July 12, 1996
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, 1996.
Sincerely,
TOKHEIM CORPORATION
JOHN A. NEGOVETICH
Vice President and
Chief Financial Officer
Enclosure
pc: New York Stock Exchange
Division of Stock List
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, 1996
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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) 470-4600
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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, 1996, 7,938,595 shares of voting common stock were outstanding.
In addition, 795,696 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.
<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 Six Months Ended
May 31, May 31, May 31, May 31,
1996 1995 1996 1995
---------------------- ----------------------
<S> <C> <C> <C> <C>
NET SALES............................... $57,620 $54,127 $107,167 $ 99,972
Cost of sales, exclusive of items
listed below........................... 43,497 40,554 81,356 76,967
Selling, general, and administrative
expenses............................... 11,958 10,689 22,940 19,867
Depreciation and amortization........... 1,067 1,167 2,137 2,327
Interest expense (net of interest
income of $75 and $172 in 1996 and $60
and $107 in 1995 for the three-month
and six-month periods, respectively).. 605 799 1,223 1,459
Foreign currency (gains) losses......... 40 1 (250) (177)
Other expenses, net..................... 268 302 399 428
Earnings (loss) before income taxes..... 185 615 (638) (899)
Income taxes............................ (351) 89 (506) (62)
NET EARNINGS (LOSS)..................... $ 536 $ 526 $ (132) $ (837)
Preferred stock dividends............... $ 385 $ 395 $ 774 $ 796
Net earnings (loss) applicable to
common stock.......................... $ 151 $ 131 $ (906) $(1,633)
Earnings (loss) per common share:
Primary:
Net earnings (loss)................. $ 0.02 $ 0.02 $ (0.11) $ (0.21)
Weighted average shares outstanding. 8,009 7,904 7,938 7,864
Fully Diluted:
Net earnings (loss)................. $ 0.02 $ 0.01 $ (0.11) $ (0.21)
Weighted average shares outstanding. 9,681 9,659 7,938 7,864
</TABLE>
<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, 1996 and the results of operations and cash flows for the three-month
periods and six-month periods ended May 31, 1996 and 1995.
Amounts for interim periods are unaudited. Amounts for the year ended November
30, 1995 were derived from audited financial statements included in the 1995
Annual Report to Stockholders.
See financial statements and accompanying notes in the Company's 1995 Annual
Report.
<PAGE>
CONSOLIDATED CONDENSED BALANCE SHEET
(IN THOUSANDS)
May 31, November 30,
1996 1995
----------- ------------
ASSETS
Current assets:
Cash and short-term investments............... $ 2,005 $ 2,966
Receivables, net.............................. 37,530 45,649
Inventories:
Raw materials and supplies................ 9,329 7,649
Work in process............................ 25,935 25,535
Finished goods............................. 6,617 4,911
41,881 38,095
Less amount necessary to reduce certain
inventories to LIFO method............... 3,105 3,100
38,776 34,995
Prepaid expenses.............................. 2,519 3,188
Total current assets.......................... 80,830 86,798
Property, plant, and equipment, net........... 27,372 28,558
Other assets and deferred charges............. 10,695 5,876
Total assets.................................. $118,897 $121,232
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt.......... $ 441 $ 351
Notes payable, banks.......................... 2,969 2,364
Accounts payable.............................. 19,473 18,689
Accrued expenses.............................. 14,489 18,141
Total current liabilities..................... 37,372 39,545
Long-term debt................................ 23,468 21,321
Guaranteed Employees' Stock Ownership
Plan obligation............................ 13,064 14,576
Postretirement benefit liability.............. 14,202 13,882
Minimum pension liability..................... 3,868 3,868
Other long-term liabilities................... -- 110
Deferred income taxes......................... 717 807
92,691 94,109
Redeemable convertible preferred stock........ 24,000 24,000
Guaranteed Employees' Stock Ownership
Plan obligation............................ (12,761) (13,790)
Treasury stock, at cost....................... (4,105) (3,784)
7,134 6,426
Common stock.................................. 19,409 19,409
Guaranteed Employees' Stock Ownership
Plan obligation............................ (303) (786)
Minimum pension liability..................... (3,868) (3,868)
Foreign currency translation adjustments...... (4,759) (3,542)
Retained earnings............................. 8,796 9,715
19,275 20,928
Treasury stock, at cost....................... (203) (231)
19,072 20,697
Total liabilities and stockholders' equity.... $118,897 $121,232
<PAGE>
CONSOLIDATED CONDENSED
STATEMENT OF CASH FLOWS
(IN THOUSANDS)
Six Months Ended
------------------------
May 31, May 31,
1996 1995
------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.......................................... $ (132) $ (837)
Adjustments to reconcile net loss to net cash
provided by (used in) operations:
Depreciation and amortization................. 2,137 2,327
Gain on sale of property, plant, and
equipment................................... (65) (73)
Deferred income taxes......................... (55) (151)
Changes in assets and liabilities:
Receivables, net............................ 7,289 399
Inventories................................. (4,262) (2,168)
