UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
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OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to __________
Commission File Number 1-9789
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TECH/OPS SEVCON, INC.
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(Exact name of registrant as specified in its charter)
Delaware 04-2985631
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Beacon Street, Boston, Massachusetts, 02108
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(Address of principal executive offices and zip code)
(617) 523-2030
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(Registrant's telephone number, including area code:)
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
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Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at August 1, 1995
- ----------------------------- -----------------------------
Common stock, par value $.10 1,523,340
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TECH/OPS SEVCON, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets
ASSETS
June 30, September 30,
1995 1994
--------- ------------
(unaudited) (derived from
audited
statements)
Current assets:
Cash and cash equivalents $ 2,094,000 $ 2,336,000
Accounts receivable, less allowances
of $168,000 at 6/30/95
and $166,000 at 9/30/94 5,500,000 3,789,000
Inventories:
Raw materials 1,767,000 950,000
Work-in-process 740,000 516,000
Finished goods 319,000 303,000
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2,826,000 1,769,000
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Total current assets 10,420,000 7,894,000
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Property, plant and equipment, at cost 4,003,000 3,878,000
Less: Accumulated depreciation
and amortization 2,710,000 2,721,000
--------- ---------
Net property, plant
and equipment 1,293,000 1,157,000
--------- ---------
Cost of purchased businesses in excess
of net assets acquired 1,435,000 1,435,000
Other assets 111,000 109,000
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$13,259,000 $10,595,000
========== ==========
The accompanying notes are an integral part of these financial statements.
2
TECH/OPS SEVCON, INC.
Consolidated Balance Sheets
LIABILITIES AND STOCKHOLDERS' INVESTMENT
June 30, September 30,
1995 1994
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(unaudited) (derived from
audited
statements)
Current liabilities:
Accounts payable $ 2,216,000 $ 1,287,000
Dividend payable 305,000 305,000
Accrued expenses 1,978,000 1,968,000
Accrued taxes on income 745,000 282,000
--------- ---------
Total current liabilities 5,244,000 3,842,000
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Deferred taxes on income 185,000 185,000
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Stockholders' investment (Note 3)
Preferred stock - -
Common stock 152,000 152,000
Premium paid in on common stock 3,146,000 3,140,000
Retained earnings 5,004,000 3,855,000
Cumulative translation adjustment (472,000) (579,000)
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Total stockholders' investment $ 7,830,000 $ 6,568,000
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$13,259,000 $10,595,000
========== ==========
The accompanying notes are an integral part of these financial statements.
3
TECH/OPS SEVCON, INC.
Consolidated Statement of Income
(Unaudited)
($000, except for per share numbers)
Three Months Ended Nine Months Ended
---------------- ----------------
June 30, July 2, June 30, July 2,
1995 1994 1995 1994
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Net sales $ 6,177 $ 4,358 $17,116 $11,724
Costs and expenses:
Cost of sales 3,551 2,510 9,951 6,836
Selling, general and
administrative 1,522 1,194 4,200 3,529
----- ----- ------ ------
5,073 3,704 14,151 10,365
----- ----- ----- ------
Operating income 1,104 654 2,965 1,359
Other income net 12 2 78 10
---- ---- ----- ---
Income before income taxes 1,116 656 3,043 1,369
Income taxes 367 207 964 442
----- --- ----- ---
Net income $ 749 $ 449 $2,079 $ 927
===== === ===== ===
Net income per share $ .47 $ .29 $1.32 $ .60
=== === ==== ===
Average common and common
equivalent shares outstanding 1,590 1,558 1,578 1,558
===== ===== ===== =====
The accompanying notes are an integral part of these financial statements.
4
TECH/OPS SEVCON, INC.
Consolidated Statement of Cash Flows
(Unaudited)
Nine Months Ended
----------------------
June 30, July 2,
1995 1994
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Net cash flow from operating activities:
Net income $ 2,079,000 $ 927,000
Adjustments to reconcile net income to
net cash from operating activities:
Depreciation and amortization 228,000 212,000
Deferred tax provision - 25,000
Increase (decrease) in cash resulting
from changes in operating assets
and liabilities:
Receivables (1,711,000) (564,000)
Inventories (1,057,000) ( 60,000)
Accounts payable 930,000 30,000
Accrued compensation and expenses 8,000 ( 35,000)
Accrued and deferred taxes on income 463,000 5,000
Other assets ( 2,000) 24,000
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Net cash generated from
operating activities 938,000 864,000
Cash flow used by investing activities
Acquisition of property, plant, and
equipment, net (341,000) (190,000)
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Cash flow used by financing activities
Exercise of stock options ( 8,000) ( 1,000)
Dividends paid (913,000) (571,000)
-------- -------
Net cash used by financing activities (921,000) (572,000)
Effect of exchange rate changes on cash 82,000 57,000
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Net increase (decrease) in cash (242,000) 159,000
Opening balance - cash and cash equivalents 2,336,000 1,973,000
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Ending balance - cash and cash equivalents $2,094,000 $2,132,000
========= =========
Supplemental disclosure of cash flow
information:
Cash paid for income taxes $ 421,000 $ 215,000
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Supplemental disclosure of non-cash
financing activity:
Dividend declared $ 305,000 $ 190,000
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The accompanying notes are an integral part of these financial statements.
