<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: MARCH 31, 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 April 16, 1997 there were 4,977,431 shares of common stock, without par
value, outstanding.
(1)
<PAGE>
BOLT TECHNOLOGY CORPORATION
---------------------------
INDEX
-----
Page Number
___________
Part I - Financial Information:
Consolidated statements of income - three and
nine months ended March 31, 1997 and 1996 3
Consolidated balance sheets -
March 31, 1997 and June 30, 1996 4
Consolidated statements of cash flows -
nine months ended March 31, 1997 and 1996 5
Notes to consolidated financial statements 6-7
Management's discussion and analysis of financial
condition and results of operations 8-10
Part II - Other Information:
Item 6 - Exhibits and reports on Form 8-K 10
Signatures 10
(2)
<PAGE>
PART I - FINANCIAL INFORMATION
BOLT TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
-------------------------
Three Months Ended Nine Months Ended
March 31, March 31,
----------------------- -----------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
REVENUES:
Sales................... $2,795,000 $1,782,000 $7,173,000 $5,418,000
Service................. 91,000 167,000 384,000 437,000
---------- ---------- ---------- ----------
2,886,000 1,949,000 7,557,000 5,855,000
---------- ---------- ---------- ----------
COSTS AND EXPENSES:
Cost of sales........... 1,530,000 913,000 3,781,000 2,884,000
Cost of service......... 129,000 187,000 474,000 627,000
Research and development 67,000 42,000 139,000 120,000
Selling, general and
administrative........ 608,000 520,000 1,768,000 1,462,000
Interest (income)
expense, net.......... (18,000) - (40,000) 11,000
---------- ---------- ---------- ----------
2,316,000 1,662,000 6,122,000 5,104,000
---------- ---------- ---------- ----------
Income before provision
for income taxes.......... 570,000 287,000 1,435,000 751,000
Provision for income taxes.. - 10,000 - 10,000
---------- ---------- ---------- ----------
Net income............. $ 570,000 $ 277,000 $1,435,000 $ 741,000
========== ========== ========== ==========
Net income per common share $0.11 $0.06 $0.28 $0.15
========== ========== ========== ==========
Weighted average common
and common equivalent
shares outstanding........ 5,185,285 4,971,431 5,172,023 4,971,431
========== ========== ========== ==========
See Notes to Consolidated Financial Statements.
(3)
<PAGE>
BOLT TECHNOLOGY CORPORATION
CONSOLIDATED BALANCE SHEETS
---------------------------
ASSETS
------
March 31, June 30,
1997 1996
(unaudited)
------------- --------------
Current Assets:
Cash and cash equivalents.. $2,672,000 $1,364,000
Accounts receivable, net 1,477,000 2,181,000
Inventories................ 1,928,000 1,624,000
Prepaid expenses........... 684,000 543,000
---------- ----------
Total current assets 6,761,000 5,712,000
---------- ----------
Property and Equipment, net 138,000 96,000
---------- ----------
Deferred Income Taxes 671,000 633,000
---------- ----------
Other Assets 21,000 21,000
---------- ----------
$7,591,000 $6,462,000
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities:
Accounts payable........... $ 606,000 $ 905,000
Accrued liabilities........ 674,000 685,000
---------- ----------
Total current
liabilities........ 1,280,000 1,590,000
---------- ----------
Stockholders' Equity:
Common stock,without par
value.................... 24,664,000 24,660,000
Accumulated deficit........ (18,353,000) (19,788,000)
---------- ----------
Total stockholders'
equity............. 6,311,000 4,872,000
---------- ----------
$7,591,000 $6,462,000
========== ==========
See Notes to Consolidated Financial Statements.
(4)
<PAGE>
BOLT TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
-------------------------
Nine Months Ended
March 31,
-------------------
1997 1996
------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................ $1,435,000 $ 741,000
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation......................... 43,000 46,000
Deferred income taxes................ (100,000) -
---------- ---------
1,378,000 787,000
Change in Operating Assets and Liabilities
Accounts receivable.................. 704,000 315,000
Inventories (304,000) (52,000)
Other assets......................... (79,000) (18,000)
Accounts payable and accrued
liabilities......................... (310,000) (220,000)
---------- ---------
Net cash provided by operating
activities.......................... 1,389,000 812,000
---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment........ (85,000) (20,000)
---------- ---------
Net cash used in investing activities (85,000) (20,000)
---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net decrease in borrowings under
revolving credit facility.............. - (103,000)
Exercise of stock options................. 4,000 -
---------- ---------
Net cash provided by (used in)
financing activities 4,000 (103,000)
---------- ---------
Net increase in cash and cash equivalents... $1,308,000 $689,000
========== =========
Supplemental disclosure of cash flow
information:
Interest paid............................... $ 12,000 $ 25,000
Income taxes paid........................... $ 130,000 $ 13,000
See Notes to Consolidated Financial Statements.
