<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 December 31, 1994
-------------------------------
/ / 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 0-15902
--------------------------------------------------
ESSEF Corporation
- -------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Ohio 34-0777631
- -------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
220 Park Drive, Chardon, Ohio 44024
- -------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (216) 286-2200
----------------------
None
- -------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since
last report.
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, as amended, 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 N/A
----- ----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common shares, as of the latest practicable date.
Class Outstanding at February 6, 1995
- -------------------------------- -------------------------------------
Common Shares, no par value 4,869,419 Shares
Page 1 of 19
<PAGE> 2
ESSEF CORPORATION
Form 10-Q
For Quarter Ended December 31, 1994
INDEX
<TABLE>
<CAPTION>
Sequential
Page No.
----------
<S> <C>
Part I - Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -
December 31, 1994 and September 30, 1994........... 3-4
Condensed Consolidated Statements of Operations -
Three Months Ended December 31, 1994 and 1993...... 5
Condensed Consolidated Statements of Cash Flows -
Three Months Ended December 31, 1994 and 1993...... 6
Notes to Condensed Consolidated Financial
Statements......................................... 7-10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.... 11-12
Part II - Other Information
Item 1. Legal Proceedings................................ 13
Item 2. Changes in Securities............................ 13
Item 4. Submission of Matters to a Vote of Security
Holders.......................................... 13
Item 5. Other Information................................ 13
Item 6. Exhibits and Reports on Form 8-K................. 14
</TABLE>
Page 2 of 19
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ESSEF CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
December 31, September 30,
1994 1994
------------ -------------
ASSETS (unaudited)
- ------
<S> <C> <C>
Current Assets
Cash and cash equivalents.............. $ 1,071 $ 2,509
Accounts receivable, net .............. 24,463 20,983
Inventories, net ...................... 13,614 11,789
Other current assets................... 1,010 1,221
------- -------
Total current assets................ 40,158 36,502
Property, Plant and Equipment, at cost
Land................................... 350 350
Buildings.............................. 16,710 16,689
Machinery and equipment................ 50,715 49,510
Construction-in-progress............... 2,475 1,381
------- -------
70,250 67,930
Less accumulated depreciation.......... 39,698 38,376
------- -------
Net property, plant and equipment... 30,552 29,554
Other Assets
Receivable under agreement for deed.... 4,059 4,079
Goodwill, net.......................... 3,102 3,123
Other.................................. 975 913
------- -------
Total other assets.................. 8,136 8,115
------- -------
$78,846 $74,171
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current Liabilities
Current maturities of long-term debt... $ 1,429 $ 1,436
Accounts payable....................... 8,074 6,716
Other current liabilities ............. 7,476 10,138
------- -------
Total current liabilities........ 16,979 18,290
Long-Term Debt ............................ 21,239 16,246
Other Long-Term Liabilities................ 1,785 1,739
------- -------
Total liabilities................ 40,003 36,275
</TABLE>
Page 3 of 19
<PAGE> 4
<TABLE>
<S> <C> <C>
Shareholders' Equity
Preferred shares without par value,
authorized 1,000,000 shares,
none issued........................... -- --
Common shares without par value,
authorized 15,000,000 shares, issued
4,970,498 and 4,970,250 shares less
101,330 treasury shares at cost,
stated at............................ 15,069 15,045
Retained earnings....................... 22,398 21,501
Cumulative foreign currency translation
adjustment........................... 1,376 1,350
------- -------
Total shareholders' equity....... 38,843 37,896
------- -------
$78,846 $74,171
======= =======
</TABLE>
The accompanying Notes To Condensed Consolidated Financial Statements are an
integral part of these balance sheets.
