<PAGE>
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 March 30, 1996
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
--------------------
(Exact name of registrant as specified in its charter)
Delaware 76-0254329
-------- ----------
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
370 Faunce Corner Road, North Dartmouth, Massachusetts 02747
- ----------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(508) 995-8000
--------------
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
--- ---
Indicate the number of shares outstanding of each of the issuer's classes
of common stock as of the latest practicable date:
At March 30, 1996, 5,308,195 shares of registrant's common stock (par value,
$1.00) were outstanding.
PAGE 1
<PAGE>
AEROVOX INCORPORATED
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Amounts in Thousands)
<TABLE>
<CAPTION>
Mar 30, Dec 30,
1996 1995
----------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 295 $ 573
Accounts receivable, net 21,682 19,588
Inventories 24,665 22,630
Prepaid expenses and other current assets 1,606 1,073
Deferred income taxes 885 885
------- -------
Total current assets 49,133 44,749
Property, plant and equipment,
net of accumulated depreciation 41,055 41,251
Deferred income taxes 2,290 2,290
Other assets 393 401
------- -------
Total assets $92,871 $88,691
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $12,850 $11,270
Accrued expenses 4,587 3,339
Current maturities of long-term debt 3,555 3,205
Income taxes 1,082 508
------- -------
Total current liabilities 22,074 18,322
Deferred income taxes 6,719 6,727
Industrial revenue bond 2,476 2,573
Long-term debt less current maturities 24,895 25,132
Other liabilities 1,109 1,072
Stockholders' equity:
Common stock 5,308 5,299
Additional paid-in capital 805 769
Retained earnings 30,251 29,488
Foreign currency translation adjustment (766) (691)
------- -------
Total stockholders' equity 35,598 34,865
------- -------
Total liabilities and stockholders'
equity $92,871 $88,691
======= =======
</TABLE>
The accompanying notes are an integral part of the financial statements.
PAGE 2
<PAGE>
AEROVOX INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Amounts in Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
Three Months Ended
------------------
Mar 30, Apr 1,
1996 1995
------- -------
<S> <C> <C>
Net sales $33,164 $34,141
Cost of sales 27,305 28,216
------- -------
Gross profit 5,859 5,925
Selling, general and administrative expenses 4,005 4,279
------- -------
Income from operations 1,854 1,646
Other income(expense):
Interest expense (717) (513)
Other income 134 229
------- -------
Income before income taxes 1,271 1,362
Provision for income taxes 508 528
------- -------
Net income $ 763 $ 834
------- -------
Net income per share $ 0.14 $ 0.15
------- -------
</TABLE>
The accompanying notes are an integral part of the financial statements.
PAGE 3
<PAGE>
AEROVOX INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Amounts in Thousands)
<TABLE>
<CAPTION>
Three Months Ended
------------------
Mar 30, Apr 1,
1996 1995
--------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 763 $ 834
Adjustments to reconcile to cash provided by (used in)
operating activities:
Depreciation and amortization 1,210 1,113
Deferred income taxes (8) 7
Changes in operating assets and liabilities:
Accounts receivable (2,094) (4,300)
Inventories (2,035) (2,905)
Prepaid expenses and other current assets (533) (364)
Accounts payable 1,580 2,490
Accrued expenses 1,248 650
Income taxes payable 574 275
------- -------
Net cash provided by operating activities 705 (2,200)
------- -------
Cash flows from investing activities:
Acquisition of property, plant and equipment (1,014) (2,572)
Other (30) 21
------- -------
Net cash used in investing activities (1,044) (2,551)
------- -------
Cash flows from financing activities:
Net borrowings/(repayments) under line of credit (652) 5,706
Long-term debt borrowings 1,500 -
Long-term debt repayment (832) (563)
Common stock issued 45 12
------- -------
Net cash provided by financing activities 61 5,155
------- -------
Increase in cash and cash equivalents (278) 404
Cash and cash equivalents at beginning of period 573 102
------- -------
Cash and cash equivalents at end of period $ 295 $ 506
------- -------
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 581 $ 520
------- -------
Cash paid during the period for income taxes $ 89 $ 284
------- -------
</TABLE>
The accompanying notes are an integral part of the financial statements.
PAGE 4
<PAGE>
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.
PAGE 5
<PAGE>
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 March 30, 1996 as compared to Three
Months Ended April 1, 1995.
Net sales for the first quarter of 1996 totaled $33,164,000 compared to
$34,141,000 for the first quarter of 1995, a 2.9% decrease.
Gross margin for the quarter totaled $5,859,000 (17.8% of net sales)
compared to $5,925,000 (17.4% of net sales) in the corresponding quarter of
1995. Product lines for the Aero M Group in Mexico reported gross margins of
approximately $371,000 for the first quarter of 1996 versus a negative $125,000
for the first quarter of 1995. Selling and general and administrative expenses
were $4,005,000 (12.1% of net sales) compared to $4,279,000 (12.5% of net
sales) for the first quarter of 1995.
