<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarter Ended December 31, 1995 Commission File No. 0-147
HICKOK INCORPORATED
Incorporated in the State of Ohio I.R.S. No. 34-0288470
10514 Dupont Avenue Cleveland, Ohio 44108
Telephone Number (216) 541-8060
Indicated below are the number of shares outstanding of each of the issuer's
classes of Common Stock as of the close of the period covered by this report.
Class A Common 737,984
Class B Common 454,866
Company or Group of Companies for which report is filed:
HICKOK INCORPORATED
SUPREME ELECTRONICS CORP.
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
--------- ---------
<PAGE>
FORM 10-Q
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS:
HICKOK INCORPORATED
CONSOLIDATED INCOME STATEMENTS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
December 31
------------------------
1995 1994
----------- -----------
<S> <C> <C>
Net Sales
Product Sales $ 5,800,724 $3,152,066
Service Sales 1,417,897 1,527,998
----------- -----------
Total Net Sales 7,218,621 4,680,064
Costs and Expenses:
Cost of Products Sold 3,688,645 1,924,526
Cost of Services Sold 1,228,956 1,171,177
Product Development 926,608 545,122
Operating Expenses 889,804 789,686
Interest Charges 50,695 9,507
Other Income (45,851) (32,680)
----------- -----------
6,738,857 4,407,338
----------- -----------
----------- -----------
Income before
Income Taxes 479,764 272,726
Income Taxes 178,000 106,400
----------- -----------
Net Income $ 301,764 $ 166,326
----------- -----------
----------- -----------
EARNINGS PER COMMON SHARE:
Net Income $ .25 $ .14
----------- -----------
----------- -----------
Weighted Average Shares of
Common Stock Outstanding 1,192,850 1,196,410
----------- -----------
----------- -----------
Dividends per Common Share $ -0- $ -0-
----------- -----------
----------- -----------
</TABLE>
See Notes to Consolidated Financial Statements.
(2)
<PAGE>
HICKOK INCORPORATED
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, September 30, December 31,
1995 1995 1994
------------ ------------ ------------
(Unaudited) (Note) (Unaudited)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents $ 177,479 $ 696,425 $ 336,220
Trade Accounts Receivable - Net 6,250,612 6,271,195 3,897,831
Inventories 5,504,536 6,921,192 5,265,554
Prepaid and Deferred Expenses 357,987 306,113 186,144
------------ ------------ ------------
TOTAL CURRENT ASSETS 12,290,614 14,194,925 9,685,749
------------ ------------ ------------
PROPERTY, PLANT AND EQUIPMENT
Land 139,192 139,192 139,192
Buildings 1,456,390 1,456,390 1,092,595
Machinery and Equipment 3,151,434 3,138,077 3,006,803
------------ ------------ ------------
4,747,016 4,733,659 4,238,590
Less: Allowance for Depreciation 2,613,438 2,473,556 2,314,625
------------ ------------ ------------
TOTAL PROPERTY - NET 2,133,578 2,260,103 1,923,965
------------ ------------ ------------
OTHER ASSETS
Goodwill - Net of Amortization 157,000 160,000 169,000
Deposits 13,744 13,744 13,444
------------ ------------ ------------
TOTAL OTHER ASSETS 170,744 173,744 182,444
------------ ------------ ------------
TOTAL ASSETS $ 14,594,936 $ 16,628,772 $ 11,792,158
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
NOTE: Amounts derived from audited financial statements previously filed with
the Securities and Exchange Commission.
See Notes to Consolidated Financial Statements.
