<PAGE> 1
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 April 30, 1995
Commission File Number 1-4124
JETRONIC INDUSTRIES, INC.
-------------------------
(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
---------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (215) 482-7660
--------------
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 ___.
At April 30, 1995, 3,604,499 shares of common stock were outstanding.
<PAGE> 2
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> 3
Summarized business segment information for fiscal years 1996 and 1995 (in
thousands) is as follows:
Three Months Ended April 30,
----------------------------
1995 1994
---- ----
Net revenues:
Electronic communication and
navigation equipment $ 733 $ 1,866
Energy conversion products
group 5,659 3,642
-------- --------
Consolidated $ 6,392 $ 5,508
======== ========
Operating profit:
Electronic communication and
navigation equipment $( 84) $ 434
Energy conversion products
group 558 131
Net corporate expenses ( 466) ( 539)
-------- --------
$ 8 $ 26
======== ========
<PAGE> 4
ITEM 2
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
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 $733,000 and an operating loss of $84,000 for the three months
ended April 30, 1995 (FY 1996) compared to revenues of $1,866,000 and an
operating profit of $434,000 for the three months ended April 30, 1994 (FY
1995). Reductions in revenue and profitability were primarily sustained as a
result of having made final product deliveries under a U.S. Government
contract at the end of the last fiscal year. Presently, negotiations for
similar product are being conducted, but it was necessary to retain the cadre
of experienced personnel and the associated costs to satisfy these future
contracts. The marine electronic and communication business continues to be
impacted by competitive pricing pressures and general softness in the
consumer marine market.
The energy conversion products group reported revenues of $5,659,000 and an
operating profit of $558,000 for the three months ended April 30, 1995
compared to revenues of $3,642,000 and an operating profit of $131,000 for
the three months ended April 30, 1994. Increases in revenues and
profitability were primarily a result of substantially increased custom
switchgear business at our switchgear and engine control systems subsidiary.
The solid state power supply business has improved over the prior year and
has also made a contribution to the revenue and profitability increase.
Net corporate expenses, comprised of interest expense and general corporate
items, were $466,000 for the three months ended April 30, 1995 compared to
$539,000 for the three months ended April 30, 1994.
<PAGE> 5
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - (continued):
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 April 30, 1995, such
borrowings amounted to $2,505,000 with an additional availability based on
the various formulae of $1,010,000. The Company's line of credit agreement
with its current lender expires on June 30, 1996.
At this time, there are no material commitments for capital expenditures
except for the possibility of the Company entering into the manufacturing of
electrical distribution panels for boats and commercial vehicles. The
financing for this transaction is being arranged in conjunction with the
Company's present lending institution. Based upon the availability of funds
under the various financing arrangements the Company deems its liquidity to
be adequate.
<PAGE> 6
JETRONIC INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(000's Omitted)
April 30, 1995 January 31, 1995
-------------- ----------------
ASSETS
Current assets:
Cash $ 30 $ 144
Accounts receivable 3,805 2,852
Inventories 6,445 6,175
Prepaid and other assets 473 575
-------- --------
Total current assets 10,753 9,746
Property, plant and equipment, net 1,193 1,217
Goodwill 318 321
Other assets 259 281
-------- --------
Total assets $ 12,523 $ 11,565
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable to lenders $ 2,505 $ 1,844
Current portion of long-term debt 124 135
Accounts payable 2,083 1,729
Other accrued liabilities 1,026 1,083
-------- --------
Total current liabilities 5,738 4,791
Deferred interest 1,087 1,060
Long-term debt 4,371 4,393
-------- --------
Total liabilities 11,196 10,244
-------- --------
Shareholders' equity:
Common stock 361 361
Capital in excess of par value 12,569 12,569
Retained earnings (deficit) (11,603) (11,609)
-------- --------
Total shareholders' equity 1,327 1,321
-------- --------
$ 12,523 $ 11,565
======== ========
See notes to consolidated financial statements.
<PAGE> 7
JETRONIC INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(000's Omitted)
Three Months Ended April 30,
----------------------------
1995 1994
---- ----
Net sales $ 6,392 $ 5,508
Cost and expenses:
Cost of goods sold 5,485 4,547
Selling and administrative expenses 646 690
Interest and debt expenses 253 245
-------- --------
Total costs and expenses 6,384 5,482
-------- --------
Income before income taxes 8 26
Income tax provision 2 2
-------- --------
Net income $ 6 $ 24
======== ========
Net income per share (A) $ .00 $ .01
======== ========
Notes:
(A) Weighted average number of shares for the three months ended April 30,
1995 and 1994 was 3,604,000 and 3,726,000, respectively.
See notes to consolidated financial statements.
<PAGE> 8
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 income, three months
ended April 30, 1995 6 6
--------- ----- -------- --------- ----- -------
Balance, April 30, 1995 3,604,499 $ 361 $ 12,569 ($ 11,603) $ -0- $ 1,327
========= ===== ======== ========= ===== =======
</TABLE>
See notes to consolidated financial statements.
<PAGE> 9
JETRONIC INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(000's Omitted)
Three Months Ended April 30,
----------------------------
1995 1994
---- ----
Cash flows from operating activities:
Net income $ 6 $ 24
Adjustments to reconcile net income
to net cash provided (used) by
operating activities:
Depreciation and amortization 66 84
Reduction of goodwill 3 2
Deferred taxes ( 15)
Changes in assets and liabilities:
Accounts receivable ( 953) ( 1,173)
Inventories ( 270) 199
Prepaid and other assets 117 89
Other assets 22 16
Accounts payable 354 95
Other liabilities ( 30) 46
-------- --------
Total adjustments ( 706) ( 642)
-------- --------
Net cash provided (used) by
operating activities ( 700) ( 618)
-------- --------
Cash flows from investing activities:
Capital expenditures ( 42) ( 73)
-------- --------
Cash flows from financing activities:
Net borrowings from lenders 661 657
Principal payments on long-term debt ( 33) ( 32)
-------- --------
Net cash provided (used) by
financing activities 628 625
-------- --------
Net increase (decrease) in cash ( 114) ( 66)
Cash beginning of period 144 217
-------- --------
Cash end of period $ 30 $ 151
======== ========
Supplemental disclosures of cash flow
information:
Interest paid during the period $ 12 $ 23
======== ========
Income taxes paid during the period $ 1 $ -0-
======== ========
See notes to consolidated financial statements.
<PAGE> 10
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 (18% 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:
April 30, 1995 January 31, 1995
-------------- ----------------
Finished goods $ 452 $ 516
Raw materials and work in process 5,993 5,659
-------- --------
Total $ 6,445 $ 6,175
======== ========
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 $2,688, arising principally from net operating loss
carryforwards, were partially offset in by deferred tax liabilities and
valuation allowance of $2,586 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:
Three Months Ended April 30,
----------------------------
1995 1994
---- ----
Federal income tax rate 34.0% 34.0%
State income taxes, net of
federal tax benefit 137.0 4.6
Tax effect of non-deductible
expenses 40.8 7.3
NOL utilization under SFAS No. 109 (189.9) ( 38.9)
----- -----
Effective income tax rate 21.9% 7.0%
===== =====
<PAGE> 11
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
April 30, 1995.
SIGNATURES
----------
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.
-------------------------
Registrant
/s/ LEONARD W. PIETRZAK
------------------------
Leonard W. Pietrzak
Vice President - Finance
June 14, 1995
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<NAME> JETRONIC INDUSTRIES, INC.
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