<PAGE> 1
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 December 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 No. 0-147
HICKOK INCORPORATED
-----------------------------------------------------------------
(Exact Name of Registrant as specified in its charter)
OHIO 34-0288470
- -------------------------------- --------------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
10514 Dupont Avenue; Cleveland, Ohio 44108
- ------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code (216) 541-8060
- ------------------------------------------------------------------------------
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 the
filing requirements for the past 90 days.
Yes X No
---- ----
As of FEBRUARY 14, 2000, 744,884 Hickok Incorporated Class A Common
Shares and 454,866 Class B Common Shares were outstanding.
<PAGE> 2
FORM 10-Q
PART I. FINANCIAL INFORMATION
- ------------------------------
ITEM 1. FINANCIAL STATEMENTS:
<TABLE>
<CAPTION>
HICKOK INCORPORATED
CONSOLIDATED INCOME STATEMENTS
(Unaudited)
Three months ended
December 31,
---------------------------------
1999 1998
---------- ----------
<S> <C> <C>
Net Sales
Product Sales $5,124,392 $3,522,567
Service Sales 256,227 291,859
---------- ----------
Total Net Sales 5,380,619 3,814,426
Costs and Expenses:
Cost of Products Sold 2,827,269 2,113,661
Cost of Services Sold 209,373 181,318
Product Development 708,633 675,937
Operating Expenses 1,287,638 1,239,575
Interest Charges 14,947 17,913
Other Income (15,632) (21,904)
---------- ----------
5,032,228 4,206,500
---------- ----------
Income (Loss) before
Income Taxes 348,391 (392,074)
Income (Recovery of) taxes 122,000 (145,000)
---------- ----------
Net Income (Loss) $ 226,391 $ (247,074)
========== ==========
Earnings per Common Share:
- -------------------------
Net Income (Loss) $ .19 $ (.21)
========== ==========
Earnings per Common Share
Assuming Dilution:
------------------
Net Income (Loss) $ .19 $ (.21)
========== ==========
Dividends per Common Share $ - 0 - $ .15
========== ==========
</TABLE>
See Notes to Consolidated Financial Statements.
(2)
<PAGE> 3
<TABLE>
<CAPTION>
HICKOK INCORPORATED
CONSOLIDATED BALANCE SHEETS
December 31, September 30, December 31,
1999 1999 1998
------------- ------------- -------------
(Unaudited) (Note) (Unaudited)
<S> <C> <C> <C>
ASSETS
- ------
Current Assets
- --------------
Cash and Cash Equivalents $ 700,527 $ 533,579 $ 912,791
Trade Accounts Receivable - Net 3,284,391 3,377,291 2,629,800
Inventories 5,664,132 5,708,098 5,944,270
Deferred Income Taxes 315,900 315,900 196,000
Prepaid Expenses 87,093 51,569 94,670
Refundable Income Taxes 199,624 199,624 --
----------- ----------- -----------
Total Current Assets 10,251,667 10,186,061 9,777,531
-------------------- ----------- ----------- -----------
Property, Plant and Equipment
- -----------------------------
Land 299,089 299,089 226,738
Buildings 1,565,021 1,565,021 1,541,245
Machinery and Equipment 4,259,162 3,973,241 4,037,029
----------- ----------- -----------
6,053,272 5,767,351 5,805,012
Less: Allowance for Depreciation 3,684,982 3,542,098 3,469,944
----------- ----------- -----------
Total Property - Net 2,368,290 2,225,253 2,335,068
-------------------- ----------- ----------- -----------
Other Assets
- ------------
Goodwill - Net of Amortization 1,884,440 1,833,324 1,914,508
Deferred Charges - Net of Amortization 29,452 35,752 62,145
Deposits 1,750 1,750 8,790
----------- ----------- -----------
Total Other Assets 1,915,642 1,870,826 1,985,443
------------------ ----------- ----------- -----------
Total Assets $14,535,599 $14,282,140 $14,098,042
============ =========== =========== ===========
</TABLE>
NOTE: Amounts derived from audited financial statements previously filed with
the Securities and Exchange Commission.
