Page 4
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended November 28, 1999
Commission file number 0-12611
AULT INCORPORATED
MINNESOTA 41-0842932
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7105 Northland Terrace
Minneapolis, Minnesota 55428-1028
(Address of principal executive offices)
Registrant's telephone number: (612) 592-1900
Indicate by check mark whether 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, 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.
Outstanding at
Class of Common Stock November 28,1999
No par value 4,391,787 shares
Total pages 18
Exhibits Index on Page 15
Page 2
PART 1. FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
AULT INCORPORATED & SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(in Thousands, Except Amounts Per Share)
(Unaudited)
Second Quarter Ended Six Months Ended
Nov. 28 Nov. 29 Nov. 28 Nov. 29
1999 1998 1999 1998
Net Sales $14,386 $11,046 $27,921 $22,383
Cost of Goods Sold 10,683 7,995 20,642 16,270
Gross Profits $ 3,703 3,051 7,279 6,113
Gross Profits % 25.7 27.6 26.1 27.3
Operating Expenses
Marketing 1,309 1,046 2,509 2,081
Design Engineering 783 511 1,603 996
G&A 1,126 956 2,368 1,863
3,218 2,513 6,480 4,940
Operating Income 485 538 799 1,173
Other Income (Expense)
Other (9) 142 21 254
Interest Expense (59) (24) (109) (53)
Income Before Income Taxes 417 656 711 1,374
Income Taxes 106 193 188 436
Net Income $311 $463 $523 $938
Earnings Per Common and
Equivalent Shares
Outstanding (Note 3)
Basic EPS $0.07 $0.11 $0.12 $0.23
Diluted EPS $0.07 $0.11 $0.11 $0.22
Common and Equivalent Shares
Outstanding
Basic 4,432,371 4,166,989 4,430,338 4,166,524
Diluted 4,676,819 4,401,703 4,677,442 4,329,090
See NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Page 3
PART 1. FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
AULT INCORPORATED & SUBSIDIARY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
( in Thousands, Except Amounts Per Share)
(Unaudited)
Second Quarter Ended Six Months Ended
Nov. 28 Nov. 29 Nov. 28 Nov. 29
1999 1998 1999 1998
Net Income $311 $463 $523 $938
Other Comprehensive Income
Net of Tax:
Foreign Currency Translation
adjustments (Note 11) (45) 106 (67) 227
Comprehensive Income $266 $569 $456 $1,165
See NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Page 4
AULT INCORPORATED & SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
( in Thousands)
(Unaudited)
November 28, May 30,
1999 1999
Assets:
Current Assets
Cash & Cash Equivalents (Note 4) $2,514 $3,303
Investment in Trading Securities 847 850
Trade Receivables, Less Allowance
for doubtful Accounts of $41,000 at
November 28, 1999, and $31,000
May 30, 1999 11,286 10,467
Inventories:
Finished Goods 7,033 4,959
Work in Process 143 216
Raw Material 4,453 3,876
Total Inventories 11,629 9,051
Prepaid and Other Expenses (Note 5) 862 854
Deferred Taxes 265 265
Total Current Assets 27,403 24,790
Other Assets:
Patents, (Note 6) 1,492 1,560
Deferred Taxes 105 105
Other 48 40
1,645 1,705
Property Equipment and Leasehold
Improvements at Cost:
Land 2,124 2,117
Building 1,109 816
Machinery and Equipment 7,132 6,423
Office Furniture 1,068 930
E.D.P. Equipment 1,478 1,465
Leasehold Improvements 686 975
Construction in Progress 4,292 815
17,889 13,541
Less Accumulated Depreciation 7,098 6,733
Net Equipment and Leasehold
Improvements 10,791 6,808
Total Assets $39,839 $33,303
See NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Page 5
AULT INCORPORATED & SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(in Thousands)
(Unaudited)
November 28, May 30,
1999 1999
Liabilities and Stockholders' Equity
Current Liabilities:
Note Payable to Bank $5,060 $1,428
Current Maturuties of Long-Term
Debt (Note 7) 534 402
Account Payable 7,412 5,557
Accrued Expenses:
Compensation (Note 8) 564 417
Other (Note 9) 900 622
Income Taxes Payable 50 0
Total Current Liabilities 14,520 8,426
Long-Term Debt, Less Current Maturities
Included Above (Note 7) 1,087 1,187
Deferred Rent Expense 0 14
Retirement and Severance Benefits
(Note 10) 317 234
Stockholders' Equity:
Preferred Stock, No Par Value, Authorized
1,000,000 Shares; None Issued.
