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 September 30, 1996 Commission File No. 0-3680
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 [ ]
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
<PAGE>
INDUSTRIAL ACOUSTICS COMPANY, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
<TABLE>
<CAPTION>
Unaudited
Nine months ended Three months ended
September 30 September 30 September 30 September 30
-------------------------------------------------------------
1996 1995 1996 1995
---- ---- ---- ----
(In thousands, except per share data)
<S> <C> <C> <C> <C>
REVENUES
Net Sales $ 51,183 $ 47,648 $ 15,365 $ 16,740
Interest Income 1,162 1,167 389 418
Other (Net) 481 411 (62) 191
-------- -------- -------- ---------
52,826 49,226 15,692 17,349
-------- -------- -------- ---------
COST AND EXPENSES
Cost of Products Sold 43,646 42,763 12,998 14,531
Selling General and
Administrative Expenses 8,726 8,474 2,827 2,513
Interest 662 452 289 180
-------- -------- -------- ---------
53,034 51,689 16,114 17,224
-------- -------- -------- ---------
(Loss) Income before provision
for income taxes (208) (2,463) (422) 125
Provision/(Benefit) for income taxes 64 (924) (125) 40
-------- -------- -------- ---------
Net (Loss) Income ($272) ($1,539) ($297) $85
======== ======== ======== =========
PER COMMON SHARE DATA:
Net (Loss) Income ($0.09) ($0.52) ($0.10) $0.03
======== ======== ======== =========
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
<TABLE>
<CAPTION>
Unaudited
September 30, 1996 December 31, 1995
------------------ -----------------
(In thousands, except per share data)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents $ 1,295 $ 1,506
Short-term Investments, available for sale 217 955
Receivables 25,610 26,657
Costs and Estimated Earnings in Excess
Of Billings on Uncompleted Contracts 4,715 7,336
Inventories 4,019 3,578
Income Taxes 459
Deferred Income Taxes
Prepaid Expenses 948 1,389
------- -------
TOTAL CURRENT ASSETS 37,263 41,421
MARKETABLE SECURITIES, available for sale 19,862 21,966
PROPERTY, PLANT AND EQUIPMENT - Net 11,832 11,793
DEFERRED INCOME TAXES 224
OTHER ASSETS 447 536
------- -------
TOTAL ASSETS $69,628 $75,716
======= =======
</TABLE>
<PAGE>
INDUSTRIAL ACOUSTICS COMPANY, INC. & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
Unaudited
September 30, 1996 December 31, 1995
------------------ -----------------
(In thousands, except per share data)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Loans Payable $ 11,757 $ 11,169
Accounts Payable and Accrued Expenses 10,159 15,757
Income Taxes 306
Deferred Income taxes 5 9
Customer Deposits 719 307
Current Portion of Long-term Debt
and Capital Lease Obligations 58 58
Billings in Excess of Costs and Estimated Earnings
on Uncompleted Contracts 1,478 993
-------- --------
TOTAL CURRENT LIABILITIES $ 24,176 $ 28,599
CAPITAL LEASE OBLIGATIONS 3,101 3,145
DEFERRED INCOME TAXES 261
DEFERRED COMPENSATION 1,338 1,277
-------- --------
TOTAL LIABILITIES $ 28,615 $ 33,282
======== ========
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 (393) (345)
Net unrealized (loss)/gain on marketable securities (349) 454
Retained Earnings 39,234 39,804
-------- --------
TOTAL SHAREHOLDERS' EQUITY $ 41,013 $ 42,434
-------- --------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $ 69,628 $ 75,716
======== ========
</TABLE>
<PAGE>
INDUSTRIAL ACOUSTICS COMPANY, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 and 1995
<TABLE>
<CAPTION>
Unaudited
September 30, 1996 September 30, 1995
------------------ -------------------
<S> <C> <C>
Net cash (used in)/provided by operating activities $ (935) $ 877
Investing Activities
Purchase of property, plant and equipment, net (996) (684)
Sale of investments and marketable securities 15,134 2,081
Purchase of investments and marketable securities (13,633) (2,229)
-------- --------
Net cash provided by/(used in) investing activities 505 (832)
-------- --------
Financing Activities
Dividends paid (298) (298)
Short Term Loan 568 (807)
Payments on long term debt and capital less obligations (44) (91)
-------- --------
Net cash provided by/(used in) financing activities 226 (1,196)
-------- --------
Effect of exchange rate on changes on cash (7) 32
-------- --------
Decrease in Cash and Cash Equivalents (211) (1,119)
Cash and cash equivalents at beginning of period 1,506 3,273
-------- --------
Cash and cash equivalents at end of period $ 1,295 $ 2,154
======== ========
</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 nine month period ended
September 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 AN ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Sales for the three months ended September 30, 1996 were 8% below the same
period last year but Cost of Products Sold at 85% was 2% lower than the 1995
levels. Therefore, gross profit, at $2,367,000 is 7% above the 1995 level of
$2,209,000. Other income is down because 1995 contained insurance claim
settlements which did not recur in 1996, losses on the sale of investments
which did not occur in 1995 and lower 1996 royalty income. The 1996 increase in
selling, general and administrative expenses can be attributed to a 1995
reversal of a $400,000 provision for bad debts and accrued employee bonuses.
