<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
--------------------------------------------------
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from_________________________to_______________________
Commission file number 0-3821
---------
GENCOR INDUSTRIES, INC.
-----------------------
(Exact name of registrant as specified in its charter)
Delaware 59-0933147
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporated or organization) Identification No.)
5201 North Orange Blossom Trail, Orlando, Florida 32810
--------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(407) 290-6000
--------------
(Registrant's telephone number, including area code)
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 and 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
------- -------
Indicate number of shares outstanding of each of the issuer's classes of common
stock as of the latest practicable date.
Class Outstanding at April 29, 1995
----- -----------------------------
Common stock, $.10 par value 1,338,832 shares
Class B stock, $.10 par value 434,032 shares
1
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Gencor Industries, Inc.
Form 10-Q for the Quarter Ended March 31, 1995
Index
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<TABLE>
<CAPTION>
Page
----
<S> <C>
Part I. Financial Information - Unaudited
Item 1. Financial Statements
a) Consolidated Balance Sheet -
March 31, 1995 and
September 30, 1994 3
b) Consolidated Income Statement -
Three and Six Months Ended
March 31, 1995 and 1994 4
c) Consolidated Statement of Cash Flows -
Six Months Ended
March 31, 1995 and 1994 5
d) Notes to Consolidated
Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Position and Results of Operations 7
Part II. Other Information 8
Exhibit 11 10
</TABLE>
2
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PART I. FINANCIAL INFORMATION
ITEM 1.
- - - - - - -------
GENCOR INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
March 31, September 30,
1995 1994
---- ----
<S> <C> <C>
Assets
- - - - - - ------
Current assets:
Cash and cash equivalents $ 1,240 $ 3,925
Accounts and notes receivable, less allowance
for doubtful accounts of $2,411 and $2,533 7,530 5,532
Inventories:
Raw materials 8,081 6,348
Work-in-progress 4,373 1,059
Finished goods 4,127 4,703
---------- ----------
16,581 12,110
Prepaid expenses, including deferred income taxes
of $1,175 and $1,210 1,582 1,871
---------- ----------
Total current assets 26,933 23,438
Property and equiptment, net 10,576 10,669
Other assets 366 432
---------- ----------
$ 37,875 $ 34,539
========== ==========
Liabilities and Shareholder' Equity
- - - - - - -----------------------------------
Current Liabilities:
Notes payable $ 424 $ 964
Current portion of long-term debt 2,626 2,602
Accounts payable 6,220 3,700
Customer deposits 3,314 1,513
Accrued expenses 4,566 5,086
Income taxes payable 738 1,307
---------- ----------
Total current liabilities 17,888 15,172
Long-term debt 10,633 11,623
Deferred income taxes 581 644
Shareholders' equity:
Preferred stock, par value $0.10 per share; authorized
300,000 shares, none issued --- ---
Common stock, par value $0.10 per share; authorized
5,000,000 shares; 1,605,267 and 1,459,507 shares issued,
respectively 161 146
Class B stock, par value $0.10 per share; authorized
3,000,000 shares; 434,032 and 394,575 shares issued,
respectively 43 40
Capital in excess of par value 7,741 6,807
Retained earnings 1,443 744
Cumulative translation adjustment 335 316
---------- ----------
9,723 8,053
Subscription receivable from officer (95) (100)
Less common stock in treasury, at cost (266,435 and 242,214
shares, respectively) (855) (853)
---------- ----------
8,773 7,100
Contingencies (Note 2)
---------- ----------
$ 37,875 $ 34,539
========== ==========
</TABLE>
See accampanying notes to consolidated financial statements.
3
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GENCOR INDUSTRIES, INC.
