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 March 28, 1998
--------------
/ / 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
----------------------------------------------------
(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 April 28, 1998
- ----------------------------- -------------------------------
Common stock, par value $.10 3,093,630
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TECH/OPS SEVCON, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets
ASSETS
(in thousands)
<TABLE>
<CAPTION>
March 28, Sept 30,
1998 1997
--------- ------------
(unaudited) (derived from
audited
statements)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 2,030 $ 2,361
Accounts receivable, less allowances
of $173 at 3/28/98
and $150 at 9/30/97 7,626 5,637
Inventories:
Raw materials 2,265 1,532
Work-in-process 716 903
Finished goods 606 691
----- -----
3,587 3,126
------ ------
Total current assets 13,243 11,124
----- ------
Property, plant and equipment, at cost 6,360 5,869
Less: Accumulated depreciation
and amortization 3,530 3,249
----- -----
Net property, plant
and equipment 2,830 2,620
----- -----
Cost of purchased businesses in excess
of net assets acquired 1,435 1,435
Other assets 0 6
----- - ------
$17,508 $15,185
====== ======
</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>
March 28, Sept 30,
1998 1997
-------- ------------
(unaudited) (derived from
audited
statements)
<S> <C> <C>
Current liabilities:
Current portion of long-term debt $ 255 $ 235
Accounts payable 3,052 1,770
Dividend payable 464 463
Accrued expenses 2,720 2,694
Accrued taxes on income 856 482
----- -----
Total current liabilities 7,347 5,644
----- -----
Long-term debt, less current portion 160 278
Deferred taxes on income 164 156
----- -----
Stockholders' investment (Note 2)
Preferred stock - -
Common stock 310 310
Treasury stock, at cost ( 81) ( 85)
Premium paid in on common stock 3,729 3,730
Retained earnings 6,386 5,786
Cumulative translation adjustment (507) (634)
------ ------
Total stockholders' investment $ 9,837 $ 9,107
------ ------
$17,508 $15,185
====== ======
</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 Six Months Ended
------------------ ----------------
March 28 March 29 March 28 March 29
1998 1997 1998 1997
------- ------ ------- ------
<S> <C> <C> <C> <C>
Net sales $ 8,625 $ 7,133 $15,674 $13,330
Costs and expenses:
Cost of sales 5,249 4,476 9,511 8,363
Selling, general and
administrative 1,916 1,702 3,744 3,274
----- ----- ----- -----
7,165 6,178 13,255 11,637
----- ----- ----- -----
Operating income 1,460 955 2,419 1,693
Other income/(expense), net ( 17) ( 9) ( 38) ( 30)
---- ---- ----- ---
Income before income taxes 1,443 946 2,381 1,663
Income taxes 513 325 846 577
----- --- ----- ---
Net income $ 930 $ 621 $1,535 $1,086
===== === ===== =====
Basic income per share $ .30 $ .20 $ .50 $ .35
=== === === ===
Diluted income per share $ .30 $ .20 $ .49 $ .35
=== === === ===
Cash dividends per share $ .15 $ .15 $ .30 $ .30
==== === === ===
The accompanying notes are an integral part of these financial
statements.
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<PAGE>
TECH/OPS SEVCON, INC.
Consolidated Statement of Cash Flows
(Unaudited)
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended
---------------------
Mar 28, Mar 29,
(in thousands) 1998 1997
-------- --------
<S> <C> <C>
Net cash flow from operating activities:
Net income $1,535 $1,086
Adjustments to reconcile net income to
net cash from operating activities:
Depreciation and amortization 179 210
Deferred tax provision 8 9
Increase (decrease) in cash resulting from
changes in operating assets and liabilities:
Receivables (1,989) ( 786)
Inventories (461) 8
Accounts payable 1,282 124
Accrued compensation and expenses ( 9) ( 26)
Accrued and deferred taxes on income 409 ( 23)
Other assets 6 12
---- ---
Net cash generated from operating activities 960 614
Cash flow used by investing activities:
Acquisition of property, plant, and
equipment, net ( 292) (1,498)
----- -----
Cash flow used by financing activities:
Long-term debt incurred on purchase of building - 704
Payment of long-term debt ( 98) ( 77)
Exercise of stock options 5 -
Purchase of common stock ( 9) -
Dividends paid (927) (926)
----- -----
Net cash used by financing activities (1,029) ( 299)
Effect of exchange rate changes on cash 30 ( 1)
----- -----
Net (decrease) in cash ( 331) (1,184)
Opening balance - cash and cash equivalents 2,361 2,886
----- -----
Ending balance - cash and cash equivalents $2,030 $1,702
===== =====
Supplemental disclosure of cash flow information
Cash paid for income taxes $ 535 $ 604
Cash paid for interest 29 21
--- ---
Supplemental disclosure of non-cash
financing activity:
Dividend declared $ 464 $ 464
=== ===
</TABLE>
The accompanying notes are an integral part of these financial
statements.