These adjustments did not recur in 1996. Interest expense increased due to
charges against the settlement of prior year local tax audits. The Pre Tax Loss
for the quarter of $422,000 (compared to a $125,000 profit in 1995) is offset
by a $125,000 benefit from income taxes resulting in an after tax loss of
$297,000 or 10 cents a share (against an after tax profit of $85,000 or 3 cents
a share in 1995).
Sales for the nine months ended September 30, 1996 increased 7% compared to the
same period last year. The increased volume, combined with a 4% reduction
in Cost of Products Sold from 89% to 85%, has resulted in a gross profit
increase of $2,652,000 from $4,885,000 to $7,537,000. Other income is up
(despite the reduction in the third quarter) because, in 1996, the Company
realized gains on the sale of investments compared to losses in 1995.
Selling, general and administrative expenses are up for the reasons noted
above. Interest expense rose due to larger borrowings coupled with higher
interest rates and interest paid on the settlement of local tax audits. The Pre
Tax Income of $208,000 shows an improvement compared to the $2,463,000 loss
suffered for the same period last year, however, domestic income continues to be
more than offset by losses at IAC Ltd. in the United Kingdom. The Pre Tax Loss
combined with a $64,000 tax provision results in an after tax loss of $272,000
or 9 cents a share (compared to an after tax loss of $1,539,000 or 52 cents a
share in 1995).
<PAGE>
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - contd.
The reduction in accounts payable and accrued expenses has been financed by
cash flow from receivables, a reduction in cash and the sale of investments.
Order intake for the nine months was $50,825,000 (down due to the very low order
input in domestic Aviation business) for a closing backlog of $49,891,000
compared to $53,986,000 at December 31, 1995.
The Company believes that its financial position remains strong and should
assure adequate capital for the projects the Company is actively pursuing.
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995:
This report contains forward-looking statements. For this purpose, any
statements contained herein that are not statements of historical fact may be
deemed to be forward-looking statements. Without limiting the foregoing, the
words "believes," "anticipates," "plans,""expects" and similar expressions are
intended to identify forward looking statements. There are a number of factors
that could cause the Company's actual results to differ materially from those
indicated by such forward looking statements. These factors include, without
limitation, general economic conditions in the Company's markets, including
inflation, recession, interest rates and other economic factors, especially in
the United States and the United Kingdom but also including other areas of the
world where the Company markets its products, any loss of the services of the
Company's key management personnel, changes in the cost and availability of raw
materials, fluctuations in exchange rates relative to the US dollar for
currencies of the United Kingdom and other nations where the Company does
business, casualty to or disruption of the Company's production facilities and
equipment, delays and disruptions in the shipment of the Company's products and
raw materials, and other factors that generally affect the business of
manufacturing companies with international operations.
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
None
<PAGE>
SIGNATURE
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: November 12, 1996 By: /s/ Arnold W. Kanarek
-----------------------
Arnold W. Kanarek
Senior Vice President, Secretary
Date: November 12, 1996 By: /s/ Robert N. Bertrand
------------------------
Robert N. Bertrand
Vice President - Finance, Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 1,295
<SECURITIES> 217
<RECEIVABLES> 25,610
<ALLOWANCES> 4,715
<INVENTORY> 4,019
<CURRENT-ASSETS> 37,263
<PP&E> 11,832
<DEPRECIATION> 0
<TOTAL-ASSETS> 69,628
<CURRENT-LIABILITIES> 24,176
<BONDS> 0
0
0
<COMMON> 2,979
<OTHER-SE> 2,223
<TOTAL-LIABILITY-AND-EQUITY> 69,628
<SALES> 51,183
<TOTAL-REVENUES> 52,826
<CGS> 43,646
<TOTAL-COSTS> 53,034
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 662
<INCOME-PRETAX> (208)
<INCOME-TAX> 64
<INCOME-CONTINUING> (272)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (272)
<EPS-PRIMARY> (0.09)
<EPS-DILUTED> (0.09)
</TABLE>
