1996. Options are granted quarterly to
each eligible director in lieu of Director Fees and are exercisable six
months after the date of grant. The option price and number of shares
optioned are determined by formula to replace the value of cash
directors' fees otherwise due for the preceding quarter. A total of
50,000 shares are available for grant under the Plan.
Options were granted under the 1989 Stock Option Plan at the fair
market value on the day preceding the date of the grant and are
exercisable in varying amounts through 2007, with vesting at 25% a year
from date of grant. Granting of stock options under the 1989 Plan
ceased in October 1998.
Options were granted under the 1981 Incentive Stock Option Plan at
the fair market value on the day preceding the date of the grant. The
1981 Plan expired in October 1992, and all outstanding options granted
under the Plan expired in October 1998.
<PAGE>
<TABLE>
<CAPTION>
________________________________________________________________________________
________________
Weighted Weighted 1996 Weighted Weighted
1981 Average 1989 Average Directors' Average
1998 Average
Plan Exercise Plan Exercise Plan Exercise
Plan Exercise
Shares Price Shares Price Shares Price
Shares Price
________________________________________________________________________________
________________
<S> <C> <C> <C> <C> <C> <C> <C>
<C>
Options outstanding
at June 30, 1996 16,547 $6.46 91,500 $8.41 -- $ -- -- $ --
Options granted -- -- -- -- 5,426 1.97 -- --
Options exercised -- -- (6,500) 4.56 -- -- -- --
Options canceled (5,512) 5.72 (14,000) 11.25 -- -- -- --
________________________________________________________________________________
________________
Options outstanding
at June 30, 1997 11,035 6.83 71,000 8.20 5,426 1.97 -- --
Options granted -- -- 45,000 6.34 11,907 1.80 -- --
Options exercised -- -- (200) 4.88 -- -- -- --
Options canceled (2,300) 7.00 (8,000) 8.06 -- -- -- --
________________________________________________________________________________
________________
Options outstanding
at June 30, 1998 8,735 6.79 107,800 7.44 17,333 1.85 -- --
Options granted -- -- -- -- 13,537 1.42 105,000 4.00
Options exercised -- -- -- -- (7,323) 1.61 -- --
Options canceled (8,735) 6.79 (15,000) 6.21 -- -- (4,000) 4.00
________________________________________________________________________________
________________
Options outstanding
at June 30, 1999 -- -- 92,800 7.64 23,547 1.68 101,000 4.00
________________________________________________________________________________
________________
Options exercisable
at June 30, 1999 -- $ -- 55,050 $7.83 17,183 $1.81 50,500 $4.00
________________________________________________________________________________
________________
Exercise prices
per share $4.88-$11.25 $1.28-$2.11 $4.00
Shares available
for options at
June 30, 1999 -- -- 19,130 399,000
________________________________________________________________________________
________________
</TABLE>
<PAGE>
A Summary of Stock Options at June 30, 1999, follows:
_______________________________________________________________________
Options Outstanding Options Exercisable
Range of Weighted Average Weighted Average
Exercise Life Exercise Exercise
Price($) Shares (in years) Price Shares Price
_______________________________________________________________________
$1.28-2.11 23,547 8.7 $1.68 17,183 $1.81
4.00 101,000 9.2 4.00 50,500 4.00
4.88 21,800 1.8 4.88 21,800 4.88
6.34 40,000 8.2 6.34 10,000 6.34
11.25 31,000 6.2 11.25 23,250 11.25
_______________________________________________________________________
The Company applies Accounting Principles Board Opinion No. 25
"Accounting for Stock Issued to Employees," and related interpretations
in accounting for the stock option plans. Accordingly, no compensation
expense was recognized in 1999, 1998, or 1997 for stock option awards
made from either the 1998 or the 1989 Stock Option Plans, since the
exercise price of the stock options granted under the Stock Option Plan
was not less than the fair market value of the Common Stock at date of
grant. Compensation expense of $45,000, $50,000, and $25,000 was
recognized in 1999, 1998, and 1997, respectively, for stock awards
under the 1996 Directors' Stock Option Plan. Had compensation expense
for stock option awards granted from the 1998 and 1989 Plans in 1999,
1998, and 1997 been determined consistent with SFAS No. 123, net income
and earnings per share would be reduced to the pro forma amounts
indicated below:
Dollars in thousands (except per share amounts)
Years ended June 30 1999 1998 1997
Net income
As reported $2,707 $2,529 $136
Pro forma 2,579 2,420 66
Net income per common share
As reported $.53 $.50 $.03
Pro forma .51 .48 .01
The Company used the Black Scholes pricing model to estimate the
grant date present value of stock options granted in 1999, 1998, and
1997. The estimated value per option averaged approximately $1.64,
$2.64, and $3.80 for options granted in 1999, 1998, and 1997,
respectively. The values were calculated using the following
assumptions: (i) an option term of 5.5 years (representing the
estimated period between grant date and exercise date based on
historical data); (ii) a risk-free interest rate approximating 4.86%,
5.99%, and 6.48%, in 1999, 1998, and 1997, respectively (representing
the yield on a U.S. Treasury Security with remaining term equal to the
expected option term); (iii) expected volatility of 53% for 1999, 52%
for 1998 and 58% for 1997; (iv) no future dividends paid; and (v) a 30%
forfeiture rate used to reflect the estimate of the probability of
forfeiture prior to vesting.
