October 14, 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 August 31, 1996.
Sincerely,
TOKHEIM CORPORATION
JOHN A. NEGOVETICH
President, N.A. Operations 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 August 31, 1996
--------------
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, 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 Nine Months Ended
August 31, August 31, August 31, August 31,
1996 1995 1996 1995
---------------------- ----------------------
<S> <C> <C> <C> <C>
NET SALES............................... $59,044 $52,935 $166,212 $152,907
Cost of sales, exclusive of items
listed below........................... 45,451 40,577 126,809 117,544
Selling, general, and administrative
expenses............................... 11,093 10,505 34,033 30,372
Depreciation and amortization........... 989 1,165 3,126 3,492
Interest expense (net of interest
income of $172 and $344 in 1996 and $75
and $182 in 1995 for the three-month
and nine-month periods, respectively). 726 695 1,949 2,155
Foreign currency (gains) losses......... 39 227 (211) 50
Other expenses, net..................... 592 614 990 1,040
Earnings (loss) before income taxes..... 154 (848) (484) (1,746)
Income taxes............................ 266 93 (240) 32
NET LOSS................................ $ (112) $ (941) $ (244) $(1,778)
Preferred stock dividends............... $ 385 $ 392 $ 1,159 $ 1,188
Net loss applicable to
common stock.......................... $ (497) $(1,333) $(1,403) $(2,966)
Loss per common share:
Primary:
Net loss............................ $ (0.06) $ (0.17) $ (0.18) $ (0.38)
Weighted average shares outstanding. 7,939 7,913 7,938 7,880
Fully diluted:
Net loss............................ $ (0.06) $(0.17) $ (0.18) $ (0.38)
Weighted average shares outstanding. 7,939 7,913 7,938 7,880
</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
August 31, 1996 and the results of operations and cash flows for the three-
month periods and nine-month periods ended August 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.
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.
Certain prior year amounts in these financial statements have been reclassified
to conform with current year presentation.
See financial statements and accompanying notes in the Company's 1995 Annual
Report.
<PAGE>
CONSOLIDATED CONDENSED BALANCE SHEET
(IN THOUSANDS)
August 31, November 30,
1996 1995
----------- ------------
ASSETS
Current assets:
Cash and short-term investments............... $ 6,974 $ 2,966
Receivables, net.............................. 38,148 45,649
Inventories:
Raw materials and supplies................ 7,859 7,649
Work in process............................ 27,716 25,535
Finished goods............................. 5,661 4,911
41,236 38,095
Less amount necessary to reduce certain
inventories to LIFO method............... 3,180 3,100
38,056 34,995
Prepaid expenses.............................. 2,411 3,188
Total current assets.......................... 85,589 86,798
Restricted cash held in escrow................ 96,401 ----
Property, plant, and equipment, net........... 26,375 28,558
Other assets and deferred charges............. 9,363 5,876
Total assets.................................. $217,728 $121,232
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt.......... $ 386 $ 351
Notes payable, banks.......................... 3,153 2,364
Accounts payable.............................. 17,900 18,689
Accrued expenses.............................. 15,149 18,141
Total current liabilities..................... 36,588 39,545
Long-term debt................................ 123,392 21,321
Guaranteed Employees' Stock Ownership
Plan obligation............................ 12,535 14,576
Postretirement benefit liability.............. 14,351 13,882
Minimum pension liability..................... 3,868 3,868
Other long-term liabilities................... --- 110
Deferred income taxes......................... 822 807
191,556 94,109
Redeemable convertible preferred stock........ 24,000 24,000
Guaranteed Employees' Stock Ownership
Plan obligation............................ (12,232) (13,790)
Treasury stock, at cost....................... (4,129) (3,784)
7,639 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...... (4,800) (3,542)
Retained earnings............................. 8,298 9,715
18,736 20,928
Treasury stock, at cost....................... (203) (231)
18,533 20,697
Total liabilities and stockholders' equity.... $217,728 $121,232
<PAGE>
CONSOLIDATED CONDENSED
STATEMENT OF CASH FLOWS
(IN THOUSANDS)
Nine Months Ended
------------------------
August 31, August 31,
1996 1995
------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.......................................... $ (244) $ (1,778)
Adjustments to reconcile net loss to net cash
used in operations:
Depreciation and amortization................. 3,126 3,492
Gain on sale of property, plant, and
equipment................................... (70) (62)
Deferred income taxes......................... 35 (134)
Changes in assets and liabilities:
Receivables, net............................ 6,648 4,369
Inventories................................. (3,489) (3,821)
Prepaid expenses............................ 766 (1,387)
Accounts payable............................ (301) (53)
Accrued expenses............................ (1,682) (125)
U.S. and foreign income taxes............... (788) (150)
Other....................................... (5,125) (366)
Net cash used in operations....................... (1,124) (15)
CASH FLOWS FROM INVESTING AND OTHER ACTIVITIES:
Restricted cash held in escrow.................... (96,401) ---
Plant and equipment additions..................... (1,887) (4,204)
Proceeds from sale of property, plant, and
equipment..................................... 1,007 106
Net cash used in investing and other activities... (97,281) (4,098)
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in term debt............................. 103,071 1,370
Increase notes payable, banks..................... 848 1,315
Treasury stock, net............................... (334) 278
Preferred stock dividends......................... (1,159) (1,188)
Net cash provided by financing activities........ 102,426 1,775
EFFECT OF TRANSLATION ADJUSTMENT ON CASH.......... (13) 110
CASH AND CASH EQUIVALENTS:
Decrease in cash.................................. 4,008 (2,228)
Beginning of year................................. 2,966 3,933
End of period..................................... $ 6,974 $ 1,705
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Sales for the third quarter reflected an 11.5% increase over those recorded in
the same quarter in the prior year with international sales up 33.8% and
domestic demand remaining strong.
