SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
(Mark one)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the fiscal year ended June 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from ________ to ________
Commission file number 1-8277
ACME ELECTRIC CORPORATION
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(Exact name of Registrant as specified in its charter)
STATE OF NEW YORK 16-0324980
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
400 Quaker Road, East Aurora, New York 14052
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(Address of principal corporate offices) (Zip Code)
716/655-3800
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(Telephone Number)
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
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Common Stock - Par Value $1.00 per share New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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 and (2) has been subject to such
filing requirements for the past 90 days. YES X NO
----- ----
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
State the aggregate market value of the voting stock held by non-affiliates
of the Registrant as of September 11, 1998.
Common Stock, Par Value $1 Per Share, $21,186,906
Indicate the number of shares outstanding of each of the Registrant's
classes of common stock as of September 11, 1998.
Common Stock, Par Value $1 Per Share, 5,056,541 shares
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Shareholders for the fiscal
year ended June 30, 1998, are incorporated by reference into Parts I and
II.
Portions of the Registrant's definitive proxy statement for the annual
meeting of shareholders to be held on October 30, 1998, are incorporated by
reference into Part III.
PART I
ITEM 1 - BUSINESS
Business
The Registrant was duly organized and incorporated under the laws of the
State of New York on April 26, 1946, as successor to a business founded
in 1917. Its sole line of business is the design and manufacture of
power conversion equipment for electronic and electrical systems.
Principal markets encompass the computer, test equipment, information
systems, military, aerospace and telecommunications and a variety of
industrial, commercial and residential fields for applications that
require conversion of electrical energy from one useable state to
another. Products are distributed to customers through the Registrant's
sales force, independent sales representatives and wholesale
distributors. The business of the Registrant is not seasonal in nature.
Competition
Competitive conditions within the power conversion industry are intense.
The Registrant competes with many other companies, some of which have
far greater resources than the Registrant. The principal methods of
competition within the industry are price, service and product
performance. To meet this competition, the Registrant attempts to
maintain high standards of engineering, manufacturing and customer
service. Due to the number and variety of competitors, reliable data
relative to the Registrant's competitive position within the power
conversion industry would be difficult to develop and is not known nor
believed to exist.
Customers
Power conversion equipment sales encompass markets wherein the demands
of any one customer may vary greatly due to changes in technology and
market strategy. One customer of the Company accounted for 17.2%,
16.2%, and 14.8%, respectively, of fiscal 1998, 1997, and 1996 sales and
3.7%, 10.0%, and 8.2%, respectively, of June 30, 1998, 1997, and 1996,
accounts receivable. This customer's program is scheduled for
curtailment in January 1999, and, accordingly, the Company is currently
addressing alternatives to replace this business.
Backlog
The backlog of orders believed to be firm totaled approximately
$15,502,000 at June 30, 1998, compared with approximately $16,946,000 at
June 30, 1997. The lower backlog at June 30, 1998, compared with the
backlog at June 30, 1997, reflects a reduced backlog of orders in the
Registrant's aerospace business, as improved production capabilities
supported a return to on-time deliveries on several delinquent customer
programs, thereby reducing the end of the year cumulative backlog.
Backlog orders at June 30, 1998, are generally expected to be filled
during the current fiscal year.
Raw Materials
The Registrant purchases materials in a semi-finished state from other
manufacturers and distributors. Availability of materials is considered
adequate to maintain current production levels.
Patents
The Registrant holds several technical patents and trademarks and is a
party to certain patent applications. The extent of the effect of such
patents and trademarks is, however, in the opinion of management, not
material at this time.
Licenses
The Registrant is a party to several license agreements. The only
material license, providing for the sale and manufacture of a
proprietary fiber nickel cadmium battery (FNC), is an agreement with
Hoppecke Batterie Systeme GmbH (formerly, Daug-Hoppecke Gesellschaft Fur
Batteriesysteme mbH ("DAHO")) of Brilon, Germany. The Company recorded
an impairment loss write-off as of June 30, 1994, assigning zero value
to the FNC license agreement.
Employees
As of June 30, 1998, approximately 630 persons were employed by the
Registrant.
