July 14, 1994
Securities & Exchange Commission
Division of Corporate Finance
500 North Capitol Street
Washington, D.C. 20549
Gentlemen:
Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934,
enclosed is Tokheim's Form 10-Q for the period ended May 31, 1994.
Sincerely,
TOKHEIM CORPORATION
Jess B. Ford
Vice President, Finance
Secretary, and Chief
Financial Officer
Enclosure
cc: New York Stock Exchange
Division of Stock List - 2
Fred Axley - McDermott, Will & Emery
Louis Pach - Coopers & Lybrand
<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended MAY 31, 1994
--------------------
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 1-6018
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TOKHEIM CORPORATION
(Exact name of registrant as specified in its charter)
INDIANA 35-0712500
- -------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10501 CORPORATE DR., FORT WAYNE, IN 46845
- ---------------------------------------- ---------------
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number including area code) (219) 423-2552
----------------
NOT APPLICABLE
- ---------------------------------------------------------------------
(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 .
--- ---
As of May 31, 1994, 7,814,023 shares of voting common stock were
outstanding.
In addition, 832,091 shares of convertible preferred stock were held by
the Retirement Savings Plan for Employees of Tokheim Corporation and
Subsidiaries.
The exhibit index is located on page 7.
1
<PAGE>
PART I. FINANCIAL INFORMATION
TOKHEIM CORPORATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(AMOUNTS IN THOUSANDS EXCEPT AMOUNTS PER SHARE)
Three Months Ended Six Months Ended
-----------------------------------------------
May 31 May 31 May 31 May 31
1994 1993 1994 1993
---------------------- ------------------------
<S> <C> <C> <C>
NET SALES.......................................... $ 49,908 $44,679 $ 95,144 $ 76,628
Cost of sales, exclusive of items listed below..... 37,246 33,944 71,759 59,851
Selling, general, and administrative expenses...... 9,497 9,513 18,003 17,627
Depreciation and amortization...................... 1,155 1,363 2,341 2,723
Interest expense (net of interest income of
$51 and $139 in 1994 and $65 and $163 in 1993
for the three-month and six-month periods,
respectively).................................... 651 738 1,281 1,474
Foreign currency gains (losses).................... 117 (39) 53 (412)
Other income (expense), net ....................... (107) 7 (247) (526)
Earnings (loss) before income taxes and
cumulative effect of change in method of
accounting for postretirement benefits other
than pensions.................................... 1,369 (911) 1,566 (5,985)
Income taxes....................................... 218 205 260 332
Earnings (loss) before cumulative effect of
change in method of accounting for post-
retirement benefits other than pensions.......... 1,151 (1,116) 1,306 (6,317)
Cumulative effect of change in method of
accounting for postretirement benefits other
than pensions.................................... -- -- (13,416) --
NET EARNINGS (LOSS)................................ $ 1,151 $(1,116) $(12,110) $ (6,317)
Preferred stock dividends.......................... $ 403 $ 417 $ 814 $ 838
Net earnings (loss) applicable to common stock..... $ 748 $(1,533) $(12,924) $ (7,155)
Earnings (loss) per common share:
Primary:
Before cumulative effect of change in method of
accounting for postretirement benefits other
than pensions................................ $ 0.10 $ (0.24) $ 0.06 $ (1.13)
Cumulative effect of change in method of
accounting for postretirement benefits
other than pensions.......................... -- -- (1.73) --
Net earnings (loss)............................ $ 0.10 $ (0.24) $ (1.67) $ (1.13)
Weighted average shares outstanding............ 7,863 6,398 7,775 6,359
Fully diluted:
Before cumulative effect of change in method
of accounting for postretirement benefits
other than pensions.......................... $ 0.08 $ (0.24) $ 0.06 $ (1.13)
Cumulative effect of change in method of
accounting for postretirement benefits other
than pensions................................ -- -- (1.73) --
Net earnings (loss)............................ $ 0.08 $ (0.24) $ (1.67) $ (1.13)
Weighted average shares outstanding............ 9,103 6,398 7,775 6,359
</TABLE>
2
<PAGE>
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
In the opinion of the Company, the accompanying unaudited consolidated
condensed financial statements contain all adjustments (consisting of only
normal recurring items) necessary to present fairly its financial position as
of May 31, 1994, and the results of operations and cash flows for the
three-month periods and six-month periods ended May 31, 1994 and 1993.
