SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
Quarterly Report Pursuant to Section 13 or 15 (d) of
the Securities Exchange Act of 1934
For the quarterly period ending Commission File
September 29, 1996 Number 0-3063
TINSLEY LABORATORIES, INC.
____________________________________________________________
(Exact name of registrant as specified in its charter)
California 94-1049146
State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization
3900 Lakeside Drive, Richmond, California 94806
_______________________________________________________________
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code (510)222-8110
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 past 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 __
1,543,948 shares of Common Stock outstanding as of September 29, 1996.
<PAGE>
Part 1. Financial Information
Item 1.
<TABLE>
TINSLEY LABORATORIES, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
<CAPTION>
Sep 29, Dec 31,
1996 1995
--------- ---------
<S> <C> <C>
ASSETS
Current Assets:
Cash and short-term investments $475,772 $560,692
Accounts receivable 3,503,868 2,358,798
Inventories 1,919,624 1,864,988
Prepaid expenses & other 425,217 443,873
---------- ----------
Total current assets 6,324,481 5,228,351
Net property, plant & equipment 6,301,528 5,285,487
Other assets 979,389 909,387
Net goodwill 1,425,334 1,516,963
---------- ----------
$15,030,732 $12,940,188
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Trade account payable $862,499 $491,296
Current income taxes 564,108 362,006
Other accrued liabilities 1,837,226 1,727,688
----------- -----------
Total current liabilities 3,263,833 2,580,990
Long-term debt 1,598,429 500,928
Long-term notes payable
to related parties 460,000 860,000
Deferred income taxes 369,230 369,231
Deferred compensation 315,027 312,102
Stockholders' Equity:
Common stock at stated value 128,662 127,851
Capital in excess of stated value1,369,747 1,343,883
Retained earnings 7,653,644 6,973,043
Minimum pension liability (127,840) (127,840)
---------- ----------
Total stockholders' equity 9,024,213 8,316,937
---------- ----------
$15,030,732 $12,940,188
=========== ===========
</TABLE>
<PAGE>
<TABLE>
TINSLEY LABORATORIES, INC.
Condensed Consolidated Statements of Income
(Unaudited)
<CAPTION>
Three months ended Nine months ended
-------------------- -------------------
Sep 29, Oct 1, Sep 29, Oct 1,
1996 1995 1996 1995
-------- ------- -------- --------
<S> <C> <C> <C> <C>
Net sales $4,918,550 $3,558,842 $13,070,647 $9,840,269
Cost of goods sold 3,468,239 2,481,686 9,010,443 6,831,313
Selling, administrative
and research and
development expenses 785,159 855,009 2,576,445 2,390,674
Amortization of
intangible assets 55,543 55,543 166,629 166,629
---------- ---------- ---------- ---------
Income from operations 609,609 166,604 1,317,130 451,653
Other (income) expense 27,534 (40,492) (37,622) (19,035)
Interest expense 68,847 45,504 158,052 133,655
---------- ---------- --------- ---------
Income before taxes 513,228 161,592 1,196,700 337,033
Provision for
taxes on income 217,700 77,400 516,100 171,900
---------- ---------- --------- ---------
Net income $295,528 $84,192 $680,600 $165,133
========== ========== ========= =========
Per share of common stock:
Net income $0.19 $0.05 $0.44 $0.11
========== ========== ========= =========
</TABLE>
Notes:
Per share data are based on 1,543,948 shares issued
and outstanding in 1996 and 1,534,248 shares in
1995, after adjustment for a 2 for 1 stock split.
<PAGE>
TINSLEY LABORATORIES, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
For the nine months ended
--------------------------
Sep 29, Oct 1,
1996 1995
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $680,600 $165,133
Adjustments to reconcile net
income to net cash provided
(used) by operating activities:
Depreciation & amortization 743,140 688,122
Change in operating assets and
liabilities (637,904) (55,517)
--------- ----------
Net cash provided by operating
activities 785,836 797,738
Cash flows from investing activities:
Purchase of fixed assets (1,592,552) (790,410)
Other (45,000) (43,500)
---------- ----------
Net cash used in investing
activities (1,637,552) (833,910)
Cash flows from financing activities:
Proceeds from borrowing
arrangements 1,250,000 --
Principal payments
on long-term debt (509,879) (511,940)
Other 26,675 28,050
---------- -----------
Net cash provided by (used in)
financing activities 766,796 (483,890)
---------- -----------
Net change in cash and cash
equivalents (84,920) (520,062)
Cash and cash equivalents at
beginning of period 560,692 893,241
---------- ----------
Cash and cash equivalents at
end of period $475,772 $373,179
========== ===========
- --------------------------------------------------------------------
Supplemental disclosure of cash
flow information:
Cash paid for:
Interest $172,006 $151,987
Income taxes $354,000 $219,546
- --------------------------------------------------------------------
</TABLE>
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 29, 1996
Note: 1. Basis of Presentation
The accompanying unaudited condensed consolidated
financial statements have been prepared in accordance with generally
accepted accounting principles for interim financial information and with
the instructions to Form 10-QSB and article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation
have been included. Operating results for the nine month period ended
September 29, 1996 are not necessarily indicative of the results that may
be expected for any future periods. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's annual report on Form 10-KSB for the year ended December 31,
1995.
