<PAGE> 1
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 0-11309
GALILEO ELECTRO-OPTICS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 04-2526583
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
GALILEO PARK, P.O. BOX 550, STURBRIDGE, MASSACHUSETTS 01566
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code (508) 347-9191
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 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 the number of shares outstanding of the Issuer's classes of common
stock, as of the latest practicable date.
COMMON STOCK, PAR VALUE $.01: 6,473,654 SHARES OUTSTANDING AT
MARCH 31, 1995.
<PAGE> 2
<TABLE>
GALILEO ELECTRO-OPTICS CORPORATION
INDEX
<CAPTION>
PAGE NO.
--------
<S> <C>
PART I. Financial Information:
Consolidated Condensed Balance Sheets -
March 31, 1995 and September 30, 1994 ............................... 3
Consolidated Condensed Statements of Income - Three Months
ended and six months ended March 31, 1995 and March 31, 1994......... 5
Consolidated Condensed Statements of Cash Flows -
Six months ended March 31, 1995 and March 31, 1994................... 6
Notes to Consolidated Condensed Financial Statements.................. 8
Management's Discussion and Analysis of Financial
Condition and Results of Operations.................................. 9
PART II. Other Information:
Other Information..................................................... 11
Index to Exhibits..................................................... 13
Exhibit 11 - Calculation of Earnings Per Share........................ 14
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
GALILEO ELECTRO-OPTICS CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands of dollars)
<CAPTION>
Unaudited Audited
Mar. 31, 1995 Sept. 30, 1994
------------------------------------
<S> <C> <C>
ASSETS
------
Current assets:
Cash and cash equivalents $ 5,964 $ 6,185
Accounts receivable, net 4,965 5,190
Refundable income taxes, net 17 17
Inventories:
Finished goods 162 31
Work-in-process 249 352
Raw materials 5,308 4,324
------------------------------------
5,719 4,707
Deferred income taxes 460 460
Other current assets 210 149
------------------------------------
Total current assets 17,335 16,708
Assets held for sale, net 2,345 2,345
Property, plant and equipment:
Land, buildings and improvements 16,066 16,066
Machinery, equipment and furniture 24,186 24,186
Capital projects in process 1,092 643
------------------------------------
41,344 40,895
Less accumulated depreciation (20,779) (19,202)
------------------------------------
Net property, plant and equipment 20,565 21,693
Other assets, net 2,792 2,875
------------------------------------
Total assets $ 43,037 $ 43,621
====================================
</TABLE>
See accompanying notes.
- Continued -
3
<PAGE> 4
<TABLE>
GALILEO ELECTRO-OPTICS CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands of dollars)
<CAPTION>
Unaudited Audited
Mar. 31, 1995 Sept. 30, 1994
-----------------------------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable $ 2,120 $ 2,200
Accrued liabilities 1,326 1,539
-----------------------------------
Total current liabilities 3,446 3,739
Deferred income taxes 620 620
Long-term obligation -- capital leases 43 42
Accrued postretirement benefits other than
pensions 620 605
Shareholders' equity:
Common stock 65 65
Additional paid-in capital 42,192 42,192
Accumulated deficit (3,949) (3,642)
-----------------------------------
Total shareholders' equity 38,308 38,615
-----------------------------------
Total liabilities and shareholders' equity $43,037 $43,621
===================================
</TABLE>
See accompanying notes.
4
<PAGE> 5
<TABLE>
GALILEO ELECTRO-OPTICS CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(In thousands of dollars except share and per share data)
UNAUDITED
<CAPTION>
Three Months Ended Six Months Ended
------------------ ----------------
3/31/95 3/31/94 3/31/95 3/31/94
------------------------- --------------------------
<S> <C> <C> <C> <C>
Net sales $ 8,261 $ 6,789 $ 15,459 $ 14,001
Cost of sales 5,973 5,274 11,526 10,855
------------------------- --------------------------
Gross profit 2,288 1,515 3,933 3,146
Operating expenses:
Engineering 987 1,013 1,938 2,075
Selling & administrative 1,196 1,267 2,409 2,542
------------------------- --------------------------
2,183 2,280 4,347 4,617
------------------------- --------------------------
Operating profit (loss) 105 (765) (414) (1,471)
Other income 80 34 147 91
------------------------- --------------------------
Income (loss) before income taxes 185 (731) (267) (1,380)
Provision for income taxes 16 18 40 36
------------------------- --------------------------
Net income (loss) $ 169 $ (749) $ (307) $ (1,416)
========================= ==========================
Net income (loss) per common and common
equivalent share outstanding $ .03 $ (.12) $ (.05) $ (.22)
========================= ==========================
Weighted average common and common
equivalent shares outstanding 6,486,962 6,473,654 6,473,654 6,473,654
</TABLE>
See accompanying notes.
