<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, 1999
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 24, 1999 there were 5,370,378 shares of common stock, without par
value, outstanding.
<PAGE>
BOLT TECHNOLOGY CORPORATION
---------------------------
INDEX
-----
<TABLE>
<CAPTION>
Page Number
-----------
<S> <C> <C>
Part I - Financial Information:
Item 1. Financial Statements.
Consolidated statements of income - three and
nine months ended March 31, 1999 and 1998........................ 3
Consolidated balance sheets -
March 31, 1999 and June 30, 1998................................ 4
Consolidated statements of cash flows -
nine months ended March 31, 1999 and 1998....................... 5
Notes to consolidated financial statements.......................... 6-10
Item 2. Management's discussion and analysis of financial
condition and results of operations.............................. 11-14
Item 3. Quantitative and Qualitative Disclosures about Market Risk......... 14
Part II - Other Information:
Item 6. Exhibits and reports on Form 8-K .................................. 14
Signatures................................................................. 14
</TABLE>
(2)
<PAGE>
PART I - FINANCIAL INFORMATION
BOLT TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
_____________________________________
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
------------------ -------------------------
1999 1998 1999 1998
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues:
Sales................................ $4,618,000 $5,117,000 $15,827,000 $11,509,000
Service.............................. - - - 15,000
---------- ---------- ----------- -----------
4,618,000 5,117,000 15,827,000 11,524,000
---------- ---------- ----------- -----------
Costs and Expenses:
Cost of sales........................ 2,460,000 2,973,000 8,149,000 6,383,000
Cost of service...................... - - - 80,000
Research and development............. 127,000 54,000 289,000 160,000
Selling, general and administrative.. 893,000 817,000 2,737,000 2,216,000
Amortization of intangibles.......... 57,000 57,000 171,000 57,000
Interest income, net................. (46,000) (7,000) (109,000) (89,000)
---------- ---------- ----------- -----------
3,491,000 3,894,000 11,237,000 8,807,000
---------- ---------- ----------- -----------
Income before income taxes............ 1,127,000 1,223,000 4,590,000 2,717,000
Provision (benefit) for income taxes 419,000 - 566,000 (358,000)
---------- ---------- ----------- -----------
Net income....................... $ 708,000 $1,223,000 $ 4,024,000 $ 3,075,000
========== ========== =========== ===========
Earnings per share:
Basic................................ $0.13 $ 0.23 $ 0.76 $ 0.60
Diluted.............................. $0.13 $ 0.23 $ 0.75 $ 0.59
Shares Outstanding:
Basic................................ 5,306,886 5,204,093 5,267,415 5,119,266
Diluted.............................. 5,365,893 5,335,892 5,363,079 5,254,064
</TABLE>
See Notes to Consolidated Financial Statements.
(3)
<PAGE>
BOLT TECHNOLOGY CORPORATION
CONSOLIDATED BALANCE SHEETS
---------------------------
ASSETS
------
<TABLE>
<CAPTION>
March 31,
1999 June 30,
(unaudited) 1998
----------- ------------
<S> <C> <C>
Current Assets:
Cash and cash equivalents .............................. $ 6,326,000 $ 1,317,000
Accounts receivable, net ............................... 3,102,000 5,002,000
Inventories ............................................ 2,750,000 2,451,000
Deferred income taxes .................................. 893,000 1,060,000
Other .................................................. 138,000 89,000
------------ -----------
Total current assets ......................... 13,209,000 9,919,000
------------ ------------
Goodwill, net ............................................ 4,172,000 4,339,000
Property and Equipment, net .............................. 235,000 201,000
Deferred Income Taxes .................................... 1,914,000 1,945,000
Other Assets ............................................. 132,000 58,000
------------ ------------
$19,662,00 $ 16,462,000
============ ============
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities:
Accounts payable ....................................... $ 1,024,000 $ 1,717,000
Accrued liabilities .................................... 1,530,000 1,702,000
------------ -----------
Total current liabilities ........................ 2,554,000 3,419,000
------------ ------------
Stockholders' Equity:
Common stock .......................................... 25,617,000 25,576,000
Accumulated deficit .................................... (8,509,000) (12,533,000)
Total stockholders' equity ................... 17,108,000 13,043,000
------------ -----------
$ 19,662,000 $16,462,000
============ ===========
</TABLE>
See Notes to Consolidated Financial Statements.