See Notes to Consolidated Financial Statements.
(3)
<PAGE> 4
<TABLE>
<CAPTION>
FORM 10-Q
December 31, September 30, December 31,
1999 1999 1998
------------ ------------- ------------
(Unaudited) (Note) (Unaudited)
<S> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current Liabilities
- -------------------
Short-term Financing $ -- $ 100,000 $ --
Current Portion of Long-term debt 612,128 132,616 149,959
Trade Accounts Payable 559,683 682,950 355,830
Accrued Payroll & Related Expenses 376,951 440,107 453,092
Dividends Declared -- -- 179,963
Accrued Expenses 310,388 180,481 196,817
Accrued Income Taxes 298,757 176,757 --
----------- ----------- -----------
Total Current Liabilities 2,157,907 1,712,911 1,335,661
------------------------- ----------- ----------- -----------
Deferred Income Taxes 41,500 41,500 165,000
- --------------------- ----------- ----------- -----------
Long-term Debt -- 417,928 466,483
- -------------- ----------- ----------- -----------
Stockholders' Equity
- --------------------
Class A, $1.00 par value;
authorized 3,750,000 shares; 744,884
shares outstanding excluding
9,586 shares in treasury 744,884 744,884 744,884
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 948,803 948,803 948,803
Retained Earnings 10,187,639 9,961,248 9,982,345
----------- ----------- -----------
Total Stockholders' Equity 12,336,192 12,109,801 12,130,898
-------------------------- ----------- ----------- -----------
Total Liabilities and
Stockholders' Equity $14,535,599 $14,282,140 $14,098,042
==================== =========== =========== ===========
</TABLE>
(4)
<PAGE> 5
HICKOK INCORPORATED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED DECEMBER 31,
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
------------- -------------
<S> <C> <C>
Cash Flows from Operating Activities:
Cash received from customers $ 5,473,519 $ 3,882,638
Cash paid to suppliers and employees (4,906,943) (4,509,803)
Interest paid (5,803) (46,731)
Interest received 8,704 15,033
Income taxes (paid) refunded -- 155,212
------------- -------------
Net Cash Provided by (used in)
Operating Activities 569,477 (503,651)
Cash Flows from Investing Activities:
Capital expenditures (285,921) (83,488)
Decrease (Increase) in deposits -- (4,440)
Payments for business purchased (78,192) --
------------- -------------
Net Cash Used in
Investing Activities (364,113) (87,928)
Cash Flows from Financing Activities:
Increase (Decrease) in short-term financing 379,512 (11,803)
Decrease in long-term financing (417,928) (82,991)
Sale of Class A Shares under option -- 5,850
------------- -------------
Net Cash Used in
Financing Activities (38,416) (88,944)
------------- -------------
Net Increase (decrease) in cash and
cash equivalents 166,948 (680,523)
Cash and cash equivalents at beginning
of year 533,579 1,593,314
------------- -------------
Cash and cash equivalents at end
of first quarter $ 700,527 $ 912,791
============= =============
</TABLE>
See Notes to Consolidated Financial Statements.
(5)
<PAGE> 6
<TABLE>
<CAPTION>
FORM 10-Q
1999 1998
----------- ----------
<S> <C> <C>
Reconciliation of Net Income (Loss) to Net
Cash Provided by Operating Activities:
Net Income (Loss) $ 226,391 $(247,074)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 176,260 214,691
Non-cash compensation charge related
to stock options -- 1,150
Changes in assets and liabilities:
Decrease (Increase) in accounts
receivable 92,900 68,212
Decrease (Increase) in inventories 43,966 (52,181)
Decrease (Increase) in prepaid
expenses (35,524) (55,868)
Decrease (Increase) in refundable
income taxes -- 181,812
Increase (Decrease) in trade
accounts payable (123,267) (300,472)
Increase (Decrease) in accrued
payroll and related expenses (63,156) (151,547)
Increase (Decrease) in accrued
expenses 129,907 (86)
Increase (Decrease) in accrued
income taxes 122,000 (162,288)
----------- ----------
Total Adjustments 343,086 (256,577)
----------- ----------
Net Cash Provided by (used in)
Operating Activities $ 569,477 $(503,651)
=========== ==========
</TABLE>
(6)
<PAGE> 7
FORM 10-Q
HICKOK INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
DECEMBER 31, 1999
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, 1999 are not necessarily indicative of the results that may be
expected for the year ended September 30, 2000. For further
information, refer to the consolidated financial statements and
footnotes thereto included in the Company's annual report on Form 10-K
for the year ended September 30, 1999.
