FORM 10-QSB
Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the quarterly period ended October 31, 1997
Commission File No. 2-33256
TOROTEL, INC.
(Exact name of small business issuer as specified in its charter)
MISSOURI 44-0610086
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
13402 SOUTH 71 HIGHWAY, GRANDVIEW, MISSOURI 64030
(Address of principal executive offices)
(816) 761-6314
(Issuer's telephone number)
NONE
(Former name, former address and former fiscal year, if change since
last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months
and (2) has been subject to such filing requirements for the past 90
days.
Yes X No
As of December 8, 1997, there were 2,808,785 shares of Common Stock, $.50 Par
Value, outstanding.
TOROTEL, INC. AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet as of October 31, 1997 1
Consolidated Statements of Operations for the six months
ended October 31, 1997 and 1996 2
Consolidated Statements of Operations for the three months
ended October 31, 1997 and 1996 3
Consolidated Statements of Cash Flows for the six months
ended October 31, 1997 and 1996 4
Notes to Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis or Plan of Operation 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED BALANCE SHEET (Unaudited)
As of October 31, 1997
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash $ 114,000
Accounts receivable, net 1,892,000
Inventories (Note 2) 3,013,000
Prepaid expenses and other current assets 159,000
5,178,000
Property, plant and equipment, net 1,722,000
Deferred tax asset (Note 3) 228,000
Other assets 39,000
$ 7,167,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term revolving credit line (Note 4) $ 971,000
Current maturities of long-term debt (Note 5) 529,000
Current maturity of note payable to
former officer (Note 6) -
Trade accounts payable 846,000
Accrued liabilities (Note 6) 420,000
2,766,000
Long-term debt, less current maturities (Note 5) 1,065,000
Note and interest payable to former
officer (Note 6) 418,000
Commitments and contingencies (Notes 6 and 7) 486,000
Stockholders' equity (Note 8):
Common stock, at par value 1,440,000
Capital in excess of par value 8,672,000
Accumulated deficit (7,475,000)
2,637,000
Less treasury stock, at cost 205,000
2,432,000
$ 7,167,000
</TABLE>
The accompanying notes are an integral part of these statements.
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Six Months Ended October 31,
<TABLE>
<S> <C> <C>
1997 1996
Net sales $ 6,642,000 $ 7,835,000
Cost of goods sold 5,001,000 5,699,000
Gross profit 1,641,000 2,136,000
Operating expenses:
Engineering 396,000 405,000
Selling, general and administrative 1,165,000 1,716,000
1,561,000 2,121,000
Earnings from operations 80,000 15,000
Other income (expense):
Interest expense (133,000) (127,000)
Other, net (71,000) (12,000)
(204,000) (139,000)
Earnings (loss) before provision for
income taxes and cumulative effect of
change in method of accounting (124,000) (124,000)
Provision for income taxes (Note 3) - -
Earnings (loss) before cumulative effect
of change in method of accounting (124,000) (124,000)
Cumulative effect of change in method of
accounting - (506,000)
Net earnings (loss) $ (124,000) $ (630,000)
Earnings (loss) per common and common
equivalent share:
Earnings (loss) before cumulative
effect $ (.04) $ (.04)
Cumulative effect - (.18)
$ (.04) $ (.22)
Weighted average common and common
equivalent shares outstanding 2,809,000 2,798,000
</TABLE>
The accompanying notes are an integral part of these statements.