The consolidated financial statements include the accounts of
Tinsley Laboratories, Inc., and its wholly owned subsidiaries, Century
Precision Industries, Inc. d/b/a Century Precision Optics ("Century") and
Tinsley International, Inc., after elimination of intercompany transactions
and balances.
Note: 2. Inventories
The components of inventory consist of the following:
<TABLE>
<CAPTION>
September 29, December 31,
1996 1995
------------ -------------
<S> <C> <C>
Raw materials $196,236 $230,271
Contracts in progress (net of
cost of progress billings of
$500,000 at September 29,
1996 and $431,000 at
December 31, 1995) 1,114,991 874,604
Finished goods 608,397 760,113
----------- ----------
$1,919,624 $1,864,988
=========== ===========
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF QUARTERLY FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Item 2.
During our first nine months of 1996 we continued to maintain our
improvement in operating results compared to the prior year. We
experienced a strong September quarter, sales reaching $4,918,550, or 38
percent above sales for the same period a year ago of $3,558,842.
Third quarter net income of $295,528 or 19 cents a share was substantially
ahead of the $84,192 or 5 cents a share we reported for the September
quarter a year ago.
Taking the year to date as a whole, sales for the first three quarters
advanced to $13,070,647, which represents a 33 percent increase over our
nine month sales last year of $9,840,269. Net income for the first three
quarters amounted to $680,600 or 44 cents a share, against $165,133 or 11
cents a share earned last year.
During the second quarter the Board of Directors declared a 2-for-1 stock
split applicable to our 771,994 shares of common stock then outstanding.
The record date for the stock split was August 15, 1996. Per share data
has been adjusted to reflect the effect of the 2-for-1 split.
We have continued to experience a strong backlog throughout the year,
backlog amounted to approximately $10,380,000 as of September 29, 1996,
as compared to a backlog of approximately $8,885,000 at the beginning of
the year, and $6,277,000 at this time a year ago. Our backlog provides
grounds for an encouraging outlook for the balance of the year.
The Company was recently selected as a participant in the high precision
optics Joint Sponsored Research Agreement (JSRA) bringing together a
national team of four industry and government organizations designed to
provide significant advancements for the semiconductor industry.
The leading funding participant, SEMATECH, Inc., a consortium of U.S.
semiconductor companies, was established in 1987 to help counter the
sharp drop in the United States share of the microlithography market
through strategic investments in advanced technologies.
The other participants are NASA's Goddard Space Flight Center of
Greenbelt, Maryland and Silicon Valley Group Lithography Systems of
Wilton, Connecticut.
Precision Optics are central to the technology of microlithography which is
used to etch the semiconductor chips essential to computer
manufacturing. Tinsley is an international leader in ultra precision optics
and produced the new, very-precise optics for the Hubble Space
Telescope.
The Company will benefit from the JSRA by using expertise and funding
from the partnership to develop newer, ultra precision, optical
manufacturing technologies to produce breakthroughs in quality and
volume.
It is anticipated that the collaboration of the JSRA partners will aid in the
development of new microlithography equipment that will produce denser
and faster semiconductors assisting the semiconductor industry to
maintain its leadership in the microchip industry.
Daniel J. Duckhorn, who has been a Director of Tinsley since 1971, is
resigning from the Board of Directors in order to devote more time to the
St. Helena Wine Company in St. Helena, California of which he is President.
We have very much valued his advice and contributions as a Board
Member over the past 25 years that he has served as a Director.
Liquidity and Sources of Capital:
Cash of $785,836 was provided by operating activities during the nine
months ended September 29, 1996, compared to $797,738 in the similar
period ended October 1, 1995. Funds provided by net income plus
depreciation and amortization amounted to $1,423,740, but was offset
$637,904 due to changes in operating assets and liabilities. Most notably
accounts receivable increased $1,131,163 from their 1995 year end
balance.
The Company made capital acquisitions totaling $1,592,552 during the first
nine months of 1996, of which $910,000 was used for the purchase of the
building adjacent to our Richmond facility.
The Company financed part of this purchase with a note payable to the
former owner of the property in the amount of $750,000. This note requires
interest only payments each month for two years, at which time the
principal become due.
The Company drew down $500,000 against its $1 million line of credit
during the nine months. Principal payments against debt agreements
totaled $509,879.
The Company expects that funds generated from operations and available
through established borrowing agreements should be sufficient to meet
normal cash flow requirements through the balance of 1996.
<PAGE>
Part II Other Information
Item 4. Submission of Matters to a Vote of Security Holders
Reference is made to materials appearing with respect to
election of the Board of Directors, set forth in the Company's
definitive Proxy Statement filed in connection with the
Company's 1995 Annual Meeting of Shareholders, held on
April 26, 1995 which material is incorporated herein.
Item 6. Exhibits and Reports on Form 8-K
(b) No reports on Form 8-K were filed during the current
period.
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.
TINSLEY LABORATORIES, INC.
/s/ ROBERT J. ARONNO
____________________________
Robert J. Aronno
President and
Chief Executive Officer
November 14, 1996
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0
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</TABLE>
