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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
For the quarterly period ended April 1, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File #0-18018
AEROVOX INCORPORATED
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(Exact name of registrant as specified in its charter)
Delaware 76-0254329
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(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification No.)
370 Faunce Corner Road, North Dartmouth, Massachusetts 02747
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(Address of principal executive offices) (Zip Code)
(508) 995-8000
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Registrant's telephone number
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____
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Indicate the number of shares outstanding of each of the issuer's classes
of common stock as of the latest practicable date:
At April 1, 1995, 5,232,350 shares of registrant's common stock (par value,
$1.00) were outstanding.
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AEROVOX INCORPORATED
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Amounts in Thousands)
<TABLE>
<CAPTION>
APR. 1, DEC. 31,
1995 1994
-----------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 506 $ 102
Accounts receivable, net 20,578 16,278
Inventories 22,800 19,895
Prepaid expenses and other current assets 1,589 1,225
Deferred income taxes 997 997
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TOTAL CURRENT ASSETS 46,470 38,497
Property, plant and equipment,
net of accumulated depreciation 38,560 37,101
Deferred income taxes 1,752 1,752
Other assets 638 409
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TOTAL ASSETS $ 87,420 $ 77,759
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 12,476 $ 9,986
Accrued expenses 3,944 3,294
Current maturities of long-term debt 2,337 2,292
Income taxes 759 484
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TOTAL CURRENT LIABILITIES 19,516 16,056
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Deferred income taxes 5,828 5,821
Industrial revenue bond 2,854 2,943
Long-term debt less current maturities 23,892 18,705
Other liabilities 851 818
STOCKHOLDERS' EQUITY:
Common stock 5,232 5,231
Additional paid-in capital 603 592
Retained earnings 28,721 27,887
Foreign currency translation adjustment (77) (294)
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TOTAL STOCKHOLDERS' EQUITY 34,479 33,416
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 87,420 $ 77,759
=========== ==========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
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AEROVOX INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
APRIL 1, APRIL 2,
1995 1994
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<S> <C> <C>
Net Sales $ 34,141 32,904
Cost of sales 28,216 26,304
GROSS PROFIT ---------- ---------
5,925 6,600
Selling, general and administrative expenses 4,279 4,101
INCOME FROM OPERATIONS ---------- ---------
1,646 2,499
OTHER INCOME, (EXPENSES):
Interest expense (513) (340)
Other Income 229 97
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INCOME BEFORE INCOME TAXES 1,362 2,256
Provision for income taxes 528 903
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NET INCOME $ 834 $ 1,353
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NET INCOME PER SHARE $ 0.15 $ 0.25
========== =========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
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AEROVOX INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Amounts in Thousands)
<TABLE>
<CAPTION>
Three Months Ended
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April 1, April 2,
1995 1994
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<S> <C> <C>
Cash flows from operating activities:
Net income $ 834 $ 1,353
Adjustments to reconcile to cash provided by (used in)
operating activities:
Depreciation and amortization 1,113 949
Deferred income taxes 7 35
Changes in operating assets and liabilities:
Accounts receivable (4,300) (3,357)
Inventories (2,905) (1,174)
Prepaid expenses and other current assets (364) (514)
Accounts payable 2,490 2,145
Accrued expenses 650 (148)
Income taxes payable 275 646
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Net cash provided by operating activities (2,200) (65)
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Cash flows from investing activities:
Acquisition of property, plant and equipment (2,572) (1,361)
Other 21 119
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Net cash used in investing activities (2,551) (1,242)
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Cash flows from financing activities:
Net borrowings under line of credit 5,706 1,862
Long-term debt repayment (563) (522)
Common stock issued 12 34
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Net cash provided by financing activities 5,155 1,374
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Increase in cash and cash equivalents 404 67
Cash and cash equivalents at beginning of period 102 215
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Cash and cash equivalents at end of period $ 506 $ 282
============ ============
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 520 $ 362
============ ============
Cash paid during the period for income taxes $ 284 $ 105
============ ============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
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AEROVOX INCORPORATED
NOTES TO FINANCIAL STATEMENTS
(1) The consolidated financial statements are unaudited, and in the opinion of
management, reflect all adjustments, all of a normal recurring nature,
necessary for a fair presentation of the financial statements for the
interim periods.
The financial statements are presented as permitted by Form 10Q, and do not
contain certain information included in the Company's annual financial
statements and notes.
Deferred taxes at April 1, 1995, consist of the following:
<TABLE>
<CAPTION>
<S> <C>
Deferred Income Tax Assets:
Current deferred income taxes $ 997,000
Long-term deferred income taxes 1,752,000
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Total deferred income tax assets $2,749,000
=========
Deferred Income Tax Liabilities: $5,828,000
=========
</TABLE>
The deferred income tax asset of $2,749,000 is presented net of a valuation
allowance of $75,000.
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PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Results of operations for Three Months Ended April 1, 1995 as compared to Three
Months Ended April 2, 1994.
Net sales for the first quarter of 1995 totaled $34,141,000 compared to net
sales of $32,904,000 for the comparable period of 1994, an increase of
approximately 3.8%.
