April 11, 1995
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 February 28,1995.
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 FEBRUARY 28, 1995
-----------------------
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 February 28, 1995, 7,868,223 shares of voting common stock were
outstanding.
In addition, 827,155 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)
Three Months Ended
-------------------------
February 28 February 28
1995 1994
----------- ------------
NET SALES.......................................... $ 45,845 $ 45,236
Cost of sales, exclusive of items listed below..... 36,414 34,512
Selling, general, and administrative expenses...... 9,179 8,507
Depreciation and amortization...................... 1,161 1,186
Interest expense (net of interest income of
$46 and $88 in 1995 and 1994, respectively)...... 660 630
Foreign currency gains (losses).................... 178 (64)
Other expense, net................................. (122) (140)
Earnings (loss) before income taxes and
cumulative effect of change in method of
accounting....................................... (1,513) 197
Income taxes....................................... (150) 42
Earnings (loss) before cumulative effect of
change in method of accounting................... (1,363) 155
Cumulative effect of change in method of
accounting for postretirement benefits other
than pensions.................................... -- (13,416)
NET LOSS........................................... $ (1,363) $(13,261)
Preferred stock dividends.......................... $ 401 $ 411
Net loss applicable to common stock................ $ (1,764) $(13,672)
Loss per common share:
Primary:
Loss before cumulative effect of change in
method of accounting for postretirement
benefits other than pensions................. $ (0.22) $ (0.03)
Cumulative effect of change in method of
accounting for postretirement benefits
other than pensions.......................... -- (1.73)
Net loss....................................... $ (0.22) $ (1.76)
Weighted average shares outstanding............ 7,852 7,755
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 February 28, 1995, and the results of operations and cash
flows for the three-month periods ended February 28, 1995 and 1994.
Amounts for interim periods are unaudited. Amounts for the year ended
November 30, 1994, were derived from audited financial statements included
in the 1994 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.
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 1994
Annual Report.
3
<PAGE>
CONSOLIDATED CONDENSED BALANCE SHEET
(IN THOUSANDS)
February 28 November 30
1995 1994
ASSETS ------------ ------------
Current assets:
Cash and cash equivalents........................ $ 319 $ 3,933
Receivables, net................................. 39,101 38,812
Inventories:
Raw materials and supplies.................... 7,317 7,697
Work in process............................... 27,196 25,675
Finished goods................................ 5,916 4,729
40,429 38,101
Less amount necessary to reduce certain
inventories to LIFO method.................. 2,836 2,746
37,593 35,355
Prepaid expenses................................. 3,467 2,308
Total current assets............................. 80,480 80,408
Property, plant, and equipment, net.............. 28,523 27,425
Other assets and deferred charges................ 5,513 5,672
Total assets..................................... $114,516 $113,505
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt............. $ 1,254 $ 1,248
Notes payable, banks............................. 2,023 1,661
Accounts payable................................. 20,227 16,215
Accrued expenses................................. 14,569 16,990
Total current liabilities........................ 38,073 36,114
Long-term debt................................... 19,403 18,941
Guaranteed Employees' Stock Ownership
Plan obligation............................... 16,047 16,975
Post retirement benefit liability................ 13,687 13,512
Minimum pension liability........................ 1,906 1,906
Other long-term liabilities...................... 150 150
Deferred income taxes............................ 834 791
90,100 88,389
Redeemable convertible preferred stock........... 24,000 24,000
Guaranteed Employees' Stock Ownership
Plan obligation............................... (15,261) (15,733)
Less treasury stock, at cost..................... 3,321 3,262
5,418 5,005
Common stock..................................... 19,410 19,410
Guaranteed Employees' Stock Ownership
Plan obligation............................... (786) (1,242)
Minimum pension liability........................ (1,906) (1,906)
Foreign currency translation adjustments......... (3,576) (3,543)
Retained earnings................................ 7,300 9,279
20,442 21,998
Less treasury stock, at cost..................... 1,444 1,887
18,998 20,111
Total liabilities and stockholders' equity....... $114,516 $113,505
4
<PAGE>
CONSOLIDATED CONDENSED
STATEMENT OF CASH FLOWS
(IN THOUSANDS)
Three Months Ended
--------------------------
February 28 February 28
1995 1994
--------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss............................................ $(1,363) $(13,261)
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................... 1,161 1,186
Gain on sale of property, plant, and equipment.. (40) (6)
Deferred income taxes........................... -- (84)
Changes in assets and liabilities:
Receivables, net.............................. 616 6,069
Inventories................................... (2,059) (1,645)
Prepaid expenses.............................. (1,143) (252)
Accounts payable.............................. 3,098 (6,445)
Accrued expenses.............................. (2,215) (748)
U.S. and foreign income taxes................. (141) (34)
Other......................................... 33 (101)
Net cash used in operations......................... (2,053) (1,905)
CASH FLOWS FROM INVESTING AND OTHER ACTIVITIES:
Plant and equipment additions....................... (1,948) (413)
Proceeds from sale of property, plant, and
equipment......................................... 60 8
Net cash used in investing and other activities..... (1,888) (405)
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in term debt.................... 310 (595)
Increase (decrease) notes payable, banks............ 236 (1,998)
Treasury stock, net................................. 168 148
Preferred stock dividends........................... (401) (411)
Net cash provided by (used in) financing
activities........................................ 313 (2,856)
EFFECT OF TRANSLATION ADJUSTMENT ON CASH............ 14 (1)
CASH AND CASH EQUIVALENTS:
Decrease in cash.................................... (3,614) (5,167)
Beginning of year................................... 3,933 9,097
End of period....................................... $ 319 $ 3,930
5
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The loss for the fiscal first quarter was very much in line with our previously
announced expectations; and we continue to expect, for the fiscal year as a
whole, to deliver improved results as have been achieved in each of the past
two years despite softness in industry pricing during those periods.