Common Shares, No Par Value, Authorized
10,000,000 Shares; Shares Outstanding:
4,391,787 November 28, 1999; and
4,372,789 May 30, 1999 19,846 19,827
Less Note Receivable From Sale of
Common Stock (145) (145)
Retained Earnings 4,880 4,359
Accumulated Other Comprehensive
Income (Note 11) (666) (599)
TOTAL 23,915 23,442
Total Liabilities and
Stockholders' Equity $39,839 $33,303
See NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Page 6
AULT INCORPORATED & SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
( in Thousands)
(Unaudited)
Six Months Ended Six Months Ended
Nov. 28 Nov. 29
1999 1998
Cash Flows From Operating Activities
Net Income: $523 $938
Adjustments to Reconcile Net
Income to Net Cash (Used in)
Operating Activities:
Depreciation 433 299
Decrease (Increase) in Market
Value of Securities 3 19
Changes in Assets and Liabilities:
(Increase) Decrease In:
Trade Receivables (819) (1,351)
Inventories (2,578) (820)
Prepaid and Other Expenses (18) (146)
(Decrease) Increase in:
Accounts Payable 1,855 1,559
Accrued Expenses 494 286
Income Tax Payable 50 (173)
Net Cash Provided by Operating Activities (57) 611
Cash Flows From Investing Activities:
Purchase of Equipment and Leasehold
Improvements (4,348) (971)
Decrease in Other Assets 0 30
Net Cash Used in Investment Activities (4,348) (941)
Cash Flows From Financing Activities:
Net Borrowings on Revolving
Credit Agreements 3,632 164
Proceeds from Long-Term Borrowings 0 445
Proceeds from Issuance of Common Stock 19 27
Principal Payments on Long-Term
Borrowings Including Capital Leases 32 (100)
Net Cash Provided by Financing
Activities 3,683 536
Effect of Foreign Currency Exchange
Rate Changes on Cash (67) 227
Cash and Cash Equivalents:
Increase (789) 433
Beginning 3,303 5,935
Ending $2,514 $6,368
AULT INCORPORATED AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SECOND QUARTER ENDING NOVEMBER 28,1999
NOTE 1, Principles of Consolidation
The accompanying consolidated financial statements include
the accounts of Ault Incorporated, its wholly-owned
subsidiaries, Ault Korea Corporation and Ault Xianghe Co.
Ltd. All significant intercompany transactions have been
eliminated. The foreign currency translation adjustment
represents the translation into United States dollars of the
Company's investment in the net assets of its foreign
subsidiaries in accordance with the provisions of FASB
Statement No. 52.
NOTE 2, Income Taxes
The Company's tax provision includes taxes accrued on US and
Korean income calculated at an average rate of 34.0% after
recognition of deferred tax assets.
NOTE 3, Net Income Per Share
The Company has presented basic and diluted per share
earnings in accordance with FASB Statement No. 128. Basic
per share earnings are presented only for outstanding common
stock. In addition to outstanding common stock,
presentation of diluted per share earnings also assumes the
conversion, exercise or issuance of all potential common
stock instruments that are not antidilutive, using average
common market values.
The Company also has adopted the disclosure-only provisions
of Statement of Financial Accounting Standards No. 123,
Accounting for Stock-Based Compensation. Accordingly, no
compensation cost has been recognized for the Company's
stock option plan. Had compensation cost been determined
for the three months of fiscal 1998 and fiscal 1999 based on
the fair value of options at the grant dates consistent with
the provisions of SFAS No. 123, the Company's net income and
net income per share would have changed to the pro forma
amounts indicated below:
Six Months Ending
November 28, November 29,
1999 1998
Net Income, as reported $523,000 $938,000
Net Income (loss) pro forma 85,139 775,292
Net Income, per share, as
reported, basic 0.12 0.23
Net income, per share, as
reported, diluted 0.11 0.22
Net Income, per share, basic,
pro forma 0.02 0.18
Net Income, per share, diluted,
pro forma 0.02 0.18
The fair value of each option grant is estimated on the date
of grant using the Black-Scholes option-pricing model with
the following weighted-average assumptions used for grants
included in fiscal 2000 and fiscal 1999 calculations.
