<PAGE> 1
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, 1996 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> 2
FORM 10-Q
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS:
HICKOK INCORPORATED
CONSOLIDATED INCOME STATEMENTS
(Unaudited)
Three months ended
December 31,
------------------------
1996 1995
--------- ----------
Net Sales
<S> <C> <C>
Product Sales ................ $3,580,473 $5,800,724
Service Sales ................ 1,070,536 1,417,897
---------- ----------
Total Net Sales ............ 4,651,009 7,218,621
Costs and Expenses:
Cost of Products Sold ........ 2,336,189 3,688,645
Cost of Services Sold ........ 971,037 1,228,956
Product Development .......... 800,719 926,608
Operating Expenses ........... 865,882 889,804
Interest Charges ............. 2,328 50,695
Other Income ................. (16,505) (45,851)
---------- -----------
4,959,650 6,738,857
---------- -----------
Income (Loss) before
Income Taxes ............... (308,641) 479,764
Income (Recovery of) taxes ..... (114,200) 178,000
---------- ----------
Net Income (Loss) ............ $ (194,441) $ 301,764
========== ==========
Earnings per Common Share:
Net Income (Loss) ............ $ (.16) $ .25
========== ==========
Weighted Average Shares of
Common Stock Outstanding ....... 1,192,850 1,192,850
========== ==========
Dividends per Common Share ..... $ .20 $ .10
</TABLE> ========== ==========
See Notes to Consolidated Financial Statements.
(2)
<PAGE> 3
<TABLE>
<CAPTION>
HICKOK INCORPORATED
CONSOLIDATED BALANCE SHEETS
December 31, September 30, December 31,
1996 1996 1995
------------ ------------- ------------
(Unaudited) (Note) (Unaudited)
ASSETS
- ------
Current Assets
- --------------
<S> <C> <C> <C>
Cash and Cash Equivalents $ 1,178,807 $ 486,812 $ 177,479
Trade Accounts Receivable - Net 3,070,072 5,357,634 6,250,612
Inventories 4,530,824 4,912,858 5,504,536
Prepaid and Deferred Expenses 170,298 169,625 357,987
Refundable Income Taxes 381,799 267,599 --
----------- ----------- ------------
Total Current Assets 9,331,800 11,194,528 12,290,614
-------------------- ----------- ----------- ------------
Property, Plant and Equipment
- -----------------------------
Land 215,495 215,495 139,192
Buildings 1,472,050 1,472,050 1,456,390
Machinery and Equipment 3,506,189 3,404,827 3,151,434
----------- ----------- ------------
5,193,734 5,092,372 4,747,016
Less: Allowance for Depreciation 2,831,550 2,670,111 2,613,438
----------- ----------- ------------
Total Property - Net 2,362,184 2,422,261 2,133,578
-------------------- ----------- ----------- ------------
Other Assets
- ------------
Goodwill - Net of Amortization 238,875 243,556 157,000
Deferred Charges - Net of Amortization 143,279 106,712 --
Deposits 16,344 13,744 13,444
----------- ----------- ------------
Total Other Assets 398,498 364,012 170,744
------------------ ----------- ----------- ------------
Total Assets $12,092,482 $13,980,801 $14,594,936
============ =========== =========== ===========
<FN>
NOTE: Amounts derived from audited financial statements previously filed with
the Securities and Exchange Commission.
</TABLE>
See Notes to Consolidated Financial Statements.