The pro forma effects presented above are in accordance with the
requirements of SFAS No. 123, however, such effects are not
representative of the effects to be reported in future years due to the
fact that options vest over several years and additional awards
generally are made each year.
6. LEASES:
The Company leases certain manufacturing facilities and equipment,
described in Note 4, under lease agreements which have been
capitalized, and various other equipment under operating leases. Under
the terms of the capital leases, the Company has included $3,254,000
and $3,333,000 in the cost of property, plant and equipment June 30,
1999, and June 30, 1998, respectively. Accumulated depreciation of
such assets was $1,280,000 at June 30, 1999, and $1,051,000 at June 30,
1998. Total rental expense under operating leases, which includes the
headquarters facility, was $850,000, $940,000 and $829,000 in 1999,
1998 and 1997, respectively. Minimum future rental commitments under
non-cancelable operating leases are approximately $781,000 in 2000,
$502,000 in 2001, $449,000 in 2002, $414,000 in 2003, and $344,000 in
2004.
7. INCOME TAXES:
The provision for income taxes includes the following:
Years Ended June 30
Dollars in thousands 1999 1998 1997
Current Tax Provision
Federal $556 $216 $--
State 102 17 16
Deferred Tax Provision
Federal 952 1,073 130
State 158 259 (37)
Total Provision $1,768 $1,565 $109
The provision for income taxes differs from the federal statutory
rate of 34% due to the following:
1999 1998 1997
Statutory rate 34.0% 34.0% 34.0%
Foreign losses not tax effected -- -- 5.8%
State taxes, net of federal benefit 3.8% 4.5% (5.6%)
Other 1.7% (.3%) 10.4%
Effective tax rate 39.5% 38.2% 44.6%
At June 30, the deferred tax assets (liabilities) were comprised of the
following:
Dollars in thousands 1999 1998 1997
Deferred tax assets:
Accounts receivable $62 $264 $206
Inventory 769 560 446
Accrued expenses 723 667 696
Restructuring and impairment charges 152 314 463
Supplemental Executive Retirement 444 427 415
Other 89 51 201
Loss and credit carry forwards 191 742 1,680
2,430 3,025 4,107
Deferred tax liabilities:
Pensions (1,542) (1,160) (1,023)
State taxes (65) (119) (207)
Property, plant and equipment (887) (700) (250)
(2,494) (1,979) (1,480)
Net deferred tax asset (liability) $(64) $1,046 $2,627
The Company has certain state loss carry forwards available to offset
future taxable income. Portions of the state loss carry forwards, if
not used, will begin to expire in 2001.
8. EARNINGS PER SHARE
The computation of basic earnings per share is reconciled with
diluted earnings per share as follows.
