October 6, 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 August 31, 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 August 31, 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 August 31, 1995, 7,933,881 shares of voting common stock were outstanding.
In addition, 809,536 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 8.
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,
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
NET SALES. . . . . . . . . . . . . . . . $52,935 $47,931 $152,907 $143,075
Cost of sales, exclusive of items
listed below. . . . . . . . . . . . . . 40,577 37,610 117,544 109,367
Selling, general, and administrative
expenses. . . . . . . . . . . . . . . . 10,031 9,778 29,899 27,781
Depreciation and amortization. . . . . . 1,165 1,129 3,492 3,470
Other operating expenses . . . . . . . . 473 -- 473 --
Interest expense (net of interest
income of $75 and $182 in 1995 and $53
and $192 in 1994 for the three-month
and nine-month periods, respectively). 695 609 2,155 1,890
Foreign currency gains (losses). . . . . (227) 95 (50) 148
Other expense, net . . . . . . . . . . . (615) (158) (1,040) (407)
Earnings (loss) before income taxes and
cumulative effect of change in
method of accounting. . . . . . . . . (848) (1,258) (1,746) 308
Income taxes . . . . . . . . . . . . . . 93 215 32 475
Loss before cumulative effect
of change in method of accounting. . . (941) (1,473) (1,778) (167)
Cumulative effect of change in method of
accounting for postretirement benefits
other than pensions. . . . . . . . . . -- -- -- (13,416)
NET LOSS . . . . . . . . . . . . . . . . $ (941) $(1,473) $(1,778) $(13,583)
Preferred stock dividends. . . . . . . . $ 392 $ 401 $ 1,188 $ 1,215
Net loss applicable to common stock. . . $(1,333) $(1,874) $(2,966) $(14,798)
Loss per common share:
Primary:
Before cumulative effect of
change in method of accounting . . $ (0.17) $ (0.24) $ (0.38) $ (0.18)
Cumulative effect of change in
method of accounting . . . . . . . -- -- -- (1.72)
Net loss . . . . . . . . . . . . . . $ (0.17) $ (0.24) $ (0.38) $ (1.90)
Weighted average shares outstanding 7,913 7,823 7,880 7,790
</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, 1995 and the results of operations and cash flows for the three-month
periods and nine-month periods ended August 31, 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.
See financial statements and accompanying notes in the Company's 1994 Annual
Report.
3
<PAGE>
CONSOLIDATED CONDENSED BALANCE SHEET
(IN THOUSANDS)
August 31, November 30,
1995 1994
ASSETS ------------ ------------
Current assets:
Cash and short-term investments . . . . . $ 1,705 $ 3,933
Receivables, net. . . . . . . . . . . . . 35,194 38,812
Inventories:
Raw materials and supplies . . . . . . 8,642 7,697
Work in process. . . . . . . . . . . . 27,281 25,675
Finished goods . . . . . . . . . . . . 6,370 4,729
42,293 38,101
Less amount necessary to reduce
certain inventories to LIFO method . 3,016 2,746
39,277 35,355
Prepaid expenses. . . . . . . . . . . . . 3,693 2,308
Total current assets. . . . . . . . . . . 79,869 80,408
Property, plant, and equipment, net . . . 28,701 27,425
Other assets and deferred charges . . . . 5,851 5,672
Total assets. . . . . . . . . . . . . . . $114,421 $113,505
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt. . . $ 1,163 $ 1,248
Notes payable, banks. . . . . . . . . . . 3,093 1,661
Accounts payable. . . . . . . . . . . . . 16,880 16,215
Accrued expenses. . . . . . . . . . . . . 16,349 16,990
Total current liabilities . . . . . . . . 37,485 36,114
Long-term debt. . . . . . . . . . . . . . 20,445 18,941
Guaranteed Employees' Stock Ownership
Plan obligation. . . . . . . . . . . . 15,076 16,975
Postretirement benefit liability. . . . . 13,995 13,512
Minimum pension liability . . . . . . . . 2,651 1,906
Other long-term liabilities . . . . . . . 110 150
Deferred income taxes . . . . . . . . . . 698 791
90,460 88,389
Redeemable convertible preferred stock. . 24,000 24,000
Guaranteed Employees' Stock Ownership
Plan obligation. . . . . . . . . . . . (14,289) (15,733)
Treasury stock, at cost . . . . . . . . . (3,762) (3,262)
5,949 5,005
Common stock. . . . . . . . . . . . . . . 19,409 19,410
Guaranteed Employees' Stock Ownership
Plan obligation. . . . . . . . . . . . (787) (1,242)
Minimum pension liability . . . . . . . . (2,651) (1,906)
Foreign currency translation adjustments. (3,163) (3,543)
Retained earnings . . . . . . . . . . . . 5,480 9,279
18,288 21,998
Treasury stock, at cost . . . . . . . . . (276) (1,887)
18,012 20,111
Total liabilities and stockholders'
equity . . . . . . . . . . . . . . . . $114,421 $113,505