Amounts for interim periods are unaudited. Amounts for the year ended
November 30, 1993, were derived from audited financial statements included in
the 1993 Annual Report to Stockholders.
Certain prior year amounts in these financial statements have been reclassified
to conform with current year presentation.
Effective December 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions," which requires that certain postretirement
medical and life insurance benefits be accounted for on an accrual basis.
Notes payable, banks has been classified as a long-term liability, reflecting
the three-year term of the underlying financing agreement.
See financial statements and accompanying notes in the Company's 1993 Annual
Report.
3
<PAGE>
CONSOLIDATED CONDENSED BALANCE SHEET
(IN THOUSANDS)
<TABLE>
May 31 November 30
1994 1993
------------ -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and short-term investments.................... $ 2,798 $ 9,097
Receivables, net................................... 31,753 36,644
Inventories:
Raw materials and supplies...................... 10,312 6,295
Work in process................................. 25,796 22,864
Finished goods.................................. 5,854 8,644
41,962 37,803
Less amount necessary to reduce certain
inventories to LIFO method.................... 3,127 2,932
38,835 34,871
Prepaid expenses................................... 2,451 2,527
Total current assets............................... 75,837 83,139
Property, plant, and equipment, net................ 27,552 29,004
Other assets and deferred charges.................. 5,312 4,922
Total assets....................................... $108,701 $117,065
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt............... $ 1,078 $ 1,237
Notes payable, banks............................... -- 18,684
Accounts payable................................... 13,990 19,333
Accrued expenses................................... 14,383 14,471
Total current liabilities.......................... 29,451 53,725
Long-term debt..................................... 20,693 5,374
Guaranteed Employees' Stock Ownership
Plan obligation................................. 17,892 19,206
Post retirement benefit liability.................. 13,158 --
Minimum pension liability.......................... 3,348 3,348
Other long-term liabilities........................ 150 150
Deferred income taxes.............................. 1,571 1,622
86,263 83,425
Redeemable convertible preferred stock............. 24,000 24,000
Guaranteed Employees' Stock Ownership
Plan obligation................................. (16,650) (17,533)
Treasury stock, at cost............................ (3,198) (2,789)
4,152 3,678
Common stock....................................... 19,377 19,594
Guaranteed Employees' Stock Ownership
Plan obligation................................. (1,242) (1,673)
Minimum pension liability.......................... (3,348) (3,348)
Foreign currency translation adjustments........... (3,904) (4,037)
Retained earnings.................................. 9,684 22,829
20,567 33,365
Less treasury stock, at cost....................... 2,281 3,403
18,286 29,962
Total liabilities and stockholders' equity......... $108,701 $117,065
4
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED CONDENSED
STATEMENT OF CASH FLOWS
(IN THOUSANDS) Six Months Ended
May 31 May 31
1994 1993
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss........................................... $(12,110) $(6,317)
Adjustments to reconcile net loss to cash
used in operations:
Cumulative effect of change in method of
accounting for postretirement benefits
other than pensions.......................... 13,416 --
Depreciation and amortization.................. 2,341 2,723
Loss on sale of property, plant, and equipment. 9 463
Deferred income taxes.......................... (85) (200)
Changes in assets and liabilities:
Receivables, net........................... 4,973 837
Inventories................................ (4,067) 1,527
Prepaid expenses........................... 71 51
Accounts payable........................... (5,540) (2,384)
Accrued expenses........................... (346) (3,745)
U.S. and foreign income taxes.............. 8 586
Other...................................... (466) (22)
Net cash used in operations........................ (1,796) (6,481)
CASH FLOWS FROM INVESTING AND OTHER ACTIVITIES:
Plant and equipment additions...................... (827) (1,001)
Proceeds from sale of property, plant, and
equipment...................................... 137 808
Net cash used in investing and other activities.... (690) (193)
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in long term debt.............. (1,639) (728)
Decrease notes payable, banks...................... (2,074) (3,967)
Treasury stock, net................................ 492 16
Cash dividends..................................... (814) (838)
Net cash used in financing activities.............. (4,035) (5,517)
EFFECT OF TRANSLATION ADJUSTMENT ON
CASH............................................ 222 20
CASH AND SHORT-TERM INVESTMENTS:
Decrease in cash................................... (6,299) (12,171)
Beginning of year.................................. 9,097 15,517
End of period...................................... $ 2,798 $ 3,346
5
</TABLE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
We are pleased to report an increase in both sales and profits for the fiscal
1994 second quarter, a further reduction in debt, and an improvement in our
overall balance sheet position.
