UNITED STATES
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, 1996
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/ / 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 1-9789
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TECH/OPS SEVCON, INC.
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(Exact name of registrant as specified in its charter)
Delaware 04-2985631
- ------------------------------- --------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Beacon Street, Boston, Massachusetts, 02108
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(Address of principal executive offices and zip code)
(617) 523-2030
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(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
--- ---
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at August 1, 1996
- ----------------------------- ------------------------------
Common stock, par value $.10 3,080,932
1
<PAGE>
TECH/OPS SEVCON, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets
ASSETS
(in thousands)
<TABLE>
<CAPTION>
Jun 30, Sept 30,
1996 1995
--------- ------------
(unaudited) (derived from
audited
statements)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,736 $ 2,692
Accounts receivable, less allowances
of $135,000 at 6/30/96
and $153,000 at 9/30/95 6,558 4,487
Inventories:
Raw materials 1,976 1,643
Work-in-process 1,311 779
Finished goods 599 541
----- -----
3,886 2,963
----- -----
Total current assets 12,180 10,142
----- ------
Property, plant and equipment, at cost 4,139 4,013
Less: Accumulated depreciation
and amortization 2,864 2,664
----- -----
Net property, plant
and equipment 1,275 1,349
----- -----
Cost of purchased businesses in excess
of net assets acquired 1,435 1,435
Other assets 40 55
----- ------
$14,930 $12,981
====== ======
</TABLE>
The accompanying notes are an integral part of these financial
statements.
2
<PAGE>
TECH/OPS SEVCON, INC.
Consolidated Balance Sheets
LIABILITIES AND STOCKHOLDERS' INVESTMENT
(in thousands)
<TABLE>
<CAPTION>
Jun 30, Sept 30,
1996 1995
-------- ------------
(unaudited) (derived from
audited
statements)
<S> <C> <C>
Current liabilities:
Accounts payable $ 2,539 $ 2,019
Dividend payable 384 387
Accrued expenses 2,258 1,849
Accrued taxes on income 1,121 423
----- -----
Total current liabilities 6,302 4,678
----- -----
Deferred taxes on income 175 178
----- -----
Stockholders' investment (Note 2)
Preferred stock - -
Common stock 310 310
Premium paid in on common stock 2,964 3,383
Retained earnings 6,254 4,926
Treasury stock, at cost (260) -
Cumulative translation adjustment (815) (494)
------ ------
Total stockholders' investment $ 8,453 $ 8,125
------ ------
$14,930 $12,981
====== ======
</TABLE>
The accompanying notes are an integral part of these financial
statements.
3
<PAGE>
TECH/OPS SEVCON, INC.
Consolidated Statement of Income
(Unaudited)
(in thousands except per share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30
------------------ -----------------
1996 1995 1996 1995
------- ------ ------- ------
<S> <C> <C> <C> <C>
Net sales $ 7,692 $ 6,177 $20,971 $17,116
Costs and expenses:
Cost of sales 4,579 3,551 12,450 9,951
Selling, general and
administrative 1,677 1,522 4,753 4,200
----- ----- ------ ------
6,256 5,073 17,203 14,151
----- ----- ------ ------
Operating income 1,436 1,104 3,768 2,965
Other income/(expense), net ( 19) 12 ( 19) 78
---- ---- ----- ---
Income before income taxes 1,417 1,116 3,749 3,043
Income taxes 469 367 1,241 964
----- --- ----- ---
Net income $ 948 $ 749 $2,508 $2,079
===== === ===== =====
Net income per share $ .30 $ .24 $ .80 $ .66
=== === === ===
Average common and common
equivalent shares outstanding 3,145 3,180 3,143 3,156
===== ===== ===== =====
Cash dividends per share $ .125 $ .10 $.375 $ .30
==== === === ===
</TABLE>
The accompanying notes are an integral part of these financial
statements.
4
<PAGE>
TECH/OPS SEVCON, INC.
