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
June 30, 1997 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 __
1,555,548 shares of Common Stock outstanding as of June 30, 1997.
<PAGE>
Part 1. Financial Information
Item 1.
<TABLE>
TINSLEY LABORATORIES, INC.
Condensed Consolidated Balance
Sheets
(Unaudited)
<CAPTION>
June 30, Dec. 29,
1997 1996
-------- --------
<S> <C> <C>
ASSETS
Current Assets:
Cash and short-term investments $379,136 $946,222
Accounts receivable 3,401,574 2,925,786
Inventories 1,809,566 1,785,721
Prepaid expenses & other 651,931 666,436
--------- ---------
Total current assets 6,242,207 6,324,165
Net property, plant & equipment 7,332,801 6,288,088
Other assets 852,627 872,627
Net goodwill 1,333,705 1,394,791
--------- ---------
$15,761,340 $14,879,671
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Trade account payable $880,821 $640,397
Other accrued liabilities 3,443,883 2,702,169
--------- ---------
Total current liabilities 4,324,704 3,342,566
Long-term debt 656,112 1,491,110
Long-term notes payable
to related parties 108,000 10,000
Deferred income taxes 227,101 324,686
Deferred compensation 629,105 613,777
Stockholders' Equity:
Common stock at stated value 258,933 258,633
Capital in excess of stated value 1,271,376 1,261,776
Retained earnings 8,560,227 7,704,963
Minimum pension liability (274,218) (127,840)
--------- ---------
Total stockholders' equity 9,816,318 9,097,532
--------- ---------
$15,761,340 $14,879,671
========== ==========
</TABLE>
<PAGE>
<TABLE>
TINSLEY LABORATORIES, INC.
Condensed Consolidated Statements
of Income
(Unaudited)
<CAPTION>
Three months ended Six Months ended
------------------ ----------------
June 30, June 30, June 30, June 30,
1997 1996 1997 1996
-------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales $5,115,735 $4,250,898 $10,539,978 $8,152,097
Cost of goods sold 3,161,487 2,869,940 6,696,264 5,542,204
Selling, administrative and
research and development exp. 1,235,608 1,042,025 2,189,165 1,884,286
Amortization of intangible assets 55,543 55,543 111,086 111,086
--------- --------- --------- ---------
Income from operations 663,097 283,390 1,543,463 614,521
Other (income), net (47,694) (26,856) (7,978) (65,156)
Interest expense 42,666 56,487 82,677 89,205
--------- --------- --------- ---------
Income before taxes 668,125 253,759 1,468,764 590,472
Provision for taxes on income 280,300 113,304 613,500 260,204
--------- --------- --------- ---------
Net income $387,825 $140,455 $855,264 $330,268
========= ========= ========= =========
Per share of common stock:
Net income $0.22 $0.09 $0.49 $0.21
========= ========= ========= =========
Number of shares used in per
share calculation 1,747,325 1,543,948 1,731,125 1,543,948
========= ========= ========= =========
</TABLE>
<PAGE>
TINSLEY LABORATORIES, INC.
Condensed Consolidated Statements
of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
For the six months ended
------------------------
June 30, June 30,
1997 1996
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income $855,264 $330,268
Adjustments to reconcile net
income to net cash provided
(used) by operating activities:
Depreciation & amortization 488,039 481,853
Change in operating assets and
liabilities (409,093) (701,044)
--------- ---------
Net cash provided by operating
activities 934,210 111,077
Cash flows from investing activities:
Purchase of fixed assets (1,302,226) (1,256,384)
Other (30,000) (30,000)
--------- ---------
Net cash used in investing
activities (1,332,226) (1,286,384)
Cash flows from financing activities:
Proceeds from borrowing
arrangements 350,000 1,250,000
Principal payments on long-term debt (528,970) (473,845)
Other 9,900 26,675
--------- ---------
Net cash provided by (used in)
financing activities (169,070) 802,830
--------- ---------
Net change in cash and cash
equivalents (567,086) (372,477)
Cash and cash equivalents at
beginning of period 946,222 560,692
--------- --------
Cash and cash equivalents at
end of period $379,136 $188,215
======== ========
- ------------------------------------------------------------------------------
Supplemental disclosure of cash
flow information:
Cash paid for:
Interest $90,039 $99,873
Income taxes $1,106,000 $201,000
==============================================================================
</TABLE>
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1997
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 six month period ended,
June 30, 1997, 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/A for the year ended December
29, 1996.