Research and Development
Approximately 7% of the Registrant's employees are engaged in
engineering design and product development. New products are
continuously designed to satisfy specific customer requirements, and the
cost of such development is expensed as incurred. Since satisfaction of
many customers' needs requires advancing applicable technology, applied
research is an integral part of engineering-design and product-
development activities. The cost of such activities during the fiscal
years ended June 30, 1998, 1997 and 1996, was $4,136,000, $4,552,000 and
$4,735,000, respectively.
Environmental Matters
On June 27, 1997, the Registrant settled the claim by the New York State
Department of Environmental Conservation (DEC) for contribution toward
the costs of remediation of a municipal waste landfill site upon payment
of $725,000. The Registrant did have insurance policies in effect
during the period that waste was disposed of at the site, which the
Company is pursuing for possible recovery.
ITEM 2 - PROPERTIES
The Registrant owns one plant in Lumberton, North Carolina, and leases
two plant facilities; one in Cuba, New York (with an option to purchase
in accordance with a $500,000 20-year industrial revenue bond financing,
subject to repayment of $3,400,000 of subordinate financing) and a
second in Tempe, Arizona. The Registrant further leases facility space
at a second location in Cuba, New York, and a warehouse in Tempe,
Arizona.
Square Footage Square Footage Lease Ex-
Location Owned Leased piration Date
-------- -------------- -------------- -------------
Cuba, NY (New Plant) -- 91,000 April 2017
Cuba, NY (Old Plant) -- 72,000 August 1999
East Aurora, NY -- 10,000 April 2004
(Exec. Offices)
Lumberton, NC 128,170 -- N/A
Tempe, AZ -- 40,260 March 2005
ITEM 3 - LEGAL PROCEEDINGS
The Registrant is involved in ordinary routine litigation incidental to
its business, but none is expected to have a material impact upon the
financial condition of the Registrant.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted during the fourth quarter of the fiscal year
covered by this report to a vote of security holders through the
solicitation of proxies or otherwise.
PART II
ITEM 5 - MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY
HOLDER MATTERS
Information relating to the market and market prices of the Registrant's
common stock, the approximate number of Registrant's shareholders and
its dividend history for the past two fiscal years appears on page 24 of
the Registrant's Annual Report to Shareholders for the fiscal year ended
June 30, 1998, submitted herewith as an exhibit and such information is
incorporated by reference herein.
Information relating to long-term debt for the past two fiscal years
appears on page 19 of the Registrant's Annual Report to Shareholders for
the fiscal year ended June 30, 1998, submitted herewith as an exhibit
and such information is incorporated by reference. The Registrant
suspended its quarterly cash dividend effective the third quarter of
fiscal 1991. The loss in fiscal 1991 resulted in a deficit of retained
earnings. As the Company continues to have a deficit of retained
earnings, it does not expect to reinstate dividends in the foreseeable
future.
ITEM 6 - SELECTED FINANCIAL DATA
A five-year summary of certain financial information relating to the
financial condition and results of operations of the Registrant appears
on page 13 of the Registrant's Annual Report to Shareholders for the
fiscal year ended June 30, 1998, submitted herewith as an exhibit and
such summary is incorporated by reference herein.
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Management's discussion and analysis of financial condition and results
of operations appears on pages 10 through 13 of the Registrant's Annual
Report to Shareholders for the fiscal year ended June 30, 1998,
submitted herewith as an exhibit and such management's discussion and
analysis is incorporated by reference herein.
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following financial statements of the Registrant and its
subsidiaries, appearing on pages 14 through 23 of the Registrant's
Annual Report to Shareholders for the fiscal year ended June 30, 1998,
submitted herewith as an exhibit, are incorporated by reference herein:
Statements of Operations - Years Ended June 30, 1998, 1997, 1996
Balance Sheets - June 30, 1998 and 1997
Statements of Cash Flows - Years Ended June 30, 1998, 1997, 1996
Statements of Shareholders' Equity - Years Ended June 30, 1998, 1997,
1996
Notes to Financial Statements
ITEM 9 - DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
There have been no disagreements with accountants on accounting and
financial disclosure matters.
PART III
ITEM 10 - DIRECTORS AND OFFICERS OF THE REGISTRANT
Identification of Directors
--------------------------
Information on directors of the Registrant is contained under the
caption "Election of Directors," presented in the Registrant's
Definitive Proxy Statement filed pursuant to Regulation 14A and used in
conjunction with the Registrant's 1998 Annual Meeting of Shareholders to
be held on October 30, 1998, and is incorporated by reference herein.
