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 December 31, 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
- ------------------------------- --------------
(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
--- ---
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 February 1, 1996
- ----------------------------- -------------------------------
Common stock, par value $.10 3,048,330
1
TECH/OPS SEVCON, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets
ASSETS
Dec 31, Sept 30,
1995 1995
--------- ------------
(unaudited) (derived from
audited
statements)
Current assets:
Cash and cash equivalents $ 1,988,000 $ 2,692,000
Accounts receivable, less allowances
of $134,000 at 12/31/95
and $153,000 at 9/30/95 4,901,000 4,487,000
Inventories:
Raw materials 1,614,000 1,643,000
Work-in-process 1,046,000 779,000
Finished goods 614,000 541,000
--------- ---------
3,274,000 2,963,000
--------- ---------
Total current assets 10,163,000 10,142,000
--------- ----------
Property, plant and equipment, at cost 4,018,000 4,013,000
Less: Accumulated depreciation
and amortization 2,716,000 2,664,000
--------- ---------
Net property, plant
and equipment 1,302,000 1,349,000
--------- ---------
Cost of purchased businesses in excess
of net assets acquired 1,435,000 1,435,000
Other assets 55,000 55,000
---------- ----------
$12,955,000 $12,981,000
========== ==========
The accompanying notes are an integral part of these financial
statements.
2
TECH/OPS SEVCON, INC.
Consolidated Balance Sheets
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Dec 31, Sept 30,
1995 1995
-------- ------------
(unaudited) (derived from
audited
statements)
Current liabilities:
Accounts payable $ 2,561,000 $ 2,019,000
Dividend payable 381,000 387,000
Accrued expenses 1,679,000 1,849,000
Accrued taxes on income 409,000 423,000
--------- ---------
Total current liabilities 5,030,000 4,678,000
--------- ---------
Deferred taxes on income 174,000 178,000
--------- ---------
Stockholders' investment (Note 2)
Preferred stock - -
Common stock 310,000 310,000
Premium paid in on common stock 3,388,000 3,383,000
Retained earnings 5,135,000 4,926,000
Treasury stock, at cost (529,000) -
Cumulative translation adjustment (553,000) (494,000)
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Total stockholders' investment $ 7,751,000 $ 8,125,000
---------- ----------
$12,955,000 $12,981,000
========== ==========
The accompanying notes are an integral part of these financial
statements.
3
TECH/OPS SEVCON, INC.
Consolidated Statement of Income
(Unaudited)
Three Months Ended
December 31,
----------------
1995 1994
--------- ---------
Net sales $ 5,798,000 $ 4,774,000
Costs and expenses:
Cost of sales 3,432,000 2,812,000
Selling, general and
administrative 1,459,000 1,190,000
--------- ---------
4,891,000 4,002,000
--------- ---------
Operating income 907,000 772,000
Other income, net 14,000 19,000
-------- --------
Income before income taxes 921,000 791,000
Income taxes 305,000 238,000
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Net income $ 616,000 $ 553,000
======= =======
Net income per share $ .20 $ .18
=== ===
Average common and common
equivalent shares outstanding 3,152,000 3,138,000
========= =========
The accompanying notes are an integral part of these financial
statements.
4
TECH/OPS SEVCON, INC.
Consolidated Statement of Cash Flows
(Unaudited)
Three Months Ended
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Dec 31, Dec 31,
1995 1994
Net cash flow from operating activities:
Net income $ 616,000 $ 553,000
Adjustments to reconcile net income to
net cash from operating activities:
Depreciation and amortization 101,000 70,000
Deferred tax provision ( 4,000) ( 3,000)
Increase (decrease) in cash resulting
from changes in operating assets
and liabilities:
Receivables (414,000) (203,000)
Inventories (311,000) (272,000)
Accounts payable 542,000 439,000
Accrued compensation and expenses (160,000) (420,000)
Accrued and deferred taxes on income ( 24,000) 173,000
-------- -------
Net cash generated from
operating activities 346,000 337,000
Cash flow used by investing activities:
Acquisition of property, plant, and
equipment, net ( 77,000) ( 79,000)
------- -------
Cash flow used by financing activities:
Exercise of stock options ( 22,000) -
Purchase of common stock (529,000) -
Dividends paid (387,000) (305,000)
-------- -------
Net cash used by financing activities (938,000) (305,000)
Effect of exchange rate changes on cash ( 35,000) ( 15,000)
------- --------
Net increase (decrease) in cash (704,000) ( 62,000)
Opening balance - cash and cash equivalents 2,692,000 2,336,000
--------- ---------
Ending balance - cash and cash equivalents $1,988,000 $2,274,000
========= =========
Supplemental disclosure of cash flow information
Cash paid for income taxes $ 77,000 $ 95,000
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Supplemental disclosure of non-cash
financing activity:
Dividend declared $ 381,000 $ 305,000
======= =======
The accompanying notes are an integral part of these financial
statements.
5
TECH/OPS SEVCON, INC.
Notes to Consolidated Financial Statements - December 31, 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 December 31,
1995 and the results of operations and cash flows for the three
months ended December 31, 1995 and 1994.
The accounting policies followed by Tech/Ops Sevcon are set
forth in Note 1 to the financial statements in the 1995 Tech/Ops
Sevcon, Inc. Annual Report filed on Form 10-K.
The results of operations for the three-month periods ended
December 31, 1995 and 1994 are not necessarily indicative of the
results to be expected for the full year.
(2) Stock Split and Cash Dividends
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. Per share information for
the quarter ended December 31, 1994 has been restated to reflect the
stock split.
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 was paid 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.
On December 13, 1995, the Company declared a quarterly dividend
of $.125 per share for the first quarter of fiscal 1996, which was
paid on January 11, 1996 to stockholders of record on December 29,
1995. The Company has paid regