<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED: SEPTEMBER 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM __________ TO __________
COMMISSION FILE NUMBER: 0-10723
BOLT TECHNOLOGY CORPORATION
(Exact name of registrant as specified in its charter)
CONNECTICUT 06-0773922
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
FOUR DUKE PLACE, NORWALK, CONNECTICUT 06854
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (203) 853-0700
Indicate by a check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange 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 [ ]
At October 17, 1997 there were 5,077,228 shares of common stock, without par
value, outstanding.
(1)
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BOLT TECHNOLOGY CORPORATION
---------------------------
INDEX
-----
Page Number
___________
Part I - Financial Information:
Consolidated statements of income - three months ended
September 30, 1997 and 1996 3
Consolidated balance sheets - September 30, 1997
and June 30, 1997 4
Consolidated statements of cash flows - three months
ended September 30, 1997 and 1996 5
Notes to consolidated financial statements 6-7
Management's discussion and analysis of financial
condition and results of operations 8-9
Part II - Other Information:
Item 6 - Exhibits and reports on Form 8-K 10
Signatures 10
(2)
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PART I - FINANCIAL INFORMATION
BOLT TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
_____________________________________
Three Months Ended
September 30,
------------------
1997 1996
---- ----
REVENUES:
Sales............................... $2,647,000 $2,158,000
Service............................. 10,000 160,000
---------- ----------
2,657,000 2,318,000
---------- ----------
COSTS AND EXPENSES:
Cost of sales........................ 1,304,000 1,126,000
Cost of service...................... 45,000 168,000
Research and development 55,000 32,000
Selling, general and administrative.. 677,000 608,000
Interest income,net.................. (34,000) (9,000)
---------- ----------
2,047,000 1,925,000
---------- ----------
Income before income taxes........... 610,000 393,000
Benefit for income taxes.............. 258,000 -
---------- ----------
Net income............................ $868,000 $393,000
========== ==========
Net income per common share .......... $ 0.17 $ 0.08
========== ==========
Weighted average common and
common equivalent shares outstanding 5,075,786 5,150,106
========== ==========
See Notes to Consolidated Financial Statements
(3)
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BOLT TECHNOLOGY CORPORATION
CONSOLIDATED BALANCE SHEETS
---------------------------
ASSETS
------
September 30, June 30,
1997 1997
(unaudited)
------------- -----------
Current Assets:
Cash and cash equivalents....... $3,633,000 $2,628,000
Accounts receivable, net 1,531,000 2,266,000
Inventories..................... 1,662,000 1,886,000
Other........................... 1,021,000 712,000
---------- ----------
Total current assets 7,847,000 7,492,000
---------- ----------
Property and Equipment, net...... 121,000 127,000
Deferred Income Taxes............ 680,000 680,000
---------- ----------
Other Assets..................... 22,000 22,000
---------- ----------
$ 8,670,000 $ 8,321,000
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities:
Accounts payable................ $ 224,000 $ 449,000
Accrued liabilities............. 566,000 861,000
------------ ------------
Total current liabilities 790,000 1,310,000
Stockholders' Equity:
Common stock,without par value.... 24,679,000 24,678,000
Accumulated deficit............. (16,799,000) (17,667,000)
------------ ------------
Total stockholders' equity..... 7,880,000 7,011,000
------------ ------------
$ 8,670,000 $8,321,000
============ ============
See Notes to Consolidated Financial Statements.
(4)
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BOLT TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
--------------------------------------
Three Months Ended
September 30,
------------------
1997 1996
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 868,000 $ 393,000
Adjustments to reconcile net income to
cash provided by (used in) operating activities:
Depreciation................................... 11,000 13,000
Deferred income taxes.......................... (300,000) (25,000)
---------- ---------
579,000 381,000
Changes in Operating Assets and Liabilities:
Accounts receivable 735,000 (201,000)
Inventories...................................... 224,000 (21,000)
Other assets..................................... (9,000) (66,000)
Accounts payable and accrued liabilities......... (520,000) (183,000)
---------- ---------
Net cash provided by (used in) operating activities 1,009,000 (90,000)
---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment............... (5,000) (31,000)
---------- ---------
Net cash used in investing activities............ (5,000) (31,000)
---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Exercise of stock options........................ 1,000 -
---------- ---------
Net cash provided by financing activities........ 1,000 -
---------- ---------
Net increase (decrease) in cash and cash equivalents. $1,005,000 $(121,000)
========== =========
Supplemental disclosure of cash flow information:
Interest paid........................................ - $ 12,000
Income taxes paid.................................... $ 8,000 $ 13,000
See Notes to Consolidated Financial Statements.
(5)
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BOLT TECHNOLOGY CORPORATION
---------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------
(UNAUDITED)
-----------
NOTE-1- BASIS OF PRESENTATION
-----------------------------
The consolidated balance sheet as of September 30, 1997, the consolidated
statements of income for the three month periods ended September 30, 1997 and
1996 and the consolidated statements of cash flows for the three month periods
ended September 30, 1997 and 1996 are unaudited. In the opinion of management ,
all adjustments necessary for a fair presentation of such financial statements
have been included. Such adjustments consisted only of normal recurring items.
Interim results are not necessarily indicative of results for a full year. It
is suggested that the September 30, 1997 consolidated financial statements be
read in conjunction with the consolidated financial statements and notes
included in the Company's Annual Report on Form 10-K for the year ended June
30, 1997.
In interim and annual periods ending after December 15, 1997, the Company
will adopt Statement of Financial Accounting Standards No. 128, "Earnings per
Share". This standard specifies the compilation, presentation and disclosure
requirements for earnings per share for entities with publicly held common
stock or potential common stock. Management does not believe that the adoption
of this standard will have a material effect on the financial statements.
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131 (FAS 131), "Disclosures about Segments
of an Enterprise and Related Information", which will be effective July 1,
1998. FAS 131 requires disclosure of certain financial and descriptive
information about operating segments. Based upon current circumstances, the
adoption of FAS 131 will not have a material impact on current disclosures.
NOTE- 2- NOTES PAYABLE
----------------------
In March 1997, the Company entered into a $1,500,000 unsecured credit
agreement with a bank and terminated its prior $1,200,000 secured facility.
The new agreement expires in March 1998. Borrowings under the new line bear
interest at the prime rate. The agreement contains certain restrictive
covenants including limitation on indebtedness, asset sales and the maintenance
of certain financial ratios. The Company had no borrowings outstanding at
September 30, 1997 or June 30, 1997.
NOTE 3 - INCOME TAXES
---------------------
At September 30, 1997, the Company had net operating loss carry-forwards of
approximately $14,109,000 which expire in the years 2002 through 2007.
Financial Accounting Standards No. 109 (FAS 109), "Accounting for Income
Taxes", requires that the tax benefit of net operating loss ("nol") carry-
forwards be recorded as an asset to the extent that management assesses the
utilization of such nol carry-forwards to be "more likely than not". In the
first quarter of fiscal 1998, the Company continued its quarterly assessment of
the realization of its deferred tax assets based on its past earnings history
and trends, current sales backlog, its dependence on a few customers for a
significant portion of revenue and the cyclical nature of the seismic
exploration industry and concluded that future taxable income would
(6)
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BOLT TECHNOLOGY CORPORATION
---------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
(CONTINUED)
-----------
NOTE 3 - INCOME TAXES (CONT'D.)
-------------------------------
increase over amounts previously estimated. Therefore, it was more likely than
not that additional reserved tax assets would be realized in the future. As a
result, in the first quarter of fiscal 1998, the Company reduced the valuation
allowance related to these tax assets by $300,000.
The amount of the net deferred tax asset recorded could be reduced if
estimates of future taxable income during the carry-forward period are reduced.
At September 30, 1997 and June 30, 1997, current deferred tax assets of
$910,000 and $610,000, respectively, were included in the consolidated balance
sheets under the caption "Other current assets".