2. INVENTORIES
Inventories are valued at the lower of cost or market and consist of
the following:
December 31, Sept. 30, December 31,
1999 1999 1998
------------ ----------- -----------
Components $ 3,481,404 $ 3,336,853 $ 3,215,256
Work-in-Process 1,379,764 1,408,952 1,464,795
Finished Product 802,964 962,293 1,264,219
----------- ----------- -----------
$ 5,664,132 $ 5,708,098 $ 5,944,270
=========== =========== ===========
3. CAPITAL STOCK, TREASURY STOCK, CONTRIBUTED CAPITAL AND STOCK OPTIONS
Under the Company's Key Employees Stock Option Plans (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. Non-qualified stock options
may be granted at such exercise price and such other terms and
conditions as the Compensation Committee of the Board of Directors may
determine. No options may be granted at a price less than $2.925.
Options for 134,300 Class A shares were outstanding at December 31,
1999 (106,500 shares at September 30, 1999 and 114,600 shares at
December 31, 1998) at prices ranging from $2.925 to $17.25 per share.
Options for 27,800 shares and 23,000 shares were granted during the
three month period ended December 31, 1999 and December 31, 1998
respectively, at a price of $5.00 and $7.125 per share respectively,
all options are exercisable.
(7)
<PAGE> 8
FORM 10-Q
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED
During the first quarter period ended December 31, 1999 no options were
exercised. During the first quarter period ended December 31, 1998,
options for 2,000 Class A shares were exercised at $2.925 per share
resulting in non-cash compensation to the optionee of $1,150. Options
for 4,000 shares of Class A shares were cancelled during the three
month period ended December 31, 1998.
No other options were granted, exercised or cancelled during the
periods presented under the Employee Plans.
The Company's Outside Directors Stock Option Plans (collectively the
"Directors Plans"), provide for the automatic grant of options to
purchase up to 45,000 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 36,000 Class A shares
were outstanding at December 31, 1999 (36,000 shares at September 30,
1999 and 30,000 shares at December 31, 1998) at prices ranging from
$7.125 to $18.00 per share. All outstanding options under Directors
Plans become fully exercisable on February 25, 2002.
Unissued shares of Class A common stock (625,166 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 Plans.
The Company declared a $.15 per share special dividend on its Class A
and Class B common shares on December 9, 1998 payable January 22, 1999
to shareholders of record January 4, 1999.
(8)
<PAGE> 9
FORM 10-Q
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - continued
4. EARNINGS PER COMMON SHARE
Earnings per common share are based on the provisions of FAS Statement
No. 128, "Earnings per Share." Accordingly, the adoption of this
statement did not affect the Company's results of operations, financial
position or liquidity. The effects of applying FAS No. 128 on earnings
per share and required reconciliations are as follows:
Three Months Ended
December 31,
1999 1998
----------- ----------
BASIC EARNINGS PER SHARE
Income (Loss) available
to common stockholders $ 236,391 $ (247,074)
Shares denominator 1,199,750 1,198,424
Per share amount $ .19 $ (.21)
=========== ==========
EFFECT OF DILUTIVE
SECURITIES
Average shares
outstanding 1,199,750 1,198,424
Stock options 13,858 -
----------- ----------
1,213,608 1,198,424
DILUTED EARNINGS PER SHARE
Income (Loss) available
to common stockholders $ 236,391 $ (247,074)
Per share amount $ .19 $ (.21)
=========== ===========
Options to purchase 124,500 and 144,600 shares of common stock during
the first quarter of fiscal 2000 and the first quarter of fiscal 1999,
respectively, at prices ranging from $6.92 to $18.00 per share were
outstanding but were not included in the computation of diluted
earnings per share because the option's effect was antidilutive or the
exercise price was greater than the average market price of the common
share.