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended October 31,
<TABLE>
<S> <C> <C>
1997 1996
Net sales $ 3,265,000 $ 3,768,000
Cost of goods sold 2,550,000 2,751,000
Gross profit 715,000 1,017,000
Operating expenses:
Engineering 189,000 210,000
Selling, general and administrative 561,000 989,000
750,000 1,199,000
Earnings (loss) from operations (35,000) (182,000)
Other income (expense):
Interest expense (66,000) (57,000)
Other, net (1,000) (1,000)
(67,000) (58,000)
Earnings (loss) before provision for
income taxes (102,000) (240,000)
Provision (credit) for income taxes (Note 3) - (40,000)
Net earnings (loss) $ (102,000) $ (200,000)
Earnings (loss) per common and common
equivalent share $ (.03) $ (.07)
Weighted average common and common
equivalent shares outstanding 2,809,000 2,806,000
</TABLE>
The accompanying notes are an integral part of these statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended October 31,
<TABLE>
<S> <C> <C>
1997 1996
Cash flows from operating activities:
Net earnings (loss) $ (124,000) $ (630,000)
Adjustments to reconcile net earnings to
net cash provided by operations:
Loss from estimated government penalty 70,000 -
Depreciation and amortization 172,000 152,000
Deferred tax asset - -
Increase (decrease) in cash flows from
operations resulting from changes in:
Accounts receivable 228,000 1,227,000
Inventories (219,000) (590,000)
Prepaid expenses and other assets (72,000) (98,000)
Trade accounts payable (107,000) 156,000
Accrued liabilities (18,000) 279,000
54,000 1,126,000
Net cash provided by (used in) operating
activities (70,000) 496,000
Cash flows from investing activities:
Capital expenditures (79,000) (199,000)
Net cash used in investing activities (79,000) (199,000)
Cash flows from financing activities:
Borrowings against credit line 785,000 3,834,000
Payments against credit line (670,000) (4,174,000)
Proceeds from issuance of long-term debt - 113,000
Principal payments on long-term debt (42,000) (44,000)
Payments on capital lease obligations (7,000) (7,000)
Proceeds from issuance of common stock - 51,000
Acquisition of treasury stock 1,000 (50,000)
Net cash provided by (used in) financing
activities 67,000 (277,000)
Net increase (decrease) in cash $ (82,000) $ 20,000
Cash at beginning of year 196,000 149,000
Cash at end of October $ 114,000 $ 169,000
Supplemental Disclosures of Cash Flow
Information
Cash paid during the period for:
Interest $ 110,000 $ 164,000
Income taxes $ - $ -
</TABLE>
The accompanying notes are an integral part of these statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Note 1 - Basis of Presentation
The accompanying unaudited consolidated financial statements
reflect the normal recurring adjustments which are, in the opinion of
management, necessary to present fairly the company's financial position at
October 31, 1997, and the results of operations for the three and six months
ended October 31, 1997.
The financial statements contained herein should be read in
conjunction with the company's financial statements and related notes filed
on Form 10-KSB for the year ended April 30, 1997.
Note 2 - Inventories
The components of inventories are summarized as follows:
<TABLE>
<S> <C>
Raw materials, less allowance for obsolescence of $739,000 $ 1,808,000
Work in process 778,000
Finished goods 427,000
$ 3,013,000
</TABLE>
Note 3 - Income Taxes
The net deferred tax asset included in the accompanying
consolidated balance sheet at October 31, 1997, includes the tax effects of
temporary differences and carryforwards which are the source of the
deferred asset, less a valuation allowance.
The components of the net deferred tax asset are summarized as
follows:
<TABLE>
<S> <C>
Net operating loss carryforwards $ 2,009,000
Inventory valuation reserve 245,000
Tax credit carryforwards 406,000
Property, plant and equipment 188,000
Other 60,000
2,908,000
Less valuation allowance 2,680,000
$ 228,000
</TABLE>
The tax credit and operating loss carryforwards expire in various
amounts in the years 1997 through 2012.
Note 4 Short-term Revolving Credit Line
On September 2, 1997, the company renewed its revolving credit
agreement with Phillipsburg National Bank & Trust Company (PNBT). The
credit agreement, which provides a $2,500,000 revolving credit line, expires
August 31, 1998. Advances under the credit line are limited to the sum of
75% of eligible billed receivables and 50% of inventories, net of reserves.
The revolving credit line is collateralized by trade accounts receivable,
inventories, and a third lien mortgage on OPT's facility. Under the terms of
the agreement, the outstanding balance of the revolving line bears interest
at 1/2% over the bank's prime lending rate. As of October 31, 1997, the
company had utilized $971,000 of the revolving credit line and the effective
borrowing rate was 9%. The company is required to comply with certain
covenants including restrictions on the payment of cash dividends.