Identification of Executive Officers
-----------------------------------
Summary of Business Experience
Name, Age and Position Over the Last Five Years
- ---------------------- ----------------------------------
Robert J. McKenna, 50, Chairman, Prior to assuming the position
President and Chief Executive Officer currently held in October 1994,
served as President and Chief
Executive Officer since October
1993.
John B. Drenning, Esq., 61 Partner, Phillips, Lytle,
Secretary Hitchcock, Blaine,& Huber since
1990.
Michael A. Simon, 41 Prior to assuming the position
Corporate Controller and currently held in August 1997,
Assistant Secretary served as Controller since 1992.
Daniel K. Corwin, 51, Prior to assuming the position
Vice President and General currently held in April 1997,
Manager, Electronics Division served as Vice President and
Chief Financial Officer since
August 1994. Prior thereto,
served as Vice President of
Administration andChief Financial
Officer since February 1992.
Nicola T. Arena, 49 Prior to assuming the position
Vice President and General currently held in February 1996,
Manager, Power Distribution served as Director of Sales and
Products Division Marketing for Aeroquip Cor-
poration since 1991.
John E. Gleason, 51, Prior to assuming the position
Vice President and General currently held in April 1997,
Manager, Aerospace Division served as Acting Manager of the
Aerospace Division and Vice
President and General Manager of
the Electronics Division since
August 1996. Prior thereto, served
as Vice President and General
Manager of the Electronics Division
since May 1993.
ITEM 11 - MANAGEMENT REMUNERATION AND TRANSACTIONS
Information called for in response to this item is contained under the
captions "Compensation of Executive Officers," "Employment Agreements,"
"1981 Incentive Stock Option Plan," "1989 Stock Option Plan," "Pension
Plan," and the "1998 Stock Option Plan" proposal presented in the
Registrant's definitive proxy statement filed pursuant to Regulation 14A
and used in conjunction with the Registrant's 1998 Annual Meeting of
Shareholders to be held on October 30, 1998, and is incorporated by
reference herein.
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information relating to security ownership of certain beneficial owners
and management is contained under the captions "Voting Securities and
Principal Holders Thereof" and "Nominees For Election As Directors" in
the Registrant's definitive proxy statement filed pursuant to Regulation
14A and used in conjunction with the Registrant's 1998 Annual Meeting of
Shareholders to be held on October 30, 1998, and is incorporated by
reference herein.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain transactions have been referenced under Item 11. There are no
other applicable relationships or related transactions.
PART IV
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. Financial Statements
--------------------
See the accompanying Index to Financial Statements and Financial
Statement Schedules on page F-1 of this report.
2. Financial Statement Schedules
-----------------------------
See the accompanying Index to Financial Statements and Financial
Statement Schedules on page F-1 of this report.
3. Exhibits Page Number or Incorporation
-------- by Reference
----------------------------
3a Certificate of Incorporation, Exhibit (3a) to Report on
as amended to date Form 10-K for fiscal year
ended June 30, 1989.
3b Bylaws, as amended to date Exhibit (3b) to Report on
Form 10-K for fiscal year
ended June 30, 1990.
11 Statement re. computation of Note (8) to Financial
per share earnings Statements at page 21 of
1998 Annual Report to
Shareholders.
13 Acme Electric Corporation 1998
Annual Report to Shareholders See Exhibit 13 attached.
22 1998 Proxy Statement Definitive Proxy Statement
filed under Schedule 14A,
September 16, 1998,
File No. 001-08277.
23 a,b, Additional Exhibits - Pages F-4 through F-5 on
c,d Undertakings Report on Form 10-K for
fiscal year ended
June 30, 1998.
27 Financial Data Schedule See Exhibit 27 attached.
99 Additional Exhibits -
News Release, August 5, 1998,
announcing fourth quarter
and year-end results. See Exhibit 99 attached.