(4)
<PAGE>
BOLT TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
_____________________________
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
---------------
1999 1998
---- ----
<S> <C> <C>
Cash Flows From Operating Activities:
Net income .................................................... $ 4,024,000 $ 3,075,000
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation and amortization ............................... 214,000 91,000
Deferred income taxes ....................................... 293,000 (538,000)
----------- -----------
4,531,000 2,628,000
Change in Operating Assets and Liabilities
Accounts receivable ......................................... 1,900,000 (1,074,000)
Inventories ................................................. (299,000) 283,000
Other assets ................................................ (224,000) (64,000)
Accounts payable and accrued liabilities .................... (865,000) 1,492,000
----------- -----------
Net cash provided by operating activities ................... 5,043,000 3,265,000
----------- -----------
Cash Flows From Investing Activities:
Acquisition of the net assets of Custom Products .............. - (4,974,000)
Purchase of property and equipment ............................ (75,000) (24,000)
----------- -----------
Net cash used in investing activities ....................... (75,000) (4,998,000)
----------- -----------
Cash Flows From Financing Activities:
Exercise of stock options ..................................... 41,000 4,000
Borrowings from bank .......................................... - 800,000
Payments of long-term debt .................................... - (1,076,000)
----------- -----------
Net cash provided by (used in) financing activities....... 41,000 (272,000)
----------- -----------
Net increase (decrease) in cash and cash equivalents .............. $ 5,009,000 $(2,005,000)
=========== ===========
Supplemental disclosure of cash flow information:
Interest paid ..................................................... - 6,000
Income taxes paid ................................................. $ 382,000 $ 207,000
Common stock issued in connection with acquisition ................ - $ 881,000
</TABLE>
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, 1999, the consolidated
statements of income for the three-month and nine-month periods ended March 31,
1999 and 1998 and the consolidated statements of cash flows for the nine-month
periods ended March 31, 1999 and 1998 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 March 31,1999 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, 1998.
Financial Accounting Standards No. 131 "Disclosures about Segments of an
Enterprise and Related Information" was adopted by the Company for the year
ended June 1998. See Note 8 to the consolidated financial statements for related
segment disclosure.
In the quarter ended September 30, 1998, the Company adopted "Financial
Accounting Standards No. 130 (FAS 130), "Reporting Comprehensive Income." FAS
130 establishes standards for the reporting and displaying of comprehensive
income and its components in a full set of general purpose financial statements.
For the first nine months of fiscal 1999, the Company did not have any
components of comprehensive income to report.
Note 2 - Custom Products Corporation Acquisition
- ------------------------------------------------
On January 6, 1998 the Company completed the acquisition of Custom Products
Corporation ("Custom") pursuant to the terms of an asset purchase agreement.
Custom is a manufacturer of precision mechanical and pneumatic slip clutches
sold under the "Polyclutch" tradename.
The purchase price of the assets acquired included (i) $4,971,000 in cash;
(ii) 135,000 shares of common stock valued at $881,000; (iii) estimated
acquisition costs of $208,000 and (iv) contingent cash payments. Such contingent
cash payments could total $4,000,000 and are dependent on the annual increases
in the net sales of Custom for the period January 1, 1998 to December 31, 2003.
The results of operations of Custom have been included in the consolidated
statement of income from the acquisition date.
(6)
<PAGE>
BOLT TECHNOLOGY CORPORATION
---------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
(CONTINUED)
-----------
Note 2 - Custom Products Corporation Acquisition (cont'd.)
-------------------------------------------------
The following table presents the unaudited pro forma combined results of
operations of the Company and Custom Products for the nine months ended March
31, 1998. The pro forma results are not necessarily indicative of the results
that might have occurred had the acquisition actually taken place on July 1,
1997 or of future results of operations
Nine Months Ended
March 31, 1998
--------------
Revenues.................. $13,161,000
Net Income................ $ 3,536,000
Earnings per share........ $ 0.68
Diluted................... $ 0.66
Note 3 - Credit Facility
- ------------------------
The Company has a $3,000,000 unsecured credit facility with a term to
January 2003. Maximum borrowings under the facility decrease by $500,000 on each
January and bear interest at the prime rate.