(3)
<PAGE>
FORM 10-Q
<TABLE>
<CAPTION>
December 31, September 30, December 31,
1995 1995 1994
------------ ------------ ------------
(Unaudited) (Note) (Unaudited)
<S> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term Financing $ 2,335,000 $ 3,510,000 $ 1,000,000
Trade Accounts Payable 367,608 855,218 787,834
Accrued Payroll & Related Expenses 598,722 1,320,611 537,732
Dividends Declared 119,285 - 209,372
Accrued Expenses 265,005 353,763 206,004
Accrued Income Taxes 173,401 35,744 18,065
------------ ------------ -----------
TOTAL CURRENT LIABILITIES 3,859,021 6,075,336 2,759,007
------------ ------------ -----------
DEFERRED INCOME TAXES 159,000 159,000 106,000
------------ ------------ -----------
REDEEMABLE COMMON STOCK
6,600 Class B Shares at
December 31, 1994 - - 235,000
------------ ------------ -----------
STOCKHOLDERS' EQUITY
Class A, $1.00 par value;
authorized 3,750,000 shares;
737,984 shares outstanding
(737,984 shares at September
30, 1995 and 368,492 at December
31, 1994) excluding 9,586 shares
in treasury 737,984 737,984 368,492
Class B, $1.00 par value;
authorized 1,000,000 shares;
454,866 shares outstanding
at December 31, 1995 and
September 30, 1995 (229,713 at
December 31, 1994 of which 6,600
shares have been classified as
redeemable) excluding 20,667
shares in treasury at December
31, 1995 and September 30, 1995
(16,107 December 31, 1994) 454,866 454,866 223,113
Contributed Capital 914,316 914,316 723,490
Retained Earnings 8,469,749 8,287,270 7,377,056
------------ ------------ -----------
TOTAL STOCKHOLDERS' EQUITY 10,576,915 10,394,436 8,692,151
------------ ------------ -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 14,594,936 $ 16,628,772 $ 11,792,158
------------ ------------ -----------
------------ ------------ -----------
</TABLE>
(4)
<PAGE>
HICKOK INCORPORATED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED DECEMBER 31
(Unaudited)
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
Cash Flows from Operating Activities:
Cash received from customers $ 7,239,204 $ 6,823,859
Cash paid to suppliers and employees (6,468,443) (6,132,357)
Interest paid (61,006) (10,520)
Interest received - 1,834
Income taxes paid (40,344) (340,500)
------------ ------------
Net Cash Provided by
Operating Activities 669,411 342,316
Cash Flows from Investing Activities:
Capital expenditures (13,357) (177,387)
Cash Flows from Financing Activities:
Decrease in short-term financing (1,175,000) (230,000)
------------ ------------
Net (Decrease) in cash and
cash equivalents (518,946) (65,071)
Cash and cash equivalents at beginning
of year 696,425 401,291
------------ ------------
Cash and cash equivalents at end
of first quarter $ 177,479 $ 336,220
------------ ------------
------------ ------------
</TABLE>
See Notes to Consolidated Financial Statements.
(5)
<PAGE>
FORM 10-Q
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
Reconciliation of Net Income to Net
Cash Provided by Operating Activities:
Net Income $ 301,764 $ 166,326
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 142,882 155,963
Changes in assets and liabilities:
Decrease (Increase) in accounts
receivable 20,583 2,143,795
Decrease (Increase) in inventories 1,416,656 (1,421,152)
Decrease (Increase) in prepaid
expenses (51,874) (57,975)
Decrease (Increase) in prepaid
rents and deposits - -
Increase (Decrease) in trade
accounts payable (487,610) 245,811
Increase (Decrease) in accrued
payroll and related expenses (721,889) (627,276)
Increase (Decrease) in accrued
expenses (88,758) (29,077)
Increase (Decrease) in accrued
income taxes 137,657 (234,099)
------------ ------------
Total Adjustments 367,647 175,990
------------ ------------
Net Cash Provided by
Operating Activities $ 669,411 $ 342,316
------------ ------------
------------ ------------
</TABLE>
(6)
<PAGE>
FORM 10-Q
HICKOK INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
DECEMBER 31, 1995
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results
for the three month period ended December 31, 1995 are not necessarily
indicative of the results that may be expected for the year ended September
30, 1996. For further information, refer to the consolidated financial
statements and related footnotes included in the Company's annual report
on Form 10-K for the year ended September 30, 1995.
2. INVENTORIES
Inventories are valued at the lower of cost or market and consist of the
following:
<TABLE>
<CAPTION>
Dec. 31, Sept. 30, Dec. 31,
1995 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Components $ 1,998,294 $ 2,488,711 $ 1,558,440
Work-in-Process 1,752,507 2,651,577 2,488,289
Finished Product 1,753,735 1,780,904 1,218,825
----------- ----------- -----------
$ 5,504,536 $ 6,921,192 $ 5,265,554
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
3. CAPITAL STOCK, TREASURY STOCK, CONTRIBUTED CAPITAL AND STOCK OPTIONS
On February 23, 1995, the number of authorized shares of Class A common stock
and Class B common stock were increased to 3,750,000 from 1,000,000 and
1,000,000 from 295,980, respectively. On April 10, 1995, the Company
distributed to stockholders of record on March 10, 1995, a 2 for 1 stock
split in the form of a 100% share dividend of Class A and Class B common
stock. One share of Class A common stock was issued for each share of Class
A outstanding and one share of Class B common stock was issued for each share
of Class B outstanding.
The Company purchased 16,107 shares of Class B common stock for Treasury for
approximately $365,000 from the Estate of Robert D. Hickok (the "Estate") in
January, 1993 pursuant to a Section 303 Stock Redemption Agreement (the
"Agreement"). The Agreement required the Company to purchase a sufficient
(7)
<PAGE>
FORM 10-Q
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - continued
number of Class B common stock from the Estate, proceeds of which to be used
by the Estate for payment of taxes and expenses in connection with probating
the Estate. During 1994, the Company classified approximately $235,000 as
redeemable stock to allow for future possible redemption pursuant to the
Agreement. The Company purchased an additional 4,560 shares of Class B stock
from the Estate on March 31, 1995 for approximately $78,000, completing the
obligation.