CONSOLIDATED INCOME STATEMENT
(UNAUDITED)
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
--------------------------- --------------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net revenue $ 18,686 $ 20,259 $ 30,144 $ 29,478
Costs and expenses:
Production costs 12,566 14,819 21,158 22,200
Product engineering and development 524 523 942 1,038
Selling, general and administrative 3,023 2,518 5,057 4,491
---------- ---------- ---------- ----------
16,113 17,860 27,157 27,729
---------- ---------- ---------- ----------
Operating income 2,573 2,399 2,987 1,749
Other income (expense):
Interest income 8 19 10 37
Interest expense (262) (220) (507) (479)
Miscellaneous 49 (32) 246 (42)
---------- ---------- ---------- ----------
Income before income taxes 2,368 2,166 2,736 1,265
Provision for income taxes 925 772 1,085 470
---------- ---------- ---------- ----------
Net income $ 1,443 $ 1,394 $ 1,651 $ 795
========== ========== ========== ==========
Income per common share $ 0.81 $ 0.86 $ 0.98 $ 0.49
========== ========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
4
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GENCOR INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Six Months Ended
March 31,
------------------------
1995 1994
---- ----
<S> <C> <C>
Net Income $ 1,651 $ 795
Adjustments to reconcile net income to cash
provided by operations:
Depreciation and amortization 392 409
Loss on equipment disposal 3 3
Loss (gain) on foreign exchange (2) 3
Deposits to escrow account (300)
Change in assets and liabilities:
Decrease (increase) in receivables (1,985) 47
Increase in inventories (4,463) (941)
Decrease in prepaid expenses 289 173
Increase (decrease) in deferred income taxes (63) 134
Increase in accounts payable and customer deposits 4,304 2,371
Increase (decrease) in accrued expenses (525) (362)
Increase (decrease) in income taxes payable (570) 381
---------- ---------
Total adjustments (2,620) 2,642
---------- ---------
Cash provided (absorbed) by operations (969) 3,437
Cash flows from investing activities:
Capital expenditures (227) (356)
Other, net 28 (134)
---------- ---------
Cash used for investing activities (199) (490)
Cash flows from financing activities:
Net reduction under lines of credit and notes payable (1,514) (736)
Other, Net (2) 14
---------- ---------
Cash used for financing activities (1,516) (722)
Effect of exchange rate changes on cash (1) (1)
---------- ---------
Net increase (decrease) in cash (2,685) 2,224
Cash and cash equivalents at
beginning of period 3,925 429
---------- ---------
end of period $ 1,240 $ 2,653
========== =========
Supplemental cash flow information:
- - - - - - -----------------------------------
Cash paid during the period for
Interest $ 426 $ 402
========== =========
Income taxes $ 1,683 $ ---
========== =========
</TABLE>
See accompanying notes to consolidated financial statements.
5
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Gencor Industries, Inc.
Notes to Consolidated Financial Statements (Unaudited)
NOTE 1 - BASIS OF PRESENTATION
- - - - - - ------------------------------
The accompanying unaudited interim consolidated financial statements have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission. Accordingly, certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been omitted pursuant to such rules and regulations.
The accompanying unaudited interim consolidated financial statements and related
notes should be read in conjunction with the financial statements and related
notes included in the Company's 1994 Annual Report on Form 10-K. In the opinion
of management, all material adjustments, consisting of normal recurring
adjustments, considered necessary for a fair presentation have been included in
the accompanying unaudited interim consolidated financial statements. Operating
results for the six months ended March 31, 1995, are not necessarily indicative
of the results that may be expected for the year ending September 30, 1995.
NOTE 2 - LITIGATION
- - - - - - -------------------
In September 1994, the Company settled its patent litigation with Standard
Havens Products, Inc. The secondary liens on various assets and the restricted
cash equivalents held in escrow were released in accordance with this
confidential settlement agreement in October 1994.
The Company is involved in various other litigation matters arising in the
ordinary course of business. Management has reviewed all claims and lawsuits
and, upon the advice of counsel, has made provision for estimable losses and
expenses of litigation relating to claims against the Company.