The improvement in business activity is across the board in terms of both
products and markets. Retail and commercial product sales are up over last year
and are showing increases in both domestic and international markets. The
improvement in operating results over the prior year, and over the first quarter
of this year, reflects both stronger sales and the combined effect of better
margins and reduced operating expenses as a percent of sales.
SALES: Consolidated sales for the fiscal 1994 second quarter were $49,908,000,
an increase of 11.7% from sales of $44,679,000 reported in the comparable period
in 1993 and an increase of 10.3% over the $45,236,000 reported in the fiscal
1994 first quarter. Sales of $95,144,000 for the first six months were up
24.2% over sales of $76,628,000 reported in the same period last year.
EARNINGS: Consolidated net earnings in the fiscal 1994 second quarter were
$1,151,000, or $0.10 primary earnings per share, compared to a net loss of
$1,116,000, or $0.24 per share, reported in the previous year's second quarter.
Six months consolidated net earnings were $1,306,000, or $0.06 primary earnings
per share, before the cumulative effect of an accounting change, compared to a
loss of $6,317,000, or $1.13 per share, for the same period last year. The net
loss, after giving effect to the mandatory accounting change reflecting the 1994
first quarter adoption of Statement of Financial Accounting Standards (SFAS) No.
106 governing accounting for nonpension retiree benefit costs, was $12,110,000,
or $1.67 per share.
COSTS AND EXPENSES: Gross margin as a percent of sales improved to 25.4%, up
from 24% reported in the fiscal 1993 second quarter due to the combined effect
of reduced costs and improved product mix. Selling, General, and Administrative
expenses were below those of the prior year both in terms of dollars and as a
percent of sales. Interest expense was below the prior year due to lower levels
of debt throughout the 1994 second quarter and a lower interest rate resulting
from a new financing agreement.
OTHER: Cash used in operations for the six-month period ended May 31, 1994 was
$1,796,000 versus $6,481,000 used in the prior year six-month period. The
improvement relative to the prior year resulted from the higher sales level,
higher inventory turns, and improved receivables collections.
Funds used in investing and other activities were $690,000 in 1994, representing
$827,000 in capital expenditures less $137,000 of proceeds from sale of
equipment. Cash used in investing and other activities in the 1993 six-month
period was $193,000 reflecting capital expenditures of $1,001,000 offset, in
part, by proceeds from the sale of property, plant, and equipment of $808,000.
Cash used in financing activities of $4,035,000, principally representing debt
reduction and preferred stock dividend payments, was $1,482,000 less than the
prior year.
DIVIDENDS: Financial covenants of Tokheim's current bank agreement preclude the
payment of cash dividends on common stock throughout the 1994 fiscal year.
6
<PAGE>
OTHER DEVELOPMENTS: The Company's balance sheet at the end of the second
quarter continues to show improvement with the working capital ratio increasing
to 2.6 from 1.6 reported in the 1994 first quarter, reflecting the financial
effect of completion of the new three-year financing agreement. Total debt was
further reduced to $39.7 million during the second quarter from $41.1 million
reported at the end of the first quarter. The Company's debt level is less than
half what it was at the beginning of 1992 when it peaked at nearly $85 million.
While it is difficult at this early stage of the industry recovery to pinpoint
just how order activity will slot into the third and fourth quarters, we remain
optimistic that the year as a whole will continue to show considerable
improvement over last year. In addition, we firmly believe that our clear
customer focus and dedication to quality and service will lead to continuing
increases in earnings and stockholder returns in the long run.
The Annual Meeting of Stockholders was held on April 13, 1994. Accomplishments
toward 1993 objectives were reviewed, and objectives for the 1994 fiscal year
were discussed. Enclosed is a copy of the "Highlights of the Annual Meeting"
which reviews the meeting's formal proceedings.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Reports on Form 8-K - None.
7
<PAGE>
SIGNATURES
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 thereunto duly authorized.