5
<PAGE>
TECH/OPS SEVCON, INC.
Notes to Consolidated Financial Statements - March 28, 1998
(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 March 28, 1998
and the results of operations and cash flows for the three months and
six months ended March 28, 1998 and March 29, 1997.
The accounting policies followed by Tech/Ops Sevcon are set
forth in Note 1 to the financial statements in the 1997 Tech/Ops
Sevcon, Inc. Annual Report on Form 10-K.
The results of operations for the three-month and six-month
periods ended March 28, 1998 and March 29, 1997 are not necessarily
indicative of the results to be expected for the full year.
(2) Cash Dividends
On March 5, 1998, the Company declared a quarterly dividend of
$.15 per share for the second quarter of fiscal 1998, which was paid
on April 2, 1998 to stockholders of record on March 18, 1998. 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
Three months ended March 28, 1998
Sales in the second fiscal quarter ended March 28, 1998 were
$8,625,000, compared to $7,133,000 in the same quarter of the
previous year, an increase of $1,492,000, or 21%. All operations
reported revenue increases compared to the same period last year.
Revenues in the second quarter were an all-time record. Revenues in
the US increased by 11%, mainly due to increased demand in the fork
lift truck market. Sales in foreign markets increased by 26%. The
sales growth in foreign markets was to both fork lift truck and
aerial lift customers.
Gross profit was 39.1% of sales compared to 37.2% in the second
quarter of fiscal 1997. Gross profit was $719,000 higher than last
year. The increase in gross profit was mainly attributable to higher
volumes, and lower material costs. Operating expenses for the quarter
were $214,000, or 13%, higher than in 1997.
Operating income was $1,460,000, an increase of $505,000, or 53%
compared to the second quarter of last year. The principal reason for
the increase in operating income was higher volumes.
Income before income taxes was $1,443,000, compared to $946,000
last year, an increase of $497,000, or 53%. Income taxes were 35.6%
of pre-tax income, compared to 34.4% last year, mainly due to higher
foreign tax rates. Primarily due to higher sales, net income
increased by $309,000, or 50%, to $930,000. Basic and fully diluted
income per share was $.30 compared to $.20 in the second quarter of
fiscal 1997.
Six months ended March 28, 1998
Sales in the first six months of fiscal 1998 were $15,674,000,
compared to $13,300,000 in the same period last year, an increase of
$2,344,000, or 18%. Revenues were higher than last year in all
business units. Revenues in the US increased by $628,000,or 13%,
mainly due to increased demand in the fork lift truck market. Sales
in foreign markets increased by $1,716,000, or 20%, with increased
sales to both fork lift truck and aerial lift markets.
Gross profit was 39.3% of sales compared to 37.3% in 1997.
Gross profit increased by $1,196,000 compared to the first six months
of last year. The higher gross profit was mainly attributable to
increased volumes, and lower material costs. Operating expenses for
the six month period were $3,744,000, an increase of $470,000, or
16%, compared to last year.
7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued):
Results of Operations (continued):
Operating income for the first half year was $2,419,000, an
increase of $726,000, or 43% compared to last year. Increased sales
volumes was the main reason for the increase in operating income.
Income before income taxes was $2,381,000, compared to
$1,663,000 last year, an increase of $718,000, or 43%. Income taxes
were 35.5% of pre-tax income, compared to 34.7% last year, mainly due
to higher foreign tax rates. Net income was $1,535,000, an increase
of $449,000, or 41%, compared to the same period last year. Basic
income per share was 43% higher than last year at $.50 per share
compared to $.35 per share in 1997. Fully diluted net income was
$.49 per share, an increase of 41% compared to 1997.
Financial Condition
The Company has, since January 1990, maintained a program of
regular cash dividends, which, for the most recent quarter, amounted
to $464,000. 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 4. Submission of Matters to a Vote of Security Holders
At the Company's Annual Meeting held on January 28, 1998, the
shareholders voted to re-elect as directors for three year terms the
following persons: Marvin G. Schorr and David R. Steadman. Dr.