NOTE 3 - STOCK DIVIDEND
- - - - - - -----------------------
On December 30, 1994, the Company issued a 10% stock dividend to all
shareholders of record on November 16, 1994. Accordingly, amounts equal to the
fair market value (based on quoted market prices) of the additional shares
issued have been charged to retained earnings, to the extent available, and
credited to Common and Class B Stock and capital in excess of par value.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- - - - - - -------
RESULTS OF OPERATIONS
A. Consolidated Results of Operations
----------------------------------
Results of operations for the quarter ended March 31, 1995, as compared to the
quarter ended March 31, 1994:
Total net revenue for the quarter ended March 31, 1995 was $18,686,000 versus
$20,259,000 for the same period of 1994, a decrease of $1,573,000 or 7.8% due to
lower shipments during the last three months.
Production costs were $12,566,000 or 67.2% of net revenue in the second quarter
of fiscal 1995, versus $14,819,000 or 73.1% of net revenue in the same period in
fiscal 1994. The decrease in production cost dollars is a direct result of the
decreased shipments and lower indirect production costs partially offset by
slightly higher service costs. The lower production costs percentage is a result
of an increase in sales of higher margin products and lower indirect production
costs, partially offset by slightly higher service costs.
Selling, general and administrative expenses increased in the second quarter of
fiscal 1995 to $3,023,000 from $2,518,000 in the same period of fiscal 1995 due
primarily to higher commissions and an increase in bad debt expense.
The change in interest expense reflects lower average borrowings and higher
interest rates.
Net income in the second quarter of fiscal 1995 amounted to $1,443,000, a
$49,000 improvement over the second quarter of fiscal 1994 net income of
$1,394,000 as a result of the above factors.
Results of operations for the six months ended March 31, 1995, as compared to
the six months ended March 31, 1994:
Total net revenue for the six months ended March 31, 1995, was $30,144,000
versus $29,478,000 for the same period of 1994, an increase of $666,000 or 2.3%
due to a slight increase in sales of asphalt production equipment.
Production costs were $21,158,000 or 70.2% of net revenue in the first six
months of fiscal 1995, versus $22,200,000 or 75.3% of net revenue in the same
period in fiscal 1994. The decrease in production costs dollars is a direct
result of lower repairs, maintenance, and service costs during the six months,
partially offset by the increased sales volume. The lower production costs
percentage is a result of increased sales of higher margin products and lower
indirect production and service costs.
Product engineering and development costs declined $96,000 or 9.2% primarily as
a result of lower personnel costs.
Selling, general, and administrative expenses increased in the first six months
of fiscal 1995 to $5,057,000 from $4,491,000 in the same period of fiscal 1994,
due primarily to higher commissions and an increase in bad debt expense.
The change in interest expense for the reporting period reflects lower average
borrowings and higher interest rates.
7
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Net income increased in the first six months of fiscal 1995 to $1,651,000, from
$795,000 in the first six months of fiscal 1994 as a result of the above
factors.
Liquidity and Capital Resources
- - - - - - -------------------------------
The Company had working capital at March 31, 1995 of $9,045,000 as compared with
working capital of $8,266,000 as of September 30, 1994. The increase in working
capital resulted from an increase in accounts receivable and inventories,
partially offset by an increase in customer deposits and accounts payable.
The Company's asphalt production equipment operations are subject to seasonal
fluctuations, often resulting in lower sales in the first and fourth fiscal
quarters of each year and much lower earnings or losses during such quarters.
Traditionally, asphalt producers do not purchase new equipment or replace old
equipment during the summer and fall months, thereby avoiding disruption of
their activities during such peak periods of highway construction.
The Company owns several real estate properties which are regarded as excess and
are unused as a result of having built more efficient, modern facilities and
consolidation. The proceeds of these sales will be used primarily to reduce bank
debt. The Company cannot predict when it will sell these parcels of property.
The Company has a dispute with the holder of the second mortgage on its Orlando
property and, as a consequence, such mortgage is in default. The matter is under
review by the partners and if the Company will be not able to negotiate a
satisfactory resolution, it intends to litigate the issues vigorously. As of
this time, such mortgage is included in the current portion of long-term debt.
