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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report: November 25, 1996
Date of Earliest Event Report: November 25, 1996
TOROTEL, INC.
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(Exact name of registrant as specified in its charter)
Missouri 2-33256 44-0610086
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
13402 South 71 Highway, Grandview, Missouri 64030
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(Address of principal executive offices, including zip code)
816-761-6314
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(Registrant's telephone number, including area code)
N/A
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(Former name or former address, if changed since last report.)
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ITEM 5. OTHER EVENTS.
Torotel, Inc., a Missouri corporation ("Torotel"), issued a press
release on November 25, 1996 announcing that it has recently learned that its
wholly-owned subsidiary, Torotel Products, Inc., in all likelihood failed to
perform some required "thermal shock" testing as frequently as required, and has
inaccurately certified that all required testing had been performed.
New Torotel management, which discovered the discrepancies, has made
immediate corrections and now believes Torotel Products is in full compliance
with the testing requirements.
Torotel has made voluntary disclosure to the United States Department
of Defense ("DOD") under the DOD Voluntary Disclosure Program and
expects to cooperate actively with any governmental investigation.
Pursuant to Torotel Products' contracts with multiple private
corporations to supply electronic components on Defense Department acquisitions,
Torotel Products is obligated to perform various tests on the electronic
components. Some of the contracts require that a "thermal shock" test be
performed on 100% of certain electronic components. Torotel Products' shipping
statements certify that all mandated tests were performed. These deficiencies
have been identified and corrected. If Torotel Products has made false
certifications it may be exposed to legal penalties and damages.
As a result of these apparent testing failures and false certifications,
parties to certain of Torotel Products' material contracts could have various
rights and remedies against Torotel Products. In addition, the Department of
Defense could have similar claims against Torotel Products. The successful
assertion of some or all of these claims would have a material adverse effect on
Torotel and its business and assets, as well as its revenues and income from
continuing operations.
The investigation by Torotel management into the reporting
discrepancies is continuing.
Separately, Torotel announced that the potential sale of shares of its
common stock by Torotel and its founder's family shareholders to Brockson
Investment Company ("Brockson") is under review. In the event these
transactions were consummated as previously announced, Brockson would acquire
more than 50 percent of the outstanding Torotel shares.
All trading of Torotel's common stock on the American Stock Exchange was
suspended before the markets opened on November 25, 1996.
For further information on Torotel by FAX, dial 1-800-PRO-INFO, ext. 155.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Exhibits.
Exhibit Description
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1. Press Release dated November 25, 1996
3
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TOROTEL, INC.
Date: November 25, 1996 By /s/ H. James Serrone
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H. James Serrone
Vice President of Finance and
Chief Financial Officer
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EXHIBIT INDEX
Exhibit Description
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99.1 Press Release dated November 25, 1996
5
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EXHIBIT 99.1
NEWS BULLETIN
TOROTEL
TRADED: ASE:TTL
For Further Information:
AT THE COMPANY: AT THE FINANCIAL RELATIONS BOARD:
Jim Serrone Lynne Franklin (General info) Chief Financial Officer
816/761-6314 312/266-7800
FOR IMMEDIATE RELEASE
MONDAY, NOVEMBER 25, 1996
NEW TOROTEL MANAGEMENT DISCOVERS TESTING DISCREPANCIES; VOLUNTARILY REPORTS SAME
TO DOD; BROCKSON DEAL UNDER REVIEW
KANSAS CITY, MO, November 25, Torotel, Inc. (AMEX:TTL) announced today that it
has recently learned that its wholly-owned subsidiary, Torotel Products, Inc.,
in all likelihood failed to perform some required "thermal shock" testing as
frequently as required, and has inaccurately certified that all required testing
had been performed.
New Torotel management, which discovered the discrepancies, has made
immediate corrections and now believes Torotel Products is in full compliance
with the testing requirements.
Torotel has made voluntary disclosure to the United States Department of
Defense ("DOD") under the DOD Voluntary Disclosure Program and expects to
cooperate actively with any governmental investigation.
Pursuant to Torotel Products' contracts with multiple private corporations
to supply electronic components on Defense Department acquisitions, Torotel
Products is obligated to perform various tests on the electronic components.
Some of the contracts require that a "thermal shock" test be performed on 100%
of certain electronic components. Torotel Products' shipping statements certify
that all mandated tests were performed. These deficiencies have been identified
and corrected. If Torotel Products has made false certifications it may be
exposed to legal penalties and damages.
As a result of these apparent testing failures and false certifications,
parties to certain of Torotel Products' material contracts could have various
rights and remedies against Torotel Products. In addition, the Department of
Defense could have similar claims against Torotel Products. The successful
assertion of some or all of these claims would have a material adverse effect on
Torotel and its business and assets, as well as its revenues and income from
continuing operations.
<PAGE>
The investigation by Torotel management into the reporting discrepancies is
continuing.
Separately, Torotel announced that the potential sale of shares of its
common stock by Torotel and its founder's family shareholders to Brockson
Investment Company is under review. In the event these transactions were
consummated as previously announced, Brockson would acquire more than 50 percent
of the outstanding Torotel shares.
Torotel, Inc. specializes in the design and manufacture of high-power
switching power supplies and a broad range of precision magnetic components used
in commercial and military electronics. Torotel's products are sold to original
equipment manufacturers for use in telecommunications systems, digital control
devices, and avionics equipment.
For further information on Torotel by FAX, dial 1-800-PRO-INFO, ext. 155.