Components of income tax (benefit) expense for the three months ended
September 30, 1997 and 1996 follow:
September 30, September 30,
1997 1996
-------------- ------------
Current:
State...................................... $ 42,000 $ 25,000
---------- ------------
Deferred:
Federal.................................... (300,000) (25,000)
---------- ------------
Income tax benefit............................ $ (258,000) $ -
========== ============
NOTE 4 - INVENTORIES
- --------------------
Inventories, net of reserves, are comprised of the following:
September 30, June 30,
1997 1997
---- ----
Raw materials and sub-assemblies............ $1,486,000 $1,665,000
Work-in process............................. 176,000 221,000
---------- ------------
$1,662,000 $1,886,000
========== ============
NOTE 5 - PROPERTY AND EQUIPMENT
--------------------------------
Property and equipment are comprised of the following:
September 30, June 30,
1997 1997
-------------- ------------
Building and leasehold improvements............ $ 534,000 $ 534,000
Geophysical equipment.......................... 2,567,000 2,566,000
Machinery and equipment........................ 4,117,000 4,113,000
Equipment held for rental...................... 822,000 822,000
----------- -----------
8,040,000 8,035,000
Less accumulated depreciation................... (7,919,000) (7,908,000)
----------- -----------
$ 121,000 $ 127,000
=========== ===========
(7)
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BOLT TECHNOLOGY CORPORATION
---------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
---------------------------------------
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
CAUTIONARY STATEMENT FOR PURPOSES OF FORWARD-LOOKING STATEMENTS
---------------------------------------------------------------
Certain statements contained herein and elsewhere may be deemed to be
forward-looking within the meaning of The Private Securities Litigation Reform
Act of 1995 and are subject to the "safe harbor" provisions of that act,
including without limitation, statements concerning future sales, earnings,
costs, expenses, asset recoveries, working capital, capital expenditures,
financial condition, and other results of operations. Such statements involve
risks and uncertainties. Actual results could differ materially from the
expectations expressed in such forward-looking statements.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Current cash and cash equivalents balances, existing borrowing capacity and
projected cash flow from operations are currently in excess of foreseeable
operating cash flow requirements. Cash flow from operating activities before
changes in working capital items amounted to $579,000 for the three months ended
September 30, 1997. Cash flow from operating activities after changes in working
capital was $1,009,000. Affecting cash flow for the quarter was a decrease in
accounts receivable from the collection of large balances outstanding at June
30, 1997 for air gun system sales delivered in the fourth quarter of fiscal
1997. Total liabilities decreased by $520,000 from June 30, 1997 to September
30, 1997, primarily from the payment of incentive compensation and commissions
which had been accrued at June 30, 1997 and earlier payments to vendors which
reduced the balance of accounts payable.
The Company has a $1,500,000 unsecured credit facility. There were no
borrowings outstanding under the agreement at September 30, 1997 and June 30,
1997. Borrowings under the agreement bear interest at the prime rate. The
agreement, which expires in March 1998, contains certain restrictive covenants
including limitation on indebtedness, asset sales and the maintenance of certain
financial ratios.
Net property and equipment additions totaled $5,000 for the three months ended
September 30, 1997. The Company does not anticipate capital expenditures will
exceed $100,000 for 1998. These expenditures will be funded from operating cash
flow.
The Company is the owner, through a joint venture, of a one-half interest in
its administrative and engineering building. The joint venture agreement
terminated in July 1997. Under the terms of the agreement, the Company has the
option to purchase the one-half interest owned by its joint venture partner for
$300,000. The Company is currently exploring various alternatives with its
joint venture partner including the exercise of the option.
Management continues to evaluate acquisition candidates. Any acquisition
opportunity may involve the use of cash, debt or equity financing.
(8)
---
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BOLT TECHNOLOGY CORPORATION
---------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
-----------------------------------------------
RESULTS OF OPERATIONS
- ---------------------
Total revenue increased 15% for the quarter ended September 30, 1997
as compared to the quarter ended September 30, 1996. The revenue increase
reflects the high demand for the Company's marine air guns and replacement parts
which increased 25% for the quarter.
In the fourth quarter of fiscal 1997, the Company significantly
reduced its Wellseis(R) service operations. With staff reductions, the service
work performed during the first quarter of fiscal 1997 consisted of providing
service technicians to operate equipment owned by others. Service is not
expected to provide any significant revenue for fiscal 1998. The Company
continues to seek a buyer for a portion of the geophysical equipment that
comprises its Wellseis service operations. Since the carrying value of these
assets is less than fair market value, no impairment loss is required nor is any
other provision necessary because of the reduction of the service division.
Cost of sales as a percentage of sales decreased from 52% to 49% for
the quarter. Sales price increases and a favorable product mix accounted for
the increased operating margin.
Cost of service decreased $123,000 due to the reduction in service
operations discussed above. The major expense components for the quarter were
salary, benefits and occupancy costs.
Research and development costs increased $23,000 for the quarter. The
increase was the result of continued efforts to develop new marine seismic
energy sources.
Interest income increased $25,000 due to the higher level of short-
term investments for the quarter.
