<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to ____________
Commission file number 0-10095
Autoclave Engineers, Inc.
(Exact name of registrant as specified in its charter)
Pennsylvania 25-0941759
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
22600 Savi Ranch Parkway, Yorba Linda, California 92687
(Address of principal executive offices) (Zip Code)
(714) 921-2640
(Registrant's telephone number, including area code)
2930 West 22nd Street; Erie, Pennsylvania 16506
(Former name, former address and former fiscal year,
if changed since last report.)
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. Yes X No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
The number of shares of common stock, $.15 par value,
outstanding as of September 30, 1995 was 4,067,841.
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AUTOCLAVE ENGINEERS, INC. AND SUBSIDIARIES
INDEX
Page No.
Part I. Financial Information
Consolidated Balance Sheet --
August 31, 1995 and May 31, 1995 3-4
Consolidated Statement of Income --
Three months ended August 31, 1995 and 1994 5
Consolidated Statement of Cash Flows --
Three months ended August 31, 1995 and 1994 6
Notes to Consolidated Financial Statements 7
Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-10
Part II. Other Information 11
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AUTOCLAVE ENGINEERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
August 31, 1995 and May 31, 1995
(amounts in thousands)
(unaudited)
<TABLE>
<CAPTION>
08/31/95 05/31/95
-------- --------
<S> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents $ 3,938 $ 4,465
Short-term investments, at cost 3,714 4,919
Accounts and notes receivable 9,464 9,543
Inventories 9,801 8,440
Prepaid expenses and other 1,925 1,569
Net assets of discontinued operations
held for sale 11,017 11,072
------- -------
Total current assets 39,859 40,008
Property, plant and equipment, at cost:
Buildings and improvements 2,567 2,346
Machinery and equipment 9,681 9,338
------- -------
12,248 11,684
Accumulated depreciation and amortization 6,049 5,740
------- -------
6,199 5,944
Construction in progress 1,789 880
------- -------
7,988 6,824
------- -------
Goodwill, net of amortization of $1,609 and
$1,571, respectively 4,452 4,490
Other assets 550 580
------- -------
$52,849 $51,902
======= =======
See accompanying notes to consolidated financial statements.
</TABLE>
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AUTOCLAVE ENGINEERS, INC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
August 31, 1995 and May 31, 1995
(amounts in thousands, except share data)
(unaudited)
<TABLE>
<CAPTION>
08/31/95 05/31/95
-------- --------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts and notes payable, trade $ 2,341 $ 3,139
Accrued compensation and benefits 1,711 1,560
Income taxes 1,433 672
Current installments on term debt 2,672 3 156
Other current liabilities 4,081 3,908
------- -------
Total current liabilities 12,238 12,435
Term debt 280 453
Deferred income taxes 139 77
Other long-term liabilities and deferred credits 463 459
------- -------
Total liabilities and deferred credits 13,120 13,424
------- -------
Shareholders' equity:
Common stock, $.15 par value; authorized shares:
12,000,000; issued shares: 4,416,193 662 662
Additional paid-in capital 20,516 20,413
Retained earnings 19,233 18,171
Foreign currency translation adjustment (264) (252)
------- -------
40,147 38,994
Less treasury stock, at cost: 140,508 shares
at 8/31/95; 173,888 shares at 5/31/95 (418) (516)
-------- --------
Total shareholders' equity 39,729 38,478
------- -------
$52,849 $51,902
======= =======
See accompanying notes to consolidated financial statements.