Page 4 of 19
<PAGE> 5
ESSEF CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands,
except per share data)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
December 31,
--------------------
1994 1993
------- -------
<S> <C> <C>
Net Sales.................................. $32,019 $24,658
Cost of Sales.............................. 23,068 17,454
------- -------
Gross Profit........................... 8,951 7,204
Operating Expenses......................... 7,093 5,905
------- -------
Income from Operations................. 1,858 1,299
Interest Expense........................... 390 135
Other (Income) Expense..................... 66 (187)
------- -------
Income Before Income Taxes............. 1,402 1,351
Provision for Income Taxes ................ 505 516
------- -------
Net Income ............................ $ 897 $ 835
======= =======
Average Number of Shares Outstanding....... 5,746,248 5,710,504
Net Income Per Share....................... $ .16 $ .15
======= =======
Cash Dividends Per Common Share............ $ -- $ --
======= =======
</TABLE>
The accompanying Notes To Condensed Consolidated Financial Statements are an
integral part of these statements.
Page 5 of 19
<PAGE> 6
ESSEF CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
December 31,
--------------------
1994 1993
------- -------
<S> <C> <C>
Cash Flows From Operating Activities
Net Income......................................... $ 897 $ 835
Adjustments to reconcile net income
to net cash flows from operating activities
Depreciation and Amortization................ 1,310 1,363
Stock option compensation (income) expense 24 (16)
Loss on sale of fixed assets................. -- 7
(Increase) Decrease in
Accounts receivable............................. (3,464) (3,538)
Inventories..................................... (1,819) (1,452)
Prepayments..................................... (156) --
Deferred income taxes........................... -- (394)
(Decrease) Increase in
Accounts payable................................ 1,353 3,631
Other current liabilities....................... (2,298) (885)
Other long-term liabilities........................ 6 39
Other, net......................................... (21) 53
------- -------
Net cash flows from operating activities........ (4,168) (357)
------- -------
Cash Flows From Investing Activities
Additions to property, plant and
equipment....................................... (2,297) (819)
------- -------
Net cash flows from investing activities........ (2,297) (819)
------- -------
Cash Flows From Financing Activities
Borrowing on outstanding debt, net................. 4,986 783
------- -------
Net cash flows from financing activities........ 4,986 783
------- -------
Effect of Exchange Rate Changes on Cash
and Cash Equivalents............................... 41 (36)
------- -------
Net (Decrease) in Cash............................... (1,438) (429)
Cash and Cash Equivalents Balance - Beginning........ 2,509 2,836
------- -------
Cash and Cash Equivalents Balance - Ending........... $ 1,071 $ 2,407
======= =======
</TABLE>
The accompanying Notes To Condensed Consolidated Financial Statements are an
integral part of these statements.
Page 6 of 19
<PAGE> 7
ESSEF CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(1) In the opinion of the Company the accompanying unaudited Condensed
Consolidated Financial Statements consist of normal adjustments and
accruals necessary to present fairly the Company's financial position as
of December 31, 1994, the results of its operations for the three month
periods ended December 31, 1994 and 1993, and its cash flows for the
three month periods ended December 31, 1994 and 1993.
These financial statements have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures are
adequate to make the information presented not misleading. These
financial statements should be read in conjunction with the financial
statements and the notes thereto included in the Company's 1994 Annual
Report to Shareholders, sections of which are incorporated by reference
into the Company's Form 10-K filed for the fiscal year ended September
30, 1994.
(2) Inventories
<TABLE>
<CAPTION>
Inventories are valued as follows:
(Dollars in thousands) December 31, September 30,
1994 1994
----------------------------------
(unaudited)
<S> <C> <C>
Raw materials...................... $ 7,054 $ 8,418
Work-in-process.................... 1,771 1,306
Finished goods..................... 6,519 3,374
------- -------
Inventories at FIFO cost......... 15,344 13,098
Less: Allowance to reduce carrying
value to LIFO cost............... (1,730) (1,309)
------- -------
Net Inventories............... $13,614 $11,789
======= =======
</TABLE>
(3) Receivable Under Agreement for Deed
As part of the proceeds from the sale of the remaining assets of FAME
Plastics, Inc., now known as Sanford Technology Corporation, the Company
received a $6.5 million receivable under an Agreement for Deed which
bears interest at 12%. Interest only was paid on a quarterly basis
through December 1, 1993. Monthly principal and interest payments were
scheduled to begin on February 1, 1994. The scheduled interest and
principal payments due in fiscal 1995 on the part of the receivable
allocated to machinery and equipment ($750,000) have not been received.