Dollars and shares in thousands,
except per share amounts 1999 1998 1997
Income available to common shareholders $2,707 $2,529 $ 136
Basic earnings per share
Weighted average shares outstanding 5,060 5,046 4,960
Basic earnings per share $ .53 $ .50 $ .03
Diluted earnings per share
Weighted average shares outstanding 5,060 5,046 4,960
Dilutive effect of:
Stock options 31 14 14
_____________________________
Adjusted weighted average shares
outstanding 5,091 5,060 4,974
Diluted earnings per share $ .53 $ .50 $ .03
_____________________________
9. BENEFIT PLANS:
Net periodic pension expense for the three years ended June 30, 1999,
included the following components:
______________________________________________________________________
Pension Benefits Other Benefits
Dollars in thousands 1999 1998 1997 1999 1998 1997
Service cost - Benefits
earned during the period $ 544 $ 551 $ 589 $ 59 $ 45 $ 47
Interest cost on projected
benefit obligation 1,519 1,482 1,442 138 122 126
Expected return on
assets (2,777) (2,282)(2,203) -- -- --
Amortization of transition
obligation (asset) (135) (160) (160) 97 97 97
Actuarial (gain)loss (505) (153) (172) -- -- --
Amortization of prior
service cost 313 300 299 24 3 2
Net periodic pension
(income) expense $(1,041) $ (262)$ (205) $318 $267 $272
The Company maintains two non-contributory defined benefit pension
plans covering substantially all employees. The formula covering
salaried employees provides pension benefits based upon the employee's
individual yearly compensation. Formulas covering hourly employees
provide benefits of stated amounts for each year of credited service.
It is the Company's policy to fund for each qualified plan at least
an amount necessary to satisfy the minimum requirements of the Employee
Retirement Income Security Act. The amount to be funded is subject to
annual review by management and its consulting actuary. In recent
years, funding contributions have been restricted due to application of
Internal Revenue Code full-funding limitations to one or more of the
plans.
The Company also maintains a non-qualified Supplemental Executive
Retirement Plan (SERP) and a non-qualified post-retirement benefits
plan for certain executive officers of the Company. The SERP provides
benefits based upon an executive's compensation in the last year of
service and is reduced by benefits received from the salaried plan.
The nonqualified benefits plan provides post retirement health care.
Six participants of this plan are retired and receiving payments under
the plan.
Approximately 1% of the plans' assets are invested in cash and
equivalents, 67% are invested in equities, and the remaining 32% are
invested in fixed-income securities and annuities.
Data relating to the funding position of the plans were as follows:
Change in PBO and ABO:
Change in the actuarial Projected Benefit Obligation (PBO) for Pension
and SERP Benefits and Accumulated Benefit Obligation (ABO) for Other
Post-Retirement Benefits.
______________________________________________________________________
Pension Benefits Other Benefits
Dollars in Thousands 1999 1998 1999 1998
PBO/ABO at July 1 $22,467 $21,933 $1,804 $1,862
Service cost 544 551 60 45
Interest cost 1,519 1,482 138 122
Benefits paid (1,652) (1,427) (221) (217)
Plan amendments 193 -- 308 --
Changes in assumptions 1,229 -- 155 --
Actuarial (gain) loss (53) (72) (29) (8)
______________________________________________________________________
PBO/ABO at June 30 $24,247 $22,467 $2,215 $1,804
______________________________________________________________________
Change in Plan Assets:
______________________________________________________________________
Pension Benefits Other Benefits
Dollars in Thousands 1999 1998 1999 1998
Fair value of plan assets
at July 1 $33,393 $27,512 $ -- $ --
Actual return on plan assets 2,152 7,246 -- --
Actual distributions (1,652) (1,427) (218) (217)
Actual contributions 56 62 218 217
______________________________________________________________________
Fair value of plan assets
at June 30 $33,949 $33,393 $ - $ -
______________________________________________________________________
Reconciliation of Funded Status:
______________________________________________________________________
Pension Benefits Other Benefits
Dollars in Thousands 1999 1998 1999 1998
Funded status at June 30 $9,701 $10,926 $(2,480) $(2,146)
Unrecognized transition
obligation (asset) (256) (390) 416 513
Unrecognized prior service cost 2,389 2,509 324 40
Unrecognized net (gain) loss (7,848)(10,156) 184 60
Changes in minimim liability -- -- 53 77
______________________________________________________________________
Prepaid (Accrued) pension cost $3,986 $ 2,889 $(1,503) $(1,456)
______________________________________________________________________
The Company has recorded an intangible asset related to the SERP Plan
of $212,328 and $265,167 at June 30, 1999 and 1998, respectively. No
additional minimum liability was recognized as a separate component of
accumulated other comprehensive income at June 30, 1999 and 1998.