4
<PAGE>
CONSOLIDATED CONDENSED
STATEMENT OF CASH FLOWS
(IN THOUSANDS)
Nine Months Ended
-------------------------
August 31, August 31,
1995 1994
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss. . . . . . . . . . . . . . . . . . . . . . $(1,778) $(13,583)
Adjustments to reconcile net loss to net cash
provided by (used in) operations:
Cumulative effect of change in method of
accounting for postretirement benefits
other than pensions . . . . . . . . . . . . . -- 13,416
Depreciation and amortization . . . . . . . . . 3,492 3,470
(Gain) loss on sale of property, plant, and
equipment . . . . . . . . . . . . . . . . . . (82) 1
Deferred income taxes . . . . . . . . . . . . . (135) (85)
Changes in assets and liabilities:
Receivables, net. . . . . . . . . . . . . 4,370 6,204
Inventories . . . . . . . . . . . . . . . (3,822) (4,592)
Prepaid expenses. . . . . . . . . . . . . (1,387) 66
Accounts payable. . . . . . . . . . . . . (55) (5,431)
Accrued expenses. . . . . . . . . . . . . (125) 1,397
U.S. and foreign income taxes . . . . . . (148) (142)
Other . . . . . . . . . . . . . . . . . . (367) (582)
Net cash provided by (used in) operations . . . . . (37) 139
CASH FLOWS FROM INVESTING AND OTHER ACTIVITIES:
Plant and equipment additions . . . . . . . . . . . (4,205) (1,631)
Proceeds from sale of property, plant, and
equipment. . . . . . . . . . . . . . . . . . . . 130 158
Net cash used in investing and other activities . . (4,075) (1,473)
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in term debt. . . . . . . . . . 1,369 (3,797)
Increase (decrease) notes payable, banks. . . . . . 1,314 (163)
Net proceeds from issuance of common stock. . . . . -- 49
Treasury stock, net . . . . . . . . . . . . . . . . 279 550
Preferred stock dividends . . . . . . . . . . . . . (1,188) (1,215)
Net cash provided by (used in) financing
activities . . . . . . . . . . . . . . . . . . . 1,774 (4,576)
EFFECT OF TRANSLATION ADJUSTMENT ON CASH. . . . . . 110 128
CASH AND CASH EQUIVALENTS:
Decrease in cash. . . . . . . . . . . . . . . . . . (2,228) (5,782)
Beginning of year . . . . . . . . . . . . . . . . . 3,933 9,097
End of period . . . . . . . . . . . . . . . . . . . $ 1,705 $ 3,315
5
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Sales gains and margin improvements in the fiscal 1995 third quarter over the
prior- year period combined to bring about an improvement in comparative
operating results in spite of over $1 million of unusual operating costs
incurred during the quarter.
SALES: Consolidated sales for the fiscal 1995 third quarter were $52,935,000,
an increase of 10% from sales of $47,931,000 reported in the comparable period
in 1994. Sales of $152,907,000 for the first nine months were up 7% from sales
of $143,075,000 reported in the same period last year and a record level from
continuing operations for the Company.
EARNINGS: The consolidated net loss for the fiscal 1995 third quarter narrowed
to $941,000, or $0.17 per share, compared to a loss of $1,473,000, or $0.24 per
share, reported in the previous year's third quarter. Nine months consolidated
loss was $1,778,000, or $0.38 per share, compared to a loss of $13,583,000, or
$1.90 per share, for the same period last year. Last year's results included a
charge associated with the cumulative effect of the first quarter adoption of
Statement of Financial Accounting Standards (SFAS) No. 106 governing accounting
for nonpension retiree benefit costs amounting to $13,416,000, or $1.72 per
share.
COSTS AND EXPENSES: Gross margin as a percent of sales improved to 23.3%, up
from 21.5% reported in the fiscal 1994 third quarter, due to the combined effect
of reduced costs and improved product mix. Selling, general, and
administrative expenses decreased as a percent of sales to 18.9% from 20.4% of
sales in the prior year s third quarter. Other operating expenses of $0.5
million reflect costs incurred in connection with developing and implementing a
plan to improve the earnings potential of the Company's international
operations. Interest expense was higher than the prior year due to higher
interest rates. Foreign currency losses were higher due to an allowance for
unrealized exchange losses relating to the effect of the recent strengthening of
the dollar against European currencies on intercompany trade payables balances,
which offset similar gains recorded earlier in the year on weakness in the
dollar. The increase in other expense is due to approximately $0.3 million of
severance and outplacement costs incurred in connection with manpower reductions
in the U.S. operations and approximately $0.2 million for settlement of a
lawsuit.