The remainder of the $6.5 million receivable ($5,750,000) was allocated
to real estate, and the scheduled monthly principal payments due
beginning on February 1, 1994 on the real estate portion, have not been
received. The quarterly interest due
Page 7 of 19
<PAGE> 8
September 1, and December 1, 1994, on the real estate portion has not
been paid. The debtor has requested a restructuring of the Agreement
for Deed. Discussions are continuing, however, no agreement has been
reached.
(4) Long-Term Debt
The Company and its bank group entered into an unsecured $33,000,000
revolving loan, an acquisition-related line of credit in the maximum
aggregate amount of $10,000,000, and an additional term loan facility in
the maximum aggregate amount of $10,000,000. The revolving loan extends
through January 31, 1997 and may be extended in one year increments with
the approval of the bank group. The term loan is payable beginning June
30, 1994 in equal quarterly installments using a seven year amortization
schedule with the unpaid principal balance outstanding due January 31,
1997. Interest rates for both the revolver, acquisition-related line of
credit, and term loan are based on increments over the lead bank's base
lending rate or LIBOR rate at the Company's option. Currently the
increments are 1-7/8 percentage points over LIBOR and zero points above
the base lending rate for the revolver, and increments for the term
loan and acquisition-related line of credit are 2-1/8 percentage points
over LIBOR and 1/4 percent over base lending rate. The agreement
contains certain performance criteria, which if met, will cause the
base lending rate and LIBOR interest rates to be reduced up to 1/4 and
1-1/4 percentage points respectively. A 3/8 percent commitment fee is
payable on the unused portion of the revolver and the acquisition-
related line of credit. The Company's Belgium subsidiary has a line of
credit available of approximately $1,200,000. There are no outstanding
borrowings at December 31, 1994.
The Company is in compliance with all of its covenants under the new
credit facility. As of December 31, 1994, interest rates for the
revolving debt and the term loan ranged from 7.1% to 8.8%.
<TABLE>
<CAPTION>
Long-Term Debt
December 31, September 30,
1994 1994
------------ -------------
(Dollars in thousands) (unaudited)
<S> <C> <C>
Term Loan 9,286 9,643
Revolving credit agreement 13,350 8,000
Other loans 32 39
------- -------
22,668 17,628
Less current maturities 1,429 1,436
------- -------
Long-Term Debt $21,239 $16,246
======= =======
</TABLE>
Page 8 of 19
<PAGE> 9
(5) The following components of other current liabilities were in excess
of 5% of total current liabilities:
<TABLE>
<CAPTION>
December 31, September 30,
1994 1994
------------ -------------
(Dollars in thousands) (unaudited)
<S> <C> <C>
Accrued compensation $1,214 $3,567
Product liability retention $ 895 $ 931
</TABLE>
(6) The following represents supplemental cash flow information of the
Company.
<TABLE>
<CAPTION>
Three Months Ended December 31,
-------------------------------
(unaudited) 1994 1993
(Dollars in thousands) ----------- -----------
<S> <C> <C>
Interest Paid $ 466 $ 70
Income Taxes Paid $ -- $ 129
</TABLE>
(7) On March 7, 1994, Purex Pool Systems, Inc. (Purex), an indirect
wholly-owned subsidiary of the Company, acquired certain assets and
assumed certain liabilities of the Purex Pool Products Division of
Hydrotech Chemical Corporation (Hydrotech), a subsidiary of Great Lakes
Chemical Company. The assets acquired consist of equipment, inventory,
and intellectual property used by Hydrotech in the manufacturing of
filters, pumps, lights, and heaters for swimming pools and spas. The
purchase price, including liabilities assumed, totaled approximately
$13.6 million. Approximately $6 million has been allocated to inventory,
$3 million to machinery and equipment, and $4 million to goodwill and
deferred taxes. Assets, liabilities, and results of operations since
March 7, 1994 are included in the accompanying consolidated financial
statements. The acquisition has been accounted for as a purchase, and
accordingly, the purchase price has been allocated to assets and
liabilities acquired based upon the preliminary estimate of their fair
market values at the date of acquisition. Adjustments to the purchase
price allocation may result from additional valuations and analysis.
