April 14, 1997
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, 1997.
Sincerely,
TOKHEIM CORPORATION
JOHN W. PIFER
Corporate Director, Accounting & Control
enclosure
pc: New York Stock Exchange
Division of Stock List
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, 1997
-----------------
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, 1997, 7,972,224 shares of voting common stock were
outstanding.
In addition, 793,160 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>
Unaudited
Three Months Ended
February 28, February 29,
1997 1996
--------------------------
<S> <C> <C>
NET SALES............................... $92,024 $49,548
Cost of sales, exclusive of items
listed below........................... 70,391 37,805
Selling, general, and administrative
expenses............................... 15,903 10,382
Depreciation and amortization........... 1,928 1,070
Merger and acquisition costs and other
unusual items......................... ---- 600
OPERATING PROFIT (LOSS) 3,802 (309)
Interest expense, net.................. 3,740 748
Foreign currency gains................. (119) (290)
Minority interest...................... (43) ----
Other (income) expense, net............ (69) 1
Earnings (loss) before income taxes..... 293 (768)
Income taxes............................ 167 (155)
NET EARNINGS (LOSS)..................... $ 126 $ (613)
Preferred stock dividends............... $ 383 $ 389
Net loss applicable to common stock..... $ (257) $ (1,002)
Primary loss per common share........... $ (0.03) $ (0.13)
Weighted average shares outstanding.. 7,980 7,937
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
The interim financial statements are unaudited and reflect all adjustments
(consisting solely of normal recurring adjustments) that, in the opinion of
management, are necessary for a fair statement of results of the interim
periods presented. This report includes information in a condensed form
and should be read in conjunction with the audited consolidated financial
statements included in Form 10-K for the fiscal year ending November 30,
1996, filed by the Company with the Securities and Exchange Commission on
February 28,1997. The results of the operations for the three months ended
February 29, 1997 are not necessarily indicative of the results to be
expected for the full year or any other interim period.
Amounts for interim periods are unaudited. Amounts for the year ended
November 30, 1996 were derived from audited financial statements included in
the 1996 Annual Report to Stockholders.
Certain prior year amounts in these financial statements have been
reclassified to conform with current year presentation.
Prior year quarter amounts have been restated for a change in inventory
valuation from the last-in, first-out method to the first-in, first-out
method. In addition the three months ended February 28, 1997 includes
the operations of the newly acquired subsidiaries (Sofitam). For further
discussions with regard to these matters, see the Company's 1996
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.
Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of" is effective for the year ending November 30, 1997. This statement
requires that long-lived assets and certain identifiable intangibles to be
held and used by an entity be reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may
not be fully recoverable. In the opinion of management, this statement is
not expected to materially impact the Company's financial position or results
of operations.
SFAS No. 123, "Accounting for Stock-Based Compensation", is effective for the
year ending November 30, 1997. This statement encourages, but does not
require, companies to recognize compensation expense for grants of stock,
stock options, and other equity instruments based on a fair value method of
accounting. Companies that choose not to adopt the new expense recognition
rules of SFAS No. 123 will continue to apply the existing accounting rules of
Accounting Principles Board Opinion (APBO) No. 25, but will be required to
provide pro forma disclosure of the compensation expense determined under the
fair value provisions of SFAS No. 123, if material. APBO No. 25 requires
that there be no recognition of compensation expense for the stock-based
compensation arrangements provided by the Company, where the exercise price
is equal to or greater than the market price at the date of grant. The
Company expects to continue to follow the accounting provisions of APBO No.
25 for stock-based compensation and to furnish the pro forma disclosures
required under SFAS No. 123, if material.
SFAS No. 125, "Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities", SFAS No. 128, "Earnings Per Share",
and SFAS No. 129,"Disclosure of Information about Capital Structure", are
effective for the year ending November 30, 1998. In the opinion of
management, SFAS No. 125 and 129 will not have a material impact on the
Company's financial position or results of operations. Management has not
yet determined the impact that SFAS No. 128 will have on the presentation
of the Company's results of operations.
American Institute of Certified Public Accountants Statement of Position
No. 96-1, "Environmental Remediation Liabilities," is effective for the
year ending November 30, 1998. Management has not yet determined the
impact that adoption of this statement will have on the Company's financial
position or results of operations, but does not anticipate that material
liabilities will need to be recorded in addition to those already provided
for under the provisions of generally accepted accounting principles as
prescribed by SFAS No. 5, "Accounting for Contingencies".