SALES: Consolidated sales for the fiscal 1996 third quarter were $59,044,000
versus sales of $52,935,000 reported in the comparable period in 1995. Third
quarter sales were 19.2% over the $49,548,000 reported in the fiscal 1996 first
quarter and 2.5% over the $57,620,000 reported in the fiscal 1996 second
quarter. Sales of $166,212,000 for the first nine months were up 8.7% over
sales of $152,907,000 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 loss in the fiscal 1996 third quarter was
$112,000, or $0.06 per share on a primary basis, compared to a net loss of
$941,000, or $0.17 per share, reported in the previous year's third quarter.
A net loss of $244,000, or $0.18 per share on a primary basis, was reported for
the first nine months of 1996 compared to a net loss of $1,778,000, or $0.38
per share, incurred for the same period last year.
COSTS AND EXPENSES: Gross margin as a percent of sales was 23.0% compared to
23.3% reported in the fiscal 1995 third quarter. This decrease was due to an
increase in product development costs primarily attributable to work on the
three-year supply contract announced April 3, with Royal Dutch Shell for the
Asian region and mix of sales. Sales related to this contract are estimated
at $50 to $70 million over a three year period. Gross margin for the nine
month periods ended August 31, 1996 and 1995 were 23.7% and 23.1%,
respectively. This increase is attributable to the favorable first quarter
results primarily due to higher sales volumes, actions taken to improve the
Company's cost structure and a favorable product sales mix, partially offset
by the cost described above.
Selling, general, and administrative expenses increased as a percent of sales
0.2% and 0.9% over comparable 1995 levels for the three month and nine month
periods, respectively. These increases are generally attributable to legal
fees to defend the Company against certain pending cases, increased employee
cost, and a customer satisfaction program related to previously sold
dispensers.
Net interest expense for the fiscal 1996 third quarter was $726,000 versus
$695,000 reported in the comparable period in 1995. This increase was
attributable to eight days of interest on the recently issued 11.5% Senior
Subordinated Notes offset by the interest income from the bond proceeds held
in escrow. Net interest expenses of $1,949,000 for the first nine months
decreased from net interest expense of $2,155,000 reported in the same period
last year. This decrease is due to reduced average borrowings throughout most
of the first nine month period offset by an increase in interest income.
Depreciation and amortization decreased $176,000 and $366,000, respectively,
for the three and nine month periods ended August 31, 1996 from the same
periods one year ago. These decreases were due to assets becoming fully
depreciated in previous periods and utilization of operating leases to
finance the current capital needs.
Foreign currency loss for the three months ended August 31, 1996 is decreased
considerably from the same period one year ago. In the prior year devaluation
of the major European currencies caused an adverse effect on our European
subsidiaries. The favorable impact in the nine period ended August 31, 1996
is due to the overall strengthening of those same European currencies during
the current year.
Other expenses,net as a percent of sales or in dollars did not significantly
change compared to the three and nine month periods ended August 31, 1995.
OTHER: Cash used in operations for the nine-month period ended August 31,
1996 was $1,124,000 versus $15,000 in the prior year's third quarter.
The decrease relative to the prior year reflects the financial effect
of deferred charges related to the acquisition of Sofitam International.
These items are reflected under the caption "Other assets and deferred charges"
in the balance sheet.
Funds used in investing and other activities were $97,281,000 in 1996,
representing $1,887,000 in capital expenditures less $1,007,000 in proceeds
from the sale of property and equipment. In addition, $96,401,000 net proceeds
from the issuance of 11.5% Senior Subordinated Notes was held in escrow to
fund the purchase of the fuel pump business of Sofitam International. Cash
used in investing and other activities in the 1995 third quarter was
$4,098,000 reflecting capital expenditures of $4,204,000 offset by proceeds
from the sale of equipment of $106,000.
