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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 DECEMBER 31, 1994
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)
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<CAPTION>
<S> <C>
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
</TABLE>
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
DECEMBER 31, 1994.
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GALILEO ELECTRO-OPTICS CORPORATION
INDEX
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Page No.
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PART I. Financial Information:
Consolidated Condensed Balance Sheets -
December 31, 1994 and September 30, 1994 .......................................... 3
Consolidated Condensed Statements of Operations - Three
months ended December 31, 1994 and December 31, 1993............................... 5
Consolidated Condensed Statements of Cash Flows -
Three months ended December 31, 1994 and December 31, 1993......................... 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
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
GALILEO ELECTRO-OPTICS CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands of dollars)
<CAPTION>
Unaudited Audited
Dec. 31, 1994 Sept. 30, 1994
-------------------------------------
<S> <C> <C>
ASSETS
------
Current assets:
Cash and cash equivalents $ 5,814 $ 6,185
Accounts receivable, net 5,381 5,190
Refundable income taxes, net 17 17
Inventories:
Finished goods 151 31
Work-in-process 218 352
Raw materials 4,480 4,324
-------------------------------------
4,849 4,707
Deferred income taxes 460 460
Other current assets 50 149
-------------------------------------
Total current assets 16,571 16,708
Assets held for sale, net 2,345 2,345
Property, plant and equipment:
Land, buildings and improvements 16,065 16,066
Machinery, equipment and furniture 24,186 24,186
Capital projects in process 742 643
-------------------------------------
40,993 40,895
Less accumulated depreciation (19,990) (19,202)
-------------------------------------
Net property, plant and equipment 21,003 21,693
Other assets, net 2,818 2,875
-------------------------------------
Total assets $42,737 $43,621
=====================================
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See accompanying notes.
- Continued -
3
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<TABLE>
GALILEO ELECTRO-OPTICS CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands of dollars)
<CAPTION>
Unaudited Audited
Dec. 31, 1994 Sept. 30, 1994
--------------------------------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
- - - ------------------------------------
Current liabilities:
Accounts payable $ 1,813 $ 2,200
Accrued liabilities 1,510 1,539
--------------------------------------
Total current liabilities 3,323 3,739
Deferred income taxes 620 620
Long-term obligation -- Capital leases 43 42
Accrued postretirement benefits other than
pensions 612 605
Shareholders' equity:
Common stock 65 65
Additional paid-in capital 42,192 42,192
Accumulated deficit (4,118) (3,642)
--------------------------------------
Total shareholders' equity 38,139 38,615
--------------------------------------
Total liabilities and shareholders' equity $42,737 $43,621
======================================
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See accompanying notes.
4
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<TABLE>
GALILEO ELECTRO-OPTICS CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(In thousands of dollars except share and per share data)
UNAUDITED
<CAPTION>
Three Months Ended
------------------
Dec. 31, 1994 Dec. 31, 1993
------------------------------------
<S> <C> <C>
Net sales $7,198 $7,212
Cost of sales 5,553 5,581
------------------------------------
Gross profit 1,645 1,631
Operating expenses:
Engineering 951 1,062
Selling and administrative 1,213 1,275
------------------------------------
2,164 2,337
------------------------------------
Operating loss (519) (706)
Other income, net 67 57
------------------------------------
Loss before income taxes (452) (649)
Provision for income taxes 24 18
------------------------------------
Net loss $(476) $(667)
====================================
Net loss per common and common equivalent
share outstanding $ (.07) $ (.10)
====================================
Weighted average common and common
equivalent shares outstanding 6,473,654 6,473,654
</TABLE>
See accompanying notes.
5
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<TABLE>
GALILEO ELECTRO-OPTICS CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In thousands of dollars)
UNAUDITED
<CAPTION>
Three Months Ended
------------------
Dec. 31, 1994 Dec. 31, 1993
--------------------------------
<S> <C> <C>
Cash flows from operating activities:
------------------------------------
Cash received from customers $6,995 $7,582
Cash paid to suppliers and employees (7,306) (7,579)
Other income received 1 19
Interest paid (4) (5)
Investment income received 70 43
Income taxes paid (11) (11)
--------------------------------
Net cash provided (used) by operating activities (255) 49
Cash flows from investing activities:
------------------------------------
Proceeds from sales of assets -- 7
Capital expenditures (99) (636)
--------------------------------
Net cash used in investing activities (99) (629)
Cash flows from financing activities:
------------------------------------
Principal payments under capital lease obligations (17) (15)
--------------------------------
Net cash used by financing activities (17) (15)
Net decrease in cash and cash equivalents (371) (595)
Cash and cash equivalents at beginning of period 6,185 6,530
--------------------------------
Cash and cash equivalents at end of period $5,814 $5,935
================================
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- Continued -
6
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<TABLE>
GALILEO ELECTRO-OPTICS CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In thousands of dollars)
UNAUDITED
<CAPTION>
Three Months Ended
------------------
Dec. 31, 1994 Dec. 31, 1993
----------------------------------
<S> <C> <C>
Reconciliation of net loss to net cash provided (used) by
---------------------------------------------------------
operating activities:
--------------------
Net loss $(476) $(667)
Adjustments to reconcile net loss to net cash provided (used)
by operating activities:
Depreciation and amortization 812 891
Provision for losses on accounts receivable, net (11) (3)
Postretirement benefits 7 8
Increase(decrease) in cash from changes in operating
assets and liabilities:
Accounts receivable (180) 392
Inventories (142) 118
Other current assets 99 (100)
Other assets, net 34 4
Accounts payable (387) 84
Accrued liabilities (11) (678)
----------------------------------
Total adjustments 221 716
----------------------------------
Net cash provided (used) by operating activities $(255) $ 49
==================================
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See accompanying notes.