Note 5 Long-term Debt
The company has a $500,000 note with NationsBank (formerly
Boatmen's Bank IV) with a maturity date of November 29, 1997. As of
October 31, 1997, the outstanding balance was $452,000. The note is
collateralized by the land and buildings in Grandview, Missouri, and the
unimproved land in Kansas City, Missouri. The company has arranged new
financing through Phillipsburg National Bank & Trust with a loan closing
scheduled on or about December 15, 1997.
Note 6 - Contingency for Estimated Penalty
On May 6, 1997, Torotel Products, Inc. was accepted into the
Voluntary Disclosure Program of the United States Department of Defense,
resulting from its failure to perform some required "thermal shock" testing as
frequently as required, and inaccurately certifying that all required testing
had been performed. As a result of the company's investigation into the
thermal shock deficiencies, which was first reported in November 1996, the
company recorded an estimated charge of $416,000 against earnings in its
fiscal fourth quarter ended April 30, 1997. Because the investigation has
been ongoing, the company recently determined that there also were some
deficiencies in performing some required electrical testing as frequently as
required. As a result, the company recorded an additional estimated charge
of $70,000 against earnings in its fiscal first quarter ended July 31, 1997.
The aggregate amount of the estimated penalty is still subject to fluctuation
as further evidence is investigated. The company continues to cooperate as
the government conducts its investigation and continues to pursue the
existence of other damages.
At this time, the company is not certain when payment of the
damage amount will be required; however, the company does not anticipate
making any payments during the next twelve months. As a result, the entire
$486,000 has been classified as a long-term liability in the accompanying
consolidated balance sheet.
The company believes that certain of its former officers may have
been responsible for the misconduct related to the test failures, and
continues to evaluate ways of recovering the damages. In the
meantime, the company has suspended all principal and interest payments
due under a note payable to a former officer, and does not anticipate making
any additional payments during the next twelve months. As a result, as of
October 31, 1997, the aggregate amount due on the note of $418,000, which
consists of the outstanding principal of $384,000 plus the accrued interest of
$34,000, has been classified as a long-term liability in the accompanying
consolidated balance sheet.
The legal fees associated with the DOD investigation have
amounted to $35,000 during the current fiscal year, and $242,000 in
aggregate since the investigation started last year.
Note 7 Other Litigation
Torotel, Inc. and Torotel Products, Inc. have both been named as
defendants in a lawsuit brought by Joseph Turner in the U.S. District Court
for the Western District of Missouri. The case number is 96-0646-CV-W-5
and was filed on June 18, 1996. Plaintiff alleges a racially motivated failure
to hire and that Torotel Products, Inc. has discriminated against minorities in
its hiring practices. Plaintiff's motion to have the case certified as a class
action was approved by the court on September 30, 1997, with the court
entering an Order Concerning Class Certification. The court certified the
case as a class action regarding the liability phase and deferred certification
of a damage phase. The case has a trial setting on May 11, 1998. The
company believes it has a meritorious defense and continues to vigorously
defend the case.
The legal fees associated with this lawsuit have amounted to
$20,000 during the current fiscal year, and $54,000 in aggregate since the
lawsuit was filed.
Note 8 - Employee Stock Options
Employee stock options are accounted for under APB Opinion 25,
Accounting for Stock Issued to Employees, and related interpretations. The
exercise price of each option equals the market price of the company's
common stock on the date of grant. Accordingly, no compensation cost has
been recognized. The company chose not to adopt Statement of Financial
Accounting Standards 123, Accounting for Stock-Based Compensation. The
difference in the two methods of accounting for stock options is not deemed
to have a material effect on the fair value of the options at the grant date.
Stock option transactions under the 1994 Incentive Compensation
Plan for the six months ended October 31, 1997 and 1996, are summarized
as follows:
<TABLE>
<S> <C> <C> <C> <C>
1997 1996
Weighted Weighted
Shares Average Shares Average
Under Exercise Under Exercise
Option Price Option Price
Outstanding at beginning of year 150,000 $1.00 - -
Granted - - - -
Exercised - - - -
Forfeited - - - -
Outstanding at end of October 150,000 $1.00 - -
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
1997 1996
Weighted Weighted
Shares Average Shares Average
Under Exercise Under Exercise
Option Price Option Price
Options exercisable at end of October - - - -
Weighted average fair value of
options granted during the year - -
</TABLE>
The following information applies to options outstanding at October 31, 1997:
<TABLE>
<S> <C>
Number outstanding 150,000
Range of exercise prices $1.00
Weighted average exercise price $1.00
Weighted average remaining contractual life 8.1 years
</TABLE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
The discussion and analysis of the results of operations includes the
operations of Torotel, Inc., and its subsidiaries, Torotel Products, Inc. and
OPT Industries, Inc.
