October 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 August 31, 1994.
Sincerely,
TOKHEIM CORPORATION
Jess B. Ford
Vice President, Finance
Secretary, and Chief
Financial Officer
Enclosure
pc: 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 AUGUST 31, 1994
--------------------
( ) 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 1-6018
------
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) 470-4600
---------------
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 August 31, 1994, 7,833,483 shares of voting common stock were
outstanding.
In addition, 828,442 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
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(AMOUNTS IN THOUSANDS EXCEPT AMOUNTS PER SHARE)
<TABLE>
Three Months Ended Nine Months Ended
------------------------------------------------
August 31, August 31, August 31, August 31,
1994 1993 1994 1993
---------------------- -----------------------
<S> <C> <C> <C> <C>
NET SALES........................................ $ 47,931 $41,386 $143,075 $118,014
Cost of sales, exclusive of items listed below... 37,610 32,840 109,369 92,691
Selling, general, and administrative expenses.... 9,778 8,187 27,781 25,814
Depreciation and amortization.................... 1,129 1,290 3,470 4,013
Interest expense (net of interest income of $53
and $192 in 1994 and $93 and $256 in 1993
for the three-month and nine-month periods,
respectively).................................. 609 709 1,890 2,183
Foreign currency gains (losses).................. 95 (143) 148 (555)
Other income (expense), net ..................... (158) 113 (405) (413)
Loss before income taxes and cumulative
effect of change in method of accounting for
postretirement benefits other than pensions.... (1,258) (1,670) 308 (7,655)
Income taxes..................................... 215 268 475 600
Loss before cumulative effect of change
in method of accounting for post-
retirement benefits other than pensions........ (1,473) (1,938) (167) (8,255)
Cumulative effect of change in method of
accounting for postretirement benefits other
than pensions.................................. -- -- (13,416) --
NET LOSS ........................................ $ (1,473) $(1,938) $(13,583) $(8,255)
Preferred stock dividends........................ $ 401 $ 414 $ 1,215 $ 1,252
Net loss applicable to common stock.............. $ (1,874) $(2,352) $(14,798) $(9,507)
Loss per common share:
Primary:
Before cumulative effect of change in
method of accounting for postretirement
benefits other than pensions............... $ (0.24) $ (0.33) $ (0.18) $ (1.42)
Cumulative effect of change in method of
accounting for postretirement benefits
other than pensions........................ -- -- (1.72) --
Net loss..................................... $ (0.24) $ (0.33) $ (1.90) $ (1.42)
Weighted average shares outstanding.......... 7,823 7,140 7,790 6,708
</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 August 31, 1994, and the results of operations and cash flows for the
three-month periods and nine-month periods ended August 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.
The domestic portion of notes payable, banks has been classified as a
long-term liability, reflecting the three-year term of the underlying
financing agreement.
Fully diluted loss per share is considered to be the same as primary loss per
share, since the effect of certain potentially dilutive securities would be
antidilutive.
See financial statements and accompanying notes in the Company's 1993 Annual
Report.