TOKHEIM CORPORATION
Date July 11, 1994 Douglas K. Pinner
--------------- -------------------------------------
President and Chief Executive Officer
Date July 11, 1994 Jess B. Ford
--------------- -------------------------------------
Vice President, Finance, Secretary,
and Chief Financial Officer
8
<PAGE>
TOKHEIM CORPORATION AND SUBSIDIARIES
EXHIBIT (11) - EARNINGS PER SHARE
FOR THE THREE MONTH AND SIX MONTH PERIODS ENDED MAY 31, 1994, AND MAY 31, 1993
Primary earnings per share are based on the weighted average number of shares
outstanding during each year and the assumed exercise of dilutive employees'
stock options less the number of treasury shares assumed to be purchased from
the proceeds using the average market price of the Company's common stock.
The following table presents information necessary to calculate earnings (loss)
per share for the three month and six month periods ended May 31, 1994 and
May 31, 1993:
<TABLE>
PRIMARY
----------------------------------------
Three Months Ended Six Months Ended
May 31, May 31, May 31, May 31,
1994 1993 1994 1993
------------------- --------------------
<S> <C> <C> <C> <C>
Shares outstanding (in thousands):
Weighted average outstanding.................. 7,790 6,398 7,775 6,359
Share equivalents............................. 73 -- -- --
Adjusted outstanding.......................... 7,863 6,398 7,775 6,359
Net Earnings (loss):
Earnings (loss) before cumulative effect of
change in method of accounting for
postretirement benefits other than pensions. $ 1,151 $(1,116) $ 1,306 $ (6,317)
Cumulative effect of change in method of
accounting for postretirement benefits
other than pensions......................... -- -- (13,416) --
Net earnings (loss)........................... 1,151 (1,116) (12,110) (6,317)
Less preferred stock dividend................. 403 417 814 838
Net earnings (loss) applicable to
common stock.................................. $ 748 $(1,533) $(12,924) $ (7,155)
Net earnings (loss) per common share:
Before cumulative effect of change in
method of accounting for postretirement
benefits other than pensions................ $ 0.10 $ (0.24) $ 0.06 $ (1.13)
Cumulative effect of change in method of
accounting for postretirement benefits
other than pensions......................... -- -- (1.73) --
Net earnings (loss) .......................... $ 0.10 $ (0.24) $ (1.67) $ (1.13)
</TABLE>
9
<PAGE>
TOKHEIM CORPORATION AND SUBSIDIARIES
EXHIBIT (11) - EARNINGS PER SHARE
FOR THE THREE MONTH AND SIX MONTH PERIODS ENDED MAY 31, 1994, AND MAY 31, 1993
For financial reporting purposes for the three month period ended May 31, 1993,
and the six month periods ended May 31, 1993 and 1994, the loss per share,
assuming full dilution, is considered to be the same as primary since the
effect of the common stock equivalents would be antidilutive.
<TABLE>
FULLY DILUTED
----------------------------------------
Three Months Ended Six Months Ended
May 31, May 31, May 31, May 31,
1994 1993 1994 1993
-------------------- -------------------
<S> <C> <C> <C> <C>
Shares outstanding (in thousands):
Weighted average outstanding.................. 7,790 6,398 7,775 6,359
Share equivalents............................. 77 23 81 23
Weighted conversion of preferred stock........ 1,236 867 1,221 882
Adjusted outstanding.......................... 9,103 7,288 9,077 7,264
Net Earnings (loss):
Earnings (loss) before cumulative effect of
change in method of accounting for
postretirement benefits other than pensions. $ 1,151 $(1,116) $ 1,306 $ (6,317)
Cumulative effect of change in method of
accounting for postretirement benefits
other than pensions......................... -- -- (13,416) --
Net earnings (loss)........................... 1,151 (1,116) (12,110) (6,317)
Less preferred stock dividend................. 403 417 814 838
Net earnings (loss) applicable to
common stock................................ $ 748 $(1,533) $(12,924) $ (7,155)
Net earnings (loss) per common share:
Before cumulative effect of change in
method of accounting for postretirement
benefits other than pensions................ $ 0.08 $ (0.21) $ 0.05 $ (0.98)
Cumulative effect of change in method of
accounting for postretirement benefits
other than pensions......................... -- -- (1.48) --
Net earnings (loss)........................... $ 0.08 $ (0.21) $ (1.43) $ (0.98)
</TABLE>
10