The credit facility contains certain covenants which include: (i)
prohibition of additional indebtedness; (ii) minimum tangible net worth of
$5,567,000 at June 30, 1998 which increases by 50% of net income each year;
(iii) a ratio of total liabilities to tangible net worth of no more than 1.25 to
1; (iv) a ratio of minimum debt service to income of no less than 2 to 1 and (v)
no two consecutive quarterly losses. The Company is in compliance with the
covenants contained in the agreement.
Note 4 - Income Taxes
- ---------------------
At March 31, 1999, the Company had net operating loss carry-forwards of
approximately $5,849,000 which expire in the years 2002 through 2007. Statement
of 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". For the
first nine months of fiscal 1999 the Company continued its quarterly assessment
of the expected realization of its net deferred tax assets based upon its past
history of earnings, current sales backlog, dependence on a few customers for a
significant percentage of sales, the cyclical nature of the seismic exploration
industry and the effect on the taxable income of the Custom Products
acquisition. Based upon this review, management has concluded that future
taxable income will be sufficient to utilize all of the remaining nol's
available and has reflected the net tax benefit of the nol's as an asset on the
accompanying balance sheet.
(7)
<PAGE>
BOLT TECHNOLOGY CORPORATION
---------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
(CONTINUED)
-----------
Note 4 - Income Taxes (cont'd.)
- ---------------------
For the nine months ended March 31, 1998, the Company reduced the valuation
allowance for deferred taxes by $1,538,000. As required by FAS 109, $1,000,000
of the reduction in the valuation allowance was reflected in the allocation of
the purchase price of Custom and $538,000 was reflected as an income tax benefit
in the March 31, 1999 consolidated statement of income.
The amount of the net deferred tax asset recorded could be adjusted if
estimates of future taxable income during the carry-forward period are revised.
Components of income tax (benefit) expense for the nine months ended March
31, 1999 and 1998 follow:
March 31, March 31,
1999 1998
---- ----
Current:
State .................... $ 273,000 $ 180,000
Deferred:
Federal .................. 293,000 (538,000)
--------- ---------
Income tax expense (benefit).. $ 566,000 $(358,000)
========= =========
Note 5 - Inventories
- --------------------
Inventories, net of reserves, are comprised of the following:
March 31, June 30,
1999 1998
---- ----
Raw materials and sub-assemblies .. $2,559,000 $2,182,000
Work-in process ................... 191,000 269,000
--------- ---------
$2,750,000 $2,451,000
========= =========
(8)
<PAGE>
BOLT TECHNOLOGY CORPORATION
---------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
(UNAUDITED)
-----------
Note 6 - Property and Equipment
- -------------------------------
Property and equipment are comprised of the following:
March 31, June 30,
1999 1998
---- ----
Building and leasehold improvements.. $ 534,000 $ 534,000
Geophysical equipment................ 460,000 1,523,000
Machinery and equipment.............. 4,307,000 4,233,000
Equipment held for rental............ 480,000 822,000
----------- ------------
5,781,000 7,112,000
Less accumulated depreciation........ (5,546,000) (6,911,000)
----------- ------------
$235,000 $201,000
======== =========
Note 7 - Earnings Per Share
- ---------------------------
The following table sets forth the computation of basic and diluted
earnings per share.
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
March 31, March 31,
-------------------------- -------------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net earnings available to common
stockholders $ 708,000 $1,223,000 $4,024,000 $3,075,000
Weighted average number of common
shares outstanding 5,306,886 5,204,093 5,267,415 5,119,266
Common stock equivalents - stock options 59,007 131,799 95,664 134,798
--------- ---------- ---------- ----------
Weighted average number of common shares
and common share equivalents outstanding 5,365,893 5,335,892 5,363,079 5,254,064
========== ========== ========== ==========
Basic earnings per share $ 0.13 $ 0.23 $ 0.76 $ 0.60
Diluted earnings per share $ 0.13 $ 0.23 $ 0.75 $ 0.59
</TABLE>
Note 8 - Segment Information
- ----------------------------
The Company's reportable segments are its two specific business units: (1)
seismic energy sources and (2) industrial clutches manufactured by Custom
Products. The following table provides selected financial information for both
of the Company's segments for the nine months ended March 31, 1999 and 1998.
Prior to January 1998 the Company operated in only one segment, seismic energy
sources.