Interest expense for the first quarter of 1996 was $717,000 compared to
$513,000 for the comparable period in 1995 as borrowings increased by
approximately $1,850,000 from period to period as well as a slight increase in
the annual interest rates in 1996. Other income, at $134,000, was less than the
$229,000 recorded in the first quarter of 1995 as a modest exchange loss in 1996
compares to a modest gain in the first quarter of 1995.
Income before taxes was $1,271,000 (3.8% of net sales) compared to
$1,362,000 (4.0% of net sales) in 1995. Income tax provisions were $508,000
(approximately 40% of pre-tax income) for the first quarter of 1996 compared to
$528,000 (about 39% of pre-tax income) for 1995. Net income was $763,000 ($.14
per common share) compared to $834,000 net earnings for the first quarter of
1995 ($.15 per common share).
Financial Condition: Liquidity and Capital Resources
Cash at the end of the first quarter of 1996 totaled $295,000 compared to
$506,000 at the end of the first quarter of 1995. Working capital was
$27,059,000 on March 30, 1996, as compared to $26,954,000 at the end of the
first quarter of 1995. Current ratio at 2.2:1 compares to 2.4:1 at the end of
the first quarter of 1995. Approximately $1,014,000 of expenditures were made
for equipment during the first quarter of 1996 compared to $2,572,000 during the
same period of 1995.
At the end of the first quarter of 1996, the Company had borrowings of
approximately $30,926,000 versus $29,083,000 at the end of the first quarter of
1995. On December 29, 1995, a Second Amendment to the Revolving Credit
Agreement was entered into between the Bank of Boston and the Company which
adjusted the BHC Aerovox Ltd. (wholly-owned subsidiary of the Company) line of
credit to 4,400,000 British Pounds (from 4,000,000 Pounds) with no change to the
$21,000,000 total lines of credit for the Company. Interest is at the bank's
prime rate payable in arrears on the outstanding loan balance. The Company has
PAGE 6
<PAGE>
options to convert from a bank base rate loan into a Eurodollar Loan at the
then Eurodollar (LIBOR) rate plus 1 3/4 percentage points and to convert up to
$4,000,000 of loans to a Bankers' Acceptance facility at interest rates equal to
the per annum average discount rate quoted to the bank on date of request for
such facility plus 1 1/2 percentage points per annum. The Agreement matures on
May 31, 1997. A commitment fee, equal to one-quarter percent per annum will be
charged on the unused portion of the total commitment. At March 30, 1996,
borrowings outstanding under this Agreement were approximately $19,639,000
compared to approximately $19,826,000 at April 1, 1995.
A ten-year Industrial Revenue Bond was issued by the Massachusetts
Industrial Finance Agency in July 1982 to finance the acquisition of equipment.
The bond was transferred to another purchaser in June, 1992. Interest at the
rate of 12.5% per annum through June 1992 and 7.42% per annum thereafter and
principal are payable monthly commencing July 1, 1992, to July 1, 2002. At
March 31, 1996, the bond balance outstanding under this agreement was $2,854,000
compared to $3,175,000 at April 1, 1995.
Other long-term debt of the Company consists of a term line of credit with
an equipment financing company in the amount of $10,000,000 collateralized by
certain equipment. Payments of principal and interest are due quarterly. At
March 30, 1996, borrowings outstanding under this agreement were $8,433,000, at
annualized interest rates ranging from 7.4% to 8.2%, and maturing at various
dates to January 10, 2001. This balance compares to outstanding balance at
April 1, 1995, at $6,082,000.
During the year of 1995, the Company was in default of financial covenants
imposed by the Bank of Boston and the CIT Group. Both banking institutions
issued waivers of these defaults.
PAGE 7
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
6 (a). Exhibits: None
6 (b). Reports on Form 8-K: On March 4, 1996, Robert D. Elliott was elected
President and Chief Operating Officer of the Company. Mr Elliott was
also appointed to the Board of Directors.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
AEROVOX INCORPORATED
DATE May 13, 1996 BY /s/ RONALD F. MURPHY
--------------------------- --------------------------------
Ronald F. Murphy, Senior
Vice President, Treasurer, Secretary
and Principal Accounting Officer
PAGE 8
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-START> DEC-31-1995
<PERIOD-END> MAR-30-1996
<CASH> 295
<SECURITIES> 0
<RECEIVABLES> 22,382
<ALLOWANCES> 700
<INVENTORY> 24,665
<CURRENT-ASSETS> 49,133
<PP&E> 70,053
<DEPRECIATION> 28,998
<TOTAL-ASSETS> 92,871
<CURRENT-LIABILITIES> 22,074
<BONDS> 0
0
0
<COMMON> 5,308
<OTHER-SE> 30,290
<TOTAL-LIABILITY-AND-EQUITY> 92,871
<SALES> 33,164
<TOTAL-REVENUES> 33,164
<CGS> 27,305
<TOTAL-COSTS> 31,244
<OTHER-EXPENSES> (134)
<LOSS-PROVISION> 66
<INTEREST-EXPENSE> 717
<INCOME-PRETAX> 1,271
<INCOME-TAX> 508
<INCOME-CONTINUING> 763
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 763
<EPS-PRIMARY> 0.14
<EPS-DILUTED> 0.14
</TABLE>