In June 1995, the Company entered into employment agreements with its
President and Chief Executive Officer and Vice President of Marketing. The
Company had not accrued the annual bonus or deferred compensation under the
employment agreements for 1996. To correctly accrue compensation related
to the employment agreements, the Company has restated its condensed
consolidated financial statements for the quarter ended June 30, 1996. The
effect of the restatement on the results of operations was a reduction of
net income of $54,804 or $0.04 per share for the three months and six months
ended June 30, 1996. In the opinion of management, all material adjustments
necessary to restate the June 30, 1996 condensed consolidated financial
statements have been recorded.
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>
June 30, December 29,
1997 1996
---------- -----------
<S> <C> <C>
Raw materials $268,112 $229,640
Contracts in progress (net of cost
of progress billings of $1,298,622
at June 30, 1997, and $576,416
at December 29, 1996) 640,231 637,390
Finished goods 901,223 918,691
--------- ---------
$1,809,566 $1,785,721
========= =========
</TABLE>
Note 3. Recent Accounting Pronouncement
In February 1997, the Financial Accounting Standards Board
issued Statement No. 128, Earnings per Share, which is required to be
adopted on December 31, 1997. At that time, the Company will be required
to change the method currently used to compute earnings per share and to
restate all prior periods which are presented in its financial statements.
Under the new requirements for calculating basic earnings per share, the
dilutive effect of stock options will be excluded. Under the new
requirements, the Company's basic earnings per share for the six months
ending June 30, 1997 and June 30, 1996 would be 55 cents a share and 21
cents a share, respectively.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF QUARTERLY FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Item 2.
Maintaining the favorable trend in the company's operating performance of
last year and the first quarter, sales and earnings continued to
strengthen throughout the first half.
Net sales for the first six months of 1997 moved up to $10,539,978 from
$8,152,097, a gain of 29 percent over the same period of the prior year.
On these higher sales, net income of $855,264 or 49 cents a share was
double earnings of $330,268 or 21 cents a share a year ago.
Sales for the June quarter of $5,115,735 advanced over sales of
$4,250,898 for the comparable period of last year. Earnings for the
second quarter amounted to $387,825 or 22 cents a share, up from
$140,455 or 9 cents a share last year.
Backlog again improved by the end of June, rising to $13,280,000, against
$11,025,000 at the same time a year ago. We began the year with a
backlog of $10,300,000.
We have continued to invest in Century Precision Optics, which
manufactures film and video product, as well as in other branches
of the company's precision optics business. During the second quarter,
we moved most of Century's operation to a new location in North Hollywood.
The costs involved in the move were absorbed in the quarter.
Liquidity and Capital Resources:
As of June 30, 1997, the Company's principal sources of liquidity included
$379,136 of cash and cash equivalents and a secured $1.2 million revolving
line of credit which expires in April, 1998. Borrowings of $350,000 were
outstanding under the line of credit as of June 30, 1997.
The decrease in cash and cash equivalents of $567,086 for the first six
months of 1997 was principally due to the purchase of $1,302,226 of
property and equipment as well as the payment of $528,970 against
outstanding indebtedness. This was offset somewhat by $934,210
provided by operations.
The net cash provided by operating activities during the first six months of
1997 was primarily due to the Company's net income. Cash provided by
increases in accounts payable and accrued compensation, was offset by
increases in accounts receivable and inventories and a decrease in income
taxes payable.
Net cash used in investing activities of $1,332,226 related mostly to
expenditures for property, plant and equipment. Net cash used in
financing activities of $169,070 related primarily to the repayment of
outstanding indebtedness. This was partially offset by borrowing $350,000
under the line of credit and $9,900 of proceeds from the exercise of
employees stock options.
The Company believes that its available sources of funds and anticipated
cash flow from operations will be adequate to finance current operations,
capital expenditures and current maturities of outstanding indebtedness
for at least the balance of this year.
<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 1996 Annual Meeting of Shareholders, held on
April 23, 1997 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.
____________________________
Robert J. Aronno
President and
Chief Executive Officer
August 13, 1997
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<EPS-PRIMARY> .49
<EPS-DILUTED> .49
</TABLE>