5
TECH/OPS SEVCON, INC.
Notes to Consolidated Financial Statements - June 30, 1995
(Unaudited)
(1) Basis of Presentation
In the opinion of management, the accompanying unaudited
condensed consolidated financial statements contain all adjustments
(consisting of only normally recurring accruals) necessary to present
fairly the financial position of Tech/Ops Sevcon as of June 30, 1995
and the results of operations and cash flows for the three months and
nine months ended June 30, 1995 and July 2, 1994.
The accounting policies followed by Tech/Ops Sevcon are set
forth in Note 1 to the financial statements in the 1994 Tech/Ops
Sevcon, Inc. Annual Report filed on Form 10-K.
The results of operations for the three-month and nine-month
periods ended June 30, 1995 and July 2, 1994 are not necessarily
indicative of the results to be expected for the full year.
(2) Cash Dividends and Stock Split
On June 14, 1995, the Company declared a quarterly dividend of
$.20 per share for the third quarter of fiscal 1995, which was paid
on July 13, 1995 to stockholders of record on June 28, 1995. The
Company has paid regular quarterly cash dividends since the first
quarter of fiscal 1990. The dividend was initially $.075 per share,
was increased to $.125 per share in September 1992 and to $.20 per
share in September 1994.
On July 27, 1995, the Company declared a two-for-one stock split
in the form of a 100% stock dividend payable on August 28, 1995 to
shareholders of record on August 11, 1995. At the same time, the
Company declared a 25% increase in its regular quarterly dividend to
$.125 per share for the fourth quarter of fiscal 1995. This dividend
reflects the two-for-one stock split, and is payable on October 12,
1995 to shareholders of record on September 25, 1995. The cash
dividend had been $.10 per share for the previous four quarters on a
post-split basis.
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TECH/OPS SEVCON, INC.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Financial Condition
The Company has, since January 1990, maintained a program of regular
cash dividends, which at present amount to $304,500 per quarter.
Tech/Ops Sevcon's resources, in the opinion of management, are
adequate for projected operations and capital spending programs,
as well as continuation of the cash dividend.
Results of Operations
Sales in the third fiscal quarter ended June 30, 1995 were
$6,177,000, compared to $4,358,000 in the previous year, an increase
of 42%. Over half of the revenue increase in this quarter was due to
gains in business to new customers and shipments of new products,
with the balance mainly due to continuing improvement in world-wide
demand for fork lift truck controllers.
The gross profit percentage was almost identical in the two years
(42.5% compared to 42.4%), but as a result of higher revenues, the
gross profit increased by $778,000. Operating expenses for the
quarter increased at a much lower rate than sales and therefore,
operating income of $1,104,000 was 69% higher than the same period
last year. Income before income taxes was $1,116,000, compared to
$656,000 last year. Income taxes were 33% of pre-tax income compared
to 32% in 1994.
Mainly due to the higher gross profit from increased sales, net
income was $749,000 compared to $449,000 last year, an increase of
67%. Income per share was $.47 compared to $.29 in the third quarter
of fiscal 1994, on a pre-split basis.
For the first nine months of fiscal 1995, sales were $17,116,000
compared to $11,724,000 last year, an increase of 46%. Currency
fluctuations accounted for 7% of this increase, and the remaining 39%
was due to increased physical volumes, including new products and
business from new customers.
The gross profit increase for the nine months was $2,277,000, which
was a 47% gain over the prior year. Operating expenses grew at a
much lower rate, and therefore, operating income for the nine month
period increased by 118% to $2,965,000. Income before income taxes
was $3,043,000 compared to $1,369,000 last year, an increase of 122%.
Income taxes were 32% of pre-tax income for both periods.
Principally due to the higher gross profit generated by higher sales,
for the nine month period, net income was $2,079,000, or $1.32 per
share, 2.2 times last year's results of $927,000, or $.60 per share,
on a pre-split basis.
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TECH/OPS SEVCON, INC.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits filed with this report.
(27) Financial Data Schedule (EDGAR Filing only)
(b) Reports on Form 8-K - There were no reports on Form 8-K
during the quarter for which this report is filed.
SIGNATURES
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 thereunto duly authorized.
TECH/OPS SEVCON, INC.
Date: August 10, 1995 By: /s/ Paul B. Rosenberg
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Paul B. Rosenberg
Treasurer
(Chief Accounting Officer)
8