See financial statements and accompanying notes in the Company's 1996 Annual
Report.
<PAGE>
CONSOLIDATED CONDENSED BALANCE SHEET
(IN THOUSANDS)
(Unaudited)
February 28, November 30,
1997 1996
------------ -------------
ASSETS
Current assets:
Cash and cash equivalents..................... $ 6,414 $ 9,814
Receivables, net.............................. 79,777 94,402
Inventories:
Raw materials and supplies................. 31,011 30,689
Work in process............................ 32,071 33,080
Finished goods............................. 12,576 11,145
75,658 74,914
Prepaid expenses.............................. 6,238 5,056
Total current assets.......................... 168,087 184,186
Property, plant, and equipment, net........... 39,233 41,010
Other tangible assets......................... 3,107 3,836
Goodwill, net................................. 58,360 62,692
Other non-current assets and deferred charges,
net......................................... 18,004 18,137
Total assets.................................. $286,791 $309,861
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt.......... $ 3,044 $ 4,447
Notes payable, banks.......................... 5,603 7,168
Cash overdraft................................ 12,822 9,733
Accounts payable.............................. 44,531 53,593
Accrued expenses.............................. 48,023 53,618
Total current liabilities..................... 114,023 128,559
Senior subordinated notes..................... 100,000 100,000
Long-term debt, less current maturities....... 21,617 22,402
Guaranteed Employees' Stock Ownership
Plan obligation............................ 11,143 11,995
Postretirement benefit liability.............. 15,994 16,051
Minimum pension liability..................... 3,248 3,248
Other long-term liabilities................... 290 342
Deferred income taxes......................... 509 524
Minority interest............................. 882 925
267,706 284,046
Redeemable convertible preferred stock........ 24,000 24,000
Guaranteed Employees' Stock Ownership
Plan obligation............................ (11,143) (11,692)
Treasury stock, at cost....................... (4,222) (4,171)
8,635 8,137
Common stock.................................. 19,465 19,452
Guaranteed Employees' Stock Ownership
Plan obligation............................ ---- (303)
Minimum pension liability..................... (3,248) (3,248)
Foreign currency translation adjustments...... (14,557) (7,271)
Retained earnings............................. 8,982 9,240
10,642 17,870
Less treasury stock, at cost.................. (192) (192)
10,450 17,678
Total liabilities and stockholders' equity.... $286,791 $309,861
<PAGE>
CONSOLIDATED CONDENSED
STATEMENT OF CASH FLOWS
(IN THOUSANDS)
(Unaudited)
Three Months Ended
-------------------------
February 28, February 29,
1997 1996
------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss)............................... $ 126 $ (613)
Adjustments to reconcile net earnings (loss) to
cash provided from (used in) operations:
Depreciation and amortization................. 1,928 1,070
(Gain) loss on sale of property, plant, and
equipment................................... 4 (27)
Deferred income taxes......................... 14 (55)
Changes in assets and liabilities:
Receivables, net............................ 9,306 12,692
Inventories................................. (4,311) (2,855)
Prepaid expenses............................ (1,444) 262
Accounts payable............................ (5,931) (4,170)
Accrued expenses............................ (3,074) (3,614)
U.S. and foreign income taxes............... 32 (177)
Other....................................... (532) (1,567)
Net cash provided from (used in) operations....... (3,883) 946
CASH FLOWS FROM INVESTING AND OTHER ACTIVITIES:
Plant and equipment additions..................... (1,539) (787)
Proceeds from sale of property, plant, and
equipment...................................... 214 850
Net cash provided from (used in) investing and
other activities............................... (1,325) 63
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in term debt.................. (1,211) 230
Increase (decrease) notes payable, banks.......... (887) 848
Increase cash overdraft........................... 3,944 917
Proceeds from issuance of common stock............ 13 ---
Treasury stock, net............................... (51) (139)
Preferred stock dividends......................... (383) (389)
Net cash provided by financing activities......... 1,426 1,467
EFFECT OF TRANSLATION ADJUSTMENT ON CASH.......... 382 (24)
CASH AND CASH EQUIVALENTS:
Increase (decrease) in cash....................... (3,400) 2,452
Beginning of year................................. 9,814 5,462
End of period..................................... $ 6,414 $ 7,914
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Sales for the first quarter of 1997 reflected an 85.7% increase over those
recorded in the same quarter in the prior year with international sales
totaling $47,981,000 and domestic demand remaining strong. International
sales totaled 52% of revenue. The proportion of international sales would
even be greater if export sales were included.