7
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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 December 31, 1994 and the results
of operations and cash flows for the three month periods ended
December 31, 1994 and 1993.
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
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ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
- - - ---------------------
Sales for the quarter ended December 31, 1994 were $7,198,000, a decrease of
$14,000 from the same quarter in fiscal year 1994. The Company incurred an
operating loss of $519,000 and a net loss of $476,000 or $.07 per share. For
the first quarter of last year, the Company reported an operating loss of
$706,000 and a net loss of $667,000 or $.10 per share. The decrease in the
loss, despite slightly lower sales, resulted primarily from the Company's lower
cost structure due to the consolidation of manufacturing facilities which was
completed during the last fiscal year.
Commercial revenues were $6,942,000, an increase of $378,000 or 6% from the
first quarter of fiscal year 1994 and represented 96% of sales while military
sales of $256,000 declined $392,000 from a year ago and were 4% of sales.
Office Products sales continued to be strong and were up 12% from the
corresponding quarter a year ago as the demand for dicorotron glass-coated wire
assemblies increased. These assemblies generate ions which charge the
photoreceptor, the component in a copier which facilitates the image transfer
process. In addition, shipments of new products for copiers were up
significantly and represented 28% of Office Products sales for the quarter.
Scientific Detector Products revenues also increased. Sales of Channeltron(R)
single channel detectors, used primarily in analytical instruments to identify
unknown elements, and billings related to the Company's contract with the
National Institute of Standards and Technology to develop new fabrication
methods for microchannel plates were both higher versus the same quarter a year
ago, while shipments of detector assemblies and microchannel plates declined.
Microchannel plates are small, wafer-thin discs with a large number of very
small diameter holes or channels which multiply electrons which enter the
channels to intensify faint electron images and are used principally in night
vision intensifiers. Both the Office Products and Scientific Detector Products
businesses continued to be profitable while the Company's other two businesses
were not profitable.
In the Medical Products business, sales of endoscopes continued to be low as
the Company continued its programs to improve its existing products and develop
a broad line of low-cost, high-quality single use and limited reuse endoscopes
for medical applications as well as its Microvision(TM) borescope for
non-medical uses. Endoscopes are instruments for visually examining the
interior of bodily canals or organs while borescopes perform similar functions
in non-medical applications such as the inspection of pipes, engines, etc.
Approvals for the sale of two additional medical products were received
9
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from the FDA this quarter. Shipments of Remote Sensor Products, consisting of
infrared spectroscopy systems and accessories for on- line monitoring of
industrial processes, were also up from the same quarter a year ago.
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.
The Company's engineering and development efforts continued as extensive work
is underway to launch new Medical and Remote Sensor Products which are expected
to be introduced to the market in the second quarter.
FINANCIAL CONDITION
- - - -------------------
The Company's working capital at December 31, 1994, of $13,248,000 increased
$279,000 from the balance at September 30, 1994, of $12,969,000. The cash and
short-term investments balance at December 31, 1994 was $5,814,000 versus
$6,185,000 at September 30, 1994. The change in working capital was primarily
due to a decrease in accounts payable and an increase in accounts receivable
offset by a reduction in 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 $99,000. This compares with
$636,000 of capital expenditures in the first quarter of fiscal year 1994. The
higher capital spending last year was the result of investments related to the
consolidation of the Company's manufacturing facilities.
10
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PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits: Exhibit 11 - Calculation of Earnings Per Share.
b. Reports on Form 8-K: There were no reports on Form 8-K
filed for the three months ended December 31, 1994.
11
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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: February 8, 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
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GALILEO ELECTRO-OPTICS CORPORATION
INDEX TO EXHIBITS
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Exhibit No. Page No.
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<S> <C> <C>
11 Calculation of Earnings Per Share 14
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13
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EXHIBIT 11
GALILEO ELECTRO-OPTICS CORPORATION
CALCULATION OF EARNINGS PER SHARE
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<CAPTION>
Three Months Ended
------------------
Dec. 31, 1994 Dec. 31, 1993
-------------------------------------
<S> <C> <C>
Net loss $(476,000) $(667,000)
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 $(.07) $(.10)
=====================================
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14
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS OF GALILEO ELECTRO-OPTICS
CORPORATION FOR THE THREEE MONTHS ENDED DECEMBER 31, 1994 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS/
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> DEC-31-1994
<CASH> 5,814
<SECURITIES> 0
<RECEIVABLES> 5,381
<ALLOWANCES> 14
<INVENTORY> 4,849
<CURRENT-ASSETS> 16,571
<PP&E> 40,993
<DEPRECIATION> 19,990
<TOTAL-ASSETS> 42,737
<CURRENT-LIABILITIES> 3,323
<BONDS> 0
<COMMON> 65
0
0
<OTHER-SE> 38,074
<TOTAL-LIABILITY-AND-EQUITY> 42,737
<SALES> 7,198
<TOTAL-REVENUES> 7,198
<CGS> 5,553
<TOTAL-COSTS> 5,553
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (452)
<INCOME-TAX> 24
<INCOME-CONTINUING> (476)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (476)
<EPS-PRIMARY> (.07)
<EPS-DILUTED> (.07)
</TABLE>