(9)
<PAGE>
BOLT TECHNOLOGY CORPORATION
---------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
(CONTINUED)
-----------
Note 8 - Segment Information (cont'd.)
- ----------------------------
Seismic Energy Industrial
Nine Months Ended March 31, 1999 Sources Clutches Total
- -------------------------------- ------- -------- -----
Revenue $13,701,000 $2,126,000 $15,827,000
Interest income, net 109,000 - 109,000
Depreciation and amortization 28,000 186,000 214,000
Income before income taxes 4,187,000 403,000 4,590,000
Segment assets 13,388,000 6,274,000 19,662,000
Fixed asset additions 60,000 15,000 75,000
Seismic Energy Industrial
Nine Months Ended March 31, 1998 Sources Clutches Total
- -------------------------------- ------- -------- -----
Revenue $10,717,000 $ 807,000 $11,524,000
Interest income, net 89,000 - 89,000
Depreciation and amortization 29,000 62,000 91,000
Income before income taxes 2,531,000 186,000 2,717,000
Segment assets 7,320,000 6,670,000 13,990,000
Fixed asset additions 24,000 - 24,000
The Company does not allocate taxes to its segments.
Note - 9 A-G Geophysical Products, Inc. Acquisition
- ---------------------------------------------------
On April 20, 1999, the Company acquired all of the outstanding common
stock of A-G Geophysical Products, Inc. ("AG"). AG manufactures underwater
electrical connectors and cables, air gun signature hydrophones and pressure
transducers used in the marine seismic industry. The purchase price totalled
$13,600,000 and consisted of $6,100,000 in cash, a note to the selling
shareholder for $7,000,000 and 63,492 shares of common stock valued at $500,000.
The note has a final maturity of April 2002, bears interest at 8.25% and
requires minimum principal payments of $425,000 per quarter. The Company has
pledged the assets and common stock of AG as collateral for the note.
The transaction will be accounted for by the purchase method and,
accordingly, the operations of AG will be included in the consolidated results
of operations from the date of closing.
(10)
<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.
Demand for the Company's marine seismic energy sources and replacement
parts is dependent upon the level of world-wide oil and gas exploration and the
profitability of oil and gas companies and seismic contractors. World-wide
exploration activity is dependent on the supply and demand for oil and gas, oil
and gas prices and development costs. Continuing low prices for oil and gas has
resulted in reduced exploration budgets by oil companies which ultimately could
effect the demand for the Company's marine seismic energy sources.
Consolidation in the oil industry could also negatively impact demand for the
Company's products.
Liquidity and Capital Resources
- -------------------------------
The Company has financed its operations principally from internally
generated cash flow. Cash flow from operating activities before changes in
operating assets and liabilities amounted to $4,531,000 for the nine months
ended March 31, 1999 as compared to $2,628,000 for the same period last year.
After changes in operating assets and liabilities, net cash provided by
operating activities totalled $5,043,000 for the nine months ended March 31,
1999 as compared to $3,265,000 for the nine months ended March 31, 1998. The
significant net cash provided by operating activities experienced by the Company
has been the result of continued increases in sales and net income. The most
significant change in operating assets and liabilities for the nine months ended
March 31,1999 was the $1,900,000 reduction in accounts receivable from June 30,
1998.
The company has a $3,000,000 credit facility which matures in 2003.
Available borrowings under the terms of the agreement decrease by $500,000 each
year. Any borrowings under the agreement bear interest at the prime rate.
Net property and equipment additions totaled $75,000 for the first nine
months of fiscal 1999. Capital expenditure needs for plant and equipment for
fiscal 1999 are expected to aggregate no more than $125,000. The Company
believes that the combination of cash flow from operations and its unused
facility will be adequate to meet anticipated capital expenditures.
Under the terms of the asset purchase agreement for Custom Products (See
Note 2), the Company is required to make additional payments to the former
owners of Custom Products in the amount of $800,000 each year through January
2003 if net sales of Custom Products increase to certain levels. The Company
expects to be able to make these payments, if required, from operating cash
flow. Because the sales of Custom Products for the period January 1, 1998 to
December 31, 1998 did not meet the amount specified in the purchase agreement,
the Company did not have to make the contingent $800,000 payment due February
1999. It is still possible that total contingent payments of $4,000,000 could
be required if sales of Custom Products increase to the amounts required by the
asset purchase agreement.