Consolidated Statement of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
---------------------
Jun 30, Jun 30,
(in thousands) 1996 1995
-------- --------
<S> <C> <C>
Net cash flow from operating activities:
Net income $2,508 $2,079
Adjustments to reconcile net income to
net cash from operating activities:
Depreciation and amortization 241 228
Deferred tax provision ( 3) -
Increase (decrease) in cash resulting
from changes in operating assets
and liabilities:
Receivables (2,071) (1,711)
Inventories (923) (1,057)
Accounts payable 520 930
Accrued compensation and expenses 419 8
Accrued and deferred taxes on income 688 463
Other assets 15 ( 2)
----- ---
Net cash generated from operating activities 1,394 938
Cash flow used by investing activities:
Acquisition of property, plant, and
equipment, net (188) (341)
----- ---
Cash flow used by financing activities:
Exercise of stock options 245 ( 8)
Purchase of common stock ( 962) -
Dividends paid (1,149) (913)
----- ---
Net cash used by financing activities (1,866) (921)
Effect of exchange rate changes on cash ( 296) 82
----- -----
Net (decrease) in cash ( 956) (242)
Opening balance - cash and cash equivalents 2,692 2,336
----- -----
Ending balance - cash and cash equivalents $1,736 $2,094
===== =====
Supplemental disclosure of cash flow information
Cash paid for income taxes $ 527 $ 421
--- ---
Supplemental disclosure of non-cash
financing activity:
Dividend declared $ 384 $ 305
=== ===
</TABLE>
The accompanying notes are an integral part of these financial
statements. 5
<PAGE>
TECH/OPS SEVCON, INC.
Notes to Consolidated Financial Statements - June 30, 1996
(Unaudited)
(1) Basis of Presentation
In the opinion of management, the accompanying unaudited
condensed consolidated financial statements contain all adjustments
(consisting of only normally recurring accruals) necessary to present
fairly the financial position of Tech/Ops Sevcon as of June 30, 1996
and the results of operations and cash flows for the three months and
nine months ended June 30, 1996 and 1995.
The accounting policies followed by Tech/Ops Sevcon are set
forth in Note 1 to the financial statements in the 1995 Tech/Ops
Sevcon, Inc. Annual Report on Form 10-K.
The results of operations for the three-month and nine-month
periods ended June 30, 1996 and 1995 are not necessarily indicative
of the results to be expected for the full year.
(2) Stock Split
On July 27, 1995, the Company declared a two-for-one stock split
in the form of a 100% stock dividend payable on August 28, 1995 to
shareholders of record on August 11, 1995. Per share information for
the quarter and nine months ended June 30, 1995 has been restated to
reflect the stock split.
6
<PAGE>
TECH/OPS SEVCON, INC.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations
Three months ended June 30
Sales in the third fiscal quarter ended June 30, 1996 were
$7,692,000, compared to $6,177,000 in the same quarter of the
previous year, an increase of 25%. Approximately half of the revenue
increase in this quarter was due to gains in business to new
customers and shipments of new products, with the balance mainly due
to higher world-wide demand for fork lift truck controllers and for
aerial lift controllers.
The gross profit percentage was lower than last year(40.5%
compared to 42.5% )principally due to additional costs relating to
new products and warranty costs, but as a result of higher revenues,
the gross profit increased by $487,000. Operating expenses for the
quarter were 10% higher than 1995, mainly due to higher volumes.
There was an unfavorable swing in net other income / (expense) of
$31,000, mainly due to adverse currency fluctuations.
Income before income taxes was $1,417,000, compared to
$1,116,000 last year, an increase of 27%. Income taxes were 33% of
pre-tax income in both 1996 and 1995.
Mainly due to increased sales, net income increased by 27% to
$948,000 compared to $749,000 last year. Income per share was $.30
compared to $.24 in the third quarter of fiscal 1995, on a post-split
basis. This was a record quarter for the Company surpassing the
previous record which had been set in the previous quarter of the
current fiscal year.
