<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 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 Number 1-4433.
ARMATRON INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Massachusetts 04-1052250
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Two Main Street
Melrose, Massachusetts 02176
(Address of principal executive offices) (Zip Code)
(617) 321-2300
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report.)
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 [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS The number of shares of Common Stock (par
value $1) outstanding at April 30, 1995 is 2,459,754 shares.
<PAGE> 2
ARMATRON INTERNATIONAL, INC.
File No. 1-4433
____________________________
PAGE(S)
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Consolidated Condensed Balance Sheets -
March 31, 1995 and 1994, and September 30, 1994 3 - 4
Consolidated Condensed Statements of
Operations for the three and six months
ended March 31, 1995 and 1994 5
Consolidated Condensed Statements of
Cash Flows for the six months ended
March 31, 1995 and 1994 6
Notes to Consolidated Condensed Financial
Statements 7 - 8
Item 2
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 9 - 10
PART II - OTHER INFORMATION
Item 6(b) Reports on Form 8-K 12
SIGNATURES 13
<PAGE> 3
ARMATRON INTERNATIONAL, INC.
Consolidated Condensed Balance Sheets
March 31, 1995 and 1994, and September 30, 1994
(Dollars in Thousands)
<TABLE>
<CAPTION>
(Unaudited) (Audited)
March 31, September 30,
1995 1994 1994
ASSETS
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 256 $1,383 $3,006
Trade accounts receivable,net 2,419 2,171 2,414
Inventories (Note 2) 4,128 3,967 2,937
Deferred tax asset 165 - 165
Prepaids & other current assets 391 229 371
Total Current Assets 7,359 7,750 8,893
MACHINERY & EQUIPMENT, NET 752 815 599
OTHER ASSETS 107 100 107
Total Assets $8,218 $ 8,665 $ 9,599
======= ======= =======
</TABLE>
The accompanying notes are an integral part
of the consolidated condensed financial statements.
<PAGE> 4
ARMATRON INTERNATIONAL, INC.
Consolidated Condensed Balance Sheets
March 31, 1995 and 1994, and September 30, 1994
(Dollars in Thousands)
<TABLE>
<CAPTION>
(Unaudited) (Audited)
March 31, Sept. 30,
1995 1994 1994
<S> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ $ 9 $ 1
Accounts payable 1,806 1,034 1,387
Accrued liabilities (Note 3) 743 870 790
Total Current Liabilities 2,549 1,913 2,178
LONG-TERM DEBT (NOTE 4) 4,715 5,250 5,140
STOCKHOLDERS' EQUITY:
Common stock, par value $1 per
share, 6,000,000 shares author-
ized; shares issued at March 31,
1995 and 1994, and September 30,
1994, 2,606,481 shares 2,606 2,606 2,606
Paid-in capital 6,770 6,770 6,770
Retained earnings (deficit) (8,036) (7,488) (6,709)
1,340 1,888 2,667
Less:
Treasury stock at cost - 146,727
at March 31, 1995 and 1994 and
September 30, 1994 386 386 386
Total Stockholders' Equity 954 1,502 2,281
Total Liabilities &
Stockholders' Equity $ 8,218 $ 8,665 $ 9,599
======= ======= =======
</TABLE>
The accompanying notes are an integral part
of the consolidated condensed financial statements.
<PAGE> 5
ARMATRON INTERNATIONAL, INC.
Consolidated Condensed Statements of Operations
for the Three and Six Months Ended March 31, 1995 and 1994
(Dollars in Thousands Except Per Share Data)
<TABLE>
<CAPTION>
(Unaudited)
Three Months Six Months
Ended March 31, Ended March 31,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net Sales $3,019 $2,759 $4,065 $4,083
Cost of Products Sold 2,590 2,482 3,913 4,117
Selling, general and
administrative expenses 715 965 1,276 1,748
Interest expense-related parties 122 124 256 251
Interest expense-third parties - 1 - 5
Other (income) expense - net (23) (21) (53) (47)
Net Income (Loss) $ (385) $ (792) $(1,327) $(1,991)
======= ======= ======= ========
Per Share:
Net Income (Loss) $ (.16) $ (.32) $ (.54) $ (.81)
======= ======= ======== ========
Weighted average number of
common shares outstanding 2,459,754 2,459,754 2,459,754 2,459,754
</TABLE>
The accompanying notes are an integral part
of the consolidated condensed financial statements.