(11)
<PAGE>
BOLT TECHNOLOGY CORPORATION
---------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
---------------------------------------
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
Liquidity and Capital Resources (cont'd.)
- -------------------------------
The Company is the owner of a one-half interest in its administrative and
engineering building located in Norwalk, Connecticut, through a joint venture
agreement. The agreement expires in July 1999. Under the terms of the
agreement, the Company can purchase the one-half interest owned by its joint
venture partner for $300,000. The Company is currently exploring various
financial alternatives with its joint venture partner. If the Company does
purchase the building, it will use cash on hand.
On October 5, 1998, the Company announced that its board of directors
approved a stock repurchase program under which the Company is authorized to buy
up to 500,000 shares of its common stock in open market or private transactions.
The Company will use its cash flow from operations and existing cash balances
for repurchase. The Company has not repurchased any shares.
In connection with the acquisition of A-G Geophysical Products, Inc. in April
1999 the Company issued a $7,000,000 note to the selling shareholder for a
portion of the $13,600,000 purchase price. The note, which has a final maturity
in April 2002, bears interest at 8.25% and requires minimum principal payments
of $425,000 per quarter. The Company has pledged the assets and common stock of
AG Geophysical Products, Inc. as collateral for the note.
Year 2000
- ---------
The Company outlined its plan to deal with the Year 2000 issue in its June
30, 1998 Form 10-K. During the first nine months of fiscal 1999 the Company
continued its Year 2000 program and expects to be compliant by mid-1999. The
cost of the Company's program will not be material to the financial condition or
results of operations. The Company believes that there will be no material
disruptions in its operations from Year 2000 related issues. The Company has no
contingency plan in the event that Year 2000 issues not known at this time
develop or have not been considered. The Company has not considered the
potential impact of problems involving third parties such as telecommunications
or banking service providers.
Results of Operations
- ---------------------
Third Quarter of Fiscal 1999 Compared to Third Quarter of Fiscal 1998
- ---------------------------------------------------------------------
Revenue decreased 10% to $4,618,000 for the third quarter of 1999 from
$5,117,000 for the third quarter of 1998. The Company's customers reduced the
level of expenditures for seismic equipment in response to the continued low
level of oil prices and oil company mergers which delayed seismic data
acquisition projects.
Cost of sales as a percentage of sales decreased from 58% in the third
quarter of 1998 to 53% in the third quarter of 1999. The higher cost
percentage in 1998 was caused by a greater percentage of auxiliary equipment
sold as components of air gun systems which have lower margins than the
Company's proprietary equipment.
Research and development costs increased $73,000 for the quarter as the
Company incurred additional expenses in connection with the testing of its new
marine seismic energy source.
(12)
<PAGE>
BOLT TECHNOLOGY CORPORATION
---------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
---------------------------------------
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
---------------------------------------------------------
Third Quarter of Fiscal 1999 Compared to Third Quarter of Fiscal 1998 (cont'd.)
- ---------------------------------------------------------------------
Selling general and administrative expenses increased $76,000 for the
quarter. The Company increased its provision for bad debts by $35,000 relating
to a customer's filing for creditor protection. An increase of $10,000 in sales
commissions at Custom Products also contributed to the increase in selling,
general and administrative expenses.
Amortization of intangible assets associated with the acquisition of Custom
Products amounted to $57,000 in each period. The Company is amortizing the
goodwill from the acquisition over a twenty year period.
Interest income, net increased $39,000 for the quarter because of higher
balances of short-term investments generated from operating cash flow.
The Company provided for income taxes at an effective rate of 37% in the
third quarter of 1999, because all tax benefits associated with the Company's
net operating loss carry-forwards had been reflected on the Company's December
31, 1998 balance sheet. Because of the anticipated level of future taxable
income, the Company believes that realization of these tax assets are more
likely than not. In the third quarter of 1998, the Company reduced the
valuation allowance related to its deferred tax assets by $88,000 which offset
the state tax expense.
Nine Months Ended March 31, 1999 Compared to Nine Months Ended March 31, 1998
- -----------------------------------------------------------------------------
Revenue for the first nine months of fiscal 1999 increased 37% to
$15,827,000 from $11,524,000 for the 1998 period. The inclusion of Custom
Products for nine months of 1999 accounted for $1,349,000 of the revenue
increase. The remainder of the revenue increase reflects the expansion of the
world-wide fleet of seismic vessels by the Company's customers during the first
six months of fiscal 1999.