The assumed rates used in the actuarial computations were:
______________________________________________________________________
Pension Benefits Other Benefits
1999 1998 1999 1998
Discount rate 6.5% 7.0% 6.5% 7.0%
Average compensation growth 4.5% 4.5% 4.5% 4.5%
Expected return on assets 8.5% 8.5% N/A N/A
______________________________________________________________________
For measurement purposes, a 5.0% annual trend rate of increase in the
cost of covered health care benefits was assumed, with claim costs to
increase from .5% to 6.0% per annum, based on age. The rate is assumed
to remain the same over later years. A one percentage point change in
assumed health care cost trend rates would have the following effects:
______________________________________________________________________
One Percent Change
Dollars in Thousands +1% -1%
Increase (decrease) in:
Service and interest cost $ 4 $(3)
Accumulated post-retirement
benefit obligation $48 $(42)
______________________________________________________________________
The Company further maintains two 401(k) defined contribution plans,
for which it bears the costs of operating, but makes no direct or
matching contributions. Eligible employees of the Company may
contribute up to 12% of qualified compensation, subject to certain
revenue code thresholds. Employees' accounts are at all times fully
vested and nonforfeitable.
The Company, through its Employee Stock Purchase Plan, provides to
employees with one or more years of service the opportunity to purchase
stock of the Company at 90% of its fair market value, limited to a
maximum of 465 shares in any calendar year.
During fiscal year 1999, the Company adopted the provisions of FASB
Statement No. 132, "Employers' Disclosures about Pensions and Other
Post-retirement Benefits." This statement specified changes in the
disclosure requirements related to pension and other post-retirement
benefits.
10. MAJOR CUSTOMERS:
Power conversion equipment sales encompass markets wherein the
demands of any one customer may vary greatly due to changes in
technology and market strategy. No customer of the Company accounted
for more than 10% of sales in fiscal year 1999. One customer of the
Company accounted for 17.2% and 16.2% of fiscal 1998 and 1997 sales,
respectively. No customer accounted for greater than 10% of the
Company's accounts receivable balance at June 30, 1999 or 1998.
11. SHAREHOLDERS' RIGHTS PLAN:
The Company's Board of Directors has adopted a shareholders' rights
plan (the "Rights Plan") and declared a dividend of one Right for each
two shares of the Company's Common Stock outstanding. Each Right
entitles the registered holder to purchase one share of Common Stock at
a purchase price of $50.00 per share.
In the event that, at any time following distribution of the
Rights, (i) the Company is the surviving corporation in a merger with a
third party and its Common Stock is not changed or exchanged, (ii) a
Person becomes the beneficial owner of more than 20% of the then
outstanding shares of Common Stock ("Acquiring Person"), (iii) an
Acquiring Person engages in one or more "self-dealing" transactions as
set forth in the Rights Agreement between the Company and its transfer
agent, or (iv) during such time as there is an Acquiring Person, an
event occurs which results in such Acquiring Person's ownership
interest being increased by more than 1% (e.g., a reverse stock split),
each holder of the Rights, other than the Acquiring Person, will
thereafter have the right to receive, upon exercise, Common Stock (or,
in certain circumstances, cash, property or other securities of the
Company) having a value equal to two times the exercise price of the
Rights.
12. COMMITMENTS AND CONTINGENCIES
In the normal course of business, certain contingent liabilities are
outstanding which are not reflected in the financial statements. The
Company does not expect such contingencies to have a material adverse
effect on the Company's financial position or results of operations in
any future reporting period.
The Company was subject to liability for the cost of site
investigation and remediation of a municipal landfill. This matter was
settled on June 27, 1997, upon payment by the Company of $725,000 to
the New York State Department of Environmental Conservation. In July
1999, the Company received a $350,000 settlement from its insurance
carrier related to this matter. These proceeds will be included in the
reported results of the first quarter of fiscal year 2000.
13. SEGMENT REPORTING DISCLOSURES
The Company has adopted FASB Statement No. 131, "Disclosures about
Segments of an Enterprise and Related Information." This statement
revised the manner in which the Company reports information concerning
its operating segments.
The Company operates in three business segments: Aerospace,
Electronics, and Power Distribution Products. The Company's reportable
segments are strategic business units that offer different products and
services to different markets. The segments are managed separately,
based on the fundamental differences of their operations. Each
business segment has a separate manufacturing facility.
