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 27, 1997
-----------------
/ / 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, 1998
- ----------------------------- -------------------------------
Common stock, par value $.10 3,093,630
1
<PAGE>
TECH/OPS SEVCON, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets
ASSETS
<TABLE>
<CAPTION>
Dec 27, Sept 30,
1997 1997
--------- ------------
(unaudited) (derived from
audited
statements)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,943,000 $ 2,361,000
Accounts receivable, less allowances
of $167,000 at 12/27/97
and $158,000 at 9/30/97 6,264,000 5,637,000
Inventories:
Raw materials 2,262,000 1,532,000
Work-in-process 627,000 903,000
Finished goods 910,000 691,000
--------- ---------
3,799,000 3,126,000
--------- ---------
Total current assets 12,006,000 11,124,000
--------- ----------
Property, plant and equipment, at cost 6,169,000 5,869,000
Less: Accumulated depreciation
and amortization 3,458,000 3,249,000
--------- ---------
Net property, plant
and equipment 2,711,000 2,620,000
--------- ---------
Cost of purchased businesses in excess
of net assets acquired 1,435,000 1,435,000
Other assets - 6,000
---------- ----------
$16,152,000 $15,185,000
========== ==========
</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 27, Sept 30,
1997 1997
-------- ------------
(unaudited) (derived from
audited
statements)
<S> <C> <C>
Current liabilities:
Current portion of long-term debt $ 248,000 $ 235,000
Accounts payable 2,662,000 1,770,000
Dividend payable 464,000 463,000
Accrued expenses 2,529,000 2,694,000
Accrued taxes on income 496,000 482,000
--------- ---------
Total current liabilities 6,399,000 5,644,000
--------- ---------
Long-term debt, less current portion 223,000 278,000
Deferred taxes on income 163,000 156,000
--------- ---------
Stockholders' investment (Note 2)
Preferred stock - -
Common stock 310,000 310,000
Treasury stock, at cost ( 81,000) ( 85,000)
Premium paid in on common stock 3,729,000 3,730,000
Retained earnings 5,919,000 5,786,000
Cumulative translation adjustment (510,000) (634,000)
---------- ----------
Total stockholders' investment $ 9,367,000 $ 9,107,000
---------- ----------
$16,152,000 $15,185,000
========== ==========
</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 27, Dec 28,
1997 1996
-------- --------
<S> <C> <C>
Net sales $ 7,049,000 $ 6,197,000
Costs and expenses:
Cost of sales 4,262,000 3,887,000
Selling, general and
administrative 1,828,000 1,572,000
--------- ---------
6,090,000 5,459,000
--------- ---------
Operating income 959,000 738,000
Other income (expense), net ( 21,000) ( 21,000)
-------- -------
Income before income taxes 938,000 717,000
Income taxes 333,000 252,000
------- -------
Net income $ 605,000 $ 465,000
======= =======
Basic income per share $ .20 $ .15
=== ===
Diluted income per share $ .19 $ .15
=== ===
</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,
1997 1996
-------- --------
<S> <C> <C>
Net cash flow from operating activities:
Net income $ 605,000 $ 465,000
Adjustments to reconcile net income to
net cash from operating activities:
Depreciation and amortization 117,000 121,000
Deferred tax provision 7,000 18,000
Increase (decrease) in cash resulting from
changes in operating assets & liabilities:
Receivables (627,000) 38,000
Inventories (673,000) (321,000)
Accounts payable 892,000 151,000
Accrued compensation and expenses (200,000) 43,000
Accrued and deferred taxes on income 49,000 23,000
-------- -------
Net cash generated from
operating activities 176,000 538,000
Cash flow used by investing activities:
Acquisition of property, plant, and
equipment, net (126,000) (1,265,000)
Cash flow from (used by) financing activities:
Long-term debt incurred on purchase
of building - 708,000
Payment of long-term debt ( 42,000) -
Exercise of stock options 5,000 -
Purchase of common stock ( 9,000) -
Dividends paid (464,000) (463,000)
-------- -------
Net cash used by financing activities (510,000) 245,000
Effect of exchange rate changes on cash 42,000 116,000
------- --------
Net increase (decrease) in cash (418,000) (366,000)
Opening balance - cash and cash equivalents 2,361,000 2,886,000
--------- ---------
Ending balance - cash and cash equivalents $1,943,000 $2,520,000
========= =========
Supplemental disclosure of cash flow information
Cash paid for income taxes $ 325,000 $ 110,000
Cash paid for interest 14,000 10,000
------- -------
Supplemental disclosure of non-cash
financing activity: Dividend declared $ 464,000 $ 463,000
======= =======
</TABLE>
The accompanying notes are an integral part of these financial
statements.