The table below summarizes the unaudited consolidated liabilities, and
results of operations since March 7, 1994 are included in the
accompanying consolidated financial statements. The acquisition has
been accounted for as a purchase, and accordingly, the purchase price
has been allocated to assets and liabilities acquired based upon the
preliminary estimate of their fair market values at the date of
acquisition. Adjustments to the purchase price allocation may result
from additional valuations and analysis. The table below summarizes
the unaudited consolidated proforma results of operations
Page 9 of 19
<PAGE> 10
assuming the acquisition had occurred at the beginning of the earliest
period presented with adjustments primarily attributable to the
amortization of intangible assets, interest expense related to changes
in debt, and depreciation expense relating to fair value of assets
acquired.
<TABLE>
<CAPTION>
(Unaudited) Three Months Ended
(Dollars in thousands except share data) December 31
------------------
1994 1993
------- -------
<S> <C> <C>
Net Sales $32,019 $30,326
Net Income $ 897 $ 561
Net Income per Share $ .16 $ .10
</TABLE>
These proforma results have been presented for comparative purposes
only and do not purport to be indicative of what would have occurred
had the acquisition been made at the beginning of the earliest period
presented, or of results which may occur in the future.
(8) Financial Instruments
The Company has financial instruments which consist primarily of cash
and cash equivalents, long-term debt, and a receivable under agreement
for deed. In October 1994 the Financial Accounting Standards Board
issued Statement No. 119, "Disclosure About Derivative Financial
Instruments and Fair Value of Financial Instruments." The Company is
required to adopt the new accounting and disclosure rules no later than
its fiscal year ending September 30, 1996. The Company has not yet
determined the date of adoption of the Standard. Based upon existing
conditions and a preliminary review, the Company expects that adoption of
the new Standard will not have a significant effect on the Company's
financial position or results of operations.
Page 10 of 19
<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 1994 COMPARED WITH
THREE MONTHS ENDED DECEMBER 31, 1993
Net Sales
Net sales of $32,019,000 increased 29.9% from 1993 net sales of $24,658,000.
The water treatment and systems equipment segment reported a .6% increase in
sales to $15,348,000. The swimming pool and spa equipment segment sales of
$16,671,000 increased 77.4% over last year. In March, 1994, the Company
acquired the assets and assumed certain liabilities of Purex Pool Systems, Inc.
(Purex) as described in Note 7. Without the impact of Purex Pool Systems, the
swimming pool and spa equipment segment sales would have increased 22.6%.
Sales generated by the Company's European subsidiary were approximately 11% of
total U.S. dollar sales. The average U.S. dollar exchange rate used to
translate the results of operations as of December 31, 1994 weakened by 12%
compared to December 31, 1993.
The Company had a backlog of orders believed by it to be firm of approximately
$14.3 million and $11.4 million as of December 31, 1994 and December 31, 1993,
respectively.
Cost and Expenses
Cost of sales increased from 70.8% to 72.1% of net sales in fiscal 1995.
Together with a 29.9% increase in net sales, this resulted in a 24.3% increase
in the Company's gross profit from $7,204,000 to $8,951,000. The increased
cost of sales percentage was primarily the result of an increase in material
cost as a percentage of sales. During this year's first quarter, raw material
price increases occurred, while the majority of the Company's price increases
will not take effect until the second quarter. The addition of Purex, which
has higher manufacturing costs than other business units of the Company, also
contributed to the increased cost of sales percentage.
