<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 July 31, 1995
Commission File Number 1-4124
JETRONIC INDUSTRIES, INC.
-------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 23-1364981
------------ ----------
(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 July 31, 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:
Six Months Ended July 31,
-------------------------
1995 1994
---- ----
Net revenues:
Electronic communication and
navigation equipment $ 1,588 $ 3,517
Energy conversion products
group 11,052 7,299
-------- --------
Consolidated $ 12,640 $ 10,816
======== ========
Operating profit (loss):
Electronic communication and
navigation equipment $( 183) $ 734
Energy conversion products
group 843 402
Net corporate expenses ( 1,073) ( 1,096)
-------- --------
$( 413) $ 40
======== ========
<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 $1,588,000 and an operating loss of $183,000 for the six months
ended July 31, 1995 (FY 1996) compared to revenues of $3,517,000 and an
operating profit of $734,000 for the six months ended July 31, 1994 (FY 1995).
Revenues and operating loss for the quarter ended July 31, 1995 were $856,000
and $99,000, respectively, compared to revenues and operating profit for the
quarter ended July 31, 1994 of $1,651,000 and $300,000, 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. Additionally, the marine electronic and
communication business continues to be impacted by competitive pricing pressures
and 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 $11,052,000 and an
operating profit of $843,000 for the six months ended July 31, 1995 compared to
revenues of $7,299,000 and an operating profit of $402,000 for the six months
ended July 31, 1994. Revenues and operating profit for the quarter ended July
31, 1995 were $5,393,000 and $285,000, respectively, compared to revenues and
operating profit for the quarter ended July 31, 1994 of $3,657,000 and $271,000,
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. The solid state power supply business has
improved over the prior year and has also made a contribution to the revenue and
profitability increase.
<PAGE> 5
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 $1,073,000 for the six months ended July 31, 1995 compared to
$1,096,000 for the six months ended July 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 July 31, 1995, such borrowings amounted to
$2,458,000 with an additional availability based on the various formulae of
$598,000. 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. As a
result of the operating losses incurred in the second quarter, the Company has
experienced cash flow problems in meeting its obligations on a current basis.
The Company is presently negotiating with its current lenders for relief in
order to rectify the present situation.
<PAGE> 6
JETRONIC INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(000's Omitted)
July 31, 1995 January 31, 1995
------------- ----------------
ASSETS
Current assets:
Cash $ 159 $ 144
Accounts receivable 3,287 2,852
Inventories 5,769 6,175
Prepaid and other assets 620 575
-------- --------
Total current assets 9,835 9,746
Property, plant and equipment, net 1,135 1,217
Goodwill 316 321
Other assets 236 281
-------- --------
Total assets $ 11,522 $ 11,565
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable to lenders $ 2,458 $ 1,844
Current portion of long-term debt 112 135
Accounts payable 1,637 1,729
Other accrued liabilities 946 1,083
-------- --------
Total current liabilities 5,153 4,791
Deferred interest 1,113 1,060
Long-term debt 4,349 4,393
-------- --------
Total liabilities 10,615 10,244
-------- --------
Shareholders' equity:
Common stock 361 361
Capital in excess of par value 12,569 12,569
Retained earnings (deficit) (12,023) (11,609)
-------- --------
Total shareholders' equity 907 1,321
-------- --------
$ 11,522 $ 11,565
======== ========
See notes to consolidated financial statements.
<PAGE> 7
JETRONIC INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(000's Omitted)
Six Months Ended July 31,
-------------------------
1995 1994
---- ----
Net sales $ 12,640 $ 10,816
Cost and expenses:
Cost of goods sold 11,163 8,872
Selling and administrative expenses 1,367 1,418
Interest and debt expenses 523 486
-------- --------
Total costs and expenses 13,053 10,776
-------- --------
Income (loss) before income taxes ( 413) 40
Income tax provision 1 5
-------- --------
Net income (loss) $( 414) $ 35
======== ========
Net income (loss) per share (A) $( .12) $ .01
======== ========
Notes:
(A) Weighted average number of shares for the six months ended July 31, 1995 and
1994 was 3,604,000 and 3,761,000, respectively.
See notes to consolidated financial statements.