</TABLE>
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AUTOCLAVE ENGINEERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
for the three months ended
August 31, 1995 and 1994
(amounts in thousands, except share data)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended August 31
----------------------------
1995 1994
-------- --------
<S> <C> <C>
Net sales $15,023 $ 9,475
Operating costs and expenses:
Cost of goods sold 9,029 6,030
Selling, general and administrative 3,692 2,649
Restructuring costs 83 --
Research, development and engineering 956 578
------- -------
Operating income 1,263 218
Interest income 81 21
Interest expense (51) (101)
Other income, net (17) 40
-------- --------
Income from continuing opera-
tions before income taxes 1,276 178
Provision for income taxes 560 82
------- -------
Income from continuing operations 716 96
Income from discontinued operations,
net of income tax provisions
of $298 in 1995 and $2 in
1994, respectively 604 47
------- --------
Net income $ 1,320 $ 143
======= =======
Per common share:
Income from continuing operations $ 0.16 $ 0.02
Discontinued operations 0.13 0.01
------- -------
Net income $ 0.29 $ 0.03
======= =======
Average shares used in computing
earnings per share 4,502,272 4,306,601
========= =========
See accompanying notes to consolidated financial statements.
</TABLE>
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AUTOCLAVE ENGINEERS,INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
for the three months ended August 31, 1995 and 1994
(amounts in thousands - unaudited)
<TABLE>
<CAPTION>
Three Months Ended August 31
---------------------------
1995 1994
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $1,320 $ 143
Adjustments to reconcile net income
to net cash from operating activities:
Depreciation and amortization 510 749
Deferred income taxes 63 (381)
Equity interest -- 8
Changes in assets & liabilities:
Accounts receivable (126) 2,008
Inventories (1,503) (1,027)
Prepaids and other assets (326) (585)
Accounts payable and accrued
liabilities (428) 292
Income taxes 715 (396)
Other current liabilities -- 264
Change in other long-term liabilites 3 (59)
Other (78) (18)
------- -----
Net cash provided from
operating activities 150 998
------ ------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (1,632) (813)
Change in short-term investments 1,205 1
Other 65 (26)
------- -------
Net cash provided from (used in)
investing activities (362) (838)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on long-term debt (230) (110)
Change in short-term borrowings, net -- 200
Cash dividends paid (257) (253)
Proceeds from issuance of common stock 200 --
------- -------
Net cash (used in) financing activities (287) (163)
------- -------
Effect of exchange rate changes (28) 386
------ ------
Net increase(decrease) in cash and
cash equivalents (527) 383
Cash & cash equivalents at beginning of yr. 4,465 5,719
------ ------
Cash and cash equivalents at end of period $3,938 $6,102
====== ======
See accompanying notes to consolidated financial statements.
</TABLE>
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AUTOCLAVE ENGINEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share data)
1. Basis of Presentation
---------------------
The consolidated financial statements included herein are
based in part on estimates and include such adjustments
(consisting solely of normal recurring adjustments) which
management believes are necessary for a fair presentation of
the Company's financial position at August 31, 1995 and May
31, 1995, and the results of its operations for the three-
month periods ended August 31, 1995 and 1994. The
consolidated financial statements and related notes are
condensed and have been prepared in accordance with
generally accepted accounting principles applicable to
interim periods; consequently, they do not include all
generally accepted accounting disclosures required for
complete annual financial statements. These consolidated
financial statements should be read in conjunction with the
financial statements and notes thereto contained in the
Company's Annual Report on Form 10-K for the year ended May
31, 1995.
The results of operations for the period presented are not
necessarily indicative of results to be expected for the
entire fiscal year. Certain prior year items have been
reclassified to conform to the current year presentation.
2. Inventories
-----------
Inventories at August 31, 1995 and May 31, 1995 consisted of
the following:
Aug. 31, 1995 May 31, 1995
------------- ------------
Raw materials $ 6,343 $ 5,326
Work in process 2,005 1,896
Finished goods 1,453 1,218
------- -------
$ 9,801 $ 8,440
======= =======
3. Subsequent Event
----------------
On September 22, 1995 the Company completed its previously
announced sale of the Autoclave Engineers Group to Snap-
tite, Inc. Consideration received from the sale was
$13,500,000 in cash at closing, $2,000,000 cash placed in
escrow pending transfer of Registrant's ownership of shares
in its joint venture, and a $750,000 subordinated note.