5
<PAGE> 6
<TABLE>
GALILEO ELECTRO-OPTICS CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In thousands of dollars)
UNAUDITED
<CAPTION>
Six Months Ended
----------------
Mar. 31, 1995 Mar. 31, 1994
--------------------------------
<S> <C> <C>
Cash flows from operating activities:
------------------------------------
Cash received from customers $ 15,684 $ 15,274
Cash paid to suppliers and employees (15,554) (15,539)
Other income received 13 22
Interest paid (7) (10)
Investment income received 141 78
Income taxes paid (14) (16)
--------------------------------
Net cash provided (used) by operating activities 263 (191)
Cash flows from investing activities:
------------------------------------
Proceeds from sales of assets -- 5
Capital expenditures (450) (1,214)
--------------------------------
Net cash used in investing activities (450) (1,209)
Cash flows from financing activities:
------------------------------------
Principal payments under capital lease obligations (34) (30)
--------------------------------
Net cash used by financing activities (34) (30)
Net decrease in cash and cash equivalents (221) (1,430)
Cash and cash equivalents at beginning of period 6,185 6,530
--------------------------------
Cash and cash equivalents at end of period $ 5,964 $ 5,100
================================
</TABLE>
See accompanying notes.
- Continued -
6
<PAGE> 7
<TABLE>
GALILEO ELECTRO-OPTICS CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In thousands of dollars)
UNAUDITED
<CAPTION>
Six Months Ended
----------------
Mar. 31, 1995 Mar. 31, 1994
--------------------------------
<S> <C> <C>
Reconciliation of net loss to net cash used by operating
--------------------------------------------------------
activities:
----------
Net loss $ (307) $(1,416)
Adjustments to reconcile net loss to net cash used
by operating activities:
Depreciation and amortization 1,625 1,778
Provision for losses on accounts receivable, net -- (226)
Postretirement benefits 15 16
Gain on sale of fixed assets -- (1)
Increase(decrease) in cash from changes in operating
assets and liabilities:
Accounts receivable 225 1,537
Inventories (1,012) (917)
Other current assets (61) (10)
Other assets, net 36 (6)
Accounts payable (80) 999
Accrued liabilities (178) (1,945)
--------------------------------
Total adjustments 570 1,225
--------------------------------
Net cash provided (used) by operating activities $ 263 $ (191)
================================
</TABLE>
See accompanying notes.
7
<PAGE> 8
GALILEO ELECTRO-OPTICS CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. In the opinion of management, the accompanying unaudited consolidated
condensed financial statements contain all adjustments (consisting of
only normal recurring adjustments) necessary to present fairly the
Company's financial position as of March 31, 1995 and the results of
operations and cash flows for the three and six month periods ended
March 31, 1995 and 1994.
2. The accounting policies followed by the Company are set forth in Note
1 to the Company's consolidated financial statements in the Company's
Annual Report for fiscal year 1994.
8
<PAGE> 9
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
- ---------------------
Sales for the quarter ended March 31, 1995 were $8,261,000, an increase of
$1,472,000 or 22% from the same quarter in fiscal year 1994. For the first six
months, sales amounted to $15,459,000, up $1,458,000 or 10% from a year ago.
Compared to the first quarter of this fiscal year, sales increased $1,063,000
or 15%.
For the quarter, the Company reported an operating profit of $105,000 and net
income of $169,000 or $.03 per share. Last year, the Company incurred an
operating loss of $765,000 and a net loss of $749,000 or $.12 per share in the
second quarter. For the first six months of this fiscal year, the Company
incurred an operating loss of $414,000 and a net loss of $307,000 or $.05 per
share. Last year, for the first six months, the Company reported an operating
loss of $1,471,000 and a net loss of $1,416,000 or $.22 per share. The
improved profitability this quarter and for the first half was the result of
higher sales volume with a generally favorable sales mix, selective price
increases and the benefits of continuing cost reduction efforts, particularly
the elimination of excess manufacturing capacity and unprofitable products.
Commercial revenues for the quarter, which amounted to $7,814,000 or 95% of
total sales, were up $1,694,000 or 28% from the same quarter a year ago. For
the same time period, military sales totalled $447,000 or 5% of total sales, a
decline of 33% from the second quarter of last year. This decrease was
primarily due to the sale of the Fused Fiberoptics business in fiscal year
1994. On a year-to-date basis, commercial revenues were $14,756,000 or 95% of
sales while military sales amounted to $703,000 or 5% of sales.
For the quarter, shipments of Office Products, consisting primarily of
components for a variety of Xerox copiers, were up 30% from the second quarter
a year ago and set a new record. For the year-to-date, Office Products sales
increased by 21%. Demand for dicorotrons continued to be strong with the
majority of units being used as replacements in existing copiers. Dicorotrons
utilize the Company's proprietary glass-coated wire technology and are used to
generate ions to charge a copier's photoreceptor.
Sales of Remote Sensor Products, which consist of sensors and systems to
monitor industrial processes utilizing on-line, remote, infrared spectroscopy
systems increased 55% from the corresponding quarter a year ago and 54% on a
year-to-date basis. The Company continued to develop new products for this
business and received favorable reactions to several which were introduced at a
trade show this quarter.