Cash generated from financing activities of $102,426,000 in 1996 and
$1,775,000 in 1995 principally represented increases in debt less preferred
stock dividend payments. The 1996 increase in debt represents an increase
due to the placement of $100,000,000 11.5% Senior Subordinated Notes
maturing in the year 2006 and deferred charges for the acquisition.
DIVIDENDS: No cash dividends on common stock were declared during the period.
OTHER DEVELOPMENTS: The recent acquisition of the petroleum dispenser business
of Sofitam S.A., a Paris, France based corporation, launches us to a leadership
position in the petroleum dispensing industry with approximately $400 million
in combined product and service support revenues from around the world.
The $108 million purchase transaction was financed by the private placement
of $100 million principal amount of Tokheim Corporation 11.5% Senior
Subordinated Notes due 2006, and the utilization of a portion of an $80
million bank credit facility.
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS
(a) Exhibits:
(11) Details supporting the computation of primary and fully
diluted earnings per share.
<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 15, 1996 DOUGLAS K. PINNER
--------------- --------------------------------
President and Chief Executive
Officer
Date: October 15, 1996 JOHN A. NEGOVETICH
--------------- --------------------------------
President, N.A. Operations
and Chief Financial Officer
<PAGE>
TOKHEIM CORPORATION AND SUBSIDIARIES
EXHIBIT (11) - EARNINGS PER SHARE
FOR THE THREE MONTH AND NINE MONTH PERIODS
ENDED AUGUST 31, 1996 and AUGUST 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 nine month periods ended August 31, 1996 and
August 31, 1995:
<TABLE>
PRIMARY
-----------------------------------------
Three Months Ended Nine Months Ended
------------------ ------------------
August 31, August 31, August 31, August 31,
1996 1995 1996 1995
-----------------------------------------
<S> <C> <C> <C> <C>
Shares outstanding (in thousands):
Weighted average outstanding.......... 7,939 7,913 7,938 7,880
Share equivalents..................... -- -- -- --
Adjusted outstanding.................. 7,939 7,913 7,938 7,880
Net loss................................ $(112) $ (941) $ (244) (1,778)
Preferred stock dividends............... (385) (392) (1,159) (1,188)
Loss applicable to common stock......... $(497) $(1,333) $(1,403) $(2,966)
Net loss per common share............... $(0.06) $(0.17) $(0.18) $(0.38)
</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 Nine Months Ended
------------------ ------------------
August 31, August 31, August 31, August 31,
1996 1995 1996 1995
-----------------------------------------
<S> <C> <C> <C> <C>
Shares outstanding (in thousands):
Weighted average outstanding.......... 7,939 7,913 7,938 7,880
Share equivalents..................... 63 16 63 26
Weighted conversion of preferred
stock............................... 1,705 1,905 1,711 1,810
Adjusted outstanding.................. 9,707 9,834 9,712 9,716
Net loss................................ $ (112) $ (941) $ (244) $(1,778)
Incremental RSP expense................. (385) (392) (1,159) (1,188)
Loss applicable to common
stock................................. $ (497) $(1,333) $(1,403) $(2,966)
Net loss per common share............... $(0.05) $ (0.14) $ (0.14) $ (0.31)
</TABLE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Tokheim
Corporation's August 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> 9-MOS
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-END> AUG-31-1996
<CASH> 103375
<SECURITIES> 0
<RECEIVABLES> 39083
<ALLOWANCES> (935)
<INVENTORY> 38056<F1>
<CURRENT-ASSETS> 181990
<PP&E> 84227<F2>
<DEPRECIATION> 57852
<TOTAL-ASSETS> 217728
<CURRENT-LIABILITIES> 36586
<BONDS> 0
7639<F3>
0
<COMMON> 18904<F4>
<OTHER-SE> (370)<F5>
<TOTAL-LIABILITY-AND-EQUITY> 217728
<SALES> 166212
<TOTAL-REVENUES> 166212
<CGS> 116488<F6>
<TOTAL-COSTS> 116488<F6>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1949
<INCOME-PRETAX> (484)
<INCOME-TAX> (240)
<INCOME-CONTINUING> (244)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (244)
<EPS-PRIMARY> (0.18)
<EPS-DILUTED> (0.18)
<FN>
<F1>Represents gross inventory net of LIFO and loss reserves.
<F2>Represents gross PP&E.
<F3>Represents redeemable preferred stock of $24,000 less Guaranteed ESOP of
$12,232 and treasury stock of $4,129.
<F4>Represents common stock of $19,409 less Guaranteed ESOP of $303 and treasury
stock of $203.
<F5>Represents retained earnings of $8,298 less minimum pension liability of
$3,868 and foreign currency translation adjustments of $4,800.
<F6>Includes product development expenses and excludes depreciation.