Schorr received 2,738,682 votes for and 27,326 withheld, and Mr.
Steadman received 2,737,702 votes for and 28,306 withheld. The
shareholders also voted to approve the 1998 Director Stock Option
Plan by a vote of 2,534,466 for, 159,797 against, and 71,744
withheld.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits filed with this report.
(10) Director Stock Option Plan
(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: May 6, 1998 By: /s/ Paul A. McPartlin
---------------------
Paul A. McPartlin
Chief Financial and Accounting
Officer
9
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EXHIBIT 10
TECH/OPS SEVCON, INC.
1998 DIRECTOR STOCK OPTION PLAN
I. INTRODUCTION
1.1 Purposes. The Purposes of the 1998 Director Stock Option
Plan (the Plan) of Tech/Ops Sevcon, Inc., a Delaware corporation
("The Company"), and its subsidiaries from time to time (individually
a "Subsidiary" and collectively the "Subsidiaries"), are to align the
interests of the Company's stockholders and the recipients of options
under this Plan by increasing the proprietary interest of such
recipients in the Company's growth and success and to advance the
interests of the Company by attracting and retaining well-qualified
persons who are not employees of the Company for service as directors
of the Company. For purposes of this Plan, references to service on
behalf of the Company shall also mean service on behalf of a
Subsidiary.
1.2 Administration. This Plan shall be administered by a
committee (the "Committee") designated by the Board of Directors of
the Company (the "Board") consisting of two or more members of the
Board.
The Committee shall, subject to the terms of the Plan, interpret
this Plan and the application thereof and establish rules and
regulations it deems necessary or desirable for the administration of
this Plan. All such interpretations, rules and regulations shall be
conclusive and binding on all parties. Each option hereunder shall
be evidenced by a written agreement (an "Agreement") between the
Company and the optionee setting forth the terms and conditions
applicable to such option. The Committee shall determine the form of
the Agreement.
No member of the Board of Directors or the Committee shall be
liable for any act, omission, interpretation, construction or
determination made in connection with this Plan in good faith, and
the members of the Board of Directors and the Committee shall be
entitled to indemnification and reimbursement by the Company in
respect of any claim, loss, damage or expense (including attorneys'
fees) arising therefrom to the full extent permitted by law (except
as otherwise may be provided in the Company's Certificate of
Incorporation and/or Bylaws) and under any directors' and officers'
liability insurance that may be in effect from time to time.
A majority of the Committee shall constitute a quorum. The acts
of the Committee shall be either (a) acts of a majority of the
members of the Committee present at any meeting at which a quorum is
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<PAGE>
present or (b) acts approved in writing by all of the members of the
Committee without a meeting.
1.3 Eligibility. Each member of the Board of Directors of the
Company who is not an employee, either full-time or part-time, of the
Company or a Subsidiary (a "Non-Employee Director") shall be eligible
to participate in this Plan and receive a grant of options to
purchase shares of Common Stock (as defined in Section 1.4) in
accordance with Section II.
1.4 Shares Available. Subject to adjustment as provided in
Section 3.6, 50,000 shares of the common stock, par value $ .10 per
share, of the Company ("Common Stock"), shall be available for grants
of options under this Plan. To the extent that shares of Common
Stock subject to an outstanding option are not issued or delivered by
reason of the expiration, termination, cancellation or forfeiture of
such option or by reason of the delivery of shares of Common Stock to
pay all or a portion of the exercise price of such option, then such
shares of Common Stock shall again be available under the Plan.
Shares of Common Stock to be delivered under this Plan shall be
made available from authorized and unissued shares of Common Stock,
or authorized and issued shares of Common Stock reacquired and held
as treasury shares or otherwise or a combination thereof.
II. STOCK OPTIONS
2.1 Grants of Stock Options. Each Non-Employee Director shall
be granted a non-qualified stock option to purchase 5,000 shares of
Common Stock at a purchase price per share equal to the Fair Market
Value of the Common Stock on the date of grant of such option, as
follows:
(a) to each person on the date of the 1998 annual meeting of
stockholders of the Company who is a Non-Employee Director
immediately thereafter;
(b) to each person upon first election as a Non-Employee
Director after the 1998 annual meeting; and
(c) to each person upon first becoming a Non-Employee Director
as result of retirement from the Company on a date approved by the
Board in its sole discretion.