SALES: Consolidated sales for the fiscal 1997 first quarter were $92,024,000
versus sales of $49,548,000 reported in the comparable period in 1996. The
improvement in sales is attributable principally to the acceptance of new
products by the domestic marketplace and the acquisition of Sofitam.
EARNINGS: Consolidated profit in the fiscal 1997 first quarter was
$126,000, or $0.01 per share on a primary basis, compared to a net loss of
$613,000, or $0.10 per share, reported in the previous year's first quarter.
After payment of preferred dividends, on a fully diluted basis, the net loss
was $0.03 per share compared to a net loss of $0.13 per share in the prior
year. On a fully diluted basis, the net loss was $247,000 versus $1,002,000
in the prior year.
COSTS AND EXPENSES: Gross margin excluding depreciation during the first
quarter was 23.5% compared to 23.7% in the fiscal 1996 first quarter. The
small decrease in gross margin was due primarily to product mix.
Selling, general, and administrative expenses decreased to 17.3% as a percent
of sales from 20.9% in the similar period one year ago. The company started
a cost containment program in the fourth quarter of 1996 to reduce personnel
headcount. In addition, the Sofitam acquisition substantially increased
revenue during the quarter as compared to the prior year.
Net interest expense for the fiscal 1997 first quarter was $3,740,000 versus
$748,000 reported in the first quarter of 1996. This increase in interest
expense was due to the placement of senior subordinated debt in the third
quarter in 1996. During 1996, the company issued $100,000,000 of senior
subordinated notes to finance the acquisition of Sofitam. The interest for
the first quarter 1997 is net of $500,000 of interest income accrued as
estimated tax claims.
Depreciation and amortization increased $1,928,000 in the first quarter of
1997 from $1,070,000 in the first quarter of 1996. The increase was due to
additional depreciation on assets acquired as part of the Sofitam
acquisition. In addition, as part of the Sofitam acquisition, the company
recorded goodwill and depreciation and amortization expense includes the
amortization of goodwill as part of this expense. The decrease in goodwill
in the balance sheet is primarily due to translation adjustments caused by
the declining value of European currencies, primariliy the French Franc.
The Company expects to incur approximately $2,100,000 of restructuring
charges related to the consolidation of former Tokheim subsidiaries. These
amounts will be charged to expense as employee groups are notified. There
were no such notifications in the first quarater of 1997.
Foreign currency gain for the first quarter was $119,000 versus a gain of
$290,000 in the prior year. The decrease in the amount of gain versus the
prior year was due to the strengthening of the U.S. dollar versus
the European basket of currencies and, in particular, as against the French
Franc.
The Company recorded minority interest income of $43,000 in the first
quarter of 1997. The company acquired entitites as part of the Sofitam
acquisition that have minority ownership.
Income taxes for the quarter were $167,000 versus a gain of $155,000 in the
first quarter of 1996. The increase in income tax expense was due to foreign
taxes being accrued in the Sofitam companies that recorded taxable income
during the first quarter of 1997.
OTHER: Cash used in operations for the first quarter of 1997 was $3,883,000
versus cash provided from operations of $946,000 in the first quarter of
1996. The major cause of the usage of cash was due to a decrease in accounts
payable of $5,931,000 and accrued expenses of $3,074,000 and an increase in
inventories of $4,311,000. The negative cash flow changes were due to the
seasonal nature of domestic shipments and the effect of cold weather in
Europe. The first quarter traditionally is the lowest level of domestic
shipments as compared to the fourth quarter which is the strongest. As such,
there is decrease in payables and accrued expenses which relate back to the
strong activity in the fourth quarter of 1996.
Funds used in investing activities relate to capital expenditures of $1,539,000
during the quarter as compared to $787,000 in the prior year. Funds generated
from investing activities principally came from proceeds on the sale of
property, plant, and equipment.
Cash flows from investing activities showed a reduction of long term debt
of $1,211 and decrease in notes payable, banks of $887,000. The Company saw
an increase of cash overdraft in the quarter of $3,944,000 due to the
inclusion of the Sofitam acquisition.
