FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20459
Quarterly Report under Section 13 or 15 (d) of the Securities Act of 1934
For Quarter Ended June 30, 1996 Commission File No. 0-3680
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Industrial Acoustics Company, Inc.
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New York 13-1713318
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(State or other jurisdiction of (IRS employer
Incorporation or organization) Identification #)
1160 Commerce Avenue, Bronx, New York 10462
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(Address of Principal Executive Offices) (Zip Code)
(718) 931-8000
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(Registrant's Telephone Number, including Area Code)
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(Former Name, Former Address and Former Fiscal Year,
if changed from last report)
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
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
2,978,961
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<PAGE>
INDUSTRIAL ACOUSTICS COMPANY, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995
<TABLE>
<CAPTION>
Unaudited
Six months ended Three months ended
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June 30 June 30 June 30 June 30
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1996 1995 1996 1995
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(In thousands, except per share data)
<S> <C> <C> <C> <C>
REVENUES
Net Sales $ 35,818 $ 30,907 $ 20,496 $ 16,198
Interest Income 772 716 401 347
Other 546 253 165 96
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37,136 31,876 21,062 16,641
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COST AND EXPENSES
Cost of Products Sold 30,649 28,232 16,165 14,402
Selling General and
Administrative Expenses 5,899 5,961 3,170 2,965
Interest 373 272 210 104
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36,921 34,465 19,545 17,471
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Income(Loss)before provision/
(Benefit) for income taxes 215 (2,589) 1,517 (830)
Provision/(benefit) for income taxes 187 (964) 429 (385)
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Net Income (Loss) $ 28 ($1,625) $ 1,088 ($445)
==========================================
PER COMMON SHARE DATA:
Net Income (Loss) $ 0.01 ($0.55) $ 0.37 ($0.15)
==========================================
Dividends per Common Share $ 0.10 $ 0.10
Average number Common
Share Outstanding 2,979 2,979 2,979 2,979
</TABLE>
<PAGE>
INDUSTRIAL ACOUSTICS COMPANY, INC. & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1996
<TABLE>
<CAPTION>
Unaudited
June 30, 1996 December 31, 1995
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(In thousands, except per share data)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents $ 514 $ 1,506
Short-term Investments, available for sale 528 955
Receivables 25,710 26,657
Costs and Estimated Earnings in Excess
Of Billings on Uncompleted Contracts 6,236 7,336
Inventories 3,978 3,578
Income Taxes 55
Deferred Income Taxes
Prepaid Expenses 1,168 1,389
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TOTAL CURRENT ASSETS 38,189 41,421
MARKETABLE SECURITIES, Available for sale 21,568 21,966
PROPERTY, PLANT AND EQUIPMENT - Net 11,877 11,793
DEFERRED INCOME TAXES 319
OTHER ASSETS 643 536
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TOTAL ASSETS $72,596 $75,716
=====================================
</TABLE>
<PAGE>
INDUSTRIAL ACOUSTICS COMPANY, INC. & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1996
<TABLE>
<CAPTION>
Unaudited
June 30, 1996 December 31, 1996
-------------------------------------
(In thousands, except per share data)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Loans Payable $ 13,857 $ 11,169
Accounts Payable and Accrued Expenses 11,858 15,757
Income Taxes 306
Deferred Income taxes 8 9
Customer Deposits 655 307
Current Portion of Long-term Debt
and Capital Lease Obligations 54 58
Billings in Excess of Costs and Estimated Earnings
on Uncompleted Contracts 461 993
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TOTAL CURRENT LIABILITIES $ 26,893 $ 28,599
CAPITAL LEASE OBLIGATIONS 3,120 3,145
DEFERRED INCOME TAXES 261
DEFERRED COMPENSATION 1,310 1,277
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TOTAL LIABILITIES $ 31,323 $ 33,282
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COMMITMENTS
SHAREHOLDERS' EQUITY
Common Stock, par value $0.10 a share; authorized 5,000 shares; issued
and outstanding 2,979 in 1996 and 1995 excluding 87 shares in
treasury at par value 298 298
Additional Paid-in Capital 2,223 2,223
Equity adjustments:
Cumulative Currency Translation Adjustments (294) (345)
Net unrealized (loss)/gain on marketable securities (486) 454
Retained Earnings 39,532 39,804
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TOTAL SHAREHOLDERS' EQUITY $ 41,273 $ 42,434
=====================================
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $ 72,596 $ 75,716
=====================================
</TABLE>
<PAGE>
INDUSTRIAL ACOUSTICS COMPANY, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 and 1995
<TABLE>
<CAPTION>
Unaudited
June 30, 1996 June 30, 1995
------------------------------
<S> <C> <C>
Net cash (used in)/provided by operating activities (1,903) 280
Investing Activities
Purchase of property, plant and equipment, net (849) (538)
Sale of investments and marketable securities 12,107 1,582
Purchase of investments and marketable securities (12,731) (1,935)
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Net cash (used in)/provided by investing activities (1,473) (891)
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Financing Activities
Dividends paid (298) (298)
Short Term Loan 2,730 (1,057)
Payments on long term debt and capital less obligations (29) (91)
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Net cash provided by/(used in) financing activities 2,403 (1,446)
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Effect of exchange rate on changes on cash (18) 257
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Decrease in Cash and Cash Equivalents (991) (1,800)
Cash and cash equivalents at beginning of period 1,506 3,273
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Cash and cash equivalents at end of period $ 515 $ 1,473
==============================
</TABLE>
<PAGE>
Basis of Presentation
The accompanying unaudited condensed 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 Rule
10-01 of regulations S-X. Accordingly, they do not include all the information
and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments considered
necessary for a fair presentation have been included. All such adjustment are
of a normal recurring nature. Operating results for the six month period ended
June 30, 1996 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1996. For further information, refer
to the consolidated financial statements and footnotes included in the
Company's annual report on Form 10-K for the year ended December 31, 1995.
