<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended October 31, 1995
Commission File Number 1-4124
JETRONIC INDUSTRIES, INC.
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(Exact name of registrant as specified in its charter)
Pennsylvania 23-1364981
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4200 Mitchell Street, Philadelphia, PA 19128
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (215) 482-7660
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Indicate by checkmark 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 requirements for
the past 90 days. Yes X No .
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At October 31, 1995, 3,604,499 shares of common stock were outstanding.
<PAGE>
PART I
ITEM 1
------
CONSOLIDATED FINANCIAL STATEMENTS OF THE REGISTRANT AND ITS
SUBSIDIARIES
The following Consolidated Balance Sheets, Consolidated Statements
of Operations, Consolidated Statements of Changes in Shareholders'
Equity and Consolidated Statements of Cash Flows are unaudited.
In the opinion of management, all adjustments, consisting only of
normal recurring adjustments, necessary for a fair statement of
results for the interim periods have been included. Results of
operations for interim periods are not necessarily indicative of a
full year's operations. The aforementioned statements should be
read in conjunction with the annual report on Form 10-K for the
fiscal year ended January 31, 1995.
<PAGE>
Summarized business segment information for fiscal years 1996 and
1995 (in thousands) is as follows:
Nine Months Ended October 31,
-----------------------------
1995 1994
---- ----
Net revenues:
Electronic communication and
navigation equipment $ 1,948 $ 4,549
Energy conversion products
group 16,267 11,641
-------- --------
Consolidated $ 18,215 $ 16,190
======== ========
Operating profit (loss):
Electronic communication and
navigation equipment $( 409) $ 876
Energy conversion products
group 1,521 767
Net corporate expenses ( 1,733) ( 1,634)
-------- --------
$( 621) $ 9
======== ========
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ITEM 2
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
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Results of operations:
----------------------
In the following commentary, "operating profit" is total revenue
less operating expenses. In computing operating profit, none of
the following items has been added or deducted: general corporate
expenses, corporate interest expense, corporate interest income
and income taxes.
The electronic communication and navigation equipment operations
reported revenues of $1,948,000 and an operating loss of $409,000
for the nine months ended October 31, 1995 (FY 1996) compared to
revenues of $4,549,000 and an operating profit of $876,000 for the
nine months ended October 31, 1994 (FY 1995). Revenues and
operating loss for the quarter ended October 31, 1995 were
$360,000 and $226,000, respectively, compared to revenues and
operating profit for the quarter ended October 31, 1994 of
$1,031,000 and $142,000, respectively. Reductions in revenue and
profitability were sustained as a result of having made final
product deliveries under a U.S. Government contract at the end of
the last fiscal year and the necessity to retain the cadre of
experienced personnel and the associated costs to satisfy future
contracts. A new contract for similar equipment was awarded in
August 1995, however minimal deliveries were made in the third
quarter. Additionally, the marine electronic and communication
business was impacted by competitive pricing pressures and a
general softness in the marine market. As a result of these
continuing negative factors affecting the consumer marine
business, the Company is in the process of phasing down its
consumer marine business. It is expected that additional charges
to income will be required in future periods as a result of the
phase down.
The energy conversion products group reported revenues of
$16,267,000 and an operating profit of $1,521,000 for the nine
months ended October 31, 1995 compared to revenues of $11,641,000
and an operating profit of $767,000 for the nine months ended
October 31, 1994. Revenues and operating profit for the quarter
ended October 31, 1995 were $4,626,000 and $678,000, respectively,
compared to revenues and operating profit for the quarter ended
October 31, 1994 of $4,343,000 and $365,000, respectively.
Increases in revenues and profitability were primarily as a result
of substantially increased custom switchgear business at our
switchgear and engine control systems subsidiary, although the
solid state power supply business has also made a positive
contribution to the increases.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - (continued):
Net corporate expenses, consisting of interest expense and general
corporate items, were $1,733,000 for the nine months ended
October 31, 1995 compared to $1,634,000 for the nine months ended
October 31, 1994.
Liquidity and Capital Resources:
--------------------------------
During FY 1996 and FY 1995 the operations of the Company and its
subsidiaries were financed by a lending institution under various
formulae which provide operating funds as required. Such
borrowings are primarily in the form of short-term loans, secured
by assignment of accounts receivable and inventories. Under the
various formulae, borrowings are limited to varying percentages
and maximum dollar amounts of accounts receivable and inventories
with a maximum limitation of $6,500,000. As of October 31, 1995,
such borrowings amounted to $1,981,000 with an additional
availability based on the various formulae of $652,000. The
Company's line of credit agreement with its current lender expires
on June 30, 1996.