SIX MONTHS ENDED OCTOBER 31, 1997 VERSUS SIX MONTHS
ENDED OCTOBER 31, 1996
Net sales decreased 15%. The net sales of Torotel Products
decreased 8% from $3,299,000 to $3,036,000 due primarily to a lower
shippable backlog position at the beginning of the fiscal year and the
elimination of some lower-margin jobs for non-major customers. These
decreases were offset partially by a $212,000 increase in sales of the potted
coil assembly for the Hellfire II missile system. OPT's net sales decreased
20% from $4,536,000 to $3,606,000 due primarily to lower sales of
immersion power supplies to a major customer. No new orders are
expected from this major customer which will have a significant adverse
impact on sales in the third fiscal quarter ending January 31, 1998. Orders
for OPT's new power supply products are expected to improve the sales
outlook in the fourth fiscal quarter ending April 30, 1998.
Gross profit as a percentage of net sales decreased nearly 3%. The
gross profit percentage of Torotel Products decreased slightly due primarily
to operating inefficiencies resulting from labor shortages and the conversion
from a manual to a computerized work-order system. The gross profit
percentage of OPT decreased 4% due primarily to lower sales volume
without a comparable decrease in fixed production costs.
Engineering expenses decreased 2%. The engineering expenses of
Torotel Products decreased 7% from $151,000 to $141,000 due primarily to
a reduction in clerical personnel. The engineering expenses of OPT
increased slightly from $254,000 to $255,000.
Selling, general and administrative (SG&A) expenses decreased
32%. The SG&A expenses of Torotel, Inc. decreased 37% from $186,000 to
$117,000 due primarily to a $36,000 decrease in compensation costs arising
from a bonus award in fiscal 1996; a $16,000 decrease in professional fees;
a $12,000 decrease in travel costs; and a $5,000 decrease in consulting
costs. The SG&A expenses of Torotel Products decreased 43% from
$980,000 to $556,000 due primarily to a $257,000 restructuring charge
incurred in fiscal 1996; a $131,000 decrease in payroll costs due to a
reduction in personnel; a $12,000 decrease in bank charges; an $11,000
decrease in disposal costs for hazardous materials; an $8,000 decrease in
sales commissions; and a $5,000 decrease in advertising costs. The SG&A
expenses of OPT decreased 11% from $550,000 to $492,000 due primarily
to an $18,000 decrease in payroll costs; a $13,000 decrease in professional
fees; a $9,000 decrease in computer maintenance costs; a $7,000 decrease
in bank charges; a $7,000 decrease in advertising costs; and a $4,000
decrease in office supplies.
Interest expense increased 5%. The interest expense of Torotel,
Inc. remained unchanged at $21,000. The interest expense of Torotel
Products increased nearly 40% from $43,000 to $60,000 due to a higher
aggregate borrowing level. The interest expense of OPT decreased 17%
from $63,000 to $52,000 due to a lower aggregate borrowing level.
Sundry non-operating expense increased due to a $70,000 charge in
the current fiscal year for an estimated penalty as discussed in Note 6 of
Notes to Consolidated Financial Statements.
For the reasons discussed above, consolidated pretax loss remained
unchanged at $124,000. The pretax loss of Torotel, Inc. decreased from
$207,000 to $138,000. The pretax earnings of Torotel Products increased
from a loss of $243,000 to a profit of $10,000. The pretax earnings of OPT
decreased from $326,000 to $4,000.