5
<PAGE>
TECH/OPS SEVCON, INC.
Notes to Consolidated Financial Statements - December 27, 1997
(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 27,
1997 and the results of operations and cash flows for the three
months ended December 27, 1997 and December 28, 1996.
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 filed on Form 10-K.
The results of operations for the three-month periods ended
December 27, 1997 and December 28, 1996 are not necessarily
indicative of the results to be expected for the full year.
(2) Cash Dividends
On December 11, 1997, the Company declared a quarterly dividend
of $.15 per share for the first quarter of fiscal 1998, which was
paid on January 8, 1998 to stockholders of record on December 26,
1997. 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 December 27, 1997
Sales in the first fiscal quarter ended December 27, 1997 were
$7,049,000, compared to $6,197,000 in the same quarter of the
previous year, an increase of $852,000, or 14%. All operations
reported revenue increases compared to the same period last year.
Revenues in the US increased by 15%, mainly due to increased demand
in the fork lift truck market. Sales in foreign markets increased by
12%. Despite the recent economic problems in Far Eastern markets,
sales to customers headquartered in the Far East were $200,000 higher
than last year.
Gross profit was 39.5% of sales compared to 37.3% in the first
quarter of fiscal 1997. Gross profit was $477,000 higher than last
year. The increase in gross profit was mainly attributable to higher
volumes, lower warranty costs and favorable sales mix. Operating
expenses for the quarter were $256,000, or 16% higher than 1997.
Operating income was $959,000, an increase of $221,000, or 30%,
compared to the first quarter of last year. The principal reason for
the increase in operating income was higher volumes.
Income before income taxes was $938,000, compared to $717,000
last year, an increase of $221,000, or 31%. Income taxes were 35% of
pre-tax income, in line with last year. Primarily due to higher
sales, net income increased by $140,000, or 33%, to $605,000. Basic
income per share was $.20 compared to $.15 in the first quarter of
fiscal 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.
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 8, 1998 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
<TABLE>
<CAPTION>
Quarter ended 12/27/97
----------------------
Per Share
Income Shares Amount
------ ------ ---------
<S> <C> <C> <C>
Net income $ 605,000
Basic income per share 3,093,000 $ .20
Options outstanding - common stock
equivalents 45,000
------- --------- ---
Diluted income per share $ 605,000 3,138,000 $ .19
======= ========= ===
Quarter ended 12/28/96
----------------------
Per Share
Income Shares Amount
------ ------ ---------
Net income $ 465,000
Basic income per share 3,090,000 $ .15
Options outstanding - common stock
equivalents 50,000
------- --------- ---
Diluted income per share $ 465,000 3,140,000 $ .15
======= ========= ===
</TABLE>
9
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> DEC-27-1997
<CASH> 1,943
<SECURITIES> 0
<RECEIVABLES> 6,431
<ALLOWANCES> (167)
<INVENTORY> 3,799
<CURRENT-ASSETS> 12,006
<PP&E> 6,169
<DEPRECIATION> (3,458)
<TOTAL-ASSETS> 16,152
<CURRENT-LIABILITIES> 6,399
<BONDS> 0
0
0
<COMMON> 310
<OTHER-SE> 9,057
<TOTAL-LIABILITY-AND-EQUITY> 16,152
<SALES> 7,049
<TOTAL-REVENUES> 7,049
<CGS> 4,262
<TOTAL-COSTS> 4,262
<OTHER-EXPENSES> 1,828
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14
<INCOME-PRETAX> 938
<INCOME-TAX> (333)
<INCOME-CONTINUING> 605
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 605
<EPS-PRIMARY> .20
<EPS-DILUTED> .19
</TABLE>