Under the Company's Key Employees Stock Option Plan and the 1995 Key
Employees Stock Option Plan (collectively the "Employee Plans"), incentive
stock options in general, are exercisable for up to ten years, at an exercise
price of not less than the market price on the date the option is granted.
Nonqualified stock options may be issued at such exercise price and such
other terms and conditions as the Compensation Committee of the Board
Directors may determine. No options may be granted at a price less than
$2.925. Options for 53,850 Class A shares were outstanding at December 31,
1995 (39,800 shares at September 30, 1995 and 40,800 shares at December 31,
1994) at prices ranging from $2.925 to $17.25 per share. Options for 14,050
shares and 7,200 shares were granted during the three month period ended
December 31, 1995 and December 31, 1994 respectively, at a price of $17.25
and $6.92 per share respectively, all options are exercisable. No other
options were granted or exercised during the three month periods presented.
On February 23, 1995, the Board of Directors adopted the 1995 Outside
Directors Stock Option Plan (the "Directors Plan"), subject to future
approval by the Company's shareholders. The Directors Plan provides for the
automatic grant of options to purchase up to 30,000 shares of Class A common
stock to members of the Board of Directors who are not employees of the
Company, at the fair market value on the date of grant. Options for 12,000
shares were outstanding at December 31, 1995 under the Directors Plan at an
exercise price of $16.125 per share subject to shareholders approval. All
options granted under the Directors Plan become exercisable on February 23,
1998.
Unissued shares of Class A common stock (520,716 shares) are reserved for the
share-for-share conversion rights of the Class B common stock and stock
options under the Employee Plans and the Directors Plan.
The Company declared a $.10 per share special dividend on its Class A and
Class B common shares on December 6, 1995 payable January 25, 1996 to
shareholders of record January 3, 1996. A special dividend of $.175 per
share on Class A and Class B common shares, payable January 25, 1995 to
shareholders of record January 3, 1995, was declared December 7, 1994.
(8)
<PAGE>
FORM 10-Q
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - continued
4. EARNINGS PER COMMON SHARE
Earnings per common share are based on the weighted average number of shares
outstanding during each period. All per share amounts on the consolidated
income statement have been adjusted to reflect the 100% share dividend on a
retroactive basis.
5. RECLASSIFICATIONS
Certain December 31, 1994 amounts have been reclassified to conform with
December 31, 1995 presentation.
(9)
<PAGE>
FORM 10-Q
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations, First Quarter (October 1, 1995 through December 31, 1995)
Fiscal 1996 Compared to First Quarter Fiscal 1995
- --------------------------------------------------------------------------------
Product sales for the quarter ended December 31, 1995 were $5,800,724 versus
$3,152,066 for the quarter ended December 31, 1994. The 84.0% current quarter
increase in product sales was primarily volume related, largely due to a
$2,300,000 shipment of automotive diagnostic equipment against a large order
received during the current quarter.
Service sales for the quarter ended December 31, 1995 were $1,417,897 versus
$1,527,998 for the quarter ended December 31, 1994. The reduction was primarily
volume related.
Cost of products sold in the first quarter of fiscal 1996 was $3,688,645 or
63.6% of sales as compared to $1,924,526 or 61.1% of sales dollar in the first
quarter of fiscal 1995. This increase is primarily due to a change in product
mix.
Cost of services sold in the first quarter of fiscal 1996 was $1,228,956 or
86.7% of sales as compared to $1,171,177 or 76.6% of sales in the first quarter
of fiscal 1995. The increase was due to an increase in payroll costs related to
a large service contract involving significant price competition.
Product development expenses were $926,608 in the first quarter 1996 or 16.0% of
product sales as compared to $545,122 or 17.3% of product sales in the first
quarter 1995. The increase involved new product development and enhancement of
existing products. All product development costs are expensed when incurred.
The level of expenditures in the first quarter of fiscal 1996 is expected to
continue for the remainder of fiscal 1996.
Operating expenses were $889,804 or 12.3% of total sales versus $789,686 or
16.9% of total sales for the same period a year ago. The dollar increase is
primarily due to increased marketing expenses associated with the increase in
sales.
Interest expense was $50,695 in the first quarter of fiscal 1996, which compares
with $9,507 in the first quarter of fiscal 1995. This was due to increased
borrowing to support higher working capital in the current quarter versus the
same period a year ago.
Other income includes $20,619 of rental income from a sub-lease of excess space
during the first quarter of fiscal 1996 and 1995.
Net income of $301,764 was earned in the first quarter of fiscal 1996 which
compares with $166,326 in 1995. The increase is due primarily to an increase in
product sales which offset increases in product development and operating
expenses.