3
<PAGE>
CONSOLIDATED CONDENSED BALANCE SHEET
(IN THOUSANDS)
<TABLE> August 31, November 30,
1994 1993
------------- --------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.................... $ 3,315 $ 9,097
Receivables, net............................. 31,014 36,644
Inventories:
Raw materials and supplies................ 9,844 6,295
Work in process........................... 25,457 22,864
Finished goods............................ 7,292 8,644
42,593 37,803
Less amount necessary to reduce certain
inventories to LIFO method.............. 2,995 2,932
39,598 34,871
Prepaid expenses............................. 2,470 2,527
Total current assets......................... 76,397 83,139
Property, plant, and equipment, net.......... 27,432 29,004
Other assets and deferred charges............ 5,437 4,922
Total assets................................. $109,266 $117,065
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt......... $ 1,070 $ 1,237
Notes payable, banks......................... 2,005 18,684
Accounts payable............................. 14,356 19,333
Accrued expenses............................. 15,886 14,471
Total current liabilities.................... 33,317 53,725
Long-term debt............................... 18,679 5,374
Guaranteed Employees' Stock Ownership
Plan obligation........................... 17,438 19,206
Post retirement benefit liability............ 13,285 --
Minimum pension liability.................... 3,348 3,348
Other long-term liabilities.................. 150 150
Deferred income taxes........................ 1,607 1,622
87,824 83,425
Redeemable convertible preferred stock....... 24,000 24,000
Guaranteed Employees' Stock Ownership
Plan obligation........................... (16,196) (17,533)
Treasury stock, at cost...................... (3,289) (2,789)
4,515 3,678
Common stock................................. 19,410 19,594
Guaranteed Employees' Stock Ownership
Plan obligation........................... (1,242) (1,673)
Minimum pension liability.................... (3,348) (3,348)
Foreign currency translation adjustments..... (3,571) (4,037)
Retained earnings............................ 7,739 22,829
18,988 33,365
Less treasury stock, at cost................. 2,061 3,403
16,927 29,962
Total liabilities and stockholders' equity... $109,266 $117,065
</TABLE>
4
<PAGE>
CONSOLIDATED CONDENSED
STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
Nine Months Ended
August 31 August 31
1994 1993
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss..................................... $(13,583) $(8,255)
Adjustments to reconcile net loss to cash
provided from (used in) operations:
Cumulative effect of change in method
of accounting for postretirement
benefits other than pensions............. 13,416 --
Depreciation and amortization............ 3,470 4,013
Loss on sale of property, plant, and
equipment............................. 1 428
Deferred income taxes................... (85) (54)
Changes in assets and liabilities:
Receivables, net..................... 6,204 (142)
Inventories.......................... (4,592) 1,854
Prepaid expenses..................... 66 (312)
Accounts payable..................... (5,431) (2,555)
Accrued expenses..................... 1,397 (4,464)
U.S. and foreign income taxes........ (142) 756
Other................................ (582) 385
Net cash provided from (used in) operations.. 139 (8,346)
CASH FLOWS FROM INVESTING AND
OTHER ACTIVITIES:
Plant and equipment additions................ (1,631) (1,828)
Proceeds from sale of property, plant, and
equipment................................ 158 2,385
Net cash provided from (used in) investing
and other activities....................... (1,473) 557
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in term debt........................ (3,797) (2,105)
Decrease notes payable, banks................ (163) (11,259)
Proceeds from issuance of common stock....... 49 11,485
Treasury stock, net.......................... 550 277
Cash dividends............................... (1,215) (1,252)
Net cash used in financing activities........ (4,576) (2,854)
EFFECT OF TRANSLATION ADJUSTMENT
ON CASH................................... 128 (163)
CASH AND CASH EQUIVALENTS:
Decrease in cash............................. (5,782) (10,806)
Beginning of year............................ 9,097 15,517
End of period................................ $ 3,315 $ 4,711
</TABLE>
5
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The combined financial impact of a decision to maintain plant
employment levels in the face of a temporary downturn in the
equipment demand curve and recent competitive pricing pressures
resulted in our reporting a loss for the quarter.
SALES: Consolidated sales for the fiscal 1994 third quarter were
$47,931,000, an increase of 16% from sales of $41,386,000 reported
in the comparable period in 1993. Sales of $143,075,000 for the
first nine months were up 21% over sales of $118,014,000 reported
in the same period last year.
EARNINGS: The consolidated net loss for the fiscal 1994 third
quarter was $1,473,000, or $0.24 per share, slightly narrower than
the loss of $1,938,000, or $0.33 per share, reported in the
previous year's third quarter. Nine months consolidated loss was
$167,000, or $0.18 per share, before the cumulative effect of an
accounting change, a sharp improvement from the loss of $8,255,000,
or $1.42 per share, for the same period last year. The net loss,
after giving effect to the mandatory noncash 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 $13,583,000, or $1.90 per
share.
COSTS AND EXPENSES: Gross margin as a percent of sales improved to
21.5%, up from 20.6% reported in the fiscal 1993 third quarter, due
to the combined effect of reduced costs and improved product mix.
Selling, General, and Administrative expenses increased $1.6
million over the prior year's third quarter to 20.4% of sales
versus 19.8% of sales in 1993. The increase was primarily related
to costs incurred in connection with the Amoco and VeriFone
alliances and increased international marketing efforts. Interest
expense was below the prior year due to lower levels of debt
throughout the 1994 third quarter and a lower interest rate
resulting from a new financing agreement.