AULT INCORPORATED AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SECOND QUARTER ENDING NOVEMBER 28,1999
Six Months Ending
November 28, November 29,
1999 1998
Expected dividend yield - -
Expected stock price volatility 75.62% 63.14%
Risk free interest rate 4.76 - 5.85% 5.37-6.61%
Expected life of options 1-5 1-5
NOTE 4, Cash and Investments
For the purpose of reporting cash and cash flows, the
Company considers all highly liquid instruments purchased
with a maturity of three months or less to be cash
equivalents. Investment in trading securities is comprised
of preferred stocks that pay dividends on which the Company
receives a tax benefit.
NOTE 5, Prepaid and Other Expenses
Prepaid and other expenses are principally customs duty and
value-added taxes, and certain deferred expenses that are
related to, and are absorbed against revenue during the
fiscal year, as well as receivables for cash advances made
to foreign subcontractors of the Company. The customs duty
and value added taxes are paid by Ault Korea Corporation to
the Korean authority on products that are manufactured for
exportation. These payments are refundable when the
subsidiary submits to the Korean Government the appropriate
claim and proof of exportation. Advances to sub-contractors
are amortized against order deliveries.
NOTE 6, Patent
Patent cost, net of amortized amounts represents the
contract price of US Patent #5,303,137,1 which was acquired
from a source external to and independent of the Company.
The Company believes that products using the power
conversion technology it represents will generate
significant revenues into fiscal 2002. For amortization
purposes, the patent had been assigned a life of four years.
AULT INCORPORATED AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SECOND QUARTER ENDING NOVEMBER 28,1999
NOTE 7, Long-term Debt
Long-term debt, including current maturities contain the
following:
NOVEMBER 28, MAY 30,
1999 1999
(000)
US Bancorp
7.2% term loan due in monthly installments
of $7,978, including interest to December
2003, secured by equipment $337 $371
US Bancorp
8.1% term loan due in monthly installments
of $7,340, including interest to February
2001, secured by equipment 104 143
US Bancorp
7.9% term loan due in monthly installments
of $7,320, including interest to November
2001, secured by equipment 162 198
8.0% note payable, quarterly interest payments
until August 1999, thereafter due in quarterly
principal installments of $46,588, plus
interest through November 2001, secured by
Korean government-funded agency 378 373
7.5% note payable, quarterly interest payments
until April 2000, thereafter due in quarterly
principal payments of $52,464 plus interest,
through April 2002, secured by Korean
government-funded agency 425 420
8.0% note payable, due in quarterly
installments of $20,985 plus interest,
through April 2000, secured by Land,
buildings and Korean government-funded agency 43 84
7.5% note payable, September 2000 plus interest 172 ---
$1,621 $1,589
Less Current Maturities 534 402
Total $1,087 $1,187
NOTE 8, Compensation
Compensation consists principally of amounts accrued for
payment of employees' salaries, vacation and sick pay.
AULT INCORPORATED AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SECOND QUARTER ENDING NOVEMBER 28,1999
NOTE 9, Accrued Expenses, Other
Accrued expenses, other, are mainly undue amounts for sales
representatives commissions, fees to product certifying
agencies and provisions for future payment of current
warranty commitments.
NOTE 10, Retirement & Severance Benefits
Deferred compensation is a provision by Ault Korea
Corporation, in accordance with requirements of the Korea
Government, for the compensation of each current employee
when his/her employment with the subsidiary terminates. The
National Pension Scheme of Korea, does not require the
Company to fund this obligation, but requires the transfer
of certain portions of the liability to the Korean National
Pension Fund. The liabilities recorded by the Company are
net of these transfers.