(3)
<PAGE> 4
<TABLE>
<CAPTION>
FORM 10-Q
December 31, September 30, December 31,
1996 1996 1995
------------ ------------ ------------
(Unaudited) (Note) (Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current Liabilities
- -------------------
<S> <C> <C> <C>
Short-term Financing $ -- $ 1,375,000 $ 2,335,000
Trade Accounts Payable 180,348 360,143 367,608
Accrued Payroll & Related Expenses 584,477 769,600 598,722
Dividends Declared 238,570 -- 119,285
Accrued Expenses 111,072 65,032 265,005
Accrued Income Taxes -- -- 173,401
----------- ----------- -----------
Total Current Liabilities 1,114,467 2,569,775 3,859,021
------------------------- ----------- ----------- -----------
Deferred Income Taxes 176,000 176,000 159,000
- --------------------- ----------- ----------- -----------
Stockholders' Equity
- --------------------
Class A, $1.00 par value;
authorized 3,750,000 shares;
737,984 shares outstanding
excluding 9,586 shares
in treasury 737,984 737,984 737,984
Class B, $1.00 par value;
authorized 1,000,000 shares;
454,866 shares outstanding
excluding 20,667 shares
in treasury 454,866 454,866 454,866
Contributed Capital 914,316 914,316 914,316
Retained Earnings 8,694,849 9,127.860 8,469,749
----------- ----------- -----------
Total Stockholders' Equity 10,802,015 11,235,026 10,576,915
-------------------------- ----------- ----------- -----------
Total Liabilities and
Stockholders' Equity $12,092,482 $13,980,801 $14,594,936
==================== =========== =========== ===========
</TABLE>
(4)
<PAGE> 5
<TABLE>
<CAPTION>
HICKOK INCORPORATED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED DECEMBER 31,
(Unaudited)
1996 1995
--------- ---------
<S> <C> <C>
Cash Flows from Operating Activities:
Cash received from customers $ 6,938,571 $ 7,239,204
Cash paid to suppliers and employees (4,718,613) (6,468,443)
Interest paid (10,738) (61,006)
Interest received 9,737 --
Income taxes paid -- (40,344)
------------ ------------
Net Cash Provided by
Operating Activities 2,218,957 669,411
Cash Flows from Investing Activities:
Capital expenditures (101,362) (13,357)
Deferred charges (48,000) --
Increase in deposits (2,600) --
------------ ------------
Net Cash Used in
Investing Activities (151,962) (13,357)
Cash Flows from Financing Activities:
Decrease in short-term financing (1,375,000) (1,175,000)
------------ ------------
Net Increase (Decrease) in cash and
cash equivalents 691,995 (518,946)
Cash and cash equivalents at beginning
of year 486,812 696,425
------------ ------------
Cash and cash equivalents at end
of first quarter $ 1,178,807 $ 177,479
============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
(5)
<PAGE> 6
<TABLE>
<CAPTION>
FORM 10-Q
1996 1995
--------- ---------
Reconciliation of Net Income (Loss) to Net
Cash Provided by Operating Activities:
<S> <C> <C>
Net Income (Loss) $ (194,441) $ 301,764
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities:
Depreciation and amortization 177,553 142,882
Changes in assets and liabilities:
Decrease (Increase) in accounts
receivable 2,287,562 20,583
Decrease (Increase) in inventories 382,034 1,416,656
Decrease (Increase) in prepaid
expenses (673) (51,874)
Increase in refundable
income taxes (114,200) --
Increase (Decrease) in trade
accounts payable (179,795) (487,610)
Increase (Decrease) in accrued
payroll and related expenses (185,123) (721,889)
Increase (Decrease) in accrued
expenses 46,040 (88,758)
Increase (Decrease) in accrued
income taxes -- 137,657
---------- ----------
Total Adjustments 2,413,398 367,647
---------- ----------
Net Cash Provided by
Operating Activities $2,218,957 $ 669,411
========== ==========
</TABLE>
(6)
<PAGE> 7
FORM 10-Q
HICKOK INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
DECEMBER 31, 1996
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, 1996 are not
necessarily indicative of the results that may be expected for the year
ended September 30, 1997. 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,
1996.
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,
1996 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
Components $2,330,148 $2,182,723 $1,998,294
Work-in-Process 827,423 1,316,622 1,752,507
Finished Product 1,373,253 1,413,513 1,753,735
---------- ---------- ----------
$4,530,824 $4,912,858 $5,504,536
========== ========== ==========
</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.
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.
(7)
<PAGE> 8
FORM 10-Q
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - continued
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 81,400 Class A shares were outstanding at December 31,
1996 (53,850 shares at September 30, 1996 and 53,850 shares at December
31, 1995) at prices ranging from $2.925 to $17.25 per share. Options for
27,550 shares and 14,050 shares were granted during the three month period
ended December 31, 1996 and December 31, 1995 respectively, at a price of
$10.75 and $17.25 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, and shareholders
subsequently approved, the 1995 Outside Directors Stock Option Plan (the
"Directors Plan"). 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 18,000 shares were
outstanding at December 31, 1996 (18,000 shares at September 30, 1996 and
12,000 shares at December 31, 1995) at prices ranging from $16.125 to
$18.00 per share. All options granted under the Directors Plan become
fully exercisable on February 23, 1999.