Unshipped customer orders as of December 31, 1995 were $7,015,000 versus
$9,023,000 at December 31, 1994. The decrease was primarily due to a decrease
in fastening systems customer orders.
(10)
<PAGE>
FORM 10-Q
Liquidity and Capital Resources
-------------------------------
Total current assets were $12,290,614, $14,194,925 and $9,685,749 at December
31, 1995, September 30, 1995 and December 31, 1994, respectively. The increase
from December to December is primarily due to the increase in sales in the last
month of the quarter versus the same month a year ago resulting in a higher
accounts receivable balance at December 31, 1995. An increase in short-term
financing was the primary source of funding the increase in accounts receivable.
Other sources were cash, accruals and earnings retention. The decrease since
September is primarily due to a reduction in inventory and in cash which were
used to reduce current liabilities from $6,075,336 at September 30, 1995 to
$3,859,021 at December 31, 1995. At December 31, 1994 current liabilities
amounted to $2,759,007.
Working capital as of December 31, 1995 amounted to $8,431,593. This compares
to $6,926,742 a year earlier. Current assets were 3.2 times current liabilities
and total cash and receivables were 1.7 times current liabilities. These ratios
compare to 3.5 and 1.5, respectively, at December 31, 1994.
Internally generated funds of $669,411 during the three months ended December
31, 1995 were adequate to fund the Company's primary non-operating cash
requirement consisting of capital expenditures which amounted to $13,357.
Shareholders' equity during the three months ended December 31, 1995 increased
by $182,479 resulting from $301,764 net income and $119,285 dividend declared.
The Company has a credit agreement with its financial lender to provide for a
revolving credit facility of $5,000,000 at December 31, 1995. The agreement
provides for interest at the prime commercial rate and is unsecured. The
Company remains in compliance with its loan covenants. The Company is in the
annual process of renewing its credit arrangements with its financial lender.
Although no assurance can be given, management of the Company believes that a
renewal may be obtained on terms which are similar to its current credit
facility.
(11)
<PAGE>
FORM 10-Q
PART II. OTHER INFORMATION
ITEMS 1 through 5: Not applicable
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K:
The following exhibit is included herein: (11) Statement re: Computation of
earnings per share.
The Company did not file any reports on Form 8-K during the three months ended
December 31, 1995.
SIGNATURE
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.
Date FEBRUARY 13,1996 HICKOK INCORPORATED
---------------- (Registrant)
/s/ E. T. Nowakowski
-----------------------------------------
E. T. Nowakowski, Chief Financial Officer
(12)
<PAGE>
FORM 10-Q
EXHIBIT 11
HICKOK INCORPORATED
STATEMENT RE: COMPUTATION OF PER COMMON SHARE EARNINGS
<TABLE>
<CAPTION>
Three Months Ended
December 31
------------------------
1995 1994
--------- ---------
<S> <C> <C>
PRIMARY
Average shares outstanding 1,192,850 1,196,410
Net effect of dilutive
stock options - based
on the treasury stock
method using average
market price 29,681 26,704
--------- ---------
Total Shares 1,222,531 1,223,114
--------- ---------
Net Income $ 301,764 $ 166,326
--------- ---------
Per Share $ 0.25 $ 0.14
--------- ---------
--------- ---------
FULLY DILUTED
Average shares outstanding 1,192,850 1,196,410
Net effect of dilutive
stock options - based
on the treasury stock
method using period-end
market price, if
higher than average
market price 29,681* 27,636
--------- ---------
Total Shares 1,222,531 1,224,046
--------- ---------
Net Income $ 301,764 $ 166,326
--------- ---------
--------- ---------
Per Share $ 0.25 $ 0.14
--------- ---------
--------- ---------
</TABLE>
*Period-end market price is less than average market price, use same as primary
shares.
(13)
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> DEC-31-1995
<CASH> 177479
<SECURITIES> 0
<RECEIVABLES> 6250612
<ALLOWANCES> 0
<INVENTORY> 5504536
<CURRENT-ASSETS> 12290614
<PP&E> 4747016
<DEPRECIATION> 2613438
<TOTAL-ASSETS> 14594936
<CURRENT-LIABILITIES> 3859021
<BONDS> 0
0
0
<COMMON> 1192850
<OTHER-SE> 9384065
<TOTAL-LIABILITY-AND-EQUITY> 14594936
<SALES> 7218621
<TOTAL-REVENUES> 7264472
<CGS> 4917601
<TOTAL-COSTS> 1816412
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 50695
<INCOME-PRETAX> 479764
<INCOME-TAX> 178000
<INCOME-CONTINUING> 301764
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 301764
<EPS-PRIMARY> 0.25
<EPS-DILUTED> 0.25
</TABLE>