THREE MONTHS ENDED OCTOBER 31, 1997 VERSUS THREE MONTHS
ENDED OCTOBER 31, 1996
Net sales decreased 13%. The net sales of Torotel Products
decreased 5% from $1,538,000 to $1,460,000 due primarily to labor
shortages that delayed scheduled shipments. OPT's net sales decreased
19% from $2,230,000 to $1,805,000 due primarily to lower sales of
immersion power supplies to a major customer. No new orders are
expected from this major customer which will have a significant adverse
impact on sales in the third fiscal quarter ending January 31, 1998. Orders
for OPT's new power supply products are expected to improve the sales
outlook in the fourth fiscal quarter ending April 30, 1998.
Gross profit as a percentage of net sales decreased 5%. The gross
profit percentage of Torotel Products decreased 6% due primarily to
operating inefficiencies resulting from labor shortages and the conversion
from a manual to a computerized work-order system. The gross profit
percentage of OPT decreased 4% due primarily to lower sales volume
without a comparable decrease in fixed production costs.
Engineering expenses decreased 10%. The engineering expenses
of Torotel Products decreased 15% from $80,000 to $68,000 due primarily to
a reduction in clerical personnel. The engineering expenses of OPT
decreased 7% from $130,000 to $121,000 due primarily to lower payroll
costs.
Selling, general and administrative (SG&A) expenses decreased
43%. The SG&A expenses of Torotel, Inc. decreased 44% from $115,000 to
$64,000 due primarily to a $36,000 decrease in compensation costs arising
from a bonus award in fiscal 1996; an $8,000 decrease in professional fees;
and a $7,000 decrease in travel costs. The SG&A expenses of Torotel
Products decreased nearly 58% from $605,000 to $257,000 due primarily to
a $257,000 restructuring charge incurred in fiscal 1996; a $46,000 decrease
in professional fees; a $24,000 decrease in payroll costs due to a reduction
in personnel; an $11,000 decrease in disposal costs for hazardous materials;
and a $10,000 decrease in education costs. The SG&A expenses of OPT
decreased 11% from $269,000 to $240,000 due primarily to a $9,000
decrease in payroll costs, a $9,000 decrease in professional fees, a $5,000
decrease in computer maintenance costs, a $4,000 decrease in advertising
costs, and a $2,000 decrease in office supplies.
Interest expense increased 16%. The interest expense of Torotel,
Inc. remained unchanged at $11,000. The interest expense of Torotel
Products increased 48% from $21,000 to $31,000 due to a higher aggregate
borrowing level. The interest expense of OPT decreased slightly from
$25,000 to $24,000.
For the reasons discussed above, the consolidated pretax loss
decreased from $240,000 to $102,000. The pretax loss of Torotel, Inc.
decreased from $126,000 to $75,000. The pretax loss of Torotel Products
decreased from $281,000 to $39,000. The pretax earnings of OPT
decreased from $167,000 to $12,000.
LIQUIDITY AND CAPITAL RESOURCES
Historically, the company has relied on funds generated internally
and bank borrowings to meet its normal operating requirements and to
service bank indebtedness. As discussed in Note 4 of Notes to Consolidated
Financial Statements, the company has renewed its revolving credit line with
Phillipsburg National Bank & Trust Company through August 31, 1998.
During the six months ended October 31, 1997, the company's
operating activities used $70,000 in cash flow. Corporate related matters
used $143,000. The operations of Torotel Products used $158,000 due
primarily to higher levels of receivables and inventories. OPT's operations
provided $231,000 due primarily to a lower level of receivables.
Management's objective is to strengthen the company's liquidity position
through improved operations and asset management.
Investing activities used $79,000 in cash flow for capital
expenditures for production and engineering equipment. For the balance of
the fiscal year, the company anticipates additional investments of
approximately $75,000 for capital expenditures.
Financing activities provided $67,000 in cash flow due primarily to
increases in the revolving credit line. At October 31, 1997, the company had
used $971,000 of its revolving credit line and had $1,529,000 available for
future cash requirements, based on the lender's borrowing base formula. As
discussed in
Note 5 of Notes to Consolidated Financial Statements, the company has
arranged new financing through Phillipsburg National Bank & Trust to payoff
the mortgage loan with NationsBank, which has an outstanding balance of
$452,000 at October 31, 1997.
The company believes that inflation will have only a minimal effect
on future operations since such effects will be offset by sales price increases
which are not expected to have a significant effect upon demand.