(5)
<PAGE>
BOLT TECHNOLOGY CORPORATION
---------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------
(UNAUDITED)
-----------
NOTE-1- BASIS OF PRESENTATION
- -----------------------------
The consolidated balance sheet as of March 31, 1997, the consolidated
statements of income for the three-month and nine-month periods ended March 31,
1997 and 1996 and the consolidated statements of cash flows for the nine-month
periods ended March 31, 1997 and 1996 are unaudited. In the opinion of manage-
ment, 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 March 31, 1997 consolidated financial
statements be read in conjunction with the consolidated financial statements and
notes included in the Company's Annual Report and Form 10-K for the year ended
June 30, 1996.
The Company adopted the provisions of Statement of Financial Accounting
Standards No. 121, "Accounting for Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of" in the first quarter of fiscal 1997. In
accordance with the standard, the Company evaluates the carrying value of its
long-lived assets, when events or changes in circumstances indicate that the
carrying amount of such assets may not be recoverable. The adoption of the
standard did not have any effect on the Company's consolidated financial
position or results of operations.
The Company adopted the provisions of Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation" in the first
quarter of fiscal 1997. As provided for in the standard, the Company continues
to apply Accounting Principals Board Opinion No. 25, "Accounting for Stock
Issued to Employees" and related interpretations for employee stock compensation
measurement and will disclose the required pro forma information in the 1997
Form 10-K.
The Company will adopt the provisions of Statement of Financial Accounting
Standards No. 128, "Earnings Per Share" in the third quarter of fiscal 1998.
The standard specifies the computation, presentation and disclosure requirements
for earnings per share. As required by the standard, the Company will restate
all prior period earnings per share data presented. The adoption of this new
standard is not expected to have a material effect on the Company's financial
statements.
NOTE- 2- CREDIT AGREEMENT
- -------------------------
The Company has a revolving credit facility with a domestic bank which
allows for borrowings up to $1,200,000 based upon a formula comprised of 85% of
eligible accounts receivable, inventory and equipment. At March 31, 1997 there
were no borrowings outstanding under this agreement. The agreement will expire
in July 1997 and carries an interest rate of 1 1/2% over the bank's prime rate.
The Company believes that it will be able to extend its current credit agreement
or obtain a new credit facility.
The lender has a first priority security interest in all of the Company's
assets and, under the agreement, the Company must, among other things, maintain
no less than $930,000 of net worth. The Company is re-stricted from paying
dividends during the term of the loan agreement.
(6)
<PAGE>
BOLT TECHNOLOGY CORPORATION
---------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
(UNAUDITED)
-----------
NOTE 3 - INCOME TAXES
- ---------------------
At March 31, 1997, the Company had net operating loss carry-forwards of
approximately $15,188,000 which expire in the years 2001 through 2007.
Management has recorded a net tax asset of $1,226,000 relating to the expected
future benefits of the net operating loss carry-forwards and other deductible
temporary differences expected to be realized during the carry-forward periods.
At March 31, 1997 and June 30, 1996, current deferred tax assets of
$555,000 and $445,000, respectively, were included in the consolidated balance
sheet under the caption "Prepaid expenses".
For the quarter and nine month period ended March 31, 1997, the Company
offset its federal and state tax provisions by the use of previously reserved
federal net operating loss carry-forwards.
For the nine months ended March 31, 1997, the Company reduced the valuation
allowance for its deferred tax asset by $601,000 due primarily to the
utilization of net operating loss carry-forwards.
The Company has established a valuation allowance to reduce its gross
deferred tax asset to an amount which the Company believes is more likely than
not to be realized in the carry-forward period after considering current and
future estimated taxable income, current market conditions and competition for
the Company's product and the reliance of the Company on a small number of
customers for a significant portion of the Company's future source of revenues
and taxable income.