<PAGE> 6
ARMATRON INTERNATIONAL, INC.
Consolidated Condensed Statements of Cash Flows
for the Six Months Ended March 31, 1995 and 1994
(Dollars in Thousands)
<TABLE>
<CAPTION>
(Unaudited)
Six Months Ended
March 31,
1995 1994
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(1,327) $(1,991)
Adjustments to reconcile net loss
to net cash flows from operating
activities:
Depreciation 227 375
Change in operating assets
& liabilities (846) (489)
Net cash flow from (used for)
operating activities: (1,946) (2,105)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for machinery and equipment (380) (78)
Net cash flow used for
investing activities: (380) (78)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on long-term debt-related parties (425) -
Payments on long-term debt-third parties - (1)
Net cash flow used for
financing activities: (425) (1)
NET DECREASE IN CASH
AND CASH EQUIVALENTS (2,751) (2,184)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 3,007 3,567
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 256 $ 1,383
======== ========
SUPPLEMENTAL INFORMATION:
Interest paid - related parties $ 244 $ 251
Interest paid - third parties $ - $ 5
Income taxes paid $ - $ -
</TABLE>
The accompanying notes are an integral part
of the consolidated condensed financial statements.
<PAGE> 7
ARMATRON INTERNATIONAL, INC.
Notes to Consolidated Condensed Financial Statements
1. OPINION OF MANAGEMENT
In the opinion of management, the accompanying unaudited
consolidated condensed financial statements contain all adjustments
(including normal recurring adjustments) necessary to present fairly the
consolidated financial position as of March 31, 1995 and 1994, and
September 30, 1994, and the consolidated statements of operations and
cash flows for the three and six months ended March 31, 1995 and 1994.
These financial statements should be read in conjunction with the
financial statements and notes thereto included in the Company's Annual
Report on Form 10-K and, as amended, Form 10-K/A1 for the year ended
September 30, 1994. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted.
The year-end balance sheet data was derived from audited financial
statements, but does not include disclosures required by generally
accepted accounting principles. The accompanying unaudited, consolidated
condensed financial statements are not necessarily indicative of future
trends or the Company's operations for the entire year.
2. INVENTORIES
Inventories are stated on a first-in, first-out (FIFO) method at
the lower of cost or market.
Inventories consisted of the following:
<TABLE>
<CAPTION>
(In Thousands)
(Unaudited) (Audited)
March 31, September 30,
1995 1994 1994
<S> <C> <C> <C>
Purchased Components $2,637 $2,624 $1,959
Work in Process 150 116 160
Finished Goods 1,341 1,227 818
$4,128 $3,967 $2,937
======= ======= =======
</TABLE>
<PAGE> 8
3. ACCRUED LIABILITIES
Accrued liabilities consist of the following as of:
<TABLE>
<CAPTION>
(In thousands)
(Unaudited) (Audited)
March 31, September 30,
1995 1994 1994
<S> <C> <C> <C>
Salaries, commissions
and benefits . . . . . . . . . . $ 375 $ 186 $ 355
Professional fees . . . . . . . . . 31 115 119
Warranty costs . . . . . . . . . . 37 76 40
Advertising costs . . . . . . . . . 171 306 177
Other . . . . . . . . . . . . . . . 129 187 99
$ 743 $ 870 $ 790
===== ====== =====
</TABLE>
4. LONG-TERM DEBT
The Company has a $7,000,000 line of credit from a realty trust
operated for the benefit of the Company's principal shareholders. This
line of credit, with interest at 10%, requires monthly payments of
interest only, is payable in full in October 1997, and is collateralized
by all assets of the Company. The Company had $4,715,000 outstanding
under this line of credit at March 31, 1995.