At the time the Company adopted Statement of Financial Accounting
Standards No. 109 (SFAS No. 109), Accounting for Income Taxes,
there existed substantial deferred tax assets primarily related to
net operating loss carryforwards. Because of the relatively small
amounts of net income realized in recent years, the Company
provided a valuation reserve covering a substantial portion of the
deferred tax asset relative to net operating loss carryforwards.
The Company will periodically review and adjust the valuation
allowance as needed.
At this time, there are no material commitments for capital
expenditures. As a result of the operating losses incurred in FY
1996, the Company had experienced some cash flow problems in
meeting its obligations on a current basis. That situation has
been substantially rectified as a result of negotiations with the
Company's current lender and an improvement in cash flow.
<PAGE>
JETRONIC INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(000's Omitted)
October 31, 1995 January 31, 1995
---------------- ----------------
ASSETS
Current assets:
Cash $ 259 $ 144
Accounts receivable 2,828 2,852
Inventories 5,870 6,175
Prepaid and other assets 602 575
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Total current assets 9,559 9,746
Property, plant and equipment, net 1,087 1,217
Goodwill 313 321
Other assets 392 281
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Total assets $ 11,351 $ 11,565
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable to lenders $ 1,981 $ 1,844
Current portion of long-term debt 100 135
Accounts payable 2,062 1,729
Other accrued liabilities 1,061 1,083
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Total current liabilities 5,204 4,791
Deferred interest 1,140 1,060
Long-term debt 4,317 4,393
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Total liabilities 10,661 10,244
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Shareholders' equity:
Common stock 361 361
Capital in excess of par value 12,569 12,569
Retained earnings (deficit) (12,240) (11,609)
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Total shareholders' equity 690 1,321
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$ 11,351 $ 11,565
======== ========
See notes to consolidated financial statements.
<PAGE>
JETRONIC INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(000's Omitted)
Nine Months Ended October 31,
-----------------------------
1995 1994
---- ----
Net sales $ 18,215 $ 16,190
Cost and expenses:
Cost of goods sold 15,943 13,365
Selling and administrative expenses 2,090 2,064
Interest and debt expenses 803 752
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Total costs and expenses 18,836 16,181
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Income (loss) before income taxes ( 621) 9
Income tax provision 10 3
-------- --------
Net income (loss) $( 631) $ 6
======== ========
Net income (loss) per share (A) $( .18) $ .00
======== ========
Notes:
(A) Weighted average number of shares for the nine months ended
October 31, 1995 and 1994 was 3,604,000 and 3,726,000,
respectively.
See notes to consolidated financial statements.
<PAGE>
JETRONIC INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(000's Omitted)
Three Months Ended October 31,
------------------------------
1995 1994
---- ----
Net sales $ 5,575 $ 5,374
Cost and expenses:
Cost of goods sold 4,780 4,493
Selling and administrative expenses 723 646
Interest and debt expenses 280 266
-------- --------
Total costs and expenses 5,783 5,405
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Income (loss) before income taxes ( 208) ( 31)
Income tax provision 9 ( 2)
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Net income (loss) $( 217) $( 29)
======== ========
Net income (loss) per share (A) $( .06) $( .01)
======== ========
Notes:
(A) Weighted average number of shares for the three months ended
October 31, 1995 and 1994 was 3,604,000 and 3,726,000,
respectively.
See notes to consolidated financial statements.