9
<PAGE> 10
Scientific Detector Products revenues also showed a gain versus last year, being
up 28% from the corresponding quarter and up 15% for the first six months. The
three major product lines which are included in this business, namely
Channeltron[registered trademark] single-channel detectors, microchannel plates
and microchannel plate-based detectors and assemblies, all registered sales
gains ranging from 8% to 50% for the quarter.
In the Medical Products business, shipments of medical endoscopes continued to
be low while the Company is managing the market introduction of these products.
Limited clinical trials of endoscopes for least-invasive arthroscopic surgical
procedures are currently underway, and the Company has finalized an agreement
with a medical distribution company for exclusive sale and distribution of one
of its endoscope products for the North American market.
The Company's Forest, Virginia facility is still being held for sale and is
being actively marketed. The expenses associated with that facility were
accrued for at the end of fiscal year 1993. The remaining accrual balance is
believed to be adequate for the expenses which are expected for the remainder
of this fiscal year.
FINANCIAL CONDITION
- -------------------
The Company's working capital at March 31, 1995, of $13,889,000 increased
$920,000 from the balance at September 30, 1994, of $12,969,000. The cash and
short-term investments balance at March 31, 1995 was $5,964,000 versus
$6,185,000 at September 30, 1994. The change in working capital was primarily
due to an increase in inventories to support the higher level of sales
partially offset by reductions in accounts receivable and cash.
The Company considers its working capital position to be adequate to support
its currently planned operations and does not anticipate a need for external
financing.
Capital spending for the quarter amounted to $351,000. This compares with
$578,000 of capital expenditures in the second quarter of fiscal year 1994.
For the year-to-date, capital spending this year was $450,000 versus $1,214,000
for the first six months last year. The higher capital spending last year was
the result of investments related to the consolidation of the Company's
manufacturing facilities.
10
<PAGE> 11
PART II. OTHER INFORMATION
<TABLE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Annual Meeting of Shareholders held on January 26, 1995, the
shareholders of the Company elected four directors. The votes were as follows:
<CAPTION>
Abstentions
Votes Cast Votes and Broker
For Withheld Non-Votes
------------------------------------------------
<S> <C> <C> <C>
William t. burgin 5,082,662 47,773 --
Allen e. busching 5,082,962 47,473 --
Kenneth w. draeger 5,079,462 50,973 --
William t. hanley 5,075,389 55,046 --
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits: Exhibit 11 - Calculation of Earnings Per Share.
Exhibit 27 - Financial Data Schedule (EDGAR filing only).
b. Reports on Form 8-K: There were no reports on Form 8-K filed
for the three months ended March 31, 1995.
11
<PAGE> 12
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.
GALILEO ELECTRO-OPTICS CORPORATION
Dated: May 9, 1995 /s/ William T. Hanley
--------------------------------------
William T. Hanley, President and
Chief Executive Officer (Principal
Executive Officer)
/s/ Josef W. Rokus
--------------------------------------
Josef W. Rokus, Vice President,
Finance and Chief Financial Officer
(Principal Financial and Accounting
Officer)
12
<PAGE> 13
<TABLE>
GALILEO ELECTRO-OPTICS CORPORATION
INDEX TO EXHIBITS
<CAPTION>
Exhibit No. Page No.
----------- --------
<S> <C> <C>
11 Calculation of Earnings Per Share 14
27 Financial Data Schedule EDGAR
Filing
Only
</TABLE>
13
<PAGE> 1
<TABLE>
EXHIBIT 11
GALILEO ELECTRO-OPTICS CORPORATION
CALCULATION OF EARNINGS PER SHARE
<CAPTION>
Six Months Ended
----------------
Mar. 31, 1995 Mar. 31, 1994
------------------------------------
<S> <C> <C>
Net loss $ (307,000) $(1,416,000)
Average common shares outstanding 6,473,654 6,473,654
Average number of common equivalent shares
arising from stock options -- --
------------------------------------
Weighted average common and common
equivalent shares outstanding 6,473,654 6,473,654
====================================
Net loss per common and common equivalent
share outstanding $ (.05) $ (.22)
====================================
</TABLE>
14
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> MAR-31-1995
<CASH> 5,964
<SECURITIES> 0
<RECEIVABLES> 4,965
<ALLOWANCES> 25
<INVENTORY> 5,719
<CURRENT-ASSETS> 17,335
<PP&E> 41,344
<DEPRECIATION> 20,779
<TOTAL-ASSETS> 43,037
<CURRENT-LIABILITIES> 3,446
<BONDS> 0
<COMMON> 65
0
0
<OTHER-SE> 38,243
<TOTAL-LIABILITY-AND-EQUITY> 43,037
<SALES> 15,459
<TOTAL-REVENUES> 15,459
<CGS> 11,526
<TOTAL-COSTS> 11,526
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (267)
<INCOME-TAX> 40
<INCOME-CONTINUING> (307)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (307)
<EPS-PRIMARY> (.05)
<EPS-DILUTED> (.05)
</TABLE>