Prepaid expenses............................ 639 (1,254)
Accounts payable............................ 1,277 3,355
Accrued expenses............................ (2,604) (1,206)
U.S. and foreign income taxes............... (663) 35
Other....................................... (6,444) (21)
Net cash provided by (used in) operations......... (2,883) 406
CASH FLOWS FROM INVESTING AND OTHER ACTIVITIES:
Plant and equipment additions..................... (1,986) (3,613)
Proceeds from sale of property, plant, and
equipment..................................... 977 106
Net cash used in investing and other activities... (1,009) (3,507)
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in term debt............................. 3,295 1,379
Increase notes payable, banks..................... 725 712
Treasury stock, net............................... (310) 185
Preferred Stock dividends......................... (774) (796)
Net cash provided by financing
activities..................................... 2,936 1,480
EFFECT OF TRANSLATION ADJUSTMENT ON CASH.......... (5) 81
CASH AND CASH EQUIVALENTS:
Decrease in cash.................................. (961) (1,540)
Beginning of year................................. 2,966 3,933
End of period..................................... $ 2,005 $ 2,393
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Sales for the second quarter reflected a 6.5% increase over those recorded in
the same quarter in the prior year with domestic sales up 5.7% and international
sales up 7.6%
SALES: Consolidated sales for the fiscal 1996 second quarter were $57,620,000
versus sales of $54,127,000 reported in the comparable period in 1995. Second
quarter sales were 16.3% over the $49,548,000 reported in the fiscal 1996 first
quarter. Sales of $107,167,000 for the first six months were up 7.2% over sales
of $99,972,000 reported in the same period last year. The improvement in sales
is attributable principally to the acceptance of new products by the domestic
market place and the continued penetration of foreign markets.
EARNINGS: Consolidated net earnings in the fiscal 1996 second quarter were
$536,000, or $0.02 per share on a primary basis, compared to earnings of
$526,000, or $0.02 per share, reported in the previous year's second quarter.
A net loss of $132,000, or $0.11 per share on a primary basis, was reported for
the first six months of 1996 compared to a net loss of $837,000, or $0.21 per
share, incurred for the same period last year.
COSTS AND EXPENSES: Gross margin as a percent of sales was 24.5% compared to
25.1% reported in the fiscal 1995 second quarter. This decrease was due to
product development costs primarily attributable to work on the three-year
supply contract announced April 3, with Royal Dutch Shell for the Asian region.
Sales related to this contract are estimated at $50 to $70 million over a
three year period. We expect to begin realizing the financial benefit of this
contract in the third quarter. Selling, General and Administrative expenses
were 20.8% of sales versus 19.8% in the prior year. Net interest expense was
$194,000 below the prior year.
OTHER: Cash used in operations for the six-month period ended May 31, 1996 was
$2,883,000 versus $406,000 provided from operations in the prior year's second
quarter. The decrease relative to the prior year reflects the financial effect
of deposits made on the purchase of manufacturing equipment to be installed at
our Fort Wayne, Indiana manufacturing facility during the third and fourth
quarters of 1996. The equipment purchase is part of our previously announced
$12.8 million capital expenditure program to improve plant productivity and
manufacturing, capacity, product design capability and quality of both products
and processes. Deposits related to the proposed acquisition of Sofitam
International discussed below are also included in quarterly cash usage.
<PAGE>
Funds used in investing and other activities were $1,009,000 in 1996,
representing $1,986,000 in capital expenditures less $977,000 in proceeds from
the sale of property and equipment. Cash used in investing and other activities
in the 1995 second quarter was $3,507,000 reflecting capital expenditures of
$3,613,000 offset by proceeds from the sale of equipment of $106,000.
Cash generated from financing activities of $2,936,000 in 1996 and $1,480,000 in
in 1995 principally represented increases in debt less preferred stock
dividend payments. The 1996 increase in debt represents an increase due to
deposits on machinery and equipment and deposits for the acquisition.
DIVIDENDS: No cash dividends on common stock were declared during the period.
OTHER DEVELOPMENTS: On June 25, 1996, Tokheim announced an agreement to
purchase the petroleum dispensing marketing and services business of Paris,
France-based Sofitam International in a transaction having an aggregate purchase
price of approximately $108 million, subject to post-closing adjustments.
The Sofitam acquisition has major strategic significance to Tokheim in that the
merged businesses create the world's largest independent designer, manufacturer
and servicer of electronic and mechanical petroleum dispensing marketing
systems, including service station equipment, point-of-sale control systems and
cash-and-credit card-activated transaction systems. The combined global entity
would have proforma revenues of approximately $425 million and have
complementary facilities throughout Europe, the United Kingdom, Africa, the
United States and Canada. The acquisition is anticipated to be completed by
the early fall.
