<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 JUNE 30, 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 each of the Issuer's classes of
common stock, as of the latest practicable date.
COMMON STOCK, PAR VALUE $.01: 6,483,432 SHARES OUTSTANDING AT
JUNE 30, 1995.
PAGE 1 OF 14
Index to Exhibits appears on Page 13
<PAGE> 2
GALILEO ELECTRO-OPTICS CORPORATION
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Part I. Financial Information:
Consolidated Condensed Balance Sheets -
June 30, 1995 and September 30, 1994 ................................ 3
Consolidated Condensed Statements of Income - Three months
ended and nine months ended June 30, 1995 and June 30, 1994.......... 5
Consolidated Condensed Statements of Cash Flows -
Nine months ended June 30, 1995 and June 30, 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 11.0 - Calculation of Earnings Per Share...................... 14
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GALILEO ELECTRO-OPTICS CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands of dollars)
<TABLE>
<CAPTION>
Unaudited Audited
June 30, 1995 Sept. 30, 1994
------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 6,856 $ 6,185
Accounts receivable, net 5,387 5,190
Refundable income taxes, net 17 17
Inventories:
Finished goods 131 31
Work-in-process 213 352
Raw materials 4,837 4,324
------------------------------------
5,181 4,707
Deferred income taxes 460 460
Other current assets 196 149
------------------------------------
Total current assets 18,097 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 23,955 24,186
Capital projects in process 1,266 643
------------------------------------
41,286 40,895
Less accumulated depreciation (21,270) (19,202)
------------------------------------
Net property, plant and equipment 20,016 21,693
Other assets, net 2,793 2,875
------------------------------------
Total assets $43,251 $43,621
====================================
</TABLE>
See accompanying notes.
- Continued -
3
<PAGE> 4
GALILEO ELECTRO-OPTICS CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands of dollars)
<TABLE>
<CAPTION>
Unaudited Audited
June 30, 1995 Sept. 30, 1994
-----------------------------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,656 $ 2,200
Accrued liabilities 1,431 1,539
-----------------------------------
Total current liabilities 3,087 3,739
Deferred income taxes 620 620
Long-term obligation -- Capital lease 184 42
Accrued postretirement benefits other than
pensions 634 605
Shareholders' equity:
Common stock 65 65
Additional paid-in capital 42,237 42,192
Accumulated deficit (3,576) (3,642)
-----------------------------------
Total shareholders' equity 38,726 38,615
-----------------------------------
Total liabilities and shareholders' equity $43,251 $43,621
===================================
</TABLE>
See accompanying notes.
4
<PAGE> 5
GALILEO ELECTRO-OPTICS CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(In thousands of dollars except share and per share data)
UNAUDITED
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------------ -------------------------
6/30/95 6/30/94 6/30/95 6/30/94
------------------------ -------------------------
<S> <C> <C> <C> <C>
Net sales $8,817 $7,859 $24,276 $21,860
Cost of sales 6,557 5,789 18,083 16,644
------------------------ -------------------------
Gross profit 2,260 2,070 6,193 5,216
Operating expenses:
Engineering 712 868 2,650 2,943
Selling & administrative 1,246 1,174 3,655 3,716
------------------------ -------------------------
1,958 2,042 6,305 6,659
------------------------ -------------------------
Operating profit (loss) 302 28 (112) (1,443)
Other income 95 99 242 190
------------------------ -------------------------
Income (loss) before income taxes 397 127 130 (1,253)
Provision for income taxes 24 21 64 57
------------------------ -------------------------
Net income (loss) $ 373 $ 106 $ 66 $(1,310)
======================== =========================
Net income (loss) per common and
common equivalent share
outstanding $ .06 $ .02 $ .01 $ (.20)
======================== =========================
Weighted average common and common
equivalent shares outstanding 6,520,394 6,473,654 6,494,093 6,473,654
</TABLE>
See accompanying notes.