(b) Reports on Form 8-K
There were no reports filed on Form 8-K
during the fifty-two-week period ending
June 30, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature and Title Date
/s/ 09/28/98
Robert D. Batting Director
/s/ 09/28/98
Robert T. Brady Director
/s/ 09/28/98
Randall L. Clark Director
/s/ 09/28/98
G. Wayne Hawk Director
/s/ 09/28/98
Terry M. Manon Director
/s/ 09/28/98
Robert J. McKenna Director
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
ACME ELECTRIC CORPORATION
By: /s/ Date: 09/28/98
Robert J. McKenna
Chairman, President and
Chief Executive Officer
By: /s/ Date: 09/28/98
Michael A. Simon
Corporate Controller and
Assistant Secretary
ACME ELECTRIC CORPORATION
INDEX TO FINANCIAL STATEMENTS
The financial statements together with the report thereon of
PricewaterhouseCoopers LLP dated August 5, 1998, appearing on pages 14
through 24 of the accompanying 1998 Annual Report to Shareholders, are
incorporated by reference in this Form 10-K Annual Report. With the
exception of the aforementioned information and the information
incorporated in Items 5, 6, 7, 8 and 14 of this Form 10-K, the 1998 Annual
Report to Shareholders is not to be deemed filed as part of this report.
The following financial statement schedules should be read in conjunction
with the financial statements in such 1998 Annual Report to Shareholders.
Financial statement schedules not included in this Form 10-K Annual Report
have been omitted because they are not applicable or the required
information is shown in the financial statements or notes thereto.
FINANCIAL STATEMENT SCHEDULES
1998, 1997 AND 1996
Page
Report of independent accountants F-2
Valuation and qualifying accounts and F-3
reserves (Schedule VIII)
Consents of independent accountants F-4 and F-5
F-1
Report of Independent Accountants
on Financial Statement Schedule
To the Board of Directors of
Acme Electric Corporation
Our audits of the financial statements referred to in our report dated
August 5, 1998 appearing on page 24 of the 1998 Annual Report to
Shareholders of Acme Electric Corporation (which report and financial
statements are incorporated in this Annual Report on Form 10-K) also
included an audit of the Financial Statement Schedule listed in the Index
to Financial Statements and Financial Statement Schedules which appears on
page F-1 of this Form 10-K. In our opinion, this Financial Statement
Schedule presents fairly, in all material respects, the information set
forth therein when read in conjunction with the related financial
statements.
/s/
PRICEWATERHOUSECOOPERS LLP
Buffalo, New York
August 5, 1998
F-2
ACME ELECTRIC CORPORATION
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(000's Omitted)
Additions Additions
Balance At (Deductions) (Deductions)
Deductions Balance
Beginning Cost and Other
From At End
Of Year Expense Accounts
Reserves Of Year
---------- ------------ ------------ -----
- ----- -------
Fiscal year ended June 30, 1998
Reserve deducted from assets:
Allowance for doubtful accounts $ 523 $ 70 $ - $
127 $ 466
Inventory obsolescence and
impairment reserve $ 546 $ 582 $ - $
347 $ 781
Fiscal year ended June 30, 1997
Reserve deducted from assets:
Allowance for doubtful accounts $ 389 $ 464 $ -
$330 $ 523
Inventory obsolescence and
impairment reserve $ 399 $ 147 $ - $
- - $ 546
Restructuring Cost Reserves $ 399 $ - $ -
$399 $ -
Fiscal year ended June 30, 1996
Reserve deducted from assets:
Allowance for doubtful accounts $ 451 $ 493 $ -
$555 $ 389
Inventory obsolescence and
impairment reserve $ 566 $ - $ -
$167 $ 399
Restructuring Cost Reserves $ 399 $ - $ - $
- - $ 399
F-3
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Forms S-8 (No. 2-45985, No. 2-92825, No. 33-79488, No. 33-
59521, No. 33-59523, and No. 333-27243) of Acme Electric Corporation of our
report dated August 5, 1998 appearing on page 24 of the 1998 Annual Report
to Shareholders which is incorporated in this Annual Report on Form 10-K.
We also consent to the incorporation by reference of our report on the
Financial Statement Schedule, which appears on page F-2 of this Form 10-K.
/s/
PRICEWATERHOUSECOOPERS LLP
Buffalo, New York
September 28, 1998
F-4
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-3 (No. 2-89587)
of Acme Electric Corporation of our report dated August 5, 1998 appearing
on page 24 of the 1998 Annual Report to Shareholders which is incorporated
in this Annual Report on Form 10-K. We also consent to the incorporation
by reference of our report on the Financial Statement Schedule, which
appears on page F-2 of this Form 10-K.
/s/
PRICEWATERHOUSECOOPERS LLP
Buffalo, New York
September 28, 1998
F-5