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 December 28, 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 February 3, 1997
- ----------------------------- -------------------------------
Common stock, par value $.10 3,089,532
1
<PAGE>
TECH/OPS SEVCON, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets
ASSETS
<TABLE>
<CAPTION>
Dec 28, Sept 30,
1996 1996
--------- ------------
(unaudited) (derived from
audited
statements)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 2,520,000 $ 2,886,000
Accounts receivable, less allowances
of $163,000 at 12/28/96
and $150,000 at 9/30/96 5,348,000 5,386,000
Inventories:
Raw materials 2,047,000 1,706,000
Work-in-process 1,234,000 1,060,000
Finished goods 668,000 862,000
--------- ---------
3,949,000 3,628,000
--------- ---------
Total current assets 11,817,000 11,900,000
--------- ----------
Property, plant and equipment, at cost 5,768,000 4,154,000
Less: Accumulated depreciation
and amortization 3,168,000 2,861,000
--------- ---------
Net property, plant
and equipment 2,600,000 1,293,000
--------- ---------
Cost of purchased businesses in excess
of net assets acquired 1,435,000 1,435,000
Other assets 5,000 17,000
---------- ----------
$15,857,000 $14,645,000
========== ==========
</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
<TABLE>
<CAPTION>
Dec 28, Sept 30,
1996 1996
-------- ------------
(unaudited) (derived from
audited
statements)
<S> <C> <C>
Current liabilities:
Current portion of long-term debt $ 240,000 $ -
Accounts payable 1,972,000 1,821,000
Dividend payable 463,000 463,000
Accrued expenses 2,331,000 2,288,000
Accrued taxes on income 824,000 801,000
--------- ---------
Total current liabilities 5,830,000 5,373,000
--------- ---------
Long-term debt, less current portion 468,000 -
Deferred taxes on income 179,000 161,000
--------- ---------
Stockholders' investment (Note 2)
Preferred stock - -
Common stock 310,000 310,000
Treasury stock, at cost (122,000) (122,000)
Premium paid in on common stock 3,716,000 3,716,000
Retained earnings 5,789,000 5,787,000
Cumulative translation adjustment (313,000) (580,000)
---------- ----------
Total stockholders' investment $ 9,380,000 $ 9,111,000
---------- ----------
$15,857,000 $14,645,000
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial
statements.
3
<PAGE>
TECH/OPS SEVCON, INC.
Consolidated Statement of Income
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
---------------------
Dec 28, Dec 31,
1996 1995
-------- --------
<S> <C> <C>
Net sales $ 6,197,000 $ 5,798,000
Costs and expenses:
Cost of sales 3,887,000 3,432,000
Selling, general and
administrative 1,572,000 1,459,000
--------- ---------
5,459,000 4,891,000
--------- ---------
Operating income 738,000 907,000
Other income (expense), net ( 21,000) 14,000
-------- --------
Income before income taxes 717,000 921,000
Income taxes 252,000 305,000
------- -------
Net income $ 465,000 $ 616,000
======= =======
Net income per share $ .15 $ .20
=== ===
Average common and common
equivalent shares outstanding 3,090,000 3,152,000
========= =========
</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>
Three Months Ended
---------------------
Dec 28, Dec 31,
1996 1995
-------- --------
<S> <C> <C>
Net cash flow from operating activities:
Net income $ 465,000 $ 616,000
Adjustments to reconcile net income to
net cash from operating activities:
Depreciation and amortization 121,000 101,000
Deferred tax provision 18,000 ( 4,000)
Increase (decrease) in cash resulting from
changes in operating assets & liabilities:
Receivables 38,000 (414,000)
Inventories (321,000) (311,000)
Accounts payable 151,000 542,000
Accrued compensation and expenses 43,000 (160,000)
Accrued and deferred taxes on income 23,000 ( 24,000)
-------- -------
Net cash generated from
operating activities 538,000 346,000
Cash flow used by investing activities:
Acquisition of property, plant, and
equipment, net (1,265,000) ( 77,000)
Cash flow from (used by) financing activities:
Long-term debt incurred on purchase
of building 708,000 -
Exercise of stock options - ( 22,000)
Purchase of common stock - (529,000)
Dividends paid (463,000) (387,000)
-------- -------
Net cash used by financing activities 245,000 (938,000)
Effect of exchange rate changes on cash 116,000 ( 35,000)
------- --------
Net increase (decrease) in cash (366,000) (704,000)
Opening balance - cash and cash equivalents 2,886,000 2,692,000
--------- ---------
Ending balance - cash and cash equivalents $2,520,000 $1,988,000
========= =========
Supplemental disclosure of cash flow information
Cash paid for income taxes $ 110,000 $ 77,000
------- -------
Supplemental disclosure of non-cash
financing activity:
Dividend declared $ 463,000 $ 381,000
======= =======
</TABLE>
The accompanying notes are an integral part of these financial
statements.
5
<PAGE>
TECH/OPS SEVCON, INC.