NOTE 4 - INVENTORIES
- --------------------
Inventories, net of reserves, are comprised of the following:
March 31, June 30,
1997 1996
---------- ----------
Raw materials and sub-assemblies.. $1,715,000 $1,453,000
Work-in process................... 213,000 171,000
---------- ----------
$1,928,000 $1,624,000
========== ==========
NOTE 5 - PROPERTY AND EQUIPMENT
- ---------------------------------
Property and equipment are comprised of the following:
March 31, June 30,
1997 1996
----------- -----------
Building and leasehold
improvements................... $ 534,000 $ 534,000
Geophysical equipment............ 2,566,000 2,682,000
Machinery and equipment.......... 4,111,000 4,030,000
Equipment held for rental........ 822,000 822,000
----------- -----------
8,033,000 8,068,000
Less accumulated depreciation (7,895,000) (7,972,000)
----------- -----------
$ 138,000 $ 96,000
=========== ===========
(7)
<PAGE>
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
- -------------------------------
Over the past three years the Company has financed its operating cash
requirements from internally generated cash flow and borrowings from its
revolving credit agreement. Cash flow from operating activities before changes
in working capital items amounted to $1,378,000 for the nine months ending March
31, 1997. Cash flow from operating activities after changes in working capital
items was $1,389,000. Affecting cash flow for the nine months ending March 31,
1997 was a decrease in accounts receivable due to the earlier collection of
outstanding amounts; an increase in inventory because of the higher level of
sales and a reduction in accounts payable and accrued liabilities due to the
payment of June 30, 1996 outstanding balances.
The Company has a credit facility that allows for maximum borrowings of
$1,200,000. There were no borrowings outstanding under this agreement at March
31, 1997 or June 30, 1996. The agreement will expire in July 1997. The Company
believes that, based upon its current financial position, it will be able to
extend its current credit agreement or obtain a new credit facility.
The Company believes that the liquidity provided by its revolving credit
facility, cash balances and trade credit will be adequate to meet its operating
cash needs over the next twelve months.
Capital expenditures for the first nine months of fiscal 1997 amounted to
$85,000 and included normal replacement of manufacturing equipment and purchases
of computer aided design equipment. The Company does not expect capital
expenditures to exceed $100,000 for the fiscal year.
RESULTS OF OPERATIONS
- ---------------------
Total revenue increased 48% for the third quarter and 29% for the first
nine months of fiscal 1997. The third quarter and nine-month period reflect
significant growth in marine equipment sales which increased 59% and 33%,
respectively. The higher demand for the Company's marine airguns was due to
the requirements of the Company's customers to both upgrade existing seismic
vessels and expand their fleets. The increase in the number of seismic vessels
operating has been caused by the greater use of 3-D seismic surveys for
exploration, development and reservoir characterization.
Service revenue from the Company's Wellseis(R) crew decreased 46% for the
quarter and 12% for the nine-month period. The major source of service revenue
for the first nine months of fiscal 1997 was generated from the Company's
fracture diagnostic service performed in conjunction with the Gas Research
Institute, and from providing service technicians to a major oil company to
support Wellseis equipment owned by the oil company.
Cost of sales as a percentage of sales increased from 51% to 55% for the
three month period. The primary factor effecting the higher cost of sales
percentage for the quarter was the greater number of system sales which have a
lower margin than replacement parts sales. Cost of sales as a percentage of
sales was 53% for both the nine month periods ended March 31, 1997 and 1996.
(8)
<PAGE>
BOLT TECHNOLOGY CORPORATION
---------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
---------------------------------------
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
RESULTS OF OPERATIONS (CONT'D.)
- ---------------------
Cost of service decreased $58,000 for the quarter and $153,000 for the nine
months, primarily due to lower consulting costs and equipment rentals which were
in line with the lower level of contract work performed. The Company's Wellseis
crew has reported operating losses in fiscal 1996 and for the first three
quarters of fiscal 1997. In the short-term, in an effort to lower operating
losses, the Company has reduced personnel assigned to the service operations.
In the longer term, if the outlook for the types of geophysical services offered
by the Company does not improve, the Company will cease service operations or
offer the division for sale. The Company does not anticipate that the carrying
amount of any long-lived assets related to its geophysical service operations
will have to be reduced if operations are terminated or sold nor does the
Company anticipate that any provision will be required for the discontinuance of
the service operations.
Research and development increased $25,000 for the third quarter and
$19,000 for the nine-month period. The increase in research and development
resulted from the Company's increased efforts in the development of new marine
seismic energy sources.
Selling, general and administrative expenses increased $88,000 for the
third quarter, primarily because of a $60,000 increase in incentive compensation
and other employee benefits and a $12,000 increase in professional fees from
the Company's acquisition efforts. The major factors causing the $306,000
increase in selling, general and administrative expenses for the first nine
months of fiscal 1997 was a $172,000 increase in salary and employee benefits,
an increase of $45,000 in shareholder expenses from the Company's listing on the
American Stock Exchange and $47,000 related to sales and marketing travel.