Gross profit, at $5,925,000, was 17.4% of net sales for the first quarter
of 1995 compared to $6,600,000, 20.1% of net sales, for the first quarter of
1994. The Aero M Group reported a negative $125,000 at the gross profit level
for the first three months of 1995 versus an approximate gross profit of
$1,160,000 for the corresponding period in 1994. Production trends are still
improving for this operating Group that had losses attributable to the move of
the electrolytic capacitor operations from Kentucky to Juarez, Mexico, during
the latter half of 1994. Selling, general and administrative expenses were
12.5% of net sales, at $4,279,000, compared to 12.5% of net sales, at
$4,101,000, for the first quarter of 1994.
Interest expense for the first quarter of 1995 was $513,000 compared to
$340,000 for the comparable period of 1994 as interest rates (measured by the
Prime Rate) increased by approximately 2.5 to 3.0 percentage points when
comparing first quarter, 1995, interest rates with the corresponding quarter in
1994. This increase in rates was compounded by an increase in loans outstanding
of approximately $5.5 million in the first quarter of 1995 over the same period
of 1994. Other income, at $229,000, was $132,000 higher than the other income
recorded for the first quarter of 1994, as a Licensee purchased more raw
materials from the Company than the previous period, 1994, and an exchange gain
was recorded by the Company's U.K. subsidiary.
Income before taxes was $1,362,000 (4.0% of net sales) compared to
$2,256,000 (6.9% of net sales) in 1994. Income tax provisions were $528,000 for
the first quarter of 1995 versus $903,000 for the corresponding period in 1994.
The tax rate of 38.8% for 1995 (compared to 40% for 1994) was favorably affected
by an increase in the percentage of profits of the Company by its U.K.
subsidiary with a lower tax rate. Net income was $834,000 ($.15 per common
share) compared to net earnings for the first quarter of 1994 of $1,353,000
($.25 per common share).
Financial Conditions: Liquidity and Capital Resources
Cash at the end of the first quarter, 1995, totaled $506,000 as compared to
$282,000 at the end of the first quarter of 1994. Working capital was
$26,954,000 at the end of the first quarter of 1995 as compared to $22,368,000
at the end of the first quarter of 1994. Current ratio of 2.4:1 compares to
2.2:1 at the end of the first quarter of 1994. Approximately $2,572,000 of
expenditures were made for equipment during the first quarter of 1995 compared
to $1,361,000 during the same period of 1994.
The Company amended the Amended and Restated Revolving Credit Agreement,
dated July 8, 1993, between it and The First National Bank of Boston (Bank of
Boston), on August 30, 1994, to include, among other things, the right of BHC
Aerovox, Ltd. (BHC), to borrow an amount not to exceed 4,000,000 Pounds Sterling
in addition to the $15,000,000 the Company may borrow under this Agreement.
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At the end of the first quarter of 1995, the Company had borrowed
$14,200,000 (versus $11,000,000 at the end of the first quarter, 1994) and BHC
had borrowed approximately 3,500,000 Pounds Sterling under the Agreement with
the Bank of Boston. The Company also has a term line of credit with the CIT
Group, an equipment financing company. This line of $10,000,000, secured by
equipment at the Company's New Bedford facility, has a balance, at April 1,
1995, of $6,082,000, (compared to a balance at the end of the first quarter,
1994, of $7,948,000. These loans, with five-year terms, carry annual interest
rates ranging from 7.36% to 8.24%.
It was determined, at the end of the first quarter of 1995, that the
Company was in default of financial covenants imposed by the Bank of Boston and
the CIT Group. Bank covenants for an interest coverage ratio of no less than 4
to 1 (earnings before interest and income taxes divided by total interest
expense) and a debt to worth ratio (consolidated total liabilities divided by
consolidated net worth) of no greater than 1.5 to 1 were not met at the end of
the first quarter - the interest coverage ratio was 3.6:1 and the debt to worth
ratio was 1.54 to 1. Both banking institutions were advised of this position
and the Company received verbal waivers from them of what they recognize as a
temporary situation.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
6 (a). Exhibits: None
6 (b). Reports on Form 8-K: None filed.
27 Financial Data Schedule
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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.
AEROVOX INCORPORATED
DATE May 15, 1995 BY /S/ RONALD F. MURPHY
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Ronald F. Murphy, Senior
Vice President, Treasurer, Secretary
and Principal Accounting Officer
Page 8
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> APR-01-1995
<CASH> 506
<SECURITIES> 0
<RECEIVABLES> 20,943
<ALLOWANCES> 365
<INVENTORY> 22,800
<CURRENT-ASSETS> 46,470
<PP&E> 63,479
<DEPRECIATION> 24,919
<TOTAL-ASSETS> 87,420
<CURRENT-LIABILITIES> 19,516
<BONDS> 26,746
<COMMON> 5,232
0
0
<OTHER-SE> 29,247
<TOTAL-LIABILITY-AND-EQUITY> 87,420
<SALES> 34,141
<TOTAL-REVENUES> 34,141
<CGS> 28,216
<TOTAL-COSTS> 32,266
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 513
<INCOME-PRETAX> 1,362
<INCOME-TAX> 528
<INCOME-CONTINUING> 834
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 834
<EPS-PRIMARY> 0.15
<EPS-DILUTED> 0
</TABLE>
