SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
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 No. 0-9613
NUCLEAR RESEARCH CORPORATION
(Exact name of Registrant as specified in its charter)
Pennsylvania 1343870
(State or other jurisdiction (I.R.S. Employer
of organization) Identification No.)
125 Titus Avenue, Warrington, Pennsylvania 18976
(Address of Principal Executive Offices) (Zip Code)
(215) 343-5900
(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 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
As of May 15, 1995, the Registrant had 28,175 shares of its common stock
outstanding.
<PAGE>
INDEX
Number Page
PART I. Financial Information.
Item 1. Consolidated Financial Statements.
Consolidated Balance Sheets - March 31, 1995
and June 30, 1994....................................................3
Consolidated Statements of Operations - Three
Months Ended March 31, 1995 and 1994.................................5
Consolidated Statements of Operations - Nine
Months Ended March 31, 1995 and 1994.................................6
Consolidated Statements of Shareholders' Equity -
Nine Months Ended March 31, 1995 and The
Year Ended June 30, 1994.............................................7
Consolidated Statements of Cash Flows - Nine
Months Ended March 31, 1995 and 1994.................................8
Notes to Consolidated Financial Statements...........................9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................................11
PART II. Other Information.
Item 1. Legal Proceedings...................................................14
Item 2. Changes in Securities...............................................14
Item 3. Defaults Upon Senior Securities.....................................14
Item 4. Submission of Matters to a Vote of Security
Holders.............................................................14
Item 5. Other Information...................................................14
Item 6. Exhibits and Reports on Form 8-K....................................14
<PAGE>3
PART I - FINANCIAL INFORMATION
ITEM 1.
NUCLEAR RESEARCH CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS
March 31, 1995 June 30, 1994
-------------- -------------
<S> <C> <C>
CURRENT ASSETS
Cash $ 21,454 $ 163,273
Accounts receivable 3,380,943 3,760,778
Costs and Estimated
Earnings in Excess
of Billings (Note 5) 908,289 -
Other Receivable (Note 4) - 695,335
Inventory (Note 3) 4,442,894 4,780,386
Prepaid expenses and
other current assets 256,615 26,113
---------- ----------
Total Current Assets 9,010,195 9,425,885
PROPERTY, PLANT AND EQUIPMENT
(net of accumulated depre-
ciation and amortization of
$2,339,330 at March 31,
1995 and $2,079,495 at
June 30, 1994) 1,443,554 1,456,620
OTHER ASSETS
Patents (net of accumulated
amortization of $55,521
at March 31, 1995 and
$48,726 at June 30, 1994 132,655 127,483
Other 13,685 14,706
----------- -----------
Total Other Assets 146,340 142,189
----------- -----------
TOTAL ASSETS $10,600,089 $11,024,694
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE>4
NUCLEAR RESEARCH CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
March 31, 1995 June 30, 1994
-------------- -------------
<S> <C> <C>
CURRENT LIABILITIES
Short-term borrowings $ 1,500,000 $ 2,375,000
Current portion of
long-term debt 313,004 344,282
Accounts payable 2,296,078 1,980,046
Accrued expenses 324,779 510,640
Accrued payroll and
payroll taxes 376,136 424,570
Taxes payable on income 159,775 106,251
----------- ----------
Total Current Liabilities 4,969,772 5,740,789
LONG-TERM DEBT 489,071 738,870
DEFERRED INCOME TAXES 29,274 29,274
SHAREHOLDERS' EQUITY
Common Stock
Stated value $5 per
share, with 60,000 shares
authorized, 31,873 shares
issued and 28,175 shares
outstanding 159,365 159,365
Additional paid capital 517,010 517,010
Retained Earnings 4,497,950 3,901,739
Less: treasury stock,
3,698 shares at cost (62,353) (62,353)
----------- -----------
Total Shareholders' Equity 5,111,972 4,515,761
----------- -----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $10,600,089 $11,024,694
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE>5
NUCLEAR RESEARCH CORPORATION & SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1995 1994
---- ----
<S> <C> <C>
NET SALES $6,917,256 $4,559,238
COST OF SALES 5,459,182 3,730,619
---------- ----------
GROSS PROFIT 1,458,074 828,619
SELLING AND ADMINISTRATIVE
EXPENSES 453,950 313,986
RESEARCH AND DEVELOPMENT
EXPENSES 211,612 218,642
INTEREST EXPENSE 92,936 36,200
---------- ---------