Interest income net, increased for both periods presented due to higher
levels of interest income recorded from the Company's short-term investments.
For the quarter and nine-month period ended March 31, 1997 no tax provision
was required since the Company offset its federal and state tax provisions by
the use of previously reserved net operating loss carry-forwards.
The Company adopted the provisions of Statement of Financial Accounting
Standards No. 121, "Accounting for Impairment of Long-Lived Assets and for Long-
Lived Assets to be Disposed of" in the first quarter of 1997. In accordance
with the standard, the Company evaluates the carrying value of its long-lived
assets, when events or changes in circumstances indicate that the carrying
amount of such assets may not be recoverable. The adoption of the standard did
not have any effect on the Company's consolidated financial position or results
of operations.
The Company adopted the provisions for Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation" in the first
quarter of fiscal 1997. As provided for in the standard, the Company continues
to apply Accounting Principals Board Opinion No. 25, "Accounting for Stock
Issued to Employees" and related interpretations for employee stock compensation
measurement and will disclose the required pro forma information in the 1997
Form 10-K.
(9)
<PAGE>
BOLT TECHNOLOGY CORPORATION
---------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
---------------------------------------
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
RESULTS OF OPERATIONS (CONT'D.)
- ---------------------
The Company will adopt the provisions of Statement of Financial
Accounting Standards No. 128, "Earnings Per Share" in the third quarter of
fiscal 1998. The standard specifies the computation, presentation and
disclosure requirements for earnings per share. As required by the standard,
the Company will restate all prior period earnings per share data presented.
The adoption of this new standard is not expected to have a material effect on
the Company's financial statements.
PART II - OTHER INFORMATION
---------------------------
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------
(a) Exhibits.
--------
(11) Statement re computation 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) Reports on Form 8-K.
-------------------
No reports on Form 8-K were filed by the Company during January,
February or March 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 and Chief Executive Officer
(Principal Executive Officer and
Principal Financial Officer)
/s/ Alan Levy
----------------------------
Vice President-Finance
Secretary and Treasurer
(Principal Accounting Officer)
April 17, 1997
(10)
<PAGE>
EXHIBIT 11
PART II - EXHIBIT 11
COMPUTATION OF NET INCOME PER SHARE OF COMMON STOCK
---------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
---------------------------- ----------------------------
1997 1996 1997 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
PRIMARY:
Net Income $ 570,000 $ 277,000 $ 1,435,000 $ 741,000
============ ============ ============ ============
Average common shares outstanding 4,976,854 4,971,431 4,973,450 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 208,431 107,694 198,573 117,553
------------ ------------ ----------- ------------
Average common and common equivalent
shares outstanding 5,185,285 5,079,125(1) 5,172,023 5,088,984(1)
============ ============ =========== ============
Primary earnings per share $ 0.11 $ 0.05 $ 0.28 $ 0.15
============ ============ =========== ============
FULLY DILUTED:
Net income $ 570,000 $ 277,000 $ 1,435,000 $ 741,000
============ ============ =========== ============
Average common shares outstanding 4,976,854 4,971,431 4,973,450 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 211,346 107,694 211,346 107,694
------------ ----------- ----------- -----------
Average common and common equivalent
shares outstanding 5,188,200(1) 5,079,125(1) 5,184,796(1) 5,079,125(1)
============ =========== =========== ===========
Fully diluted earnings per share $ 0.11 $ 0.05 $ 0.28 $ 0.15
============ =========== =========== ===========
</TABLE>
(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%.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FINANCIAL STATEMENTS FOR THE PERIOD ENDED MARCH 31, 1997 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> MAR-31-1997
<CASH> 2,672,000
<SECURITIES> 0
<RECEIVABLES> 1,477,000
<ALLOWANCES> 0
<INVENTORY> 1,928,000
<CURRENT-ASSETS> 6,761,000
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 7,591,000
<CURRENT-LIABILITIES> 1,280,000
<BONDS> 0
0
0
<COMMON> 24,664,000
<OTHER-SE> (18,353,000)
<TOTAL-LIABILITY-AND-EQUITY> 7,591,000
<SALES> 7,173,000
<TOTAL-REVENUES> 7,557,000
<CGS> 3,781,000
<TOTAL-COSTS> 4,255,000
<OTHER-EXPENSES> 1,907,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (40,000)
<INCOME-PRETAX> 1,435,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,435,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,435,000
<EPS-PRIMARY> .28
<EPS-DILUTED> .28
</TABLE>