Nine months ended June 30
For the first nine months of fiscal 1996, sales were $20,971,000
compared to $17,116,000 last year, an increase of 23%. Over 55% of
the revenue increase in the nine months year-to-date was due to gains
in business to new customers and shipments of new products, with the
balance mainly due to higher world-wide demand for fork lift truck
controllers and for aerial lift controllers.
The gross profit percentage was lower than last year(40.6%
compared to 41.9%) principally due to additional costs relating to
new products and warranty costs, but as a result of higher revenues,
the gross profit increased by $1,356,000. Operating income for the
nine month period was $3,768,000, an increase of 27% compared to the
same period last year. The increase in operating income was mainly
due to higher sales. Other income was $97,000 lower than last year
mainly due to adverse currency fluctuations.
7
<PAGE>
TECH/OPS SEVCON, INC.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
Results of Operations (continued)
Income before income taxes was $3,749,000, an increase of 23%
compared to the first nine months of 1995. Income taxes were 33% of
pre-tax income, an increase of 1% compared to last year, due to
higher foreign taxes. Mainly as a result of higher volumes, net
income was $2,508,000 compared to $2,079,000 last year, an increase
of 21%. Income per share was $.80 compared to $.66 last year, also
an increase of 21%.
Financial Condition
The Company has, since January 1990, maintained a program of
regular cash dividends, which, for the most recent quarter, amounted
to $384,000. Tech/Ops Sevcon's resources, in the opinion of
management, are adequate for projected operations and capital
spending programs, as well as continuation of the cash dividend.
8
<PAGE>
TECH/OPS SEVCON, INC.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits filed with this report.
(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
during the quarter for which this report is filed.
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.
TECH/OPS SEVCON, INC.
Date: August 2, 1996 By:/s/ Paul A. McPartlin
---------------------
Paul A. McPartlin
Chief Financial and Accounting
Officer
9
<PAGE>
TECH/OPS SEVCON, INC.
Exhibit Index
Page
(11) Calculation of earnings per share 11
(27) Financial Data Schedule (EDGAR Filing only)
10
<PAGE>
EXHIBIT 11
TECH/OPS SEVCON, INC.
Calculation of Earnings Per Share and Weighted Average Shares
Outstanding
(In thousands, except for per share amounts)
Quarter ended Nine months ended
June 30 June 30
---------- ----------
Primary 1996 1995 1996 1995
------- ---- ---- ---- ----
Average shares outstanding 3,067 3,046 3,059 3,045
Net effect of dilutive stock options-
based on the treasury stock method
using average market price for the
period 78 134 84 111
----- ----- ----- -----
Total 3,145 3,180 3,143 3,156
Net income $ 948 $ 749 $2,508 $2,079
Net income per share $ .30 $ .24 $ .80 $ .66
A calculation of fully diluted shares outstanding for the three month
and nine months ended June 30, 1996 indicates a difference of less
than one-tenth of one percent and is not material.
11
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,736
<SECURITIES> 0
<RECEIVABLES> 6,693
<ALLOWANCES> (135)
<INVENTORY> 3,886
<CURRENT-ASSETS> 12,180
<PP&E> 4,139
<DEPRECIATION> (2,864)
<TOTAL-ASSETS> 14,930
<CURRENT-LIABILITIES> 6,302
<BONDS> 0
0
0
<COMMON> 310
<OTHER-SE> 8,143
<TOTAL-LIABILITY-AND-EQUITY> 14,930
<SALES> 20,971
<TOTAL-REVENUES> 20,971
<CGS> 12,450
<TOTAL-COSTS> 12,450
<OTHER-EXPENSES> 4,753
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3,749
<INCOME-TAX> (1,241)
<INCOME-CONTINUING> 2,508
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,508
<EPS-PRIMARY> .80
<EPS-DILUTED> .80
</TABLE>