OTHER: Cash provided from operations for the nine-month period
ended August 31, 1994 was $139,000 versus a cash deficit of
$8,346,000 in the prior-year nine-month period. The improvement
relative to the prior year resulted primarily from the higher sales
level and improved receivables collections.
Funds used in investing and other activities, were $1,473,000 in
1994 representing $1,631,000 in capital expenditures less $158,000
of proceeds from sale of equipment. Cash provided from investing
and other activities in the 1993 nine-month period was $557,000
reflecting $1,828,000 in capital expenditures offset by $2,385,000
of proceeds from the sale of property, plant, and equipment.
Cash used in financing activities of $4,576,000, principally
representing debt reduction and preferred stock dividend payments,
was $1,722,000 greater 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: Margins were impacted during the third quarter
by our conscious decision to maintain plant employment levels and
build inventories in anticipation of a sustained upturn in the
equipment demand curve. The order rate actually dipped in the
third quarter causing manufacturing inefficiencies as production
rates were reduced. Soft demand also brought about industry
pricing pressures during the past few months. The market is still
showing considerable improvement over the prior year. However, a
temporary slowdown in order activity during the third quarter,
caused by the impact of oil pricing on the profitability of major
domestic oil company operations and specific restructuring
initiatives undertaken by some of our major oil customers, resulted
in our falling short of previously anticipated levels of sales
volume and profitability. We have taken action to improve
performance in the fourth quarter by trimming manpower levels and
accelerating the implementation of cost-reduction value engineering
projects.
While the collective effect of increased costs and soft pricing
resulted in a third quarter loss, the fiscal year continues to show
substantial improvement over 1993. Ignoring the effect of the
noncash accounting change, on a year-to-date basis, our net
operating results are approximately $8,000,000 ahead of last year.
That marked improvement stems primarily from increased margins from
manufacturing efficiencies achieved and the added impact of higher
sales volumes and lower operating expenses as a percent of sales
reflecting cost-reduction actions taken in all areas of the
business.
Order rates have picked up sharply over the past few weeks and are
presently running well ahead of last year. The increase in order
activity has come from both domestic and international sources.
Our expectations are high for a strong fourth quarter and the
achievement of our goal of a return to profitability for the year
as a whole.
I am pleased to announce that John A. Todd has joined the Company
as director of engineering. Mr. Todd brings to Tokheim over 20
years of petroleum dispensing and systems engineering experience.
For the last 12 years, he has been serving as vice president of
engineering of the Wayne Pump Division of Dresser Industries. He
will assume responsibility for Tokheim's high-priority Value
Engineering Program designed to enhance the manufacturing cost and
functional efficiency of product design for both domestic and
export products as well as new product development and sustaining
engineering.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
(11) Details supporting the computation of primary and
fully diluted earnings per share
(27) Financial Data Schedule
(b) 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 October 14, 1994 Douglas K. Pinner
----------------------- --------------------------------------
President and Chief Executive Officer
Date October 14, 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 NINE MONTH PERIODS
ENDED AUGUST 31, 1994, AND AUGUST 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 loss per share
for the three-month and nine-month periods ended August 31, 1994 and August 31,
1993:
<TABLE>
PRIMARY
-----------------------------------------------------
Three Months Ended Nine Months Ended
August 31, August 31, August 31, August 31,
1994 1993 1994 1993
-----------------------------------------------------
<S> <C> <C> <C> <C>
Shares outstanding (in thousands):
Weighted average outstanding...................... 7,823 7,069 7,790 6,637
Share equivalents............................... -- 71 -- 71
