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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 March 29, l997
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
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(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification No.)
740 Belleville Avenue, New Bedford, MA 02745
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(Address of principal executive offices) (Zip Code)
(508) 994-9661
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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 March 29, l997, 5,324,800 shares of registrant's common stock (par value,
$1.00) were outstanding.
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AEROVOX INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Amounts in Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
Three Months Ended
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Mar 29, Mar 30,
1997 1996
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<S> <C> <C>
Net sales $ 32,616 $ 33,565
Cost of sales 27,431 27,749
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Gross margin 5,185 5,816
Selling, general and administrative expenses 3,767 3,679
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Income from operations 1,418 2,137
Other income(expense):
Interest expense (484) (717)
Other income(expense) (36) 6
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Income before income taxes 898 1,426
Provision for income taxes 385 565
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Net income $ 513 $ 861
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Net income per share $ 0.10 $ 0.16
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</TABLE>
The accompanying notes are an integral part of the financial statements.
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AEROVOX INCORPORATED
CONSOLIDATED BALANCE SHEETS (Unaudited)
(Amounts in Thousands)
<TABLE>
<CAPTION>
Mar 29, Dec 28,
1997 1996
===================================
<S> <C> <C>
ASSETS
Current assets:
Cash $ 560 $ 864
Accounts receivable, net 18,782 16,096
Inventories 20,308 20,910
Prepaid expenses and other current assets 1,051 1,044
Deferred income taxes 3,608 3,608
============= ==============
Total current assets 44,309 42,522
Property, plant and equipment,
net of accumulated depreciation 39,908 40,530
Deferred income taxes 1,651 1,651
Other assets 271 273
============= ==============
Total assets $ 86,139 $ 84,976
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 10,053 $ 8,298
Accrued expenses 6,157 5,886
Current maturities of long-term debt 3,268 3,552
Income taxes 555 210
============= ==============
Total current liabilities 20,033 17,946
Deferred income taxes 8,088 8,151
Industrial revenue bond 2,073 2,175
Long-term debt less current maturities 19,374 20,335
Other liabilities 1,192 1,296
Stockholders' equity:
Common stock 5,325 5,315
Additional paid-in capital 872 842
Retained earnings 29,294 28,781
Foreign currency translation adjustment (112) 135
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Total stockholders' equity 35,379 35,073
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Total liabilities and stockholders' equity $ 86,139 $ 84,976
============= ==============
</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
Mar 29, Mar 30,
1997 1996
============== =============
<S> <C> <C>
Cash flows from operating activities:
Net income $ 513 $ 861
Adjustments to reconcile net income to cash
provided by (used in) operating activities:
Depreciation 1,219 1,194
Deferred income taxes (11) (17)
Changes in operating assets and liabilities:
Accounts receivable (2,856) (2,014)
Inventories 461 (2,138)
Prepaid expenses and other current assets (4) (537)
Accounts payable 1,797 1,561
Accrued expenses 284 1,246
Income taxes payable 332 624
============== =============
Net cash provided by operating activities 1,735 780
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Cash flows from investing activities:
Acquisition of property, plant and equipment (883) (903)
Other (104) (106)
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Net cash used in investing activities (987) (1,009)
============== =============
Cash flows from financing activities:
Proceeds from employee stock purchase
plan and exercise of stock options 40 45
Net borrowings/(repayments) under line of credit (186) (757)
Long-term debt borrowings 1,500
Long-term debt repayment (931) (832)
============== =============
Net cash provided by (used in) financing activities (1,077) (44)
Effects of exchange rate on cash 25 (5)
============== =============
Increase (decrease) in cash (304) (278)
Cash beginning of period 864 573
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Cash at end of period $ 560 $ 295
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Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 461 $ 581
============== =============
Cash paid during the period for income taxes $ 84 $ 89
============== =============
</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 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.
(2) During 1996, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standard No. 128 "Earnings Per Share." This
statement specifies the computation, presentation and disclosure for
basic and dilutive earnings per share. The Company will implement the
standard in its fiscal year ended December 27, l997. Using the new
method for computing earnings per share, basic earning per share and
dilutive earnings per share would not be materially affected.
(3) The 1996 results have been restated for the change in accounting for
inventories from LIFO to FIFO.
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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
Three Months Ended March 29, 1997 compared to Three Months Ended March 30,
l996.