"Fair Market Value" shall mean the average of the high and low
transaction prices of a share of Common Stock as reported on The
American Stock Exchange on the date as of which such value is being
determined or, if the Common Stock is not listed on The American
Stock Exchange, the average of the high and low transaction prices of
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<PAGE>
a share of Common Stock on the principal national stock exchange on
which the Common Stock is traded on the date as of which such value
is being determined, or, if there shall be no reported transactions
on such date, on the next preceding date for which transactions were
reported; provided, however, that if Fair Market Value for any date
cannot be determined as above provided, Fair Market Value shall be
determined by the Committee by whatever means of method as the
Committee, in the good faith exercise of its discretion, shall at
such time deem appropriate.
2.2 Option Period and Exercisability. Except as otherwise
provided herein, each option granted under this Article II shall
become exercisable for up to 500 shares of Common Stock on the first
anniversary of its date of grant, and up to an additional 500 shares
on each anniversary thereafter, all on a cumulative basis. Subject
to Sections 2.4 and 2.5, each option granted under this Article II
shall expire 90 days after the tenth anniversary of its date of
grant. An option may be exercised in whole or in part only for whole
shares of Common Stock.
2.3 Method of Exercise. An option may be exercised (I) by
giving written notice to the Company specifying the number of whole
shares of Common Stock to be purchased and accompanied by payment
therefor in full (or arrangement made for such payment to the
Company's satisfaction) either (A) in cash, (B) by delivery of
previously owned whole shares of Common Stock (which the optionee has
held for at least six months prior to the delivery of such shares or
which the optionee purchased on the open market and for which the
optionee has good title, free and clear of all liens and
encumbrances) having a Fair Market Value, determined as of the date
of exercise, equal to the aggregate purchase price payable by reason
of such exercise, (C) in cash by a broker-dealer acceptable to the
Company to whom the optionee has submitted an irrevocable notice of
exercise or (D) a combination of (A) and (B), in each case to the
extent set forth in the Agreement relating to the option and (ii) by
executing such documents as the Company may reasonably request. The
Committee shall have sole discretion to disapprove of an election
pursuant to any clauses (B)-(D). Notwithstanding the foregoing, the
Committee shall also have discretion to permit payment to be made, in
whole or in part, by a full-recourse note or in installments at such
time and upon such terms as the Committee may approve; provided,
however, that in the case of payment by any such note or
installments, certificates for any shares of Common Stock issued in
respect thereof shall contain such legend, if any, as may be required
by, and shall otherwise be subject to the provisions of, the laws of
the state of incorporation of the Company relating to the issuance of
shares on such terms. Any fraction of a share of Common Stock which
would be required to pay such purchase price shall be disregarded and
the remaining amount due shall be paid in cash by the optionee. No
certificate representing Common Stock shall be delivered until the
full purchase price therefor has been paid.
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2.4 Termination of Directorship. Subject to Section 3.6, if
the holder of an option granted under this Article II shall cease to
be a member of the Board for any reason, each such option held by
such optionee shall be exercisable only to the extent that such
option is exercisable on the effective date of such holder's ceasing
to be a member of the Board and may thereafter be exercised by such
optionee (or such optionee's executor, administrator, legal
representative, beneficiary or similar person) until and including
the earliest to occur of (i) the date which is one year after the
date such optionee ceased to be a member of the Board and (ii) the
expiration date of the term of such option.
2.5 Death Following Termination of Directorship. If the holder
of an option granted under this Article II dies during the one year
period following the date on which such optionee ceased to be a
member of the Board, each such option held by such hold shall be
exercisable only to the extent that such option is exercisable on the
date of the holder's death and may thereafter be exercised by such
holder's executor, administrator, legal representative, beneficiary
or similar person) until and including the earliest to occur of (i)
the date which is one year after the date of death and (ii) the
expiration date of the term of such option; provided, however, that
in the event that the date of death is less than six months prior to
such expiration date, such holder's executor, administrator, legal
representative, beneficiary or similar person, as the case may be,
shall have not less than six months from the date of death to so
exercise such option.
III. General
3.1 Effective Date. Subject to the approval of the
stockholders of the Company, this Plan shall be effective on January
28, 1998.
3.2 Amendment. The Board may amend, suspend, or terminate this
Plan at any time, subject to such stockholder approval as the Board
determines to be necessary or desirable to comply with any tax or
regulatory requirements.
3.3 Non-Transferability. No option hereunder shall be
transferable other than (a) by will or the laws of descent and
distribution or pursuant to beneficiary designation procedures
approved by the Company or (b) as otherwise permitted by the
Committee.