OTHER: Cash flow from operations was a deficit of $37,000 in the period ended
August 31, 1995 versus a positive cash flow of $139,000 in the same period last
year.
Funds used in investing and other activities were $4,075,000 in 1995
representing $4,205,000 in capital expenditures less $130,000 of proceeds from
the sale of equipment. Cash used in investing and other activities in the 1994
nine-month period was $1,473,000 reflecting $1,631,000 in capital expenditures
offset by $158,000 of proceeds from the sale of property, plant, and equipment.
Cash provided from financing activities of $1,774,000 represented increases in
debt less preferred stock dividend payments. In the prior year, cash used in
financing activities was $4,576,000, primarily representing debt reduction and
preferred stock dividend payments.
6
<PAGE>
DIVIDENDS: No cash dividends on common stock were declared during the period.
OTHER DEVELOPMENTS: In August we announced our plans to seek additional capital
to accomplish a significant manufacturing upgrade. This decision was based upon
a growing recognition of the need to continue to significantly reduce
manufacturing costs in order to improve margins in a fiercely competitive
environment. During Tokheim's major 1992-1994 financial restructuring period,
which also included raising new equity and divesting noncore businesses, capital
spending was deferred as part of a plan designed to reduce debt sufficiently to
enable the Company to refinance on a longer-term basis under more favorable
terms. Debt was reduced from $85 million to under $40 million and the
refinancing was successfully completed last April. However, to accomplish the
goals of that plan, we invested less than half of our annual depreciation
expense in plant improvement over the past three years. Acknowledging the
accumulating need for capital investment, our 1995 plan called for a level of
capital expenditures nearly equal to the combined sum of the previous three
years to be financed through cash flow. The major projects, which have now been
completed, were a new CAD/CAM system to enhance the effectiveness and timeliness
of product development initiatives; a new quality testing system to help insure
that dispensers leave the factory with zero defects, which will reduce warranty
expense; and a realignment of the Fort Wayne plant into a product focus to
enhance efficiency and reduce costs. Throughout the past three years, we have
labored to utilize our manufacturing resources to their fullest potential. As a
result, we have improved our efficiency, increased our productivity, and reduced
our costs. But more needs to be done, and we are doing it.
Ultimately, there are only three ways to create value in a company. One is to
improve operating profits with the same invested capital as we have accomplished
over the past three years. Another is to liquidate capital from business
activities not providing adequate returns. This we also accomplished by
divesting noncore businesses and selling nonproductive or idle facilities. The
third way is to invest new capital in projects that will earn more than the
Company's full cost of capital. We are currently on the threshold of this third
stage in our value-building strategy. The identified investments will be made
throughout 1996 in the core manufacturing processes of fabrication, machining,
and painting. The cost of the projects approximates $13 million and, when fully
implemented, is expected to generate annual returns which will afford us the
potential of a full payback in approximately two years.
The operational turnaround effort which has been focused primarily on the
domestic operations during the past three years has now broadened to include our
international activities. Essentially, we are taking some of the same actions
to improve the earnings potential of our overseas operations that were
implemented domestically over the past three years including consolidations,
cost-cutting, and redefining the ways in which we do business. Just as these
actions helped to substantially cut domestic operating losses and reduce debt by
more than 50%, we believe the parallel initiatives in the international
operations will produce similarly positive results relative to their overall
contributions to the Company today and their importance in future industry
growth.
Current order rates, both domestically and internationally, are shaping up well
for a strong fourth quarter which we expect will continue to produce results
that compare favorably with last year.
7
<PAGE>
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.
(b) Reports on Form 8-K - None.