Notes to Consolidated Financial Statements - December 31, 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 December 28,
1996 and the results of operations and cash flows for the three
months ended December 28, 1996 and December 31, 1995.
The accounting policies followed by Tech/Ops Sevcon are set
forth in Note 1 to the financial statements in the 1996 Tech/Ops
Sevcon, Inc. Annual Report filed on Form 10-K.
The results of operations for the three-month periods ended
December 28, 1996 and December 31, 1995 are not necessarily
indicative of the results to be expected for the full year.
(2) Cash Dividends
On December 12, 1996, the Company declared a quarterly dividend
of $.15 per share for the first quarter of fiscal 1997, which was
paid on January 9, 1997 to stockholders of record on December 27,
1996. The Company has paid regular quarterly cash dividends since the
first quarter of fiscal 1990.
6
<PAGE>
TECH/OPS SEVCON, INC.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations
Sales in the first fiscal quarter ended December 28, 1996 were
$6,197,000, compared to $5,798,000 in the same period last year, an
increase of $399,000, or 7%. Approximately $80,000 of this increase
was due to foreign currency effects. During the quarter, the pound
strengthened against the dollar after three years of relative
stability, increasing the dollar value of the sales made in pounds
sterling. Sales in Europe and the Far East were well ahead of last
year, but, due to slower market conditions, sales in the United
States decreased by 6% and sales of our capacitor business were
sharply lower.
Gross profit as a percentage of sales was 37.3% of sales in the first
quarter of fiscal 1997, compared to 40.8% of sales in last year's
first quarter. The decrease in gross profit percentage was due to
higher warranty expenses, adverse sales mix and a negative impact of
currency fluctuations. Since most of the Company's manufacturing and
operating costs are denominated in pounds, the sharp increase in the
pound-dollar relationship increased the dollar costs of manufacturing
and operations. Operating expenses were 8% higher than last year
mainly due to currency fluctuations and higher R&D spending.
Operating income was $738,000 in the first quarter of fiscal 1997
compared to $907,000 in the same period last year, a decrease of
$169,000, or 19%. This decrease was a result of lower gross profits
and higher operating expenses.
Other expense was $21,000 compared to other income of $14,000 last
year. This change was mainly due to currency translation losses. Net
income was $465,000, or $.15 per share, in fiscal 1997, compared to
$616,000, or $.20 per share, last year, a decrease of 25%.
Approximately 11% of this decrease was caused by adverse currency
fluctuations.
Financial Condition
The Company has, since January 1990, maintained a program of regular
cash dividends, which at present amount to $463,000 per quarter.
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. In the quarter ended
December 28, 1996, the Company purchased a new manufacturing building
in the U.K. for $1.2 million. In connection with this purchase, the
Company obtained a three-year mortgage loan in the amount of
$708,000.
7
<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: February 6, 1997 By: /s/ Paul A. McPartlin
---------------------
Paul A. McPartlin
Vice President Finance
Principal Financial Officer
8
<PAGE>
EXHIBIT 11
TECH/OPS SEVCON, INC.
Calculation of Earnings Per Share and Weighted Average Shares
Outstanding
(In thousands, except for per share amounts)
<TABLE>
<CAPTION>
Quarters ended
------------------------
12/28/96 12/31/95
-------- --------
<S> <C> <C>
Net income $ 465 $ 616
Weighted average shares outstanding 3,090 3,152
Net income per share $ .15 $ .20
Shares outstanding - beginning 3,090 3,098
Weighted average - option exercises - 2
Weighted average shares issued 3,090 3,100
Weighted average treasury shares purchased - ( 30)
Weighted average shares outstanding 3,090 3,070
Effect of outstanding options on
primary EPS using average market
price for the period (Note (a))
a. # of options less than
average market price - 137
b. $ value of options - $ 636
c. Average market price of stock - $11.50
d. Shares "purchased" (b/c) - ( 55)
e. Common equivalent shares (a-d) - 82
f. Average issued and outstanding shares 3,090 3,070
g. Total average common and
common equivalent shares (f+e) 3,090 3,152
Note (a) The dilutive effect of outstanding options in the December
28, 1996 quarter was immaterial.
9
<PAGE>
9
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> DEC-28-1996
<CASH> 2,520
<SECURITIES> 0
<RECEIVABLES> 5,511
<ALLOWANCES> (163)
<INVENTORY> 3,949
<CURRENT-ASSETS> 11,817
<PP&E> 5,768
<DEPRECIATION> (3,168)
<TOTAL-ASSETS> 15,857
<CURRENT-LIABILITIES> 5,830
<BONDS> 0
0
0
<COMMON> 310
<OTHER-SE> 9,070
<TOTAL-LIABILITY-AND-EQUITY> 15,857
<SALES> 6,197
<TOTAL-REVENUES> 6,197
<CGS> 3,887
<TOTAL-COSTS> 3,887
<OTHER-EXPENSES> 1,572
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 717
<INCOME-TAX> 252
<INCOME-CONTINUING> 465
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 465
<EPS-PRIMARY> .15
<EPS-DILUTED> .15
</TABLE>