NOTE 11, Accumulated Other Comprehensive Income
Accumulated other comprehensive income is comprised of
foreign currency translation adjustments resulting from
translation of the financial statements of Ault Korea
Corporation from its functional currency, Korean Won, to US
dollars. Adjustments that were recorded during the quarter
of each fiscal year are as follows:
NOVEMBER 28, NOVEMBER 29,
1999 1998
(000)
Beginning cumulative exchange
gain (loss) $(599) $(898)
Gain (loss) for the period from:
a. Long-term inter-company
receivables 31 281
b. Other (98) (54)
Total $(666) $(671)
The amounts attributed to long-term inter-company
receivables for the SIX MONTHS ending November 28, 1999,
reflect changes in the Won rate from 1,191.3 Wons to $1.00
at May 30, 1999, to 1,175.6 Wons to $1.00 at November 28,
1999. Amounts attributed to long-term inter-company
receivables for the six months ending November 29, 1998,
reflect changes in the Won rate from 1,400.0 Wons to $1.00
at May 31, 1998, to 1,248.8 Wons to $1.00 at November 29,
1998. Amounts were computed on outstanding receivables of
$2,311,000.
ITEM 2 - MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITIONS AND RESULTS OF OPERATIONS
From time to time, in reports filed with the Securities and
Exchange Commission, in press releases, and in other
communications to shareholders or the investing public, the
Company may make forward-looking statements concerning
possible or anticipated future results of operations or
business developments which are typically preceded by the
words "believes", "expects", "anticipates", "intends" or
similar expressions. For such forward-looking statements,
the Company claims the protection of the safe harbor for
forward looking statements contained in the Private
Securities Litigation Reform Act of 1995. Shareholders and
the investing public should understand that such forward-
looking statements are subject to risks and uncertainties
which could cause results or developments to differ
significantly from those indicated in the forward-looking
statements. Such risks and uncertainties include, but are
not limited to, the overall level of sales by original
equipment manufacturers (OEMs) in the telecommunications,
data communications, computer peripherals and the medical
markets; buying patterns of the Company's existing and
prospective customers; the impact of new products introduced
by competitors; delays in new product introductions; higher
than expected expense related to sales and new marketing
initiatives; availability of adequate supplies of raw
materials and components; and other risks affecting the
Company's target markets generally.
RESULTS OF OPERATIONS
Three months Ended November 28, 1999
Fiscal Fiscal Increase (Decrease)
2000 1999 Amount Percentage
Net Sales $14,386,000 $11,046,000 $3,340,000 30%
Operations Income 485,000 538,000 (53,000) (10)%
Net sales were $14,386,000 for the second quarter of fiscal
2000 up 30% from $11,046,000 for the second quarter of
fiscal 1999. The growth was primarily due to significantly
higher power supply shipments to five major OEM's of high-
speed ADSL modems. The Company is also benefiting from
growing business volumes with OEM's serving the wireless
communication and medical equipment markets and the
acquisition in fiscal 1999 of the power supply business of
LZR Electronics, Inc. While one of the Company's major
cable modem customers is experiencing production slowdowns,
sales from other OEM's increased to give the strong sales
increase. The Company is a supplier for several major cable
modem manufacturers and believes the market for cable modems
will remain strong.
Operating income totaled $485,000 for the second quarter of
fiscal 2000 and $538,000 for the same period in fiscal 1999
equaling, respectively, 3.4% and 4.9% of net sales. The
change in operating income for fiscal 2000 is due primarily
to increased operating expenses. The increased operating
expenses were incurred principally due to (1) sales
commissions paid to sales representatives on the increased
sales, in the first quarter, (2) integration of LZR into the
Company, and (3) continued support of strategic initiatives,
including new product and sales development:
New Product Development: Service to customers continues as
a strong strategic focus of the Company. To this end, the
Company's engineering activities are directed to developing
products for various customer applications that are
anticipated to generate revenue in fiscal 2000 and later
years. In addition to data convergence and portable medical
products, these applications include uninterruptible power
supplies, hubs, routers and switchers for the networking
market.
Sales Development: During the latter half of fiscal 1999,
the Company opened sales offices in Shanghai and in Europe
and strengthened the Korean Sales office.
Six months Ended November 28, 1999
Fiscal Fiscal Increase (Decrease)
2000 1999 Amount Percentage
Net Sales $27,921,000 $22,383,000 $5,538,000 25%
Operations Income 799,000 1,173,000 (374,000) (32)%
Net sales were $27,921,000 for the six months ended November
28, 1999 up 25% from $22,383,000 for the same period in
1998. The growth was primarily due to securing a
significant amount of new business with OEM's in the growing
ADSL modem market, wireless communications, medical
equipment, local area networks and the acquisition in fiscal
1999 of the power supply business of LZR Electronics, Inc.