Unissued shares of Class A common stock (554,266 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 $.20 per share special dividend on its Class A and
Class B common shares on December 13, 1996 payable January 24, 1997 to
shareholders of record January 3, 1997. A special dividend of $.10 per
share on Class A and Class B common shares, payable January 25, 1996 to
shareholders of record January 3, 1996, was declared December 6, 1995.
4. Earnings per Common Share
-------------------------
Earnings per common share are based on the weighted average number of
shares outstanding during each period.
5. Reclassifications
-----------------
Certain December 31, 1995 amounts have been reclassified to conform with
December 31, 1996 presentation.
(8)
<PAGE> 9
FORM 10-Q
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations, First Quarter (October 1, 1996 through December 31, 1996)
Fiscal 1997 Compared to First Quarter Fiscal 1996
- --------------------------------------------------------------------------------
Product sales for the quarter ended December 31, 1996 were $3,580,473 versus
$5,800,724 for the quarter ended December 31, 1995. The 38.3% current quarter
decrease in product sales was primarily volume related, largely due to an order
for $2,300,000 of automotive diagnostic equipment received and shipped during
the first quarter of fiscal 1996.
Service sales for the quarter ended December 31, 1996 were $1,070,536 versus
$1,417,897 for the quarter ended December 31, 1995. The reduction was primarily
volume related. Approximately half of the reduction was due to the loss of a
contract in the second quarter of fiscal 1996 to provide technical training to
Ford Motor Company dealer technicians. The contract was lost because Ford
reduced the number of suppliers of these types of services.
Cost of products sold in the first quarter of fiscal 1997 was $2,336,189 or
65.2% of sales as compared to $3,688,645 or 63.6% of sales dollar in the first
quarter of fiscal 1996. This increase is primarily due to wage increases
implemented in October, 1996.
Cost of services sold in the first quarter of fiscal 1997 was $971,037 or 90.7%
of sales as compared to $1,228,956 or 86.7% of sales in the first quarter of
fiscal 1996. The increase was due to lower gross margins resulting from the loss
of a contract in the second quarter of fiscal 1996 to provide technical training
to Ford dealer technicians.
Product development expenses were $800,719 in the first quarter 1997 or 22.4% of
product sales as compared to $926,608 or 16.0% of product sales in the first
quarter 1996. The 13.6% decrease reflected a temporary reduction in the
development and enhancement of automotive diagnostic products. The level of
product development expenditures is expected to increase slightly for the
remainder of fiscal 1997.
Operating expenses were $865,882 or 18.6% of total sales versus $889,804 or
12.3% of total sales for the same period a year ago. The dollar decrease is
primarily due to decreased marketing expenses associated with the decrease in
total sales.
Interest expense was $2,328 in the first quarter of fiscal 1997, which compares
with $50,695 in the first quarter of fiscal 1996. This was due to decreased
borrowing 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. There was no rental income in the first
quarter of fiscal 1997 since the sub-lease expired at the end of fiscal 1996.
The excess space was eliminated when a new lease took effect November 1, 1996.
A net loss of $194,441 was incurred in the first quarter of fiscal 1997 which
compares with net income of $301,764 in 1996. The decrease is due primarily to
decreases in both product and service sales. The Company anticipates a net loss
for the second quarter of fiscal 1997 for reasons similar to that which occurred
in the first quarter of the current fiscal year.
(9)
<PAGE> 10
FORM 10-Q
Unshipped customer orders as of December 31, 1996 were $2,787,000 versus
$7,015,000 at December 31, 1995. Approximately $3,000,000 of the decrease
relates to a renewal contract to provide diagnostic services to Ford Motor
Company in calendar 1997. A similar renewal contract was received in the first
quarter of fiscal 1996. This year the contract is expected to be received in the
second quarter of fiscal 1997. Approximately $1,000,000 of the decrease is due
to a decrease in orders for both automotive diagnostic and fastening systems
products. The order shortfall for these two product classes is not expected to
be made up until late fiscal 1997.