3.4 Restrictions on Shares. Each option hereunder shall be
subject to the requirement that if at any time the Company determines
that the listing, registration or qualification of the shares of
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<PAGE>
Common Stock subject to such option upon any securities exchange or
under any law, or the consent or approval of any governmental body,
or the taking of any other action is necessary or desirable as a
condition of, or in connection with, the purchase or delivery of
shares thereunder, such shares shall not be purchased or delivered
unless such listing registration, qualification, consent, approval or
other action shall have been effected or obtained, free of any
conditions not acceptable to the Company. The Company may require
that certificates evidencing shares of Common Stock delivered
pursuant to any option hereunder bear a legend indicating that the
sale, transfer or other disposition thereof by the holder is
prohibited except in compliance with the Securities Act of 1933, as
amended, and the rules and regulations thereunder.
3.5 Adjustment. In the event of any stock split, stock
dividend, recapitalization, reorganization, merger, consolidation,
combination, exchange of shares, liquidation, spin-off or other
similar change in capitalization or event, or any distribution to
holders of Common Stock other than a regular cash dividend, the
number and class of securities available under this Plan, the number
and class of securities subject to each outstanding option and the
number and class of securities to vest annually, the purchase price
per security, and the number of securities subject to each option to
be granted to Non-Employee Directors pursuant to Article II shall be
appropriately adjusted by the Committee, provided that the number of
shares subject to outstanding options shall always be a whole number.
3.6 Change in Control.
(a) Notwithstanding any provision in the Plan or any Agreement,
in the event of a Change in Control, all outstanding options shall
immediately be exercisable in full.
(b) "Change in Control" shall mean:
(i) the acquisition by any individual, entity or group (a
"Person"), including any "person" within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), of beneficial ownership within the
meaning of Rule 13d-3 promulgated under the Exchange Act, of 50% or
more of either (A) the then outstanding shares of common stock of the
Company (the "Outstanding Company Common Stock") or (B) the combined
voting power of the then outstanding securities of the Company
entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); excluding, however the
following: (1) any acquisition directly from the Company (excluding
any acquisition resulting from the exercise of an exercise,
conversion or exchange privilege unless the security being so
exercised, converted or exchanged was acquired directly from the
Company), (2) any acquisition by the Company, (3) any acquisition by
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<PAGE>
an employee benefit plan (or related trust) sponsored or maintained
by the Company or any corporation controlled by the Company or (4)
any acquisition by any corporation pursuant to a transaction which
complies with clauses (A), (B) and (C) of subsection (iii) of this
Section 3.6(b); provided further, that for purposes of clause (2), if
any Person (other than the Company or any employee benefit plan (or
related trust) sponsored or maintained by the Company or any
corporation controlled by the Company ) shall become the beneficial
owner of 50% or more of the Outstanding Company Common Stock or 50%
or more of the Outstanding Company Voting Securities by reason of an
acquisition by the Company, and such Person shall, after such
acquisition by the Company, become the beneficial owner of any
additional shares of the Outstanding Company Common Stock or any
additional Outstanding Company Voting Securities and such beneficial
ownership is publicly announced, such additional beneficial ownership
shall constitute a Change in Control;
(ii) individuals who, as of January 28, 1998, constitute the
Board of Directors (the "Incumbent Board") cease for any reason to
constitute at least a majority of such Board; provided that any
individual who becomes a director of the Company subsequent to such
date whose election, or nomination for election by the Company's
stockholders, was approved by the vote of at least a majority of the
directors then comprising the Incumbent Board shall be deemed a
member of the Incumbent Board; and provided further, that any
individual who was initially elected as a director of the Company as
a result of an actual or threatened election contest, as such terms
are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act, or any other actual or threatened solicitation of
proxies or consents by or on behalf of any Person other than the
Board shall not be deemed a member of the Incumbent Board;
(iii) consummation by the Company of a reorganization, merger
or consolidation or sale or other disposition of all or substantially
all of the assets of the Company (a "Corporate Transaction");
excluding, however, a Corporate Transaction pursuant to which (A) all
or substantially all of the individuals or entities who are the
beneficial owners, respectively, of the Outstanding Company Common
Stock and the Outstanding Company Voting Securities immediately prior
to such Corporate Transaction will beneficially own, directly or
indirectly, more than 50% of, respectively, the outstanding shares of
common stock, and the combined voting power of the outstanding
securities of such corporation entitled to vote generally in the
election of directors, as the case may be, of the corporation
resulting from the Corporate Transaction (including, without
limitation, a corporation which as a result of such transaction owns
the Company or all or substantially all of the Company's assets
either directly or indirectly) in substantially the same proportions
relative to each other as their ownership, immediately prior to such
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<PAGE>
Corporate Transaction, of the Outstanding Company Common Stock and
the Outstanding Company Voting Securities, as the case may be, (B) no
Person (other than: the Company; any employee benefit plan (or
related trust) sponsored or maintained by the Company or any
corporation controlled by the Company; the corporation resulting from
such Corporate Transaction; and any Person which beneficially owned,
immediately prior to such Corporate Transaction, directly or
indirectly, 35% or more of the Outstanding Company Common Stock or
the Outstanding Company Voting Securities, as the case may be) will
beneficially own, directly or indirectly, 35% or more of,
respectively, the outstanding shares of common stock of the
corporation resulting from such Corporate Transaction or the combined
voting power of the outstanding securities of such corporation
entitled to vote generally in the election of directors and (C)
individuals who were members of the Incumbent Board will constitute
at least a majority of the members of the board of directors of the
corporation resulting from such Corporate Transaction; or
(iv) approval by the stockholders of the Company of a plan of
complete liquidation or dissolution of the Company.