The Company believes that, assuming a continuation of all present conditions and
banking arrangements, it will be able to meet its working capital needs during
fiscal 1995 through operations.
B. Financial Condition as of March 31, 1995
----------------------------------------
There are no material changes in the Company's financial condition from
that reported as of September 30, 1994.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
- - - - - - --------------------------
See Note 2-Litigation in Notes to Consolidated Financial Statements.
ITEM 3. DEFAULTS
- - - - - - -----------------
See Item 2-Liquidity and Capital Resources.
8
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- - - - - - -----------------------------------------
A. Exhibits:
(11) Statement regarding computation of earnings per share.
(27) Financial Data Schedule.
B. Reports on Form 8-K:
None
9
<PAGE>
SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) 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.
GENCOR INDUSTRIES, INC.
Date: May 5, 1995 /s/ Robert O. Sollman, Jr.
-----------------------------
Robert O. Sollman, Jr.
Vice President/Treasurer
11
<PAGE>
EXHIBIT 11
GENCOR INDUSTRIES, INC.
COMPUTATIONS OF NET INCOME PER SHARE
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, March 31,
----------------------------- -----------------------------
1995 1994 1995 1994
---- ---- ---- ----
<S>
Earnings per share <C> <C> <C> <C>
- - - - - - ------------------
Net income $1,443,000 $1,394,000 $1,651,000 $ 795,000
========== ========== ========== ==========
Average number of shares outstanding 1,772,864 1,611,868 1,692,366 1,609,341
========== ========== ========== ==========
Net income per share $ 0.81 $ 0.86 $ 0.98 $ 0.49
========== ========== ========== ==========
Additional primary computation
- - - - - - ------------------------------
Average number of shares outstanding 1,772,864 1,611,868 1,692,366 1,609,341
Add dilutive effect of outstanding options
(as determined by application of the
treasury stock method) 37,590 14,929 29,289 13,544
---------- ---------- ---------- ----------
Average number of shares outstanding;
as adjusted 1,810,454 1,626,797 1,721,655 1,622,885
========== ========== ========== ==========
Net income per share $ 0.80 (A) $ 0.86 (A) $ 0.96 (A) $ 0.49 (A)
========== ========== ========== ==========
Additional fully diluted computation
- - - - - - ------------------------------------
Average fully diluted computation 1,772,864 1,611,868 1,692,366 1,609,341
Add dilutive effect of outstanding options
(as determined by the application of the
treasury stock method) 37,590 14,929 29,289 15,040
---------- ---------- ---------- ----------
Average number of shares outstanding,
as adjusted 1,810,454 1,626,797 1,721,655 1,624,381
========== ========== ========== ==========
Net income per share $ 0.80 (A) $ 0.86 (A) $ 0.96 (A) $ 0.49 (A)
========== ========== ========== ==========
</TABLE>
(A) This calculation is submitted in accordance with Regulations S-K Item 601
(b)(11), although it is not required by footnote to paragraph 14 of APB
Opinion No. 15 because it results in dilution of less than 3%.
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> MAR-01-1995
<CASH> 1,240
<SECURITIES> 0
<RECEIVABLES> 7,530
<ALLOWANCES> (2,411)
<INVENTORY> 16,581
<CURRENT-ASSETS> 26,933
<PP&E> 18,647
<DEPRECIATION> (8,071)
<TOTAL-ASSETS> 37,875
<CURRENT-LIABILITIES> (17,888)
<BONDS> (10,633)
<COMMON> (204)
0
0
<OTHER-SE> (8,569)
<TOTAL-LIABILITY-AND-EQUITY> (37,875)
<SALES> (30,144)
<TOTAL-REVENUES> (30,144)
<CGS> 21,158
<TOTAL-COSTS> 21,158
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 180
<INTEREST-EXPENSE> 507
<INCOME-PRETAX> 2,736
<INCOME-TAX> 1,085
<INCOME-CONTINUING> 1,651
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,651
<EPS-PRIMARY> 0.98
<EPS-DILUTED> 0.98
</TABLE>