(9)
<PAGE> 10
FORM 10-Q
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED
5. PURCHASE
On February 17, 1998, the Company purchased certain assets of Waekon
Industries, Inc. which has been accounted for under the purchase method
of accounting. The Company initially paid $2,221,302 for the assets
consisting of accounts receivable ($504,282), inventory ($719,244),
prepaid and other assets ($42,786), machinery and equipment ($380,100),
assumption of current liabilities ($425,895), and goodwill
($1,000,785). The Company also recorded as goodwill closing costs
related to the purchase ($205,216) and the present value of an earn out
contract ($585,892). In December 1999 the Company renegotiated and
accelerated the terms of the future earn out contract incurring an
additional amount due of $78,192 deemed to be additional purchase price
and recorded as an increase in goodwill. The revised earn out balance
($567,300) has been classified as a current liability at December 31,
1999. Goodwill is being amortized over 20 years.
6. SEGMENT AND RELATED INFORMATION
The Company has adopted SFAS No. 131, Disclosures about Segments of an
Enterprise and Related Information, which changes the way the Company
reports the information about its operating segments. The information
for 1998 has been restated from the prior year's presentation in order
to conform to the current-year presentation.
The Company's four business units have separate management teams and
infrastructures that offer different products and services. The
business units have been aggregated into two reportable segments: 1.)
indicators and gauges and 2.) automotive related diagnostic tools and
equipment.
INDICATORS AND GAUGES
This segment consists of products manufactured and sold primarily to
companies in the aircraft and locomotive industry. Within the aircraft
market, the primary customers are those companies that manufacture
business and pleasure aircraft. Within the locomotive market,
indicators and gauges are sold to both original equipment manufacturers
and to operators of railroad equipment.
AUTOMOTIVE DIAGNOSTIC TOOLS AND EQUIPMENT
This segment consists primarily of products designed and manufactured
to support the servicing of automotive electronic systems. These
products are sold to the aftermarket using a variety of distribution
methods. The acquisition of Waekon Industries in 1998 added significant
new products and distribution sources for the aftermarket.
Included in this segment are fastening control products used by a large
automobile manufacturer to monitor and control the nut running process
in an assembly plant. This equipment provides high quality threading
applications. The product was added in fiscal 1994 when the Company
acquired the fastening systems business from Allen-Bradley Company.
(10)
<PAGE> 11
FORM 10-Q
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED
INFORMATION BY INDUSTRY SEGMENT IS SET FORTH BELOW:
<TABLE>
<CAPTION>
Three months ended
December 31,
------------------------------
1999 1998
----------- -----------
<S> <C> <C>
NET REVENUE
Indicators and Gauges $ 531,962 $ 608,298
Automotive Diagnostic Tools and Equipment 4,848,657 3,206,128
----------- -----------
$ 5,380,619 $ 3,814,426
=========== ===========
INCOME (LOSS) FROM OPERATIONS
Indicators and Gauges $ 95,753 $ 114,822
Automotive Diagnostic Tools and Equipment 937,876 285,923
General Corporate Expenses (685,238) (792,819)
----------- -----------
$ 348,391 $ (392,074)
=========== ===========
ASSET INFORMATION
Indicators and Gauges $ 1,262,814 $ 1,533,587
Automotive Diagnostic Tools and Equipment 9,804,139 9,345,992
Corporate 3,468,646 3,218,463
----------- -----------
$14,535,599 $14,098,042
=========== ===========
GEOGRAPHICAL INFORMATION
Included in the consolidated financial
statements are the following amounts
related to geographical locations:
REVENUE:
United States $ 5,244,986 $ 3,487,652
Canada 80,694 204,814
Other foreign countries 54,939 121,960
----------- -----------
$ 5,380,619 $ 3,814,426
=========== ===========
</TABLE>
(11)
<PAGE> 12
FORM 10-Q
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations, First Quarter (October 1, 1999 through December 31,1999)
Fiscal 2000 Compared to First Quarter Fiscal 1999
- --------------------------------------------------------------------------------
Reportable Segment Information
------------------------------
The Company has determined that it has two reportable segments: 1) indicators
and gauges and 2) automotive related diagnostic tools and equipment. The
indicators and gauges segment consists of products manufactured and sold
primarily to companies in the aircraft and locomotive industry. Within the
aircraft market, the primary customers are those companies that manufacture
business and pleasure aircraft. Within the locomotive market, indicators and
gauges are sold to both original equipment manufacturers and to operators of
railroad equipment. Revenue in this segment was $531,962 and $608,298 for the
first quarter of fiscal 2000 and fiscal 1999, respectively. The automotive
diagnostic tools and equipment segment consists primarily of products designed
and manufactured to support the servicing of automotive electronic systems.