Operations in the Aerospace segment provide design, manufacturing,
and support services to the military and commercial aerospace market.
Electronic power systems include battery chargers, power supplies, and
battery backup systems for a variety of commercial and military
aircraft applications, as well as certain ground-based military
applications.
The Electronics segment is focused on the electronic systems
integration market and products for the emerging cable industry.
The Power Distribution Products segment provides power conditioning
solutions to industrial customers, delivered primarily through
electrical distributors and related distribution channels. The core
products are industrial transformers and related power conditioning
products.
Typical customers in all segments are well known companies in the
aerospace, electronics, and power distribution business.
Total net sales by segment consist entirely of sales to unaffiliated
customers. Operating profit does not include the following items:
general corporate income and expense, investment income, interest
expense, or income taxes. Identifiable assets by segment consist of
those assets that are, or will be, used in the segmental operations.
Corporate assets consist principally of cash, business enterprise
system, deferred taxes, and other assets.
Information by industry segment is as follows:
_______________________________________________________________________
Dollars in Thousands 1999 1998 1997
_______________________________________________________________________
Net Sales
Aerospace $11,309 $11,190 $ 8,645
Electronics 19,595 28,708 34,439
Power Distribution Products 48,909 51,018 50,978
_______________________________________________________________________
Combined $79,813 $90,916 $ 94,062
_______________________________________________________________________
Operating Income(Loss)
Aerospace $ 1,036 $ 295 $(1,157)
Electronics (963) 479 (994)
Power Distribution Products 9,061 9,010 8,842
_______________________________________________________________________
Combined 9,134 9,784 6,691
General Corporate Expense (3,862) (4,138) (4,758)
Interest Expense (797) (1,552) (1,688)
_______________________________________________________________________
Earnings Before Income Taxes $ 4,475 $ 4,094 $ 245
_______________________________________________________________________
Identifiable Assets
Aerospace $ 4,704 $ 5,218 $ 6,625
Electronics 15,071 16,831 18,111
Power Distribution Products 15,935 17,145 17,414
General Corporate 5,678 $6,301 7,994
_______________________________________________________________________
Combined $41,388 $45,495 $50,144
_______________________________________________________________________
Depreciation and Amortization
Aerospace $ 364 $ 377 $ 394
Electronics 841 881 1,001
Power Distribution Products 455 421 444
General Corporate 509 479 140
_______________________________________________________________________
Combined $2,169 $2,158 $1,979
_______________________________________________________________________
Capital Expenditures
Aerospace $ 263 $ 341 $ 222
Electronics 428 516 505
Power Distribution Products 516 266 404
General Corporate 138 132 1,400
_______________________________________________________________________
Combined $1,345 $1,255 $2,531
_______________________________________________________________________
<PAGE>
PAGE 25 OF ANNUAL REPORT
REPORT OF INDEPENDENT ACCOUNTANTS
To The Board of Directors and Shareholders
of Acme Electric Corporation:
In our opinion, the accompanying balance sheet and the related
statements of operations, shareholders' equity and of cash flows
present fairly, in all material respects, the financial position of
Acme Electric Corporation at June 30, 1999 and 1998, and the results of
its operations and its cash flows for each of the three years ended
June 30, 1999, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted
auditing standards, which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
/s/
PricewaterhouseCoopers LLP
Buffalo, New York
August 5, 1999
<PAGE>
PAGE 25 OF ANNUAL REPORT
COMMON STOCK PRICES
_________________________________________________________________
Stock price
Year Ended June 30, 1999 High Low
Fourth Quarter 5 13/16 4 1/16
Third Quarter 5 3/8 4
Second Quarter 5 11/16 4 1/2
First Quarter 5 7/8 3 15/16
_________________________________________________________________
Year Ended June 30, 1998 High Low
Fourth Quarter 6 5/16 4 5/8
Third Quarter 6 1/2 4 5/8
Second Quarter 8 1/8 4 11/16
First Quarter 7 7/16 6 1/8
Acme Electric Corporation's Common Stock is traded on the New York,
Chicago, and Philadelphia Stock Exchanges. The approximate number of
shareholders of record at June 30, 1999, was 1,499.