SALES: Sales for the first quarter were $45,845,000, reflecting the typical
seasonal downturn from the previous quarter's sales of $59,059,000. Sales of
$45,236,000 were recorded in the comparable period of 1994.
EARNINGS: The Company incurred a first quarter net loss of $1,363,000, or
$0.22 per share, compared to a net loss of $13,261,000, or $1.76 per share,
in the year-ago period. The prior year amount included the cumulative
effect of adopting Statement of Financial Accounting Standards (SFAS)
No. 106 governing accounting for nonpension retiree benefit costs of
$13,416,000, which offset a $155,000 profit from operations equal to a loss
of $0.03 on a per share basis after allowance for preferred stock dividends.
COSTS AND EXPENSES: Cost of goods sold as a percent of sales for the
three-month period increased, relative to 1994, due primarily to costs
associated with realignment of the Fort Wayne manufacturing facility,
increased engineering expenses related to value engineering design efforts,
as well as new product development, and a continuation of soft pricing in
the industry. Selling, general, and administrative expenses were 1.2% to
sales higher than the comparable 1994 period. Interest expense was
slightly higher than the prior year due to higher interest rates offset in
part by a lower level of debt outstanding during the 1995 quarter. A
weakening of the U.S. dollar resulted in foreign currency exchange gains of
$178,000 for the quarter versus losses of $64,000 in the comparable prior
year period.
OTHER: Cash used in operations for the quarter ended February 28, 1995 was
$2,053,000 versus $1,905,000 used in the prior year first quarter. We expect
improvement in operating cash flow as we move out of the seasonal slow period.
Net cash used in investing and other activities was $1,888,000 in 1995,
primarily for capital expenditures, designed to reduce costs and enhance
quality, in three of the Company's manufacturing operations. The net cash
used in investing and other activities in the 1994 first quarter of $405,000
was also primarily for capital expenditures.
Net cash provided from financing activities of $313,000, primarily resulted
from increases in short-term obligations and a reduction in treasury stock,
offset in part by payment of preferred stock dividends.
DIVIDENDS: No cash dividends on common stock were declared during the period.
OTHER DEVELOPMENTS: The quarter's results were anticipated as we planned to
take advantage of the seasonal downturn by shutting down the Fort Wayne plant
and completing a rearrangement to streamline the manufacturing process and to
achieve a sustainable improvement in our cost structure. The front-end costs
and temporary inefficiencies incurred as a result of this initiative, combined
with some continuation of softer pricing, contributed to our unfavorable profit
margin comparison with the prior year first quarter. However, we are already
experiencing some of the benefits in the form of reduced nonvalue added costs
and a 13% improvement in assembly productivity. These improvements will be
highly visible during the plant tour following our stockholders' meeting which
will be held at our manufacturing facility in Fort Wayne.
6
<PAGE>
Other positive recent developments included the release of the first Tokheim
retrofit electronic head for our previous generation TCS dispenser line. The
retrofit package offers the option of the Dispenser Payment Terminal (DPT)
which allows customers to pay for their gasoline with either cash or credit
card at the dispenser. The new electronic head with the DPT also provides
an enhanced keyboard, a larger display, and the industry's most secure data
encryption standard capability for use of debit cards. A retrofit DPT
offering the same advantages was also made available for our long time popular
262A model. There is a significant population of both TCS and 262A dispensers
in service, and customers will benefit from the ability to upgrade these with
automation capability. Additionally, we have released or are finalizing Beta
testing of six major credit network interfaces in our point-of-sale systems
with the VeriFone alliance. This is tangible progress toward our objective of
14 major oil networks by mid-year which will give Tokheim one of, if not the,
largest major oil jobber networks in the rapidly expanding jobber credit card
market which we expect to be a meaningful source of future revenues.
Other product improvements include the Wireless Dispenser Communication System,
automated Customer Service enhancements, the new Fuel Point fully automated
fuel management system, the quick oil changer, and the new lift-to-start
options - all of which will also be on display at the stockholders' meeting.