OTHER
Except for historical information contained herein, certain of the
matters discussed above are forward-looking statements that are subject to
certain risks and uncertainties that could cause actual results to differ
materially from those set forth in the forward-looking statements, including
the company's dependence on timely development, introduction and
customer acceptance of new products, the impact of competition and price
erosion as well as supply and manufacturing constraints, and other risks and
uncertainties (see Note 6 of Notes to Consolidated Financial Statements).
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
There are two legal proceedings involving the company. In the first
matter, Torotel, Inc. and Torotel Products, Inc. have both been named as
defendants in a lawsuit brought by Joseph Turner in the U.S. District Court
for the Western District of Missouri. The case number is 96-0646-CV-W-5
and was filed on June 18, 1996. Plaintiff alleges a racially motivated failure
to hire and that Torotel Products, Inc. has discriminated against minorities in
its hiring practices. Plaintiff's motion to have the case certified as a class
action was approved by the court on September 30, 1997, with the court
entering an Order Concerning Class Certification. The court certified the
case as a class action regarding the liability phase and deferred certification
of a damage phase. The case has a trial setting on May 11, 1998. The
company believes it has a meritorious defense and continues to vigorously
defend the case.
In the second matter, on May 6, 1997, Torotel Products, Inc. was
accepted into the Voluntary Disclosure Program by the Inspector General of
the United States Department of Defense, resulting from its failure to
perform some required testing as frequently as required, and inaccurately
certifying that all required testing had been performed. As a result of the
company's investigation into the testing deficiencies, the company has
recorded an estimated charge of $486,000. This estimated penalty is still
subject to fluctuation as further evidence is investigated. The company
continues to cooperate as the government conducts its investigation, and
continues to pursue the existence of other damages. The company believes
that certain of its former officers may have been responsible for the
misconduct related to the test failures, and is evaluating ways of recovering
the damages. In the meantime, the company has suspended all payments
under a note payable to a former officer.
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Stockholders' Meeting was held in Kansas City,
Missouri, on September 15, 1997, to elect a Board of Directors. At the
meeting, there were 1,679,603 shares voting in the election, with nominees
needing 839,803 shares to be elected. Shareholders elected the following
individuals to a one-year term on the Board of Directors, with the number of
shares voting "FOR" each nominee indicated.
<TABLE>
<S> <C>
Dale H. Sizemore, Jr. 1,634,372
Ronald L. Benjamin 1,623,608
Christian T. Hughes 1,638,051
Dr. Thomas L. Lyon, Jr. 1,636,492
Richard A. Sizemore 1,634,372
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
a) Exhibit 27 -- Financial Data Schedule (electronic filings only)
b) Reports on Form 8-K -- There were no reports filed on Form 8-K during
the three months ended October 31, 1997.
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934,
the Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Torotel, Inc.
(Registrant)
Date: December 12, 1997 /s/ H. James Serrone
H. James Serrone
Vice President of Finance and
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF TOROTEL, INC. AND SUBSIDIARIES CONTAINED IN ITS
QUARTERLY REPORT ON FORM 10-QSB FOR THE QUARTERLY PERIOD ENDED OCTOBER 31,
1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-30-1998
<PERIOD-END> OCT-31-1997
<CASH> 114,000
<SECURITIES> 0
<RECEIVABLES> 1,974,000
<ALLOWANCES> 82,000
<INVENTORY> 3,013,000
<CURRENT-ASSETS> 5,178,000
<PP&E> 4,628,000
<DEPRECIATION> 2,906,000
<TOTAL-ASSETS> 7,167,000
<CURRENT-LIABILITIES> 2,766,000
<BONDS> 0
<COMMON> 1,440,000
0
0
<OTHER-SE> 1,969,000
<TOTAL-LIABILITY-AND-EQUITY> 7,167,000
<SALES> 6,642,000
<TOTAL-REVENUES> 6,642,000
<CGS> 5,001,000
<TOTAL-COSTS> 6,562,000
<OTHER-EXPENSES> 71,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 133,000
<INCOME-PRETAX> (124,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (124,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (124,000)
<EPS-PRIMARY> (.04)
<EPS-DILUTED> (.04)
</TABLE>