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Pre Tax Income for the six month period ended June 30, 1996 of $215,000 shows a
dramatic improvement over the $2,589,000 loss suffered in the same period last
year. However, the domestic profits earned were offset by losses at IAC Ltd. in
the United Kingdom.
Sales for the three months ended June 30, 1996 increased 27% compared to the
same period last year. The increased volume, combined with a 17% reduction in
Domestic Cost of Products Sold, has resulted in a gross profit increase from
$1,796,000 to $4,331,000. Other income is up because the 1995 results included
losses on the sale of investments which did not recur in 1996. The increase in
selling, general and administrative expenses can be attributed to legal
expenses in the successful defense of a patent lawsuit. Interest expense is up
because of higher borrowings and interest rates. Pre Tax Income for the quarter
of $1,517,000 (compared to an $830,000 loss in 1995) is offset by a $427,000
tax provision resulting in an after tax profit of $1,090,000 or 37 cents a
share (against an after tax loss of $445,000 or 15 cents a share in 1995).
Sales for the six months ended June 30, 1996 increased 16% compared to the same
period last year. The increased volume, combined with an 8% reduction in
Domestic Cost of Products Sold, has resulted in a gross profit increase from
$2,675,000 to $5,169,000. Other income is up because the 1995 results included
losses on other sale of investments which did not recur in 1996.
Selling, general and administrative expenses are close to 1995 levels because
the legal fees associated with the patent lawsuit are offset by lower bonus
expenses. Interest expense is up due to higher borrowing and interest rates.
Pre Tax Income for the six months of $215,000 (compared to a $2,589,000 loss in
1995) is offset by a $187,000 provision for taxes resulting in an after tax
profit of $28,000 or 1 cent a share (compared to an after tax loss of
$1,625,000 or 55 cents a share in 1995).
<PAGE>
The reduction in accounts payable and accrued expenses has been financed by
cash flow from receivables, a reduction in cash and additional bank borrowings.
Order intake for the period ended June 30, 1996 was $32,100,000 (which is low
due to the very low order input in Aviation business both in the domestic and
foreign operations) for a closing backlog of $50,867,000 compared to
$54,892,000 at December 31, 1995.
The Company's financial position remains strong and should assure adequate
capital for the projects the Company is actively pursuing.
PART II- OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
The Company is involved as a defendant in several actions instituted by others
in the ordinary course of business. In the opinion of management, none of the
actions will result in liability.
ITEM 5 - OTHER MATERIALLY IMPORTANT FACTS
<PAGE>
SIGNATURE
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Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be singed on its behalf by the
undersigned thereunto duly authorized.
INDUSTRIAL ACOUSTICS COMPANY, INC.
Date: August 2, 1996 By /s/ Arnold W. Kanarek
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Arnold W. Kanarek
Senior Vice President, Secretary
Date: August 2, 1996 By /s/ Robert N. Bertrand
-------------------------------------
Robert N. Bertrand
Vice President, Finance, Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 514
<SECURITIES> 528
<RECEIVABLES> 25,710
<ALLOWANCES> 6,236
<INVENTORY> 3,978
<CURRENT-ASSETS> 38,189
<PP&E> 11,877
<DEPRECIATION> 0
<TOTAL-ASSETS> 72,596
<CURRENT-LIABILITIES> 26,893
<BONDS> 0
0
0
<COMMON> 2,979
<OTHER-SE> 2,223
<TOTAL-LIABILITY-AND-EQUITY> 72,596
<SALES> 35,818
<TOTAL-REVENUES> 37,136
<CGS> 30,649
<TOTAL-COSTS> 36,921
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 373
<INCOME-PRETAX> 215
<INCOME-TAX> 187
<INCOME-CONTINUING> 28
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 28
<EPS-PRIMARY> 0.01
<EPS-DILUTED> 0.01
</TABLE>