These products are sold both directly to the end user and through the
aftermarket using a variety of distribution methods. Included in this segment
are fastening control products used primarily by a large automobile manufacturer
to monitor and control the nut running process in an assembly plant. Revenue in
this segment was $4,848,657 and $3,206,128 for the first quarter of fiscal 2000
and fiscal 1999, respectively.
Results of Operations
---------------------
Product sales for the quarter ended December 31, 1999 were $5,124,392 versus
$3,522,567 for the quarter ended December 31, 1998. The 45% increase in product
sales during the current quarter was volume related due primarily to a
$1,414,000 increase in shipment of automotive diagnostic products and a $245,000
increase in shipment of fastening systems products. Hickok anticipates that the
current level of product sales will increase slightly during the remainder of
the fiscal year based on an increase in shippable backlog at December 31, 1999
and on an anticipated increase in orders for automotive aftermarket products.
Service sales for the quarter ended December 31, 1999 were $256,227 versus
$291,859 for the quarter ended December 31, 1998. The decrease was volume
related due to a reduction in chargeable repairs. The current level of service
sales is expected to continue for the balance of the fiscal year.
Cost of products sold in the first quarter of fiscal 2000 was $2,827,269 or
55.2% of sales as compared to $2,113,661 or 60.0% of sales in the first quarter
of fiscal 1999. This decrease in the cost of products sold percentage was
primarily due to operating efficiencies realized at the manufacturing level due
to the 45% increase in product sales experienced during the quarter. The current
cost of products sold percentage is anticipated to remain at the current level
during the balance of the fiscal year.
Cost of services sold in the first quarter of fiscal 2000 was $209,373 or 81.7%
of sales as compared to $181,318 or 62.1% of sales in the first quarter of
fiscal 1999. This increase in the cost of services sold percentage is primarily
due to a slight increase in warranty repairs.
(12)
<PAGE> 13
FORM 10-Q
Product development expenses were $708,633 in the first quarter of fiscal 2000
or 13.8% of product sales as compared to $675,937 or 19.2% of product sales in
the first quarter of fiscal 1999. The percentage decrease was due to a 45%
increase in the level of product sales. The current level of product development
expenses is expected to continue for the balance of the fiscal year.
Operating expenses were $1,287,638 or 23.9% of total sales in the first quarter
of fiscal 2000 versus $1,239,575 or 32.5% of total sales for the same period a
year ago. The dollar increase is primarily due to marketing expenses directly
applicable to the significant increase in sales of automotive diagnostic
products during the quarter. The current level of operating expenses is expected
to continue for the remainder of the fiscal year.
Interest expense was $14,947 in the first quarter of fiscal 2000 which compares
with $17,913 in the first quarter of fiscal 1999. This was due to the decrease
in long-term debt applicable to the Waekon acquisition in February, 1998.