_________________________________________________________________
SHAREHOLDER INQUIRIES
The Company welcomes comments from shareholders and the opportunity to
answer their questions. Correspondence should be directed to: Richard
P. Becht or Cora M. Martin, Acme Electric Corporation, 400 Quaker Road,
East Aurora, New York 14052, (716)655-3800 or e-mail
[email protected] In addition, the Company will provide to any
shareholder, without charge, a copy of the Company's current form 10-K
annual report. Requests for this and any other Company publication
should be directed to Ms. Martin. Company news is available by FAX:
dial 1-800-758-5804, and input extension 0066775; or visit our web site
at acmeelec.com
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> JUN-30-1999
<CASH> 203
<SECURITIES> 0
<RECEIVABLES> 11,475
<ALLOWANCES> 171
<INVENTORY> 9,270
<CURRENT-ASSETS> 22,740
<PP&E> 39,028
<DEPRECIATION> 24,776
<TOTAL-ASSETS> 41,388
<CURRENT-LIABILITIES> 10,552
<BONDS> 5,987
0
0
<COMMON> 24,106
<OTHER-SE> (2,322)
<TOTAL-LIABILITY-AND-EQUITY> 41,388
<SALES> 79,813
<TOTAL-REVENUES> 79,813
<CGS> 57,007
<TOTAL-COSTS> 74,541
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 797
<INCOME-PRETAX> 4,475
<INCOME-TAX> 1,768
<INCOME-CONTINUING> 2,707
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,707
<EPS-BASIC> .53
<EPS-DILUTED> .53
</TABLE>
EXHIBIT 99-1
NEWS RELEASE
Contact:
Dick Becht
716/655-3800
FOR IMMEDIATE RELEASE
ACME ELECTRIC ANNOUNCES YEAR-END RESULTS
EAST AURORA, N.Y., August 5, 1999 -- Acme Electric Corporation (NYSE:
ACE) reported today that, for the year ended June 30, 1999, sales were
$79,813,000 with net income of $2,707,000, or $.53 per share, compared to
sales of $90,916,000 and net income of $2,529,000, or $.50 per share, for
the prior year.
Robert J. McKenna, Chairman and CEO, said, "During the year, we have
achieved many of our strategic objectives, including establishing a basis
for increased sales over time, strengthening our balance sheet, and
significantly improving the efficiency and profitability of our operations.
We are particularly pleased that these efforts enabled Acme to report
higher earnings on a smaller revenue base.
The decline in sales was attributable to the previously announced loss
of a major customer in our electronics business, due to a consolidation
process that favored multi-national suppliers much larger than Acme. Our
prompt response to this situation helped produce improved financial
performance reported for the year.
A key driver of Acme's future revenue growth is our continuing
commitment to developing both new products and customer relationships. We
have made considerable progress in both areas.
During the year, we introduced several new products, including a line
of quick-to-install DIN-rail mounted power supplies and a new line of back-
up power units for the cable industry. Customer response has been very
positive.
We also established new relationships with several major OEM
customers. As an important strategic supplier to each company, we expect
these new relationships to provide Acme with many new profitable growth
opportunities in the future."
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.
# # # #
<PAGE>
ACME ELECTRIC CORPORATION
Comparative Analysis
(in thousands, except for per share data)
For the Year Ended For the 13 Weeks Ended
06/30/99 06/30/98 06/30/99 06/30/98
Net Sales $79,813 $90,916 $19,532 $23,633
Net Income $2,707 $ 2,529 $1,021 $1,276
Net Income Per
Common Share
(Basic and Diluted) $.53 $.50 $.20 $.25
Weighted Number of Shares
Outstanding Used to Compute
Net Income Per
Common Share:
Basic 5,060 5,046 5,068 5,050
Diluted 5,091 5,060 5,110 5,065
EXHIBIT 99-2
NEWS RELEASE
Contact:
Dick Becht
716/655-3800
FOR IMMEDIATE RELEASE
ACME ELECTRIC OPENS MEXICAN SUBSIDIARY TO SERVICE
MEXICO AND CENTRAL AMERICA
-- Jorge A. Luna Appointed Plant Manager --
EAST AURORA, N.Y., August 11, 1999 -- Acme Electric Corporation
(NYSE: ACE)
announced the opening of a Mexican subsidiary and the appointment of Jorge
A. Luna as Plant Manager of the new facility.
The new subsidiary is operating under the name Acme Electric de Mexico
S. de R.L. de C.V., and will be housed in a new 45,000-square-foot facility
near Monterrey, Mexico, to support Acme's growing base of distribution in
the region.