<PAGE>
JETRONIC INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
(Unaudited)
(000's Omitted)
<TABLE>
<CAPTION>
Common Stock Capital in Retained Stock
----------------- excess of earnings option
Shares Amount par value (deficit) receivables Total
------ ------ --------- --------- ----------- -----
<S> <C> <C> <C> <C> <C> <C>
Balance, January 31, 1994 3,722,199 $ 373 $ 12,815 ($ 11,663) ($ 258) $ 1,267
Recision of stock option
subscriptions ( 117,700) ( 12) ( 246) 258
Net income, year ended
January 31, 1995 54 54
--------- ----- -------- --------- ------ ---------
Balance, January 31, 1995 3,604,499 361 12,569 ( 11,609) -0- 1,321
Net loss, nine months
ended October 31, 1995 ( 631) ( 631)
--------- ----- -------- --------- ----- --------
Balance, October 31, 1995 3,604,499 $ 361 $ 12,569 ($ 12,240) $ -0- $ 690
========= ===== ======== ========= ===== ========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
JETRONIC INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(000's Omitted)
Nine Months Ended October 31,
-----------------------------
1995 1994
---- ----
Cash flows from operating activities:
Net income (loss) $( 631) $ 6
Adjustments to reconcile net income
(loss) to net cash provided (used)
by operating activities:
Depreciation and amortization 184 252
Reduction of goodwill 8 8
Changes in assets and liabilities:
Accounts receivable 24 ( 510)
Inventories 305 ( 6)
Prepaid and other assets ( 27) 57
Other assets ( 111) 44
Accounts payable 333 20
Other liabilities 58 9
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Total adjustments 774 ( 126)
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Net cash provided (used) by
operating activities 143 ( 120)
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Cash flows from investing activities:
Capital expenditures ( 54) ( 141)
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Cash flows from financing activities:
Net borrowings from lenders 137 223
Principal payments on long-term debt ( 111) ( 85)
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Net cash provided (used) by
financing activities 26 138
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Net increase (decrease) in cash 115 ( 123)
Cash beginning of period 144 217
------- --------
Cash end of period $ 259 $ 94
======= ========
Supplemental disclosures of cash flow
information:
Interest paid during the period $ 186 $ 276
======= ========
Income taxes paid during the period $ 1 $ 6
======= ========
See notes to consolidated financial statements.
<PAGE>
JETRONIC INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(000's Omitted)
Note 1 - INVENTORIES
Inventories, which are stated at the lower of last-in first-out
(LIFO) cost or market for electronic communication and navigation
equipment and a portion of energy conversion products (10% of
inventory) and at the lower of first-in first-out (FIFO) cost or
market for the remaining portion of energy conversion products, are
summarized as follows:
October 31, 1995 January 31, 1995
---------------- ----------------
Raw materials $ 3,921 $ 3,537
Work in process 1,928 2,121
Finished goods 21 517
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Total $ 5,870 $ 6,175
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Note 2 - STATEMENT OF OPERATIONS
Effective February 1, 1993, the Company changed its method of
accounting for income taxes by adopting Statement of Financial
Accounting Standards No. 109 (SFAS No. 109). There was no
cumulative effect on prior years as a result of this change in
accounting principle. Under SFAS No. 109 the deferred tax
provision is determined under the liability method. Deferred tax
assets of $2,870, arising principally from net operating loss
carryforwards, were partially offset by deferred tax liabilities
and valuation allowance of $2,715 in accordance with guidelines
established under SFAS No. 109. The Company will periodically
review and adjust the valuation allowance as needed.
Differences between the statutory federal income tax rate and the
effective tax rate are accounted for as follows:
Nine Months Ended October 31,
-----------------------------
1995 1994
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Federal income tax rate (34.0%) 34.0%
State income taxes, net of
federal tax benefit 2.8 23.3
Tax effect of non-deductible
expenses 1.7 64.0
NOL utilization under SFAS No. 109 31.3 (86.0)
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Effective income tax rate 1.8% 35.3%
===== =====
<PAGE>
PART II
Items 1 thru 6(a) are not applicable.
Item 6(b) - There were no reports on Form 8-K filed for the
quarter ended October 31, 1995.
SIGNATURES
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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.
JETRONIC INDUSTRIES, INC.
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Registrant
---------------------------------------
Leonard W. Pietrzak
Vice President - Finance
December 13, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000053500
<NAME> JETRONIC INDUSTRIES, INC.
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-31-1996
<PERIOD-START> FEB-01-1995
<PERIOD-END> OCT-31-1995
<CASH> 259
<SECURITIES> 0
<RECEIVABLES> 2,835
<ALLOWANCES> 7
<INVENTORY> 5,870
<CURRENT-ASSETS> 9,559
<PP&E> 5,222
<DEPRECIATION> 4,135
<TOTAL-ASSETS> 11,351
<CURRENT-LIABILITIES> 5,204
<BONDS> 3,856
<COMMON> 361
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<OTHER-SE> 329
<TOTAL-LIABILITY-AND-EQUITY> 11,351
<SALES> 18,215
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<CGS> 15,943
<TOTAL-COSTS> 18,033
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