5. NOTE PAYABLE
The Company has a $3,500,000 revolving line of credit from a
commercial finance company which expires in December 1996. This line of
credit is collateralized by all assets of the Company. The terms of this
agreement include a borrowing limit which fluctuates depending on the
levels of accounts receivable and inventory which collateralize the
borrowings. Interest on amounts outstanding is payable at 2 1/4% over
the commercial base rate. The commercial base rate was 9% at March 31,
1995. No amounts were advanced under the line of credit as of March 31,
1995.
<PAGE> 9
ARMATRON INTERNATIONAL, INC.
Management's Discussion and Analysis of Financial Conditions
and Results of Operations
LIQUIDITY AND CAPITAL RESOURCES
During the six months ended March 31, 1995, operating activities used
$1,946,000 in cash. The increase in accounts payable generated
$419,000, but was offset by an increase in inventory of $1,191,000, a
net loss of $1,327,000, an increase in prepaid and other current assets
of $20,000 and by a decrease in accrued liabilities of $47,000.
Investing activities used $300,000 for the purchase of equipment.
Financing activities used $425,000 for the payment of long-term debt.
As a result primarily of these factors, cash and cash equivalents
decreased $2,751,000.
The Company obtained from a commercial finance company a revolving line
of credit which provides aggregate borrowings of $3,500,000, and which
expires in December 1996. Borrowings made against this line of credit
are collateralized by all assets of the Company. As of April 30, 1995,
the Company was contingently liable for outstanding letters of credit of
approximately $465,000 under this credit agreement.
The Company has a $7,000,000 line of credit from a realty trust operated
for the benefit of the Company's principal shareholders. This line of
credit, with interest payable at 10%, requires monthly payments of
interest only, is payable in full in October 1997, and is collateralized
by all assets of the Company. The Company had $4,715,000 outstanding
under this line of credit on April 30, 1995.
The ratio of current assets to current liabilities was 2.9 at March 31,
1995 as compared to 4.1 at September 30, 1994 and 4.1 at March 31, 1994.
The ratio of consolidated debt to consolidated net worth was 7.6 at
March 31, 1995, 3.2 at September 30, 1994, and 4.8 at March 31, 1994.
Sales terms for the Industrial Products segment are 30 days net, and
following industry trade practice, the Consumer Products segment offers
extended payment terms for delivery of existing seasonal product items
such as the Flowtron leaf eater, bugkiller, chipper/shredder, biomister,
and the compost bin, resulting in fluctuating requirements for working
capital.
The Company made an investment of $380,000 in capital expenditures in
the first two quarters of fiscal year 1995. These expenditures were
mainly for tooling and dies used in production. The Company anticipates
commitments of $120,000 for capital expenditures during the remaining
quarters of fiscal 1995.
The Company believes that its present working capital, lines of credit
from a commercial finance company and related party, and other sources
of financing will be sufficient to finance its seasonal borrowing needs,
operations and investment in capital expenditures in fiscal 1995.
<PAGE> 10
RESULTS OF OPERATIONS
The results of consolidated operations for the quarter ended March 31,
1995 resulted in net loss of $385,000, or $.16 per share, as compared
with net loss of $792,000 or $.32 per share in the same period of the
previous year. The Company distributes its products primarily to major
retailers throughout the United States, with some products distributed
under customer labels. Substantially all of the Company's sales, as
well as accounts receivable, relate to business activities with such
retailers. Sales increased $260,000 to $3,019,000 for the three months
ended March 31, 1995, as compared to $2,759,000 for the corresponding
period in the previous year. The increase in sales was primarily
attributable to the reception by the market place of our new Handy
Hauler yard cart.