Operating income totaled $799,000 for the six month period
of fiscal 2000 and $1,173,000 for the same period in fiscal
1999, a decrease of 32%. The change in operating income for
fiscal 2000 is due primarily to increased operating
expenses. The increased operating expenses were incurred
principally due to
(1) sales commissions paid to sales representatives on the
larger sales in the first quarter, (2) integration of LZR
into the Company, and (3) continued support of strategic
initiatives, including new product development and sales
development.
Acquisition of LZR: To strengthen its position in the
medical product application market, the Company acquired the
assets of the power supply division of LZR Electronics, a
closely held corporation located in Gaithersburg, Maryland
in December 1998. Prior to being acquired by Ault, LZR had
annual revenues of approximately $6.5 million in calendar
1997 and 1998. LZR's product line was based on a technology
platform which allows the efficient development of customer
specific power supplies for medical markets requiring lower
production volumes. In addition to complementing the
Company's sales for many high volume applications, many of
LZR's products were agency approved for medical product
applications. The Company's greater sales channels and
larger customer base have enabled it to leverage the LZR
products to greater revenue levels.
Order Backlog: The Company's order backlog at November 28,
1999 totaled $11,783,000 compared to $12,963,000 at May 30,
1999. The order backlog represents sales for approximately
nine weeks and reflected the posture of many OEMs to limit
their contractual commitments to the best lead-times of
their suppliers. This requires the Company to place greater
reliability on its ability to forecast customer needs and
requirements for on-time shipment of products.
Non-Operating Income: Other income of $21,000 for the six
months of fiscal 2000 and $254,000 for the same period in
fiscal 1999 represented principally interest income,
currency exchange rate gains on foreign contracts by the
Korean subsidiary and income derived from rented portions of
the Korean manufacturing facility. The Company incurred
interest expenses of $109,000 in fiscal 2000 and $53,000 in
fiscal 1999, paid principally on bank credit facilities and
long-term borrowings.
Income Tax: The Company had pre-tax income of $711,000 for
the six month period in fiscal 2000 on which it accrued US
and Korean income taxes totaling $188,000. For the six
month period in fiscal 1999, the Company had pre-tax income
of $1,374,000 on which US and Korean income taxes totaling
$436,000 were accrued.
Net Income: The Company reported diluted per share earnings
of $0.07 for the second quarter of fiscal 2000 based on
4,627,000 outstanding weighted average shares, compared to
diluted per share earnings of $0.11 for the second quarter
of fiscal 1999, which were based on 4,334,000 outstanding
weighted average shares. For the first half of fiscal 2000
the Company reported diluted per share earnings of $0.11
based on 4,619,000 outstanding weighted average shares,
compared to diluted per share earnings of $0.22 for the same
period in fiscal 1999, which were based on 4,334,000
outstanding weighted average shares.
LIQUIDITY AND CAPITAL RESOURCES
The following table describes the Company's working capital
position at November 28, 1999, and at May 30, 1998:
November 28, May 30,
1999 1999
(000)
Working capital $12,833 $16,364
Cash 2,514 $3,303
Trading Securities at market 847 850
Unutilized bank credit facilities 4,935 $2,491
Cash provided by (used in) operations (57) 22
Current Working Capital Position
At November 28, 1999, the Company had current assets of
$27,403,000 and current liabilities of $14,520,000 which
amounted to working capital of $12,833,000 and current ratio
of 1.89 to 1.00. This represents a change from its working
capital of $16,364,000 at May 30, 1999. In addition to cash
and trading securities, the Company relies on its credit
facilities and cash flows from operations as sources of
working capital supporting normal growth in revenue, capital
expenditures and attainment of profit goals.
Cash and Investments: At November 28, 1999, the Company had
cash and trading securities totaling $3,361,000, down from
$4,153,000 at May 30, 1999, principally because of cash
payments made to acquire and relocate to a new manufacturing
and office facility in Minneapolis, Minnesota.
Credit Facilities: The Company maintains two credit
facilities. Its primary credit facility is with US Bank and
a smaller facility with Korea Exchange Bank supports the
South Korean subsidiary. See Note 7, under NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS.
The credit arrangement with US Bank includes:
(a) A revolving credit facility of $4.0 million, secured by
Company assets and expiring in 1999. At November 28, 1999,
borrowings against it amounted to $729,000.