8
<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 6, 1995 DOUGLAS K. PINNER
-------------------- ------------------------------
President and Chief Executive Officer
Date October 6, 1995 JESS B. FORD
-------------------- -----------------------------
Vice President, Finance, Secretary,
and Chief Financial Officer
9
<PAGE>
TOKHEIM CORPORATION AND SUBSIDIARIES
EXHIBIT (11) - EARNINGS PER SHARE
FOR THE THREE MONTH AND NINE MONTH PERIODS
ENDED AUGUST 31, 1995 and AUGUST 31, 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 three month and nine month periods ended August 31, 1995 and
August 31, 1994:
<TABLE>
PRIMARY
------------------------------------------------
Three Months Ended Nine Months Ended
August 31, August 31, August 31, August 31,
1995 1994 1995 1994
------------------------------------------------
<S> <C> <C> <C> <C>
Shares outstanding (in thousands):
Weighted average outstanding. . . . . 7,913 7,823 7,880 7,790
Share equivalents . . . . . . . . . . -- -- -- --
Adjusted outstanding. . . . . . . . . 7,913 7,823 7,880 7,790
Net loss:
Loss before cumulative effect of
change in method of accounting. . . $ (941) $(1,473) $(1,778) $ (167)
Cumulative effect of change in
method of accounting for
postretirement benefits
other than pensions . . . . . . . . -- -- -- (13,416)
Net loss. . . . . . . . . . . . . . . (941) (1,473) (1,778) (13,583)
Less preferred stock dividend . . . . 392 401 1,188 1,215
Loss applicable to common stock . . . . $(1,333) $(1,874) $(2,966) $(14,798)
Net loss per common share:
Loss before cumulative effect of
change in method of accounting. . . $ (0.17) $ (0.24) $ (0.38) $ (0.18)
Cumulative effect of change in
method of accounting for post-
retirement benefits other
than pensions . . . . . . . . . . . -- -- -- (1.72)
Net loss per common share . . . . . . $ (0.17) $ (0.24) $ (0.38) $ (1.90)
</TABLE>
10
<PAGE>
TOKHEIM CORPORATION AND SUBSIDIARIES
EXHIBIT (11) - EARNINGS PER SHARE
FOR THE THREE MONTH AND NINE MONTH PERIODS
ENDED AUGUST 31, 1995, AND AUGUST 31, 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.
<TABLE>
FULLY DILUTED
-----------------------------------------------
Three Months Ended Nine Months Ended
August 31, August 31, August 31, August 31,
1995 1994 1995 1994
-----------------------------------------------
<S> <C> <C> <C> <C>
Shares outstanding (in thousands):
Weighted average outstanding. . . . . 7,913 7,823 7,880 7,790
Share equivalents . . . . . . . . . . 16 52 26 71
Weighted conversion of preferred
stock . . . . . . . . . . . . . . . 1,905 1,371 1,810 1,280
Adjusted outstanding. . . . . . . . . 9,834 9,246 9,716 9,141
Net loss:
Loss before cumulative effect of
change in method of accounting. . . $ (941) $(1,473) $(1,778) $ (167)
Cumulative effect of change in
method of accounting for post-
retirement benefits other than
pensions. . . . . . . . . . . . . . -- -- -- (13,416)
Net loss. . . . . . . . . . . . . . . (941) (1,473) (1,778) (13,583)
Less preferred stock dividend . . . . 392 401 1,188 1,215
Loss applicable to common stock . . . . $(1,333) $(1,874) (2,966) $(14,798)
Net loss per common share:
Loss before cumulative effect of
change in method of accounting. . . $ (0.14) $ (0.20) $(0.31) $ (0.15)
Cumulative effect of change in
method of accounting for post-
retirement benefits other than
pensions. . . . . . . . . . . . . . -- -- -- (1.47)
Net loss per common share . . . . . . $ (0.14) $ (0.20) $ (0.31) $ (1.62)
</TABLE>
11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM TOKHEIM
CORPORATION'S AUGUST 31, 1995, 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-30-1995
<PERIOD-END> AUG-31-1995
<CASH> 1705
<SECURITIES> 0
<RECEIVABLES> 36424
<ALLOWANCES> 1230
<INVENTORY> 39277<F1>
<CURRENT-ASSETS> 79869
<PP&E> 85751<F2>
<DEPRECIATION> 570501
<TOTAL-ASSETS> 114421
<CURRENT-LIABILITIES> 37485
<BONDS> 0
<COMMON> 18346<F3>
5949<F4>
0
<OTHER-SE> (334)<F5>
<TOTAL-LIABILITY-AND-EQUITY> 114421
<SALES> 152707
<TOTAL-REVENUES> 152907
<CGS> 117544<F6>
<TOTAL-COSTS> 117544<F6>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2155
<INCOME-PRETAX> (1746)
<INCOME-TAX> 32
<INCOME-CONTINUING> (1778)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1778)
<EPS-PRIMARY> (0.38)
<EPS-DILUTED> 0
<FN>
<F1>REPRESENTS GROSS INVENTORY NET OF LIFO AND LOSS RESERVES.
<F2>REPRESENTS GROSS PP & E.
<F3>REPRESENTS COMMON STOCK OF $19,409 LESS GUARANTEED ESOP OF $787 AND TREASURY
STOCK OF $276.
<F4>REPRESENTS REDEEMABLE PREFERRED STOCK OF $24,000 LESS GUARANTEED ESOP OF
$14,289 AND TREASURY STOCK OF $3,762.
<F5>REPRESENTS RETAINED ERNINGS OF $5,480 LESS MINIMUM PENSION LIABILITY OF $2,651
AND FOREIGN CURRENCY TRANSLATION ADJUSTMENTS OF $3,163.
<F6>INCLUDES PRODUCT DEVELOPMENT EXPENSES AND EXCLUDES DEPRECIATION AND
AMORTIZATION.
</FN>
</TABLE>