DIVIDENDS: No cash dividends on common stock were declared during the period.
OTHER DEVELOPMENTS: The Company incurred a foreign translation loss during the
quarter of $7,286,000 which was charged against Foreign Currency translation
adjustments. This was due to the decline of the French Franc against the
U.S. dollar on long term intercompany assets. It should be noted that the
Company's bank covenants exclude foreign currency gains or losses in the
calculation of bank covenants. The company was in compliance with the
required financial ratios to remain in compliance with all bank covenants
during the first quarter of 1997.
In conjunction with the Sofitam acquisition, the Company expects to incur
the following commitments: the Company will spend $9,800,000 million to close
redundant Sofitam operations in Europe. This expenditure will be charged
against the acquisition accruals. The Company will also spend $6,300,000 for
capital assets to expand the Normandy, France, plant, and upgrade information
systems. Finally, the Company anticipates incurring expenses of $2.1 million
against operating income to close certain existing operations. None of the
commitments have been incurred as of the first quarter of 1997 and remain
outstanding and will effect the results of operations in future periods.
<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: April 14, 1997 /s/ DOUGLAS K. PINNER
--------------- --------------------------------
Chairman, President and
Chief Executive Officer
Date: April 14, 1997 /s/ JOHN M. TOMLINSON
--------------- --------------------------------
Vice-President
<PAGE>
TOKHEIM CORPORATION AND SUBSIDIARIES
EXHIBIT (11) - EARNINGS PER SHARE
FOR THE QUARTERS ENDED
FEBRUARY 28, 1997 AND FEBRUARY 29, 1996
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, 1997 and February 29, 1996:
<TABLE>
PRIMARY
------------------
1997 1996
------------------
<S> <C> <C>
Shares outstanding (in thousands):
Weighted average outstanding.......... 7,938 7,937
Share equivalents..................... 42 ---
Adjusted outstanding.................. 7,980 7,937
Net earnings (loss)..................... $ 126 $ (613)
Preferred stock dividends............... (383) (389)
Loss applicable to common stock......... $(257) $(1,002)
Net loss per common share............... $(0.03) $(0.13)
</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
------------------
1997 1996
------------------
<S> <C> <C>
Shares outstanding (in thousands):
Weighted average outstanding.......... 7,938 7,937
Share equivalents..................... 45 53
Weighted conversion of preferred
stock............................... 1,863 1,707
Adjusted outstanding.................. 9,846 9,697
Net earnings (loss)..................... $ 126 $ (613)
Incremental RSP expense................. (383) (389)
Loss applicable to common stock......... $ (257) $(1,002)
Net loss per common share............... $(0.03) $ (0.10)
</TABLE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Tokheim
Corporation's February 29, 1997, 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> 3-MOS
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-END> FEB-28-1997
<CASH> 6414
<SECURITIES> 0
<RECEIVABLES> 82797
<ALLOWANCES> 3020
<INVENTORY> 75658<F1>
<CURRENT-ASSETS> 168087
<PP&E> 99574<F2>
<DEPRECIATION> 60341
<TOTAL-ASSETS> 286791
<CURRENT-LIABILITIES> 114023
<BONDS> 100000
<COMMON> 19273<F4>
8635<F3>
0
<OTHER-SE> (8823)<F5>
<TOTAL-LIABILITY-AND-EQUITY> 286791
<SALES> 92024
<TOTAL-REVENUES> 92024
<CGS> 70391<F6>
<TOTAL-COSTS> 70391<F6>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3740
<INCOME-PRETAX> 293
<INCOME-TAX> 167
<INCOME-CONTINUING> 126
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 126
<EPS-PRIMARY> (0.03)
<EPS-DILUTED> (0.03)
<FN>
<F1>Represents gross inventory net of loss reserves.
<F2>Represents gross PP&E.
<F3>Represents redeemable preferred stock of $24,000 less Guaranteed ESOP of
$11,143 and treasury stock of $4,222.
<F4>Represents common stock of $19,465 less treasury stock of $192.
<F5>Represents retained earnings of $8,982 less minimum pension liability of
$3,248 and foreign currency translation adjustments of $14,557.
<F6>Includes product development expenses and excludes depreciation and
amortization.