INCOME FROM OPERATIONS 699,576 259,791
OTHER INCOME 6,181 2,090
---------- ---------
INCOME BEFORE INCOME TAXES 705,757 261,881
LESS: TAXES ON INCOME 290,497 100,459
---------- ---------
NET INCOME $ 415,260 $ 161,422
========== =========
PRIMARY EARNINGS PER SHARE $ 12.73 $ 5.23
========== =========
WEIGHTED AVERAGE COMMON SHARES 32,621 30,855
========== =========
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE>6
NUCLEAR RESEARCH CORPORATION & SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
1995 1994
---- ----
<S> <C> <C>
NET SALES $16,600,710 $12,315,962
COST OF SALES 13,205,661 10,002,551
----------- -----------
GROSS PROFIT 3,395,049 2,313,411
SELLING AND ADMINISTRATIVE
EXPENSES 1,444,871 1,134,882
RESEARCH AND DEVELOPMENT
EXPENSES 733,628 749,594
INTEREST EXPENSE 223,747 203,631
----------- ----------
INCOME FROM OPERATIONS 992,803 225,304
OTHER INCOME 11,943 6,290
----------- ----------
INCOME BEFORE INCOME TAXES 1,004,746 231,594
LESS: TAXES ON INCOME 408,535 86,893
----------- ----------
NET INCOME $ 596,211 $ 144,701
=========== ==========
PRIMARY EARNINGS PER SHARE $ 18.28 $ 4.69
=========== ==========
WEIGHTED AVERAGE COMMON SHARES 32,621 30,855
=========== ==========
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE>7
NUCLEAR RESEARCH CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED MARCH 31, 1995 AND YEAR ENDED JUNE 30, 1994
(UNAUDITED)
<TABLE>
<CAPTION>
Common Stock Additional Total
Paid In Retained Shareholders'
Shares Amount Capital Earnings Treasury Stock Equity
<S> <C> <C> <C> <C> <C> <C>
Balance at 28,175 $159,365 $517,010 $3,279,386 $(62,353) $3,893,408
June 30, 1993
Net Income for
the year ended
June 30, 1994 - - - 622,353 - 622,353
------ ------- ------- --------- ------ ---------
Balance at
June 30, 1994 28,175 159,365 517,010 3,901,739 (62,353) 4,515,761
Net income for
the nine months
ended March 31,
1995 - - - 596,211 - 596,211
------- ------- ------- --------- ------ ---------
Balance at
March 31, 1995 28,175 $159,365 $517,010 $4,497,950 $(62,353) $5,111,972
====== ======== ======== ========== ========= ==========
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE>8
NUCLEAR RESEARCH CORPORATION & SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOW
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
1995 1994
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 596,211 $ 144,701
Adjustments to reconcile net
income to net cash provided by
(used by) operating activities:
Depreciation and amortization 266,625 337,125
(Increase) Decrease in:
Accounts receivable 379,835 (58,539)
Costs and Estimated
Earnings in Excess
of Billings (908,289) -
Other receivable 695,335 (896,191)
Inventory 337,492 (138,460)
Prepaid expenses and other
current assets (230,502) 84,781
Increase (decrease) in:
Accounts payable, accrued
expenses and payroll taxes 81,737 740,101
Taxes payable - on income 53,524 -
---------- -----------
NET CASH PROVIDED BY OPERATING
ACTIVITIES 1,271,968 213,518
---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (258,731) (121,315)
---------- -----------
NET CASH USED BY INVESTING ACTIVITIES (258,731) (121,315)
---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds (payments) on line of
credit (875,000) 125,000
Payments on long-term debt (281,077) (234,532)
Decrease in Other Assets 1,021 -
---------- -----------
NET CASH USED BY FINANCING
ACTIVITIES (1,155,056) (109,532)
---------- -----------
NET DECREASE IN CASH (141,819) (17,329)
---------- -----------
CASH - beginning 163,273 73,957
---------- -----------
CASH - ending $ 21,454 $ 56,628
========== ===========
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE>9
NUCLEAR RESEARCH CORPORATION & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1995 and March 31, 1994
Note 1. The Consolidated Financial Statements of Nuclear Research Corporation
have been prepared in accordance with the rules and regulations of the
Securities and Exchange Commission ("SEC"). In the opinion of management, the
accompanying Consolidated Financial Statements contain all adjustments
(consisting of only normal recurring adjustments) necessary to present fairly
the consolidated financial position as of March 31, 1995 and June 30, 1994 and
the consolidated results of operations and cash flows for the three and nine
months ended March 31, 1995 and 1994. Certain information and footnote
disclosures prepared in accordance with generally accepted accounting principles
have either been condensed or omitted pursuant to SEC rules and regulations.