Acme Electric is expanding its international presence in response to
the growing demand for its products. "Establishing a new facility to meet
growing demand in the Mexican and Central American markets will strengthen
Acme's position there, enhance our support to customers, and build our
growth potential in these important regions," said Robert J. McKenna,
Chairman and Chief Executive Officer.
McKenna continued, "This new operation will also increase the
effectiveness of Acme's global sales channels and will facilitate the
manufacturing and distribution of Acme products in the Latin American
market."
"I am excited to be involved with Acme's commitment to its sales and
business development initiatives," said Jorge Luna, who has held several
management positions with a shelter company under the direction of Lucent
Technologies and holds a degree in Electronics Engineering from the
University of Nuevo Leon.
The new subsidiary will be located at the Monterrey Industrial Park in
Apodaca, Mexico, and will be in full production by November 1999.
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.
# # # #
EXHIBIT 99-3
NEWS RELEASE
Contact:
Dick Becht
716/655-3800
ACME ELECTRIC TO BE A SOLE SUPPLIER TO POWERWARE
EAST AURORA, N.Y., August 17, 1999 -- Acme Electric Corporation
(NYSE: ACE), announced today that its Lumberton, N.C.-based Power
Distribution Products Division has been selected by Powerware (formerly
Exide Electronics Corporation) as Powerware's sole supplier of custom
electrical transformers for use in its uninterruptible power supply (UPS)
products.
Acme said it expects to generate in excess of $6 million of
additional sales per year from this new supply agreement.
Robert J. McKenna, Acme's Chairman and Chief Executive Officer,
said, "By leveraging our continuous flow manufacturing process and years of
electrical transformer design experience, Acme can deliver just-in-time
service and superior product designs at a lower cost than competing
products. All of the transformers to be supplied to Powerware will be
manufactured in our Lumberton, N.C., facility."
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.
# # # #
EXHIBIT 99-4
NEWS RELEASE
CONTACT:
Richard Becht
(716) 655-3800
FOR IMMEDIATE RELEASE
ACME ELECTRIC'S POWER DISTRIBUTION PRODUCTS DIVISION
SELECTED TO BE PRIMARY SUPPLIER TO COCA-COLA
EAST AURORA, N.Y., September 2, 1999 -- Acme Electric Corporation's
(NYSE:ACE) Power Distribution Products Division in Lumberton, N.C.,
announced that it has been selected by Coca-Cola (NYSE:KO) as that
company's primary supplier of specialty transformers for its Fountain
Division. These transformers are an integral part of a special project
Coca-Cola is launching for a new product introduction.
Acme was selected as Coca Cola's primary supplier by demonstrating its
unique ability to respond to the special requirements of the application,
including performance and product availability. Leveraging its existing
product design platform, Acme incorporated specific connector assemblies
and color-coding for each application, enabling Coca-Cola to "kit" its
final product into a turn-key package for rapid field installation.
Utilizing Demand Flow Technology, Acme was able to meet Coca Cola's
aggressive delivery schedule, which is essential for the success of the
project's rollout.
The agreement has the potential for Coca-Cola to become one of the
Power Distribution Products Division's largest customers, and represents
another significant step in building Acme's market share in the OEM market
through strong technical product and process capabilities.
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.
# # # #
EXHIBIT 99-5
PRESS RELEASE
CONTACT:
Richard Becht
(716) 655-3800
FOR IMMEDIATE RELEASE
ACME ELECTRIC CORPORATION MOVES TO NASDAQ
EAST AURORA, N.Y., September 21, 1999 -- Acme Electric Corporation
(NYSE:ACE) stated today that, in response to The New York Stock Exchange's
(NYSE) decision to raise the standards for listing requirements, Acme
Electric has made application to and has been
enthusiastically accepted for inclusion in the NASDAQ National Market
("NASDAQ"). Upon effectiveness of the registration statement, Acme
Electric will commence trading under the NASDAQ symbol "ACEE." Acme
Electric noted that the NYSE took this action with regard to several
hundred smaller companies that did not comply with the new requirements for
continued listing.
Robert J. McKenna, Chairman and Chief Executive Officer of Acme
Electric, stated, "We look forward to joining the rapidly growing NASDAQ
market system and fully expect a smooth transition."
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.
# # # #
