<PAGE>
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 March 31, 1997 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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INDUSTRIAL ACOUSTICS COMPANY, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE QUARTERS ENDED MARCH 31, 1997 AND 1996
<TABLE>
<CAPTION>
Unaudited
March 31
1997 1996
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<S> <C> <C>
(In thousands, except per share data)
REVENUES
Net Sales $15,361 $15,322
Interest Income 386 371
Other (Net) 126 380
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15,873 16,073
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COST AND EXPENSES
Cost of Products Sold 14,130 14,484
Selling General and
Administrative Expenses 3,055 2,729
Interest 217 163
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17,402 17,376
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(Loss) Income before provision
for income taxes (1,529) (1,303)
Benefit for income taxes 117 240
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Net Loss ($1,412) ($1,063)
============ ==========
PER COMMON SHARE DATA:
Net Loss ($0.47) ($0.36)
============= ==========
See notes to the consolidated financial statements
Dividends per Common Share $0.10 $0.10
Average number Common
Share Outstanding 2,979 2,979
</TABLE>
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INDUSTRIAL ACOUSTICS COMPANY, INC. & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, 1997 December 31, 1996
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(in thousands, except per share data)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents $574 $1,254
Short-term Investments, available for sale 140 218
Receivables 20,456 25,161
Costs and Estimated Earnings in Excess
Of Billings on Uncompleted Contracts 6,646 5,108
Inventories 4,848 4,605
Income Taxes Receivable 341 685
Deferred Income Taxes 143 130
Prepaid Expenses 1,432 1,473
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TOTAL CURRENT ASSETS 34,580 38,634
MARKETABLE SECURITIES, available for sale 20,470 20,584
PROPERTY, PLANT AND EQUIPMENT - Net 12,885 13,028
DEFERRED INCOME TAXES 382 124
OTHER ASSETS 124 475
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TOTAL ASSETS $68,441 $72,845
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</TABLE>
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INDUSTRIAL ACOUSTICS COMPANY, INC. & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, 1997 December 31, 1996
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(in thousands, except per share data)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Loans Payable $10,627 $8,775
Accounts Payable and Accrued Expenses 11,743 15,606
Customer Deposits 460 389
Current Portion of Long-term Debt
and Capital Lease Obligations 54 71
Billings in Excess of Costs and Estimated Earnings
on Uncompleted Contracts 1,046 1,128
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TOTAL CURRENT LIABILITIES $23,930 $25,969
CAPITAL LEASE OBLIGATIONS 3,132 3,132
DEFERRED COMPENSATION 1,342 1,367
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TOTAL LIABILITIES $28,404 $30,468
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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 1997 and 1996 excluding 87 shares in
treasury at par value 298 298
Additional Paid-in Capital 2,223 2,223
Equity adjustments:
Cumulative Currency Translation Adjustments (108) 152
Net unrealized (loss) on marketable securities (537) (167)
Retained Earnings 38,161 39,871
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TOTAL SHAREHOLDERS' EQUITY $40,037 $42,377
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TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $68,441 $72,845
======= =======
</TABLE>
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INDUSTRIAL ACOUSTICS COMPANY, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE QUARTERS ENDED MARCH 31, 1997 and 1996
<TABLE>
<CAPTION>
Unaudited
March 31, 1997 March 31, 1996
-------------- ----------------
<S> <C> <C>
Net cash (used in) operating activities $ (1,479) $ (571)
Investing Activities
Purchase of property, plant and equipment, net (425) (209)
Sale of investments and marketable securities 393 10,865
Purchase of investments and marketable securities (819) (11,720)
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Net cash (used in) investing activities (851) (1,064)
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Financing Activities
Dividends paid (298) (297)
Loans payable, net 2,000 1,265
Payments on long term debt and capital less obligations (19) (15)
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Net cash provided by/(used in) financing activities 1,683 953
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Effect of exchange rate on changes on cash (33) (17)
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(Decrease) in Cash and Cash Equivalents (680) (699)
Cash and cash equivalents at beginning of period 1,254 1,506
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Cash and cash equivalents at end of period $574 $807
======= =========
</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 three month period
ended March 31, 1997 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1997. 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, 1996.
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Earnings for the first quarter of 1997 continue to be very unsatisfactory.
Despite good order intake, shipments are hampered by customer imposed delays to
convert backlog into manufactured products and installations.
Sales for the three months ended March 31, 1997 increased $39,000 compared to
the same period last year. Despite the slight increase, gross profit is
$1,231,000 compared to $830,000 in 1996 due primarily to lower costs in the
Domestic Aviation business. Other income decreased $254,000 because 1996
included gains on the sale of investments which did not recur in 1997. The
increase in selling, general and administrative expenses is due to expense
reversals in 1996 which did not recur in 1997. The first quarter pre-tax loss
of $1,529,000 is partly offset by a $117,000 benefit from income taxes compared
to a pre-tax loss of $1,303,000 offset by a $240,000 benefit from income taxes
in 1996. The reduced tax benefit in 1997 is caused by the Company's inability
to carry back losses in the United Kingdom.
The reductions in accounts payable and accrued expenses and the loss for the
quarter were financed by strong cash flow from receivables and additional bank
borrowings.
First quarter order intake for 1997 was $16,181,000 which gives the Company a
Revenue Backlog of $46,673 (unbilled backlog of $52,273,000) compared to
Revenue Backlog of $50,322,000 (unbilled backlog of $55,479,000) at the same
time in 1996. Backlog includes only firm orders which are primarily expected to
be delivered and installed within one year. At any time, backlog is not
necessarily indicative of the level of business to be expected in the ensuing
period.
<PAGE>
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - contd.
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
During March 1997, the Company declared an annual cash dividend of $0.10 per
share, payable to shareholders of record on March 14, 1997. This was paid on
March 21, 1997.
<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: May 9, 1997 By: /s/ Arnold W. Kanarek
-------------------------------------
Arnold W. Kanarek
Senior Vice President, Secretary
Date: May 9, 1997 By: /s/ Robert N. Bertrand
-----------------------------------------
Robert N. Bertrand
Vice President - Finance, Treasurer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 574
<SECURITIES> 140
<RECEIVABLES> 20,456
<ALLOWANCES> 6,646
<INVENTORY> 4,848
<CURRENT-ASSETS> 34,580
<PP&E> 12,885
<DEPRECIATION> 0
<TOTAL-ASSETS> 68,441
<CURRENT-LIABILITIES> 23,930
<BONDS> 0
0
0
<COMMON> 2,979
<OTHER-SE> 2,223
<TOTAL-LIABILITY-AND-EQUITY> 68,441
<SALES> 15,361
<TOTAL-REVENUES> 15,873
<CGS> 14,130
<TOTAL-COSTS> 17,402
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 217
<INCOME-PRETAX> (1,529)
<INCOME-TAX> 117
<INCOME-CONTINUING> (1,412)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,412)
<EPS-PRIMARY> (0.47)
<EPS-DILUTED> (0.47)
</TABLE>