Cost of Sales as a percentage of sales decreased from 55% to nine months
ended March 31, 1998 to 51% for the nine months ended March 31, 1999. The same
factors that caused the third quarter improvement in operating margins was
responsible for the nine month improvement.
Research and development costs increased 81% for the nine months as the
Company continued its program to develop its new marine seismic energy source.
Selling, general and administrative expenses increased $521,000 for the
nine months ended March 31, 1999 as compared with the nine months ended March
31, 1998. The inclusion of Custom Products for all of 1999 accounted for
$352,000 of the increase. The remainder of the increase was caused by a $61,000
increase in incentive compensation expense and a $40,000 increase in the
provision for bad debts because of the previously noted filing by a customer for
creditor protection.
Amortization of intangibles increased $114,000 for the 1999 nine month
period as Custom Products was included in the results of operations for nine
months in 1999 and only three months in 1998.
Interest income, net increased $20,000 for the same factors that effected
the third quarter increase.
(13)
<PAGE>
BOLT TECHNOLOGY CORPORATION
---------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
-----------------------------------------------
Nine Months Ended March 31, 1999 Compared to Nine Months Ended March 31, 1998
- -----------------------------------------------------------------------------
The provision for income taxes for the nine months ended March 31, 1999 of
$566,000, an effective tax rate of 12%, reflects the benefit for utilization of
previously reserved net operating losses realized in the first six months of
fiscal 1999. The $358,000 tax credit reflected in the statement of income for
the nine months ended March 31, 1998 includes a $538,000 benefit for reduction
in the valuation allowance for deferred tax assets because of higher estimates
made of future taxable income.
Financial Accounting Standards No. 131 "Disclosures about Segments of an
Enterprise and Related Information" was adopted by the Company for the year
ended June 30, 1998. See note 8 to the Consolidated Financial Statements for
related segment disclosures.
In the quarter ended September 30, 1998, the Company adopted
"Financial Accounting Standards No. 130 (FAS 130), "Reporting Comprehensive
Income." FAS 130 establishes standards for reporting and displaying of
comprehensive income and its components in a full set of general purpose
financial statements. In the first quarter of fiscal 1999 the Company did not
have any components of comprehensive income to report.
Item 3 - Quantitative and Qualitative Disclosures about Market Risk
- -------------------------------------------------------------------
None
PART II - OTHER INFORMATION
---------------------------
Item 6 - Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibits.
--------
27- Financial data schedule
(b) Reports on Form 8-K.
--------------------
No reports on Form 8-K were filed by the Company during January, February
or March 1999. The Company filed a Current Report on Form 8-K dated April 30,
1999 with the Securities and Exchange Commission with respect to the Acquisition
of A-G Geophysical Products, Inc. Items reported were Item 2.-"Acquisition and
Disposition of Assets" and Item 7.-" Financial Statements and Exhibits".
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
---------------------------
Chairman and President
(Principal Executive Officer and
Principal Financial Officer)
/s/ Alan Levy
----------------------------------
Vice President-Finance
Secretary and Treasurer
(Principal Accounting Officer)
May 3, 1999
(14)
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FINANCIAL STATEMENTS FOR THE PERIOD ENDED MARCH 31, 1999 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> MAR-31-1999
<CASH> 6,326,000
<SECURITIES> 0
<RECEIVABLES> 3,102,000
<ALLOWANCES> 0
<INVENTORY> 2,750,000
<CURRENT-ASSETS> 13,209,000
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 19,662,000
<CURRENT-LIABILITIES> 2,554,000
<BONDS> 0
0
0
<COMMON> 25,617,000
<OTHER-SE> (8,509,000)
<TOTAL-LIABILITY-AND-EQUITY> 19,662,000
<SALES> 15,827,000
<TOTAL-REVENUES> 15,827,000
<CGS> 8,149,000
<TOTAL-COSTS> 11,237,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 4,590,000
<INCOME-TAX> 566,000
<INCOME-CONTINUING> 4,024,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,024,000
<EPS-PRIMARY> 0.76
<EPS-DILUTED> 0.75
</TABLE>