This combination of two companies, who have enjoyed strong industry position on
two separate continents, consolidates our respective relative strengths in
Northern and Southern Europe and Africa. It represents a significant
augmentation to Tokheim's recently established strong base in Asia Pacific and
Eastern and Central Europe by creating and combining an unparalleled global
service network, we are creating a structure that is congruent with the
globalization strategies of our major oil customers. It also creates the
requisite critical infrastructure to support broader and more advanced
technological development. Sofitam International and Satam are highly respected
names in our industry with good management, and we look forward to realizing the
full potential of this global partnership.
<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
A form 8-K, Current Report, was filed on April 12, 1996. This form was
filed to report a significant strengthening of the Company's relationship
with the Royal Dutch Shell Group of companies through having been chosen as
the exclusive supplier of fuel dispensing equipment for Shell's operating
companies in 6 Asian countries, including Hong Kong, Malaysia, Pakistan, the
Philippines, Singapore, and Thailand. The report was dated April 3, 1996.
A form 8-K, Current Report, was filed on July 9, 1996. This form was filed
to report the signing of an agreement to acquire the petroleum dispensing
marketing and service business of Paris-based Sofitam International in a
transaction having an aggregate purchase price of approximately $108 million,
subject to post-closing adjustments. The report was dated June 26, 1996.
<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 12, 1996 DOUGLAS K. PINNER
--------------- --------------------------------
President and Chief Executive
Officer
Date: July 12, 1996 JOHN A. NEGOVETICH
--------------- --------------------------------
Vice President and Chief
Financial Officer
<PAGE>
TOKHEIM CORPORATION AND SUBSIDIARIES
EXHIBIT (11) - EARNINGS PER SHARE
FOR THE THREE MONTH AND SIX MONTH PERIODS
ENDED MAY 31, 1996 and MAY 31, 1995
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 six month periods ended May 31, 1996 and May 31,
1995:
<TABLE>
PRIMARY
-----------------------------------------
Three Months Ended Six Months Ended
------------------ ------------------
May 31, May 31, May 31, May 31,
1996 1995 1996 1995
-----------------------------------------
<S> <C> <C> <C> <C>
Shares outstanding (in thousands):
Weighted average outstanding.......... 7,938 7,877 7,938 7,864
Share equivalents..................... 71 27 -- --
Adjusted outstanding.................. 8,009 7,904 7,938 7,864
Net earnings (loss)..................... 536 526 (132) (837)
Preferred stock dividends............... (385) (395) (774) (796)
Net earnings (loss) applicable to
common stock.......................... $ 151 $ 131 $ (906) $(1,633)
Net earnings (loss) per common share.... $ 0.02 $ 0.02 $(0.11) $ (0.21)
</TABLE>
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 Six Months Ended
------------------ ------------------
May 31, May 31, May 31, May 31,
1996 1995 1996 1995
-----------------------------------------
<S> <C> <C> <C> <C>
Shares outstanding (in thousands):
Weighted average outstanding.......... 7,938 7,877 7,938 7,864
Share equivalents..................... 71 33 63 33
Weighted conversion of preferred
stock............................... 1,672 1,749 1,714 1,693
Adjusted outstanding.................. 9,681 9,659 9,715 9,590
Net earnings (loss)..................... 536 526 (132) (837)
Incremental RSP expense................. (385) (395) (774) (796)
Net earnings (loss) applicable to common
stock................................. $ 151 $ 131 $ (906) $(1,633)
Net earnings (loss) per common share.... $ 0.02 $ 0.01 $ (0.09) $ (0.17)
</TABLE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Tokheim
Corporation's May 31, 1996, quarterly 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> 6-MOS
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-END> MAY-31-1996
<CASH> 2005
<SECURITIES> 0
<RECEIVABLES> 38668
<ALLOWANCES> (1138)
<INVENTORY> 38776<F1>
<CURRENT-ASSETS> 80830
<PP&E> 84289<F2>
<DEPRECIATION> 56917
<TOTAL-ASSETS> 118897
<CURRENT-LIABILITIES> 37372
<BONDS> 0
7134<F3>
0
<COMMON> 18903<F4>
<OTHER-SE> 168<F5>
<TOTAL-LIABILITY-AND-EQUITY> 118897
<SALES> 107167
<TOTAL-REVENUES> 107167
<CGS> 81356<F6>
<TOTAL-COSTS> 81356<F6>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1223
<INCOME-PRETAX> (638)
<INCOME-TAX> (506)
<INCOME-CONTINUING> (132)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (132)
<EPS-PRIMARY> (0.11)
<EPS-DILUTED> (0.11)
<FN>
<F1>Represents gross intentory net of LIFO and loss reserves.
<F2>Represents gross PP&E.
<F3>Represents redeemable preferred stock of $24,000 less Guaranteed ESOP of
$12,761 and treasury stock of $4,105.
<F4>Represents common stock of $19,409 less Guaranteed ESOP of $303 and treasury
stock of $203.
<F5>Represents retained earnings of $8,796 less minimum pension liability of
$3,868 and foreign currency translation adjustments of $4,759.
<F6>Includes product development expenses and excludes depreciation.