We look to the proprietary nature of these product developments as a means to
strategically differentiate Tokheim from its competitors in the marketplace.
Meanwhile, the value engineering design cost reduction initiative continues to
provide opportunities for improving our profit margins. In addition, both a
new dispenser quality testing system and a new computer-aided
design/computer-aided manufacturing (CAD/CAM) system were partially
implemented during the 1995 first quarter. These initiatives and other
corporate objectives outlined in the recent annual report are directed at
achieving reduced manufacturing cost and improved market share for the
remainder of 1995 and beyond.
We look forward to outlining our 1995 objectives for our stockholders at the
annual stockholders' meeting to be held on April 12, 1995 in the Tokheim
Employees' Clubhouse which is adjacent to our primary manufacturing facility
in Fort Wayne.
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: April 11, 1995 Douglas K. Pinner
------------------ -------------------------
President and Chief
Executive Officer
Date: April 11, 1995 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 PERIODS
ENDED FEBRUARY 28, 1995 AND FEBRUARY 28, 1994
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 per
share for the quarters ended February 28, 1995 and February 28, 1994:
PRIMARY
--------------------------
1995 1994
--------------------------
Shares outstanding (in thousands):
Weighted average outstanding................... 7,852 7,755
Share equivalents.............................. -- --
Adjusted outstanding........................... 7,852 7,755
Net loss per common share:
Earnings (loss) before cumulative effect of
change in method of accounting for post-
retirement benefits other than pensions...... $(1,363) $ 155
Cumulative effect of change in method of
accounting for postretirement benefits
other than pensions.......................... -- (13,416)
Net Loss....................................... (1,363) (13,261)
Less preferred stock dividend.................. 401 411
Loss applicable to common stock.................. $(1,764) $(13,672)
Loss per common share:
Loss before cumulative effect of change
in method of accounting for post-
retirement benefits other than pensions...... $ (0.22) $ (0.03)
Cumulative effect of change in method of
accounting for postretirement benefits
other than pensions.......................... -- (1.73)
Net loss per common share...................... $ (0.22) $ (1.76)
9
<PAGE>
TOKHEIM CORPORATION AND SUBSIDIARIES
EXHIBIT (11) - EARNINGS PER SHARE
FOR THE THREE MONTH PERIODS
ENDED FEBRUARY 28, 1995 AND FEBRUARY 28, 1994
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.
FULLY DILUTED
--------------------------
1995 1994
--------------------------
Shares outstanding (in thousands):
Weighted average outstanding................... 7,852 7,755
Share equivalents.............................. 32 93
Weighted conversion of preferred stock ....... 1,631 1,171
Adjusted outstanding........................... 9,515 9,019
Net loss per common share:
Earnings (loss) before cumulative effect of
change in method of accounting for post-
retirement benefits other than pensions...... $ (1,363) $ 155
Cumulative effect of change in method of
accounting for postretirement benefits
other than pensions.......................... -- (13,416)
Net Loss....................................... (1,363) (13,261)
Less preferred stock dividend.................. 401 411
Loss applicable to common stock.................. $ (1,764) $(13,672)
Loss per common share:
Loss before cumulative effect of change
in method of accounting for post-
retirement benefits other than pensions...... $ (0.19) $ (0.03)
Cumulative effect of change in method of
accounting for postretirement benefits
other than pensions.......................... -- (1.49)
Net loss per common share...................... $ (0.19) $ (1.52)
10
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Tokheim
Corporation's February 28, 1995 interim financial statements and is qualifed in
its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000098559
<NAME> TOKHEIM CORPORATION
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-END> FEB-28-1995
<CASH> 319
<SECURITIES> 0
<RECEIVABLES> 40080
<ALLOWANCES> 979
<INVENTORY> 37593<F1>
<CURRENT-ASSETS> 80480
<PP&E> 84041<F2>
<DEPRECIATION> 55518
<TOTAL-ASSETS> 114516
<CURRENT-LIABILITIES> 38073
<BONDS> 0
<COMMON> 17180<F3>
5418<F4>
0
<OTHER-SE> 1818<F5>
<TOTAL-LIABILITY-AND-EQUITY> 114516
<SALES> 45845
<TOTAL-REVENUES> 45845
<CGS> 36414<F6>
<TOTAL-COSTS> 36414<F6>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 660
<INCOME-PRETAX> (1513)
<INCOME-TAX> (150)
<INCOME-CONTINUING> (1363)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1363)
<EPS-PRIMARY> .22
<EPS-DILUTED> 0
<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 $786 and
treasury stock of $1,444.
<F4>Represents redeemable preferred stock of $24,000 less Guaranteed ESOP of
$15,261 and treasury stock of $3,321.
<F5>Represents retained earnings of $7,300 less minimum pension liability of
$1,906 and foreign currency translation adjustments of $3,576.
<F6>Includes product development expenses and excludes depreciation and
amortization.
11
</FN>
</TABLE>