These financial statements should be read in conjunction with the financial
statements and the notes included in the Company's latest Annual Report on Form
10-K.
The consolidated results of operations for the three and nine months ended March
31, 1995 and 1994 are not necessarily indicative of the results for the full
year.
Note 2. Principles of Consolidation.
The Consolidated Financial Statements include the accounts of Nuclear Research
Corporation and NRC Acquisition Corporation, hereafter referred to collectively
as the "Company." All significant inter-company accounts and transactions have
been eliminated in consolidation.
Note 3. Inventory.
(UNAUDITED)
March 31, June 30,
1995 1994
------ ------
Inventory consists of:
Work-In-Process
United States Government
contracts $6,902,039 $5,955,568
Commercial contracts 607,162 722,299
Purchased and manufactured
parts 1,354,410 923,972
---------- ----------
$8,863,611 $7,601,839
Less: Progress payments
on United States
Government contracts 4,420,717 2,821,453
---------- ----------
Total $4,442,894 $4,780,386
========== ==========
<PAGE>10
NUCLEAR RESEARCH CORPORATION & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Note 3. Inventory (continued)
The Company uses the last-in, first-out (LIFO) method to determine its material
inventory costs. The following information will facilitate comparison with
operating results of companies using the FIFO method. If the Company's inventory
had been determined using the FIFO method at March 31, 1995, reported
inventories would have been higher by $1,021,818 and the reported income would
have been higher by $88,641 ($2.72 per share). The pro forma effect relating to
the use of the FIFO method would have resulted in the following balances for the
statement of operations presentation for the nine months ended March 31, 1995:
Gross Profit $3,543,109
==========
Income from Operations $1,140,863
==========
Net Income $ 684,852
==========
Note 4. Other Receivable.
On March 15, 1993, a portion of the roof collapsed at the Company's Dover, New
Jersey division resulting in the disruption of production at this facility. The
property, inventory and business interruption losses resulting from the partial
roof collapse were insured. The other receivable represents the final settlement
as of June 30, 1994 of the Company's insurance claim related to the partial roof
collapse. The claim was paid in the quarterly period ended September 30, 1994.
Note 5. Costs and Estimated Earnings in Excess of Billings.
The Company uses the percentage-of-completion method of income recognition to
account for a multi-year contract.
<PAGE>11
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
During the nine months ended March 31, 1995, decreases in accounts
receivable of $379,835, a reduction in inventory of $337,492 and in an other
receivable of $695,335 combined with an increase in accounts payable, accrued
expenses and payroll taxes of $81,737 were the principal factors affecting cash
provided by operating activities. The decrease in the other receivable was the
result of the final settlement of the Company's insurance claim related to the
partial roof collapse in the Dover Division facility (see Note 4). Increases in
costs and estimated earnings in excess of billings of $908,289 and prepaid
expenses and other current assets of $230,502 offset cash provided by operating
activities for the nine months ended March 31, 1995.
The costs and estimated earnings in excess of billings resulted from the
Company using the percentage-of-completion method for income recognition of a
multi-year contract. Additionally, during the nine months ended March 31, 1995,
the Company had capital expenditures of $258,731 to purchase manufacturing and
computer equipment, to make building improvements and to make certain
expenditures associated with patents. Cash used by financing activities for the
nine months ended March 31, 1995 increased by $1,155,056, as a result of
payments on the line of credit of $875,000 and on long term debt of $281,077.
The Company's backlog of orders as of April 30, 1995 and April 30, 1994 was
$24,177,000 and $35,281,000, respectively.
The Company increased its line of credit availability by $500,000 raising
the maximum available under its line of credit to $3,500,000. The Company
believes that funds from operations and amounts available under its line of
credit will be sufficient to satisfy the Company's cash requirements.
Results of Operations.
Sales for the three months ended March 31, 1995 were $6,917,256, an
increase of $2,358,018 compared to sales of $4,559,238 for the three months
ended March 31, 1994. The increase in sales was primarily due to the Company's
ability to operate at normal shipping levels as compared to the prior year when
the partial roof collapse at the Company's Dover Division facility prevented the
Company from maintaining normal shipping levels.