3.7 No Right of Continued Service. Neither this Plan nor any
option granted hereunder shall confer upon any person any right to
continued services as a director of the Company, any Subsidiary or
any affiliate of the Company.
3.8 Rights as Stockholder. No person shall have any right as a
stockholder of the Company with respect to any shares of Common Stock
which are subject to an option hereunder until such person becomes a
stockholder of record with respect to such shares of Common Stock.
3.9 Designation of Beneficiary. Each optionee may file with
the Committee a written designation of one or more persons as such
optionee's beneficiary or beneficiaries (both primary and contingent)
in the event of the optionee's death. To the extent an outstanding
option granted hereunder is exercisable, such beneficiary or
beneficiaries shall be entitled to exercise such option.
Each beneficiary designation shall become effective only when
filed in writing with the Committee during the optionee's lifetime on
a form prescribed by the Committee. The spouse of a married optionee
16
<PAGE>
domiciled in a community property jurisdiction shall join in any
designation of a beneficiary other than such spouse. The filing with
the Committee of a new beneficiary designation shall cancel all
previously filed beneficiary designations.
If an optionee fails to designate a beneficiary, or if all
designated beneficiaries of an optionee predecease the optionee, then
each outstanding option hereunder held by such optionee, to the
extent exercisable, may be exercised by such optionee's executor,
administrator, legal representative or similar person.
3.10 Governing Law. This Plan and each option hereunder shall
be governed by the laws of the State of Delaware and construed in
accordance therewith without giving effect to principles of conflicts
of laws.
17
<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>
Three Months Ended Six Months Ended
------------------ ----------------
Mar 28 Mar 29 Mar 28 Mar 29
1998 1997 1998 1997
------- ------ ------- ------
<S> <C> <C> <C> <C>
Net income $ 930 $ 621 $1,535 $1,086
Basic income per share $ .30 $ .20 $ .50 $ .35
Average shares outstanding 3,094 3,090 3,094 3,090
Options outstanding - common stock
equivalents 45 29 45 39
Average common and common equivalent
shares outstanding 3,139 3,119 3,139 3,129
Diluted income per share $ .30 $ .20 $ .49 $ .35
=== === === ===
</TABLE>
18
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> MAR-28-1998
<CASH> 2,030
<SECURITIES> 0
<RECEIVABLES> 7,799
<ALLOWANCES> (173)
<INVENTORY> 3,587
<CURRENT-ASSETS> 13,243
<PP&E> 6,360
<DEPRECIATION> (3,530)
<TOTAL-ASSETS> 17,508
<CURRENT-LIABILITIES> 7,347
<BONDS> 0
0
0
<COMMON> 310
<OTHER-SE> 9,527
<TOTAL-LIABILITY-AND-EQUITY> 17,508
<SALES> 15,674
<TOTAL-REVENUES> 15,674
<CGS> 9,511
<TOTAL-COSTS> 9,511
<OTHER-EXPENSES> 3,744
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 38
<INCOME-PRETAX> 2,381
<INCOME-TAX> (846)
<INCOME-CONTINUING> 1,535
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,535
<EPS-PRIMARY> .50
<EPS-DILUTED> .49
</TABLE>
