<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 April 30, 1996
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 .
----- -----
At April 30, 1996, 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 (Deficit)
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, 1996.
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Summarized business segment information for fiscal years 1997 and 1996 (in
thousands) is as follows:
Three Months Ended April 30,
----------------------------
1996 1995*
-------- --------
Net revenues:
Electronic communication
equipment $ 341 $ 92
Energy conversion products
group 4,889 5,659
-------- --------
Consolidated $ 5,230 $ 5,751
======== ========
Operating profit (loss):
Electronic communication
equipment $ 110 $( 76)
Energy conversion products
group 617 558
Net corporate expenses ( 520) ( 466)
-------- --------
$ 207 $ 16
======== ========
* Reclassified to conform to 1997 presentation.
<PAGE>
ITEM 2
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 and has been reclassified to exclude discontinued operations. 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 equipment operations reported revenues of $341,000
and an operating profit of $110,000 for the three months ended April 30, 1996
(1997) compared to revenues of $92,000 and an operating loss of $76,000 for the
three months ended April 30, 1995 (1996). The increase in both revenues and
profitability is related to deliveries under a U.S. Government contract for
products similar to those produced in the past. The customer has exercised
options under the existing contract for delivery at a future date.
The energy conversion products group reported revenues of $4,889,000 and an
operating profit of $617,000 for the three months ended April 30, 1996 compared
to revenues of $5,659,000 and an operating profit of $558,000 for the three
months ended April 30, 1995. The increase in profitability is primarily
associated with the solid state power supply business which has embarked on a
substantial program of supplying ancillary equipment to a number of major
airlines.
Net corporate expenses, comprised of interest expense and general corporate
items, were $520,000 for the three months ended April 30, 1996 compared to
$466,000 for the three months ended April 30, 1995. The increase is primarily
associated with increased interest costs.
Liquidity and Capital Resources:
During FY 1997 and FY 1996 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 $5,000,000. As of April 30, 1996, such borrowings amounted to
$1,739,000 with an additional availability based on the various formulae of
$660,000. The Company's line of credit agreement with its current lender expires
on June 30, 1998.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - (continued):
At this time, there are no material commitments for capital expenditures. Cash
requirements for the current fiscal year should decrease by approximately five
percent, primarily based upon the Company's discontinuance of its marine
products division. Based upon the availability of funds under its various
existing financing arrangements, the Company deems its liquidity to be adequate.
<PAGE>
JETRONIC INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(000's Omitted)
April 30, 1996 January 31, 1996
-------------- ----------------
ASSETS
Current assets:
Cash $ 551 $ 652
Accounts receivable 2,426 2,858
Inventories 4,568 4,140
Prepaid and other assets 531 601
-------- --------
Total current assets 8,076 8,251
Property, plant and equipment, net 476 481
Goodwill 308 311
Other assets 480 364
-------- --------
Total assets $ 9,340 $ 9,407
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Notes payable to lenders $ 1,739 $ 2,331
Current portion of long-term debt 81 89
Accounts payable 2,122 1,584
Other accrued liabilities 855 1,143
Deferred interest 1,193 1,166
-------- --------
Total current liabilities 5,990 6,313
Long-term debt 4,045 3,996
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Total liabilities 10,035 10,309
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Shareholders' equity (deficit):
Common stock 361 361
Capital in excess of par value 12,569 12,569
Retained earnings (deficit) (13,625) (13,832)
-------- --------
Total shareholders'
equity (deficit) ( 695) ( 902)
-------- --------
$ 9,340 $ 9,407
======== ========
See notes to consolidated financial statements.
<PAGE>
JETRONIC INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(000's Omitted)
Three Months Ended April 30,
----------------------------
1996 1995*
-------- --------
Net sales $ 5,230 $ 5,751
Cost and expenses:
Cost of goods sold 4,313 4,944
Selling and administrative expenses 455 538
Interest and debt expenses 255 253
-------- --------
Total costs and expenses 5,023 5,735
-------- --------
Income from continuing operations
before income taxes 207 16
Income tax provision 2
-------- --------
Income from continuing operations 207 14
Discontinued operations ( 8)
-------- --------
Net income $ 207 $ 6
======== ========
Net income per share (A) $ .06 $ .00
======== ========
Notes:
(A) Weighted average number of shares for the three months ended April 30,
1996 and 1995 was 3,604,000.