In a related but separate transaction, the Company
repurchased 220,000 shares of its common stock from J & L
Levinson Partnership, the Company's largest shareholder, at
a price of $11.75 on September 22, 1995. This arrangement
was previously reported in the Company's Annual Report on
Form 10-K for the fiscal year ended May 31, 1995.
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MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis should be read in
conjunction with Autoclave Engineers, Inc.'s condensed
consolidated financial statements and related notes included
herein.
RESULTS OF OPERATIONS
THREE MONTHS ENDED AUGUST 31, 1995 COMPARED TO THREE MONTHS ENDED
AUGUST 31, 1994
Sales from continuing operations for the quarter ended August 31,
1995 increased 59% to $15,023,000 from $9,475,000 for the
comparable prior year period. This strong increase in sales
reflects, in part, the continued upturn in the semiconductor
equipment market as well as enhanced market position for the
Company. Shipments to OEM's and End Users were up 64% and 61%,
respectively, for the quarter while sales of the Company's newest
product line, metal seal mass flow controllers, advanced 124% for
the same comparative period.
Gross profit margin increased to 40% for the current quarter from
36% for the same quarter last year. This improvement in the
gross profit margin is attributable to slightly higher average
selling prices because of more favorable product mix, increases
in productivity and higher utilization of manufacturing
facilities which results in lower overhead as a percent of sales.
Selling, general and administrative ("S,G&A") expenses increased
to $3,692,000 in the first quarter of the current fiscal year
from $2,649,000 in the comparable prior year period. These
higher expenses resulted from the rapid increase in sales during
the prior year. However, as a percent of sales, S,G&A fell to
24.6% for the current period from 28.0% for the prior year's
comparable quarter. The Company anticipates that it will realize
a cost savings of approximately $1 million per year when the
current corporate office in Erie, Pennsylvania is closed and
fully relocated to Unit Instruments' facility in Yorba Linda,
California.
A restructuring charge of $83,000 was recorded in the current
quarter representing an adjustment in severance expense accrued
in the prior year-end, resulting from the anticipated sale of the
Autoclave Engineers Group.
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Research, development and engineering expenses increased to
$956,000 or 6.4% of sales for the current quarter from $578,000
or 6.1% of sales for the prior year. These high expenditures
reflect increased new product development charges to support the
higher level of sales. The Company believes that the continued
timely development of new products and enhancements to its
existing products is essential to maintaining its competitive
position within the industry. Accordingly, the Company
anticipates that such expenses will continue to increase in
absolute dollars and possibly as a percent to sales.
Interest income increased for the current quarter because of
larger investable cash balances while interest expense decreased
because of reduced levels of bank borrowings. Other income and
expense fluctuated primarily because of foreign currency
adjustments.
Income taxes were provided for a 44% rate for the first quarter
which is down slightly from the 46% rate provided for in the
prior year's first quarter. This tax rate provision results from
pre-tax income earned in California at a relatively high
statutory rate and losses incurred in Pennsylvania that are taxed
at a lower rate. The Company expects its tax rate to decrease
marginally once the sale of Autoclave Engineers Group is
complete.
Income from continuing operations was $716,000 for the current
period as compared to $96,000 for the year ago quarter.
Income from discontinued operations reflects the results of
operations of the Autoclave Engineers Group for the first quarter
of the current fiscal year. For the prior year's comparable
period, discontinued operations reflected the results of
operations for both Autoclave Engineers Group and Burton Corblin
business segment. Burton Corblin was sold in January, 1995. For
the first quarter, income from discontinued operations was
$604,000 reflecting a strong performance by the company's
Autoclave Engineers Group as compared to the prior year's results
of $47,000. Last year, Autoclave Engineers Group performance was
nearly mitigated by losses at Burton Corblin.
Net income for the first quarter was $1,315,000 or $.29 per share
which compares favorably to net income for the prior year period
of $143,000 or $.03 per share.
The Company's results of operations may be affected in the future
by a variety of factors including: the dependency of sales on a
few large customers, product mix, new product introductions by
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the Company and its competitors, operating expenses and the
specification by end users of a particular brand of mass flow
controllers on new equipment orders. In addition, the Company's
results could be affected by demand for semiconductor equipment,
which has experienced strong growth the past two years, and
technology changes in the market.