Operating profit is the result of deducting operating expenses excluding
interest expense, general corporate expenses, and income taxes from
total revenue. Operations within the Consumer Products segment consist
of the manufacture and distribution of Flowtron leaf-eaters, bugkillers,
chipper/shredders, biomisters, compost bins, yard carts. Sales and
operating income for the Consumer Products segment in the second quarter
were approximately $3,006,000 and $28,000, respectively, as compared to
$2,738,000 and operating losses of $206,000, respectively, in the
previous year. The expense reduction plan implemented last year was
responsible for the positive operating income.
Product lines within the Consumer Products segment are subject to
seasonal fluctuations, with most shipments occurring in the third and
fourth quarters of the Company's fiscal year.
The Industrial Products segment has introduced electronic obstacle
avoidance systems for automotive applications. Sales and operating
losses for the Industrial Products segment in the second quarter of 1995
were $13,000 and $88,000, respectively, as compared to $21,000 and
$93,000, respectively, in the previous year.
Selling, general and administrative expenses decreased 26%, or $250,000,
to $715,000 for the quarter ended March 31, 1995, when compared to the
previous year.
A tax benefit from the losses on operations for the three month period
ended March 31, 1995 was not reflected in the statement of consolidated
operations because the net operating losses could not be carried back to
previous years, nor offset against deferred taxes.
The results of consolidated operations for the six months ended March
31, 1995 resulted in a net loss of $1,327,000 or $.54 per share, as
compared with a net loss of $1,991,000, or $.81 per share in the same
period of the previous year. Sales decreased $18,000 to $4,065,000 for
the six months ended March 31, 1995, as compared to $4,083,000 for the
corresponding period in the previous year.
Sales and operating losses for the Consumer Products segment for the six
months ended March 31, 1995 were approximately $4,035,000 and $548,000,
respectively, as compared to $4,049,000 and $825,000, respectively, in
the previous year.
<PAGE> 11
Sales and operating losses for the Industrial Products segment during
the six months ended March 31, 1995 were approximately $30,000 and
$179,000, respectively, as compared to $30,000 and $175,000,
respectively, in the previous year.
Selling, general and administrative expenses decreased 27%, or $472,000
to $1,276,000.
A tax benefit from the losses on operations for the six month periods
ended March 31, 1995 and 1994 was not reflected in the statement of
consolidated operations because the net operating losses could neither
be carried back to previous years, nor offset against deferred taxes.
<PAGE> 12
ARMATRON INTERNATIONAL, INC.
PART II
Item 6b.
Reports on Form 8-K
The Company filed no Form 8-K's for the quarter ended March 31, 1995.
<PAGE> 13
ARMATRON INTERNATIONAL, INC.
File No. 1-4433
______________________________
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereto duly authorized.
ARMATRON INTERNATIONAL, INC.
(Registrant)
Date: /s/ Charles J. Housman
Charles J. Housman, President
and Treasurer
Date: /s/ Richard M. Housman
Richard M. Housman,
Controller
<PAGE> 14
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> MAR-31-1995
<CASH> 256
<SECURITIES> 0
<RECEIVABLES> 2,495
<ALLOWANCES> (76)
<INVENTORY> 4,128
<CURRENT-ASSETS> 7,359
<PP&E> 9,107
<DEPRECIATION> 8,355
<TOTAL-ASSETS> 8,218
<CURRENT-LIABILITIES> 2,549
<BONDS> 4,715
<COMMON> 2,606
0
0
<OTHER-SE> (1,652)
<TOTAL-LIABILITY-AND-EQUITY> 8,218
<SALES> 4,065
<TOTAL-REVENUES> 4,065
<CGS> 3,913
<TOTAL-COSTS> 1,276
<OTHER-EXPENSES> (53)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 256
<INCOME-PRETAX> (1,327)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,327)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,327)
<EPS-PRIMARY> (.54)
<EPS-DILUTED> (.54)
</TABLE>