Operating expenses, consisting of administrative, selling, and engineering and
development expenses, increased $1,188,000 to $7,093,000. As a percentage of
sales, these expenses decreased from 24.0% to 22.2%. The percentage of sales
decrease is a result of better management of administrative expenses. The
addition of Purex operating expenses accounted for 65% of this increase.
Interest Expense
Interest expense increased by $255,000 to $390,000. This primarily was the
result of an approximate 77% increase in average outstanding borrowings of the
Company, caused by the acquisition of Purex and an increase in the effective
interest rate of about 200 basis points.
Page 11 of 19
<PAGE> 12
Other Income
Other income in 1993 relates primarily to interest income received pursuant to
a receivable under an Agreement for Deed related to the sale of assets of the
Company's former Fame Plastics, Inc. subsidiary. In 1994, the debtor made no
interest payments and has requested a restructuring of the agreement (See NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS: NOTE 3).
Income Taxes
The Company recorded a $505,000 provision in 1994 which represents an effective
tax rate of 36%. In 1993 the Company recorded a $516,000 provision which
represented an effective tax rate of 38.2%.
Net Income
The Company reported net income of $897,000 as compared to a 1993 net income of
$835,000. The change between years is a result of sales growth resulting in
increased income from operations. This was offset partially by increased
interest expense and a decrease in other income.
LIQUIDITY AND CAPITAL RESOURCES
The Company had working capital of $23,179,000 at December 31, 1994 compared to
$18,212,000 at September 30, 1994, and the ratio of current assets to current
liabilities increased to 2.37 to 1.00 from 2.00 to 1.00. The increase in
working capital is due to a $3.5 million increase in net accounts receivable, a
$1.8 million increase in net inventories and a $2.3 million reduction in other
current liabilities offset by a $1.4 decrease in cash and a $1.4 million
increase in accounts payable.
The increases in accounts receivable, inventory, and accounts payable reflect
normal seasonal working capital requirements. The reduction in accrued expenses
is primarily related to the payment of management and employee fiscal 1994
bonuses during the quarter.
Capital expenditures for the first three months of fiscal year 1995 totaled
$2,297,000 compared to $819,000 for the same period last year, and were funded
from net income, depreciation and borrowing. The difference in capital
expenditures relates to building renovations, investment in tooling for new and
existing products, and the acquisition of Purex in March, 1994.
The Company is in compliance with all of its covenants under the new credit
facility. As of December 31, 1994, interest rates for the revolving debt
outstanding ranged from 7.1% to 8.8%.
As of the end of December, 1994, the Company had foreign assets of
approximately $10.3 million principally located in Belgium. The assets were
converted at quarter end using a U.S. dollar exchange rate that was essentially
the same when compared to September 30, 1993.
The Company does not have any material post retirement benefits, and thus will
not experience any significant effect resulting from SFAS No. 106, "Employers'
Accounting for Postretirement Benefits Other than Pensions" and SFAS No. 112,
"Employers Accounting for Postemployment Benefits."
Page 12 of 19
<PAGE> 13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
No change.
Item 2. Changes in Securities
No change.
Item 4. Submission of Matters to a Vote of the Security Holders.
The following matters were submitted to a vote of security holders at the
Annual Meeting of Shareholders held January 25, 1995, with the results
indicated:
Proposal 1) To elect one (1) director to hold office until the
Annual Meeting of Shareholders in 1997 and until his respective
successor is duly elected and qualified;
<TABLE>
<S> <C>
Votes cast FOR the election of Mr. Ross: 4,342,711
Votes cast AGAINST the election of Mr. Ross: -0-
Votes WITHHELD: 39,238
Shares held by brokers and nominees: 3,477,766
Shares held by brokers and nominees not voted
(broker non-votes): 410,908
Outstanding shares entitled to vote: 4,868,920
</TABLE>
Item 5. Other Information
Change in Registrant's Certifying Accountants
The Company has dismissed Arthur Andersen LLP (Andersen) as its
principal independent accountant and has engaged Deloitte & Touche LLP
to serve as its independent accountant, both on February 2, 1995.