5
<PAGE> 6
GALILEO ELECTRO-OPTICS CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In thousands of dollars)
UNAUDITED
<TABLE>
<CAPTION>
Nine Months Ended
-----------------
June 30, 1995 June 30, 1994
--------------------------------
<S> <C> <C>
Cash flows from operating activities:
Cash received from customers $24,079 $22,676
Cash paid to suppliers and employees (23,149) (23,058)
Other income received 77 82
Interest paid (9) (14)
Investment income received 219 122
Income taxes paid (23) (27)
--------------------------------
Net cash provided (used) by operating
activities 1,194 (219)
Cash flows from investing activities:
Proceeds from sales of assets 100 8
Capital expenditures (619) (1,258)
--------------------------------
Net cash used in investing activities (519) (1,250)
Cash flows from financing activities:
Principal payments under capital lease obligations (49) (46)
Proceeds from issuance of common stock 45 --
--------------------------------
Net cash used by financing activities (4) (46)
Net increase (decrease) in cash and cash
equivalents 671 (1,515)
Cash and cash equivalents at beginning of period 6,185 6,530
--------------------------------
Cash and cash equivalents at end of period $ 6,856 $ 5,015
================================
</TABLE>
See accompanying notes.
- Continued -
6
<PAGE> 7
GALILEO ELECTRO-OPTICS CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In thousands of dollars)
UNAUDITED
<TABLE>
<CAPTION>
Nine Months Ended
-----------------
June 30, 1995 June 30, 1994
--------------------------------
<S> <C> <C>
Reconciliation of net income (loss) to net cash used by
operating activities:
Net income (loss) $ 66 $(1,310)
Adjustments to reconcile net income (loss) to net
cash provided (used) by operating activities:
Depreciation and amortization 2,434 2,575
Provision for losses on accounts receivable, net -- (264)
Deferred taxes -- (12)
Postretirement benefits 29 24
Gain on sale of fixed assets (49) --
Loss on cancellation of lease 37 --
Refundable income taxes -- 17
Increase (decrease) in cash from changes in operating
assets and liabilities:
Accounts receivable (197) 1,136
Inventories (474) (536)
Other current assets (47) 24
Other assets, net 14 25
Accounts payable (544) 591
Accrued liabilities (75) (2,489)
--------------------------------
Total adjustments 1,128 1,091
--------------------------------
Net cash provided (used) by operating activities $1,194 $ (219)
================================
</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 June 30, 1995 and the results of
operations and cash flows for the three and nine month periods ended
June 30, 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 June 30, 1995 were $8,817,000, an increase of
$958,000 or 12% from the same quarter in fiscal year 1994. Commercial revenues
for the quarter, which amounted to $8,379,000 or 95% of total sales, were up
$1,269,000 or 18% from the same quarter a year ago. For the first nine months,
sales amounted to $24,276,000, up $2,416,000 or 11% from a year ago.
For the quarter, the Company reported an operating profit of $302,000 and net
income of $373,000 or $.06 per share compared to an operating profit of $28,000
and a net profit of $106,000 or $.02 per share last year.
For the first nine months of this fiscal year, the Company had an operating
loss of $112,000 and a net profit of $66,000 or $.01 per share. Last year, for
the first nine months, the Company reported an operating loss of $1,443,000 and
a net loss of $1,310,000 or $.20 per share.
For the quarter, sales of Office Products continued to be strong, up 30% from
the corresponding quarter a year ago and setting a new record. Shipments of
dicorotrons, the glass-coated wire assembly used in copiers to charge the
photoreceptor, as well as of several other electro-mechanical assemblies used
in a variety of Xerox copiers, exceeded expectations. On a year-to-date basis,
Office Products sales were up 24% from the same period in fiscal year 1994 with
sales to Xerox Corporation comprising 53% of the Company's total sales for the
period.