(b) One or more term loans, each up to $400,000. At
November 28, 1999, borrowings totaling $603,000 were
outstanding on three term loans.
(c) One or more notes payable, secured by equipment, land,
and buildings. At November 28, 1999, borrowings totaling
$846,000 were outstanding.
The South Korean credit facility is approximately $1.5
million of which borrowings at November 28, 1999 totaled
$306,000.
The Company also has a short-term advancing term note for up
to $3,200, in connection with construction of the new
manufacturing/office facility in Minneapolis. At November
28, 1999 borrowings against this note totaled $2,525,000.
The Company replaced the note with long-term financing for
the facility totaling $3,000,000 in December 1999.
CASH FLOWS FOR 2000
Operations: Operations used $57,000 of cash during the
second quarter of fiscal 2000 due principally to the
following activities in trade receivables, inventories,
accounts payables and accrued expenses:
(a) Increases in trade receivables mainly due to the
increased net sales in the second quarter of fiscal 2000
used $819,000 of cash. Further use of cash from increased
net sales is anticipated for the rest of fiscal 2000.
(b) Increases in inventories used $2,578,000 of cash. The
increases are due principally to requirements of customers
that the Company carry additional stockings of finished
products to support their emergency needs. This is a normal
business practice in the power supply market. No changes
that are anticipated over the near term are expected to be
of any significant impact on this use of cash.
(c) Decreases in accrued expenses and accounts payable
provided $2,349,000 of cash from liabilities associated with
purchases of material to support customer orders and
emergency stockings of finished products. Further
contribution to cash from increased liabilities for these
purposes is anticipated in fiscal year 2000.
Investing Activities: Investing activities used net cash of
$4,348,000 relating principally to the construction of the
new manufacturing/office facility in Minneapolis.
Financing Activities: Financing activities provided net cash
of $3,683,000, comprised principally of borrowings under the
short term advancing term note in connection with the
construction of the new manufacturing/office facility in
Minneapolis.
Effect of Foreign Currency Exchange Rate Fluctuations: The
effect of translating the Korean financial statements, which
were prepared in Won, to US dollars, resulted in a net asset
value decrease of $67,000 during the quarter, which related
principally to long-term inter-company receivables. See
Note 11, under NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
Summary: The Company's cash and working capital positions
are sound and, together with its credit facilities, are
adequate to support the Company's strategies for the
remainder of fiscal 2000.
Information about Products and Services: The Company's
business operations are comprised of principally one
activity-the design, manufacture and sale of equipment for
converting electric power to a level used by OEM's
principally in computer peripherals, data
communications/telecommunications and medical markets to
charge batteries, and/or power equipment. The Company
supports these power requirements by making available to the
OEM products that have various technical features. These
products are managed as one product segment under the
Company's internal organizational structure and the Company
does not consider any financial distinctive measures,
including net profitability and segmentation of assets to be
meaningful to performance assessment.
Information About Revenue by Geography
Distribution of revenue from the US, from each foreign
country that is the source of significant revenue and from
all other foreign countries as a group are as follows:
SIX MONTHS ENDING
November 28, November 29,
1999 1999
($000) ($000)
US $22,763 $17,388
Canada 1,518 1,044
Ireland 42 1,535
Korea 1,342 678
Mexico 570 393
Other Foreign 1,686 1,335
Total $27,921 $22,383
The Company considers a country to be the geographic source
of revenue if it has contractual obligations, including
obligation to pay for trade receivable invoices.
Impact of Foreign Operations and Currency changes:
Products manufactured by the Korean subsidiary contributed a
large portion of total sales. The value of the Won had no
significant impact on the Company's consolidated sales for
the quarter because the predominant portions of the
subsidiary's sales were made under inter-company contracts
with the US operations. Sales by the subsidiary in its
local market are not material in amounts in contrast to its
inter-company sales. The Company's US operations have no
significant exposure to currency risks because the
predominant portions of its foreign contracts are made in US
dollars.
AULT INCORPORATED AND SUBSIDIARY
PART II. OTHER INFORMATION
ITEMS 1-5 OTHER INFORMATION: Not Applicable
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
Exhibits
Reference Title of Document Location
Part 1 Exhibits
11 Computation of Per Share Earnings Filed herewith at page 19
27 Financial Data Scheduling Filed Electronically
(a) None
(b) Reports on Form 8-K
There were no reports on Form 8-K filed for the quarter
ended November 28, 1999.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange
Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly
authorized.