FINANCIAL CONDITION
Cash flow was negative for the first quarter because of large
capital expenditures and inventory accumulation at Unit
Instruments. Unit expended approximately $900,000 for a fourth
Class 100 cleanroom "tunnel" at its Yorba Linda facility and
another $300,000 for an enlarged cleanroom at its Ireland
manufacturing facility. As of August 31, 1995, the Company had no
material commitments for capital expenditures; however, the
Company will continue to invest in capital equipment as the need
arises. Inventories at Unit increased approximately $1,400,000
for the quarter because of purchases to support anticipated
increased activity levels, longer lead times on certain parts and
initial parts stocking at the Company's new service center in
Korea.
In addition to the $7,652,000 cash, cash equivalents and short-
term investment balances at August 31, 1995, the Company had
approximately $5,700,000 available under domestic credit
facilities at the end of the first quarter. In addition, the
Company expects to realize approximately $13 million in cash from
the sale of the Autoclave Engineers Group during the second
quarter of the current fiscal year. The Company believes that
these cash resources are adequate to meet its near-term capital
requirements.
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AUTOCLAVE ENGINEERS, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 11 - Computation of Earnings Per Share
(b) Reports on Form 8-K - There were no reports on
Form 8-K filed during the quarter ended
August 31, 1995.
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AUTOCLAVE ENGINEERS, INC. AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirement 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.
Autoclave Engineers, Inc.
------------------------------
Registrant
/S/ Michael J. Doyle
Date: October 13, 1995 -------------------------------
Michael J. Doyle, President
and Chief Executive Officer
/S/ Gary N. Patten
Date: October 13, 1995 -------------------------------
Gary N. Patten
Chief Financial Officer
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<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000350067
<NAME>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-END> AUG-31-1995
<CASH> 3,938
<SECURITIES> 3,714
<RECEIVABLES> 9,464
<ALLOWANCES> 0
<INVENTORY> 9,801
<CURRENT-ASSETS> 39,859
<PP&E> 12,248
<DEPRECIATION> 6,049
<TOTAL-ASSETS> 52,849
<CURRENT-LIABILITIES> 12,238
<BONDS> 0
<COMMON> 662
0
0
<OTHER-SE> 39,067
<TOTAL-LIABILITY-AND-EQUITY> 52,849
<SALES> 15,023
<TOTAL-REVENUES> 15,023
<CGS> 9,029
<TOTAL-COSTS> 9,029
<OTHER-EXPENSES> 956
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 51
<INCOME-PRETAX> 1,276
<INCOME-TAX> 560
<INCOME-CONTINUING> 716
<DISCONTINUED> 604
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,320
<EPS-PRIMARY> .29
<EPS-DILUTED> .29
</TABLE>
EXHIBIT 11
COMPUTATION OF EARNINGS PER SHARE
---------------------------------
Three Months Ended August 31
----------------------------
1995 1994
--------- ---------
INCOME FROM CONTINUING OPERATIONS $ 716,000 $ 96,000
========== =========
NET INCOME $1,320,000 $ 143,000
========== =========
Earnings Per Share
------------------
Weighted average number of shares
outstanding 4,256,172 4,214,620
Common share equivalents assuming
exercise of stock options and warrants 246,100 92,021
---------- --------
Average shares used in
computing earnings per share 4,502,272 4,306,641
========= =========
Income from continuing operations
per share $0.16 $0.02
===== =====
Net income per share $0.29 $0.03
===== =====
Earnings Per Share - Assuming Full Dilution
-------------------------------------------
Weighted average number of shares
outstanding 4,256,172 4,214,620
Common share equivalents assuming
exercise of stock options and warrants 288,899 98,566
--------- ---------
Average shares used in
computing earnings per share 4,545,071 4,313,186
========= =========
Income from continuing operations
per share $0.16 $0.02
===== =====
Net income per share $0.29 $0.03
===== =====
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