Adjusted outstanding............................ 7,823 7,140 7,790 6,708
Net loss:
Loss before cumulative effect of change
in method of accounting for postretirement
postretirement benefits other than pensions... $(1,473) $(1,938) $ (167) $ (8,255)
Cumulative effect of change in method of
accounting for postretirement benefits
other than pensions........................... -- -- (13,416) --
Net loss........................................ (1,473) (1,938) (13,583) (8,255)
Less preferred stock dividend................... 401 414 1,215 1,252
Net loss applicable to common stock............. $(1,874) $(2,352) $(14,798) $ (9,507)
Net loss per common share:
Loss before cumulative effect of change in
method of accounting for postretirement
benefits other than pensions.................. $ (0.24) $ (0.33) $ (0.18) $ (1.42)
Cumulative effect of change in method of
accounting for postretirement benefits
other than pensions........................... -- -- (1.72) --
Net loss per common share....................... $ (0.24) $ (0.33) $ (1.90) $ (1.42)
</TABLE>
9
<PAGE>
TOKHEIM CORPORATION AND SUBSIDIARIES
EXHIBIT (11) - EARNINGS PER SHARE
FOR THE THREE MONTH AND NINE MONTH PERIODS
ENDED AUGUST 31, 1994, AND AUGUST 31, 1993
For financial reporting purposes, 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 Nine Months Ended
August 31, August 31, August 31, August 31,
1994 1993 1994 1993
-----------------------------------------------------
<S> <C> <C> <C> <C>
Shares outstanding (in thousands):
Weighted average outstanding.................... 7,823 7,069 7,790 6,637
Share equivalents............................... 52 77 71 77
Weighted conversion of preferred stock.......... 1,371 859 1,280 875
Adjusted outstanding............................ 9,246 8,005 9,141 7,589
Net loss:
Loss before cumulative effect of change
in method of accounting for postretirement
benefits other than pensions.................. $(1,473) $(1,938) $ (167) $ (8,255)
Cumulative effect of change in method of
accounting for postretirement benefits
other than pensions........................... -- -- (13,416) --
Net loss........................................ (1,473) (1,938) (13,583) (8,255)
Less preferred stock dividend................... 401 414 1,215 1,252
Net loss applicable to common stock............. $(1,874) $(2,352) $(14,798) $(9,507)
Net loss per common share:
Loss before cumulative effect of change in
method of accounting for postretirement
benefits other than pensions.................. $ (0.20) $ (0.29) $ (0.15) $ (1.25)
Cumulative effect of change in method of
accounting for postretirement benefits
other than pensions........................... -- -- (1.47) --
Net loss per common share....................... $ (0.20) $ (0.29) $ (1.62) $ (1.25)
</TABLE>
10
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Tokheim
Corporation's August 31, 1994, interim financial statements and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000098559
<NAME> TOKHEIM CORPORATION
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> NOV-30-1994
<PERIOD-END> AUG-31-1994
<CASH> 3315
<SECURITIES> 0
<RECEIVABLES> 32332
<ALLOWANCES> 1318
<INVENTORY> 39598<F1>
<CURRENT-ASSETS> 76397
<PP&E> 81229<F2>
<DEPRECIATION> 53796
<TOTAL-ASSETS> 109266
<CURRENT-LIABILITIES> 33317
<BONDS> 0
<COMMON> 16107<F3>
4515<F4>
0
<OTHER-SE> 820<F5>
<TOTAL-LIABILITY-AND-EQUITY> 109266
<SALES> 143075
<TOTAL-REVENUES> 143075
<CGS> 109369<F6>
<TOTAL-COSTS> 109369<F6>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1890
<INCOME-PRETAX> 308
<INCOME-TAX> 475
<INCOME-CONTINUING> (167)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> (13416)<F7>
<NET-INCOME> (13583)
<EPS-PRIMARY> (1.90)
<EPS-DILUTED> (1.90)<F8>
<FN>
<F1>Represents gross inventory net of LIFO and loss reserves.
<F2>Represents gross PP&E.
<F3>Represents common stock of $19,410 less Guaranteed ESOP of $1,242 and treasury
stock of $2,061.
<F4>Represents redeemable preferred stock of $24,000 less Guaranteed ESOP of
$16,196 and treasury stock of $3,289.
<F5>Represents retained earnings of $7,739 less minimum pension liability of $3,348
and foreign currency translation adjustments of $3,571.
<F6>Includes product development expenses and excludes depreciation and
amortization.
<F7>Represents adoption of SFAS No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions".
<F8>Fully diluted earnings per share is considered to be the same as primary
earnings per share, since the effect of certain potentially dilutive securities
would be antidilutive.
</FN>
</TABLE>