<PAGE>12
Income from operations increased to $699,576 for the three months ended
March 31, 1995 from $259,791 for the three months ended March 31, 1994, due to
an increase in gross profit. The increase in gross profit was offset by
increases in selling and administrative expenses. Gross profit as a percentage
of sales increased to 21.08% at March 31, 1995 as compared to 18.17% for the
three months ended March 31, 1994 as a result of the Company's ability to
operate at normal shipping levels, combined with increased shipments of products
with higher gross margins.
Selling and administrative expenses increased $139,964 to $453,950 for the
three months ended March 31, 1995. The increase was primarily due to increased
marketing and commission expenses. As a percentage of sales, however, selling
and administrative expenses decreased to 6.56% for the three months ended March
31, 1995 as compared to 6.89% for the three months ended March 31, 1994.
Research and development expenses decreased $7,030 to $211,612 for the
three months ended March 31, 1995 as compared to the three months ended March
31, 1994. As a percentage of sales, research and development expenses decreased
to 3.06% for the three months ended March 31, 1995 as compared to 4.80% for the
three months ended March 31, 1994.
Interest expense increased $56,736 to $92,936 for the three months ended
March 31, 1995. The increase can be accounted for by higher interest rates and
costs associated with letters of credit for a multi-year contract.
Sales for the nine months ended March 31, 1995 were $16,600,710, an
increase of $4,284,748 from sales of $12,315,962 for the nine months ended March
31, 1994. The increase in sales was primarily due to the Company's ability to
operate at normal shipping levels as compared to the prior year when the partial
roof collapse at the Company's Dover Division facility prevented the Company
from maintaining normal shipping levels.
Income from operations increased to $992,803 for the nine months ended
March 31, 1995 from $225,304 for the nine months ended March 31, 1994. The
increase in income from operations was primarily due to an increase in gross
profit which was partially offset by an increase in selling and administrative
expenses. Gross profit as a percentage of sales increased to 20.45% for the nine
months ended March 31, 1995 compared to 18.78% for the nine months ended March
31, 1994. The increase is attributed to the Company's ability to operate at
normal shipping levels combined with increased shipments of products with higher
gross margins.
<PAGE>13
Selling and administrative expenses increased $309,989 to $1,444,871 for
the nine months ended March 31, 1995. The increase was primarily due to
increased marketing expenses, commission expenses and costs related to
negotiating an enhancement of the Company's credit facility. As a percentage of
sales, selling and administrative expenses decreased to 8.70% for the nine
months ended March 31, 1995 as compared to 9.21% for the nine months ended March
31, 1994.
Research and development expenses decreased $15,966 to $733,628 for the
nine months ended March 31, 1995 as compared to $749,594 for the nine months
ended March 31, 1994. As a percentage of sales, research and development
expenses decreased to 4.42% for the nine months ended March 31, 1995 as compared
to 6.09% for the nine months ended March 31, 1994. The decrease was primarily
due to the fact that all programming costs were fully amortized as of June 30,
1994.
Interest expense increased $20,116 to $223,747 for the nine months ended
March 31, 1995 as a result of higher interest rates and related costs associated
with letters of credit for a multi-year contract.
<PAGE>14
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Not Applicable.
Item 2. Changes in Securities.
Not Applicable.
Item 3. Defaults Upon Senior Securities.
Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
Not Applicable.
Item 5. Other Information.
Not Applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
Not applicable.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter
ended March 31, 1995.
<PAGE>15
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.
NUCLEAR RESEARCH CORPORATION
By: /s/ Earl M. Pollock
----------------------------
Earl M. Pollock
President
By: /s/ Mark S. Pollock
----------------------------
Mark S. Pollock
Treasurer
Dated: May 15, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000073296
<NAME> NUCLEAR RESEARCH CORPORATION
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> MAR-31-1995
<CASH> 21
<SECURITIES> 0
<RECEIVABLES> 3,381
<ALLOWANCES> 0
<INVENTORY> 4,443
<CURRENT-ASSETS> 9,010
<PP&E> 3,783
<DEPRECIATION> 2,339
<TOTAL-ASSETS> 10,600
<CURRENT-LIABILITIES> 4,970
<BONDS> 0
<COMMON> 159
0
0
<OTHER-SE> 4,953
<TOTAL-LIABILITY-AND-EQUITY> 10,600
<SALES> 16,601
<TOTAL-REVENUES> 16,601
<CGS> 13,206
<TOTAL-COSTS> 13,206
<OTHER-EXPENSES> 2,178
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 224
<INCOME-PRETAX> 1,005
<INCOME-TAX> 409
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<NET-INCOME> 596
<EPS-PRIMARY> 18.28
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</TABLE>