See notes to consolidated financial statements.
* Reclassified to conform to 1996 presentation.
<PAGE>
JETRONIC INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
(Unaudited)
(000's Omitted)
<TABLE>
<CAPTION>
Common Stock Capital in Retained
------------------ excess of earnings
Shares Amount par value (deficit) Total
--------- ------ --------- --------- -----
<S> <C> <C> <C> <C> <C>
Balance, January 31, 1995 3,604,499 $361 $12,569 ($11,609) $1,321
Net loss, year ended
January 31, 1996 ( 2,223) ( 2,223)
--------- ----- ------- ------- ------
Balance, January 31, 1996 3,604,499 361 12,569 ( 13,832) ( 902)
Net income, three months
ended April 30, 1996 207 207
--------- ----- ------- ------- ------
Balance, April 30, 1996 3,604,499 $361 $12,569 ($13,625) ($ 695)
========= ===== ======= ======= ======
</TABLE>
See notes to consolidated financial statements.
<PAGE>
JETRONIC INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(000's Omitted)
Three Months Ended April 30,
----------------------------
1996 1995*
-------- ---------
Cash flows from operating activities:
Net income $ 207 $ 6
Adjustments to reconcile net income
to net cash provided (used)
by operating activities:
Depreciation and amortization 49 58
Reduction of goodwill 3 3
Deferred taxes ( 15)
Changes in assets and liabilities:
Accounts receivable 432 (1,018)
Inventories ( 428) ( 321)
Prepaid and other assets 70 86
Net assets of discontinued
operations 210
Other assets ( 140) ( 2)
Accounts payable 538 368
Other liabilities ( 261) ( 75)
------- -------
Total adjustments 263 ( 706)
------- -------
Net cash provided (used) by
operating activities 470 ( 700)
------- -------
Cash flows from investing activities:
Capital expenditures ( 20) ( 42)
------- -------
Cash flows from financing activities:
Proceeds from long-term debt 65
Net borrowings from lenders ( 592) 661
Principal payments on long-term debt ( 24) ( 33)
------- -------
Net cash provided (used) by
financing activities ( 551) 628
------- -------
Net increase (decrease) in cash ( 101) ( 114)
Cash beginning of period 652 144
------- -------
Cash end of period $ 551 $ 30
======= =======
Supplemental disclosures of cash flow
information:
Interest paid during the period $ 98 $ 12
======= =======
Income taxes paid during the period $ -0- $ 1
======= =======
See notes to consolidated financial statements.
* Reclassified to conform to 1996 presentation.
<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 equipment and a portion of energy
conversion products (8% 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, 1996 January 31, 1996
-------------- ----------------
Raw materials $ 2,786 $ 2,626
Work in process 1,782 1,514
-------- --------
Total $ 4,568 $ 4,140
======== ========
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). Under SFAS No. 109 the deferred tax provision is
determined under the liability method. Deferred tax assets of $3,316,
arising principally from net operating loss carryforwards, were partially
offset by deferred tax liabilities and valuation allowance of $3,142 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,
----------------------------
1996 1995
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Federal income tax rate 34.0% 34.0%
State income taxes, net of
federal tax benefit 137.0
Tax effect of non-deductible
expenses 1.5 40.8
NOL utilization under SFAS No. 109 ( 35.5) (189.9)
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Effective income tax rate -0- % 21.9%
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<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
April 30, 1996.
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 26, 1996
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<CIK> 0000053500
<NAME> JETRONIC INDUSTRIES, INC.
<S> <C>
<PERIOD-TYPE> 3-MOS
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<PERIOD-START> FEB-01-1996
<PERIOD-END> APR-30-1996
<CASH> 551
<SECURITIES> 0
<RECEIVABLES> 2,437
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