Financial Accounting Standards No. 109 (FAS 109), "Accounting for
Income Taxes", requires that the tax benefit of net operating loss ("nol")
carry-forwards be recorded as an asset to the extent that management assesses
the utilization of such nol carry-forwards to be "more likely than not". In the
first quarter of fiscal 1998, the Company continued its quarterly assessment of
the realization of its deferred tax assets based on its past earnings history
and trends, current sales backlog, its dependence on a few customers for a
significant portion of revenue and the cyclical nature of the seismic
exploration industry and concluded that future taxable income would increase
over amounts previously estimated. Therefore, it was more likely than not that
additional reserved tax assets would be realized in the future. As a result, in
the first quarter of fiscal 1998, the Company reduced the valuation allowance
related to these tax assets by $300,000. See Note 3 for additional information
regarding income taxes.
In interim and annual periods ending after December 15, 1997, the
Company will adopt Statement of Financial Accounting Standards No. 128,
"Earnings per Share". This standard specifies the compilation, presentation and
disclosure requirements for earnings per share for entities with publicly held
common stock or potential common stock. Management does not believe that the
adoption of this standard will have a material effect on the financial
statements.
In June 1997, the Financial Accounting Standards Board issued
statement of Financial Accounting Standards No. 131 (FAS 131), "Disclosures
about Segments of an Enterprise and Related Information", which will be
effective July 1, 1998. FAS 131 requires disclosure of certain financial and
descriptive information about operating segments. Based upon current
circumstances, the adoption of FAS 131 will not have a material impact on
current disclosures.
(9)
<PAGE>
BOLT TECHNOLOGY CORPORATION
---------------------------
PART II- OTHER INFORMATION
--------------------------
Item 6- Exhibits and Reports on Form 8-K
- ----------------------------------------
(a) Exhibits.
----------
(11) Statement re compution of earnings per share.
(27) Financial Data Schedule, which is submitted electronically
to the Securities and Exchange
Commission for information only and not filed.
(b) Report on Form 8-K.
-------------------
No reports on Form 8-K were filed by the Company during July,
August or September 1997.
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
/s/ Raymond M. Soto
-----------------------
President
(Principal Executive Officer and
Principal Financial Officer)
/s/ Alan Levy
-----------------------------
Vice President-Finance
Secretary and Treasurer
(Principal Accounting Officer)
November 6, 1997
(10)
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EXHIBIT 11
PART II - EXHIBIT 11
COMPUTATION OF NET INCOME PER SHARE OF COMMON STOCK
---------------------------------------------------
Three Months Ended
September 30,
------------------
1997 1996
---- ----
PRIMARY:
Net Income $ 868,000 $ 393,000
========= =========
Average common shares outstanding 5,075,786 4,971,431
Shares which assume exercise of stock
options reduced by the number of shares
which could be purchased with proceeds
from exercise of stock options at the
average market price per share of common
stock 130,910 178,675
--------- --------
Average common and common equivalent
shares outstanding 5,206,696(1) 5,150,106
========= =========
Primary earnings per share $ 0.17 $ 0.08
========= =========
FULLY DILUTED:
Net Income $ 868,000 $ 393,000
========== ==========
Average common shares outstanding 5,075,786 4,971,431
Shares which assume exercise of stock
options reduced by the number
of shares which could be purchased
with proceeds from exercise of
stock options at the quarter ending
market price per share of common
stock, if higher 132,971 203,679
----------- -----------
Average common and common equivalent
shares outstanding 5,208,757(1) 5,175,110(1)
=========== =========
Fully diluted earnings per share $ 0.17 $ 0.08
=========== =========
(1) This calculation is submitted in accordance with Item 601(b) 11 of
Regulation S-K although not required by APB Opinion No. 15 because the
options result in dilution of less than 3%.
(11)
<TABLE> <S> <C>
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR THE PERIOD ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
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<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
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<PP&E> 0
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<CURRENT-LIABILITIES> 790000
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0
0
<COMMON> 24679000
<OTHER-SE> (16799000)
<TOTAL-LIABILITY-AND-EQUITY> 8670000
<SALES> 2647000
<TOTAL-REVENUES> 2657000
<CGS> 1304000
<TOTAL-COSTS> 1349000
<OTHER-EXPENSES> 732000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (34000)
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<INCOME-TAX> (258000)
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<EPS-PRIMARY> .17
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</TABLE>