Andersen's reports on the Company's financial statements for the past
two years did not contain an adverse opinion or a disclaimer of
opinion and were not qualified or modified as to uncertainty, audit
scope, or accounting principles. The decision to change accountants
was approved by the Company's Audit Committee. During the Company's
two most recent fiscal years, and for the quarter ended December 31,
1994, there were no disagreements with Andersen on any matter of
accounting principles or practices, financial statement disclosure or
auditing scope or procedure, which disagreements, if not resolved to
the satisfaction of Andersen, would have caused Andersen to
make reference to the subject matter of the disagreements in their
report.
Page 13 of 19
<PAGE> 14
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit No.
-----------
<S> <C>
16.1 Letter Regarding Change in Certifying
Accountants, dated February 8, 1995, filed
herewith.
27 Financial Data Schedule
</TABLE>
(b) Form 8-K
No reports on Form 8-K have been filed during the quarter for
which this Report is filed.
Page 14 of 19
<PAGE> 15
SIGNATURE
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.
ESSEF Corporation
(Registrant)
/s/ Thomas B. Waldin
-----------------------------------
Thomas B. Waldin
President and
Chief Executive Officer
(Principal Executive Officer)
/s/ Theodore A. Havens
-----------------------------------
Theodore A. Havens
Chief Financial Officer
and Treasurer
(Principal Accounting Officer)
Date: February 8, 1995
Page 15 of 19
<PAGE> 16
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934.
For the quarter ended December 31, 1994
Commission File No. 0-15902
_______________
Essef Corporation
EXHIBIT VOLUME
Page 16 of 19
<PAGE> 17
Essef Corporation
Form 10-Q
For the Quarter Ended December 31, 1994
Exhibit Volume - Table of Contents
Exhibits filed with and sequentially numbered as part of the report
<TABLE>
<CAPTION>
Sequential
number of
Exhibit page of
Number Exhibit Description full report
- ------- ------------------- -----------
<S> <C> <C>
16.1 Letter Regarding Change in Certifying 18
Accountants, dated February 8, 1995,
filed herewith.
27 Financial Data Schedule
</TABLE>
Page 17 of 19
<PAGE> 1
EXHIBIT 16.1
(Arthur Andersen Logo)
Arthur Andersen LLP
1717 East Ninth Street
Cleveland OH 44114
216 781 2140
February 8, 1995
Office of the Chief Accountant
SECPF Letter File
Securities and Exchange Commission
Mail Stop 9-5
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Sir:
We have read Item 5 enclosed in the attached Form 10-Q dated February 8, 1995
of Essef Corporation to be filed with the Securities and Exchange Commission
and are in agreement with the statements contained therein.
Very truly yours,
/s/ Arthur Andersen LLP
- ---------------------------
Arthur Andersen LLP
cc: Mr. Theodore A. Havens
Chief Financial Officer and Treasurer
Essef Corporation
Page 18 of 19
<TABLE> <S> <C>
<ARTICLE> 5
<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> 1,071
<SECURITIES> 0
<RECEIVABLES> 24,463
<ALLOWANCES> 0
<INVENTORY> 13,614
<CURRENT-ASSETS> 40,158
<PP&E> 70,250
<DEPRECIATION> 39,698
<TOTAL-ASSETS> 78,846
<CURRENT-LIABILITIES> 16,979
<BONDS> 0
<COMMON> 15,069
0
0
<OTHER-SE> 23,774
<TOTAL-LIABILITY-AND-EQUITY> 78,846
<SALES> 32,019
<TOTAL-REVENUES> 32,019
<CGS> 23,068
<TOTAL-COSTS> 23,068
<OTHER-EXPENSES> 66
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 390
<INCOME-PRETAX> 1,402
<INCOME-TAX> 505
<INCOME-CONTINUING> 897
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 897
<EPS-PRIMARY> .16
<EPS-DILUTED> .16
</TABLE>