Sales of sensors and systems to monitor industrial processes utilizing on-line,
remote infrared spectroscopy systems, which comprise the Company's Remote
Sensor Products business, were up significantly in the third quarter as well as
for the first nine months of this fiscal year. The Company is benefiting from
the introduction of several new products such as the IR Link(TM) Hand-Held
Diffuse Reflectance System. This system permits the fast and easy
identification and analysis of raw materials in a manufacturing operation's
incoming inspection area, thereby eliminating the need for the taking of
samples, transporting those samples to a quality control laboratory for
analysis and communicating the results back to the incoming inspection area.
Scientific Detector Products revenues this quarter also showed a gain versus
the third quarter last year with particularly strong sales to the semiconductor
manufacturing industry. The Company also completed work under its $1.9 million
contract with the National Institute of Standards and Technology to develop new
fabrication methods for microchannel plates. For the first nine months of this
year, Scientific Detector Products sales were up 11% over last year with
engineering billings, shipments of Channeltrons(R) single channel electron
multipliers and microchannel plates higher while sales of microchannel plate
assemblies declined.
9
<PAGE> 10
In the Medical Products business, sales of medical endoscopes in the third
quarter, as well as on a year-to-date basis, accounted for a small portion of
total revenues as clinical trials of arthroscopes for least-invasive surgical
procedures are continuing. In addition to a previously announced distribution
agreement with Millenium Medical, the Company is in the process of establishing
additional North American and international distribution channels for its
medical products.
The improvements in operating profit and net profit after tax this quarter and
for the first nine months were primarily the result of higher sales volume in
most of the Company's businesses, a favorable sales mix in some of those
businesses and lower operating expenses. The Company is also continuing to
benefit from cost reduction and efficiency improvements, such as the
consolidation of its manufacturing operations completed last fiscal year, which
resulted in record productivity levels this quarter as measured by sales per
employee.
The Company's Forest, Virginia, facility is still being held for sale and is
being actively marketed. The expenses associated with the 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 June 30, 1995 of $15,010,000 increased
$2,041,000 from the balance at September 30, 1994 of $12,969,000. The cash and
short-term investments balance at June 30, 1995 was $6,856,000 versus
$6,185,000 at September 30, 1994. The change in working capital was primarily
due to an increase in cash as well as an increase in inventories to support the
higher level of sales and a reduction in accounts payable. 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 $169,000. This compares with
$44,000 of capital expenditures in the third quarter of fiscal year 1994.
Capital spending year-to-date has been $619,000 versus $1,258,000 for the first
nine 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
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits:
11 Calculation of Earnings per Share
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 June 30, 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: July 28, 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
GALILEO ELECTRO-OPTICS CORPORATION
INDEX TO EXHIBITS
<TABLE>
<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
EXHIBIT 11
GALILEO ELECTRO-OPTICS CORPORATION
CALCULATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Nine Months Ended
-----------------
June 30, 1995 June 30, 1994
-----------------------------------
<S> <C> <C>
Net income (loss) $66,000 $(1,310,000)
Average common shares outstanding 6,475,839 6,473,654
Average number of common equivalent shares
arising from stock options 18,254 --
-----------------------------------
Weighted average common and common
equivalent shares outstanding 6,494,093 6,473,654
===================================
Net income (loss) per common and common
equivalent share outstanding $.01 $(.20)
===================================
</TABLE>
14
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> JUN-30-1995
<CASH> 6,856
<SECURITIES> 0
<RECEIVABLES> 5,387
<ALLOWANCES> 8
<INVENTORY> 5,181
<CURRENT-ASSETS> 18,097
<PP&E> 41,286
<DEPRECIATION> 21,270
<TOTAL-ASSETS> 43,251
<CURRENT-LIABILITIES> 3,087
<BONDS> 0
<COMMON> 65
0
0
<OTHER-SE> 38,661
<TOTAL-LIABILITY-AND-EQUITY> 43,251
<SALES> 24,276
<TOTAL-REVENUES> 24,276
<CGS> 18,083
<TOTAL-COSTS> 18,083
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 130
<INCOME-TAX> 64
<INCOME-CONTINUING> 66
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 66
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