<PAGE> 8
JETRONIC INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(000's Omitted)
Three Months Ended July 31,
---------------------------
1995 1994
---- ----
Net sales $ 6,248 $ 5,308
Cost and expenses:
Cost of goods sold 5,678 4,325
Selling and administrative expenses 721 728
Interest and debt expenses 270 241
-------- --------
Total costs and expenses 6,669 5,294
-------- --------
Income (loss) before income taxes ( 421) 14
Income tax provision ( 1) 3
-------- --------
Net income (loss) $( 420) $ 11
======== ========
Net income (loss) per share (A) $( .12) $ .00
======== ========
Notes:
(A) Weighted average number of shares for the three months ended July 31, 1995
and 1994 was 3,604,000 and 3,761,000, respectively.
See notes to consolidated financial statements.
<PAGE> 9
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, six months
ended July 31, 1995 ( 414) ( 414)
--------- ----- -------- -------- ----- -------
Balance, July 31, 1995 3,604,499 $ 361 $ 12,569 ($ 12,023) $ -0- $ 907
========= ===== ======== ======== ===== =======
</TABLE>
See notes to consolidated financial statements.
<PAGE> 10
JETRONIC INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(000's Omitted)
Six Months Ended July 31,
-------------------------
1995 1994
---- ----
Cash flows from operating activities:
Net income (loss) $( 414) $ 35
Adjustments to reconcile net income
(loss) to net cash provided (used)
by operating activities:
Depreciation and amortization 131 167
Reduction of goodwill 5 5
Changes in assets and liabilities:
Accounts receivable ( 435) (1,020)
Inventories 406 25
Prepaid and other assets ( 45) 136
Other assets 45 19
Accounts payable ( 92) 2
Other liabilities ( 84) ( 123)
-------- --------
Total adjustments ( 69) ( 789)
-------- --------
Net cash provided (used) by
operating activities ( 483) ( 754)
-------- --------
Cash flows from investing activities:
Capital expenditures ( 49) ( 86)
-------- --------
Cash flows from financing activities:
Net borrowings from lenders 614 857
Principal payments on long-term debt ( 67) ( 65)
-------- --------
Net cash provided (used) by
financing activities 547 792
-------- --------
Net increase (decrease) in cash 15 ( 48)
Cash beginning of period 144 217
-------- --------
Cash end of period $ 159 $ 169
======== ========
Supplemental disclosures of cash flow
information:
Interest paid during the period $ 175 $ 257
======== ========
Income taxes paid during the period $ 1 $ 6
======== ========
See notes to consolidated financial statements.
<PAGE> 11
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 (14% 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:
July 31, 1995 January 31, 1995
------------- ----------------
Finished goods $ 171 $ 516
Raw materials and work in process 5,598 5,659
-------- --------
Total $ 5,769 $ 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 $2,815, arising principally from net operating loss
carryforwards, were partially offset by deferred tax liabilities and
valuation allowance of $2,713 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:
Six Months Ended July 31,
-------------------------
1995 1994
---- ----
Federal income tax rate (34.0%) 34.0%
State income taxes, net of
federal tax benefit 2.6 9.0
Tax effect of non-deductible
expenses 1.6 9.2
NOL utilization under SFAS No. 109 30.0 (38.6)
---- ----
Effective income tax rate 0.2% 13.6%
==== ====
<PAGE> 12
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
July 31, 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
-------------------------
Leonard W. Pietrzak
Vice President - Finance
September 18, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000053500
<NAME> JETRONIC INDUSTRIES, INC.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-31-1996
<PERIOD-END> JUL-31-1995
<CASH> 159
<SECURITIES> 0
<RECEIVABLES> 3,305
<ALLOWANCES> 18
<INVENTORY> 5,769
<CURRENT-ASSETS> 9,835
<PP&E> 5,217
<DEPRECIATION> 4,082
<TOTAL-ASSETS> 11,522
<CURRENT-LIABILITIES> 5,153
<BONDS> 3,856
<COMMON> 361
0
0
<OTHER-SE> 546
<TOTAL-LIABILITY-AND-EQUITY> 11,522
<SALES> 12,640
<TOTAL-REVENUES> 12,640
<CGS> 11,163
<TOTAL-COSTS> 12,530
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 523
<INCOME-PRETAX> (413)
<INCOME-TAX> 1
<INCOME-CONTINUING> (414)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (414)
<EPS-PRIMARY> (.12)
<EPS-DILUTED> (.12)
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