Net sales for the first quarter of 1997 totaled $32,616,000 compared to
$33,565,000 for the first quarter of 1996, a decrease of $949,000 (2.8%). In
North America, an expected decline in sales of capacitors for room air
conditioners contributed to the quarterly decrease. In Europe, sales of
aluminum electrolytic capacitors by BHC Aerovox, Ltd., the Company's subsidiary
in England, were negatively impacted by unfavorable foreign currency exchange
rates.
Gross margin for the first quarter of 1997 totaled $5,185,000 (15.9% of
net sales) compared to $5,816,000 (17.3% of net sales) for the corresponding
quarter in 1996. Selling, general and administrative expenses for the quarter
totaled $3,767,000 (11.5% of net sales) versus $3,679,000 (11% of net sales) in
the first quarter of 1996.
Interest expense for the first quarter was $484,000 compared to $717,000
in the same period of 1996. Other expense totaled $36,000 versus other income of
$6,000 for the corresponding quarter of 1996.
Income before income taxes was $898,000 (2.8% of net sales) compared to
income of $1,426,000 (4.3% of net sales) for the first quarter of 1996. The
provision for income taxes for the first quarter of 1997 was $385,000 versus
$565,000 in the first quarter of 1996. Net income of $513,000 ( $0.10 per common
share) compared to net income in the first quarter of 1996 of $861,000 ($0.16
per share per common share).
Liquidity and Capital Resources
Cash at the end of the first quarter 1997, totaled $560,000 compared to
$864,000 at the end of the first quarter of 1996. Working capital totaled
$24,276,000 on March 29, 1997, and was $24,576,000 at the end of the first
quarter of 1996. Current ratio of 2.2:1 compared to a ratio of 2.4:1 at end of
the first quarter in 1996. Expenditures for equipment during the first quarter
of 1997 were $900,000, compared to $903,000 during the first quarter of 1996.
At the end of the first quarter of 1997, the Company had borrowings of
$24,715,000 versus $30,926,000 at the end of the first quarter of 1996, a
reduction of $6,211,000.
The Company maintains a Revolving Credit Agreement with the Bank of
Boston, which as amended, provides a credit line of approximately $22 million to
the Company, including a 4,400,000 British pounds sterling ($ 7,176,000 at
quarter-end exchange rates) line to BHC Aerovox Ltd., the Company's wholly-owned
subsidiary in England. At March 29, l997, the Company was
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in compliance with all financial and other covenants specified by this
Agreement, as modified by the Fifth Amendment to this Agreement of February 14,
l997. On March 29, l997, total borrowings outstanding under the Agreement were
approximately $17,008,000 compared to approximately $19,639,000 on March 30,
l996.
The Company also has a term line of credit with the CIT Group, an
equipment financing company. This line of $10,000,000, collateralized by certain
equipment, has annual interest rates ranging from 7.4% to 8.2% and maturing at
various dates to January 10, 2001. At March 29, 1997, borrowings outstanding
under this agreement were $5,231,000 compared to $8,433,000 outstanding at the
end of the first quarter of 1996.
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. Principal and
interest, at an annual rate of 7.42%, are payable monthly to July 1, 2002. On
March 29, 1997, the bond balance outstanding under this agreement was $2,476,000
compared to $2,854,000 on March 30, l996.
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.
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 7, l997 BY /S/ JEFFREY A. TEMPLER
------------------- Jeffrey A. Templer
Senior Vice President/Finance
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-27-1997
<PERIOD-START> DEC-29-1996
<PERIOD-END> MAR-29-1997
<CASH> 560
<SECURITIES> 0
<RECEIVABLES> 19,442
<ALLOWANCES> 660
<INVENTORY> 20,308
<CURRENT-ASSETS> 44,309
<PP&E> 73,743
<DEPRECIATION> 33,835
<TOTAL-ASSETS> 86,139
<CURRENT-LIABILITIES> 20,033
<BONDS> 0
0
0
<COMMON> 5,325
<OTHER-SE> 30,054
<TOTAL-LIABILITY-AND-EQUITY> 86,139
<SALES> 32,616
<TOTAL-REVENUES> 32,616
<CGS> 27,431
<TOTAL-COSTS> 31,205
<OTHER-EXPENSES> 36
<LOSS-PROVISION> (7)
<INTEREST-EXPENSE> 484
<INCOME-PRETAX> 898
<INCOME-TAX> 385
<INCOME-CONTINUING> 513
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 513
<EPS-PRIMARY> 0.10
<EPS-DILUTED> 0.10
</TABLE>