AULT INCORPORATED
(REGISTRANT)
DATED: 1/11/00 /s/Frederick M. Green
Frederick M. Green, President
Chief Executive Officer and
Chairman
DATED: 1/11/00 /s/ Donald L. Henry
Donald L. Henry
Chief Financial Officer
Page 1
EXHIBIT 11
AULT INCORPORATED & SUBSIDIARY
COMPUTATION OF CONSOLIDATED EARNINGS PER SHARE
(In Thousands of Dollars, Except Per Share Data)
(Unaudited)
Three Months Six Months
Ended Ended
November 28, November 29,
1999 1999
Basic EPS Computation
Net Income to Common Stockholders $311 $523
Common Shares Outstanding:
Beginning of Year 4,372,789 4,372,789
Common Shares from Exercise of
Employee Stock Options Daily
Weighted: 3,582 2,164
Common Shares from Exercise of
Warrants Options Daily Weighted: 56,000 55,385
Total Weighted Common Shares 4,432,371 4,430,338
Net Income $0.07 $0.12
Diluted EPS Computation
Net Income to Common Stockholders $311 $523
Total Weighted Common Shares 4,432,371 4,430,338
Dilutive Potential Common Shares,
Daily Weighted, from:
Assumed Conversion of Outstanding
Dilutive
Employee Stock Options 241,587 244,243
Employee Stock Purchase Plan 2,861 2,861
244,448 247,104
Adjusted Weighted Average Shares 4,676,819 4,677,442
Net Income $0.07 $0.11
*For the second quarter of fiscal 2000 and fiscal 1999,
options totaling 208,000 and 313,203, respectively,
were excluded from dilative EPS calculations because of
their higher exercise prices compared to the market values.
EXHIBIT 11 (cont.)
AULT INCORPORATED & SUBSIDIARY
COMPUTATION OF CONSOLIDATED EARNINGS PER SHARE
(In Thousands of Dollars, Except Per Share Data)
(Unaudited)
Three Months Six Months
Ended Ended
November 29, November 29,
1998 1998
Basic EPS Computation
Net Income to Common Stockholders $463 $938
Common Shares Outstanding:
Beginning of Year 4,161,758 4,161,758
Common Shares from Exercise of
Employee Stock Options
Daily Weighted:
Second Quarter 5,231 4,766
Total Weighted Common Shares 4,166,989 4,166,524
Net Income $0.11 $0.23
Diluted EPS Computation
Net Income to Common Stockholders $463 $938
Total Weighted Common Shares 4,166,989 4,166,524
Dilutive Potential Common Shares,
Daily Weighted, From Assumed
Conversion of Outstanding Dilutive:
Employee Stock Options 489,447 541,197
Employee Stock Purchase Plan 16,273 16,273
505,720 557,470
Less Common Shares Purchaseable
from Proceeds:
Employee Stock Options 259,388 383,290
Employee Stock Purchase Plan,
Phase 2 13,412 13,407
272,800 396,697
Adjusted Weighted Average Shares 4,399,909 4,327,297
Net Income $0.11 $0.22
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATIONS OF THE
COMPANY'S FORM 10-Q FOR THE PERIOD ENDED NOVEMBER 28, 1999, AND IS QUALIFIED IN
ITS ENTIRELY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-28-2000
<PERIOD-END> NOV-28-1999
<CASH> 2514
<SECURITIES> 847
<RECEIVABLES> 11327
<ALLOWANCES> 41
<INVENTORY> 11629
<CURRENT-ASSETS> 27403
<PP&E> 17889
<DEPRECIATION> 7098
<TOTAL-ASSETS> 39839
<CURRENT-LIABILITIES> 14520
<BONDS> 0
0
0
<COMMON> 19846
<OTHER-SE> 4069
<TOTAL-LIABILITY-AND-EQUITY> 39839
<SALES> 27921
<TOTAL-REVENUES> 27921
<CGS> 20642
<TOTAL-COSTS> 20642
<OTHER-EXPENSES> 6459
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 109
<INCOME-PRETAX> 711
<INCOME-TAX> 188
<INCOME-CONTINUING> 523
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 523
<EPS-BASIC> 0.12
<EPS-DILUTED> 0.11
</TABLE>