Liquidity and Capital Resources
-------------------------------
Total current assets were $9,331,800, $11,194,528 and $12,290,614 at December
31, 1996, September 30, 1996 and December 31, 1995, respectively. The decrease
from December to December is primarily due to the decrease in sales during
December 1996, as compared to December 1995, which resulted in a lower accounts
receivable balance at December 31, 1996. The decrease since September is
primarily due to a reduction in accounts receivable resulting from a decrease in
shipments during the current quarter. The reduction in accounts receivable at
December 31, 1996 generated cash that was used to reduce short-term financing,
resulting in a reduction of current liabilities from $2,569,775 at September 30,
1996 to $1,114,467 at December 31, 1996. At December 31, 1995 current
liabilities amounted to $3,859,021.
Working capital as of December 31, 1996 amounted to $8,217,333. This compares to
$8,431,593 a year earlier. Current assets were 8.4 times current liabilities and
total cash and receivables were 3.8 times current liabilities. These ratios
compare to 3.2 and 1.7, respectively, at December 31, 1995.
Internally generated funds of $2,218,957 during the three months ended December
31, 1996 were adequate to fund the Company's primary non-operating cash
requirements consisting of capital expenditures which amounted to $101,362.
Shareholders' equity during the three months ended December 31, 1996 decreased
by $433,011 resulting from $194,441 net loss and an accrual of $238,570 for a
dividend declared.
The Company has a credit agreement with its financial lender that provides for a
revolving credit facility of $5,000,000 at December 31, 1996. The agreement
provides for interest at the prime commercial rate with a LIBOR option and is
unsecured. The Company remains in compliance with its loan covenants. The
Company is in the annual process of renewing its credit arrangement 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.
(10)
<PAGE> 11
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, 1996.
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 14, 1997 HICKOK INCORPORATED
----------------- -------------------
(Registrant)
/s/ E. T. Nowakowski
--------------------------------------------
E. T. Nowakowski, Chief Financial Officer
(11)
<PAGE> 1
<TABLE>
<CAPTION>
FORM 10-Q
EXHIBIT 11
HICKOK INCORPORATED
STATEMENT RE: COMPUTATION OF PER COMMON SHARE EARNINGS
Three Months Ended
December 31,
------------------------
1996 1995
---- ----
<S> <C> <C>
PRIMARY
- -------
Average shares outstanding 1,192,850 1,192,850
Net effect of dilutive
stock options - based
on the treasury stock
method using average
market price 19,623 29,681
--------- -----------
Total Shares 1,212,473 1,222,531
--------- -----------
Net Income (Loss) $(194,441) $ 301,764
--------- -----------
Per Share $ (0.16) $ 0.25
========= ===========
FULLY DILUTED
- -------------
Average shares outstanding 1,192,850 1,192,850
Net effect of dilutive
stock options - based
on the treasury stock
method using period-end
market price, if
higher than average
market price 19,623* 29,681*
---------- -----------
Total Shares 1,212,473 1,222,531
---------- -----------
Net Income (Loss) $ (194,441) $ 301,764
========== ===========
Per Share $ (0.16) $ 0.25
========== ===========
<FN>
*Period-end market price is less than average market price, use same as primary
shares.
</TABLE>
(12)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-1-1996
<PERIOD-END> DEC-31-1996
<CASH> 1,178,807
<SECURITIES> 0
<RECEIVABLES> 3,070,072
<ALLOWANCES> 0
<INVENTORY> 4,530,824
<CURRENT-ASSETS> 9,331,800
<PP&E> 5,193,734
<DEPRECIATION> 2,831,550
<TOTAL-ASSETS> 12,092,482
<CURRENT-LIABILITIES> 1,114,467
<BONDS> 0
<COMMON> 1,192,850
0
0
<OTHER-SE> 9,609,165
<TOTAL-LIABILITY-AND-EQUITY> 12,092,482
<SALES> 4,651,009
<TOTAL-REVENUES> 4,667,514
<CGS> 3,307,226
<TOTAL-COSTS> 1,666,601
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,328
<INCOME-PRETAX> (308,641)
<INCOME-TAX> (114,200)
<INCOME-CONTINUING> (194,441)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (194,441)
<EPS-PRIMARY> (.16)
<EPS-DILUTED> (.16)
</TABLE>