Other income decreased by $6,272 during the first quarter of fiscal 2000 due to
a reduction in interest income on short term investments caused by the use of
cash to fund higher working capital requirements.
Net income in the first quarter of fiscal 2000 was $226,391 which compares with
a net loss of $247,074 in the first quarter of fiscal 1999. The change was due
primarily to a $1,566,000 increase in sales.
Unshipped customer orders as of December 31, 1999 were $3,618,000 versus
$3,148,000 at December 31, 1998. The $470,000 increase in backlog is due to
higher orders for automotive products. Almost all of this increase in backlog is
expected to be shipped in the second quarter of fiscal 2000.
Liquidity and Capital Resources
-------------------------------
Total current assets were $10,251,667, $10,186,061 and $9,777,531 at December
31, 1999, September 30, 1999 and December 31, 1998, respectively. The increase
from December to December is due to a $654,000 increase in accounts receivable
due to a higher sales, and a $319,000 increase in deferred and refundable income
taxes offset by a $212,000 decrease in cash and a $280,000 decrease in
inventory. The increase in current assets since September, 1999 is due to a
higher cash balance.
Working capital as of December 31, 1999 amounted to $8,093,760 as compared with
$8,441,870 a year earlier. The decrease was do to an increase in the current
portion of long-term debt reflecting the restructuring of the earn out contract
applicable to the acquisition of Waekon Industries in February, 1998. Current
assets were 4.8 times current liabilities and total cash and receivables were
1.8 times current liabilities. These ratios compare to 7.3 and 2.7,
respectively, at December 31, 1998.
(13)
<PAGE> 14
FORM 10-Q
Internally generated funds during the three months ended December 31, 1999 were
$569,477 and were adequate to fund the Company's primary non-operating cash
requirement consisting of capital expenditures of $285,921. The Company believes
that cash and cash equivalents, together with funds anticipated to be generated
by operations and funds available under the Company's credit agreement, will
provide the liquidity necessary to support its current and anticipated capital
expenditures through the end of fiscal 2000.
Shareholders' equity during the three months ended December 31, 1999 increased
by $226,391 which was the net income earned during the period.
The Company has a credit agreement with its financial lender that provides for a
revolving credit facility of $5,000,000 at December 31, 1999. The agreement
expires at the end of February, 2000 and 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.
Year 2000 Readiness Disclosure
------------------------------
In late fiscal 1997 the Company began its review of Year 2000 issues with
emphasis placed on information technology systems software and hardware. During
fiscal 1998 the Company expanded its review to include non-information
technology systems and the readiness of key third parties, primarily suppliers
and customers. The Company used internal resources to make its assessment. The
Company determined that its primary information systems software and hardware
were not Year 2000 compliant and decided to replace non-compliant equipment and
software. Training and testing occurred throughout all of fiscal 1998.
Installation began in early fiscal 1999 and has been completed. The system is
functioning properly. The Company's review of non-information technology systems
and the readiness of key third parties is complete. Based on assessment efforts
to date, the Company has yet to experience any significant problems internally
or with suppliers and customers in connection with Year 2000 compliance.
Nevertheless, additional dates in the future exist which could potentially cause
computer system failures. Failure of our internal computer systems or software,
or of systems maintained by third parties such as suppliers, customers, public
utilities and the government, to operate properly with regard to the Year 2000
and thereafter could result in a material adverse effect on the Company's
business and operating results. The Company's most likely worst case scenario
would be a short-term slowdown or cessation of manufacturing operations at one
or more of its facilities and a short-term inability on the part of the Company
to process orders and to deliver product to customers in a timely manner. Though
the Company does not expect a material adverse impact on operations, contingency
plans are completed. Such plans primarily involve the use of alternative
suppliers and transportation vendors. Costs associated with the Company's
assessment and remediation of Year 2000 issues are not expected to be material
in fiscal 2000. The Company has used cash and cash equivalents to fund such
costs.
(14)
<PAGE> 15
FORM 10-Q
Forward-Looking Statements
---------------------------
The foregoing discussion includes forward-looking statements relating to the
business of the Company. These forward-looking statements, or other statements
made by the Company, are made based on management's expectations and beliefs
concerning future events impacting the Company and are subject to uncertainties
and factors (including, but not limited to, those specified below) which are
difficult to predict and, in many instances, are beyond the control of the
Company. As a result, actual results of the Company could differ materially from
those expressed in or implied by any such forward-looking statements. These
uncertainties and factors include (a) the Company's dependence upon a limited
number of customers, including Ford and General Motors, (b) the highly
competitive industry in which the company operates, which includes several
competitors with greater financial resources and larger sales organizations, and
(c) the acceptance in the marketplace of new products and/or services developed
or under development by the Company including automotive diagnostic products,
fastening systems products and indicating instrument products, and (d) the
ability of significant third parties with whom the Company does business to
provide products and services in the Year 2000 and beyond.
(15)
<PAGE> 16
FORM 10-Q
ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- -----------------------------------------------------------------
The Company is exposed to certain market risks from transactions that are
entered into during the normal course of business. The Company has not entered
into derivative financial instruments for trading purposes. The Company's
primary market risk exposure relates to interest rate risk. There were no
materials changes in the Company's exposure to market risk from September 30,
1999.
PART II. OTHER INFORMATION
- ---------------------------
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K:
a) The following exhibits are included herein: (11) Statement re: Computation of
earnings per share. (27) Financial Data Schedule
b) The Company did not file any reports on Form 8-K during the three months
ended December 31, 1999.
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, 2000 HICKOK INCORPORATED
----------------- -------------------
(Registrant)
/s/ E. T. Nowakowski
--------------------
E.T. Nowakowski, Chief Financial Officer
(16)
<PAGE> 1
FORM 10-Q
EXHIBIT 11
HICKOK INCORPORATED
STATEMENT RE: COMPUTATION OF PER COMMON SHARE EARNINGS
<TABLE>
<CAPTION>
Three Months Ended
December 31,
1999 1998
----------- ----------
<S> <C> <C>
PRIMARY
- -------
Average shares outstanding 1,199,750 1,198,424
Net effect of dilutive
stock options - based
on the treasury stock
method using average
market price 13,858 - **
----------- ----------
Total Shares 1,213,608 1,198,424
----------- ----------
Net Income (Loss) $ 226,391 $ (247,074)
----------- ----------
Per Share $ .19 $ (.21)
FULLY DILUTED =========== ==========
- -------------
Average shares outstanding 1,199,750 1,198,424
Net effect of dilutive
stock options - based
on the treasury stock
method using period-end
market price, if
higher than average
market price 13,858* - **
----------- ----------
Total Shares 1,213,608 1,198,424
----------- ----------
Net Income (Loss) $ 226,391 $ (247,074)
========== ==========
Per Share $ .19 $ (.21)
========== ==========
</TABLE>
* Period-end market price is less than average market price, use same as
primary shares.
** Net effect of stock options was antidilutive for the period.
(17)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-START> OCT-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 700,527
<SECURITIES> 0
<RECEIVABLES> 3,284,391
<ALLOWANCES> 0
<INVENTORY> 5,664,132
<CURRENT-ASSETS> 10,251,667
<PP&E> 6,053,272
<DEPRECIATION> 3,684,982
<TOTAL-ASSETS> 14,535,599
<CURRENT-LIABILITIES> 2,157,907
<BONDS> 0
0
0
<COMMON> 1,199,750
<OTHER-SE> 11,136,442
<TOTAL-LIABILITY-AND-EQUITY> 14,535,599
<SALES> 5,380,619
<TOTAL-REVENUES> 0
<CGS> 3,036,642
<TOTAL-COSTS> 1,996,271
<OTHER-EXPENSES> (15,632)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,947
<INCOME-PRETAX> 348,391
<INCOME-TAX> 122,000
<INCOME-CONTINUING> 226,391
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 226,391
<EPS-BASIC> .19
<EPS-DILUTED> .19
</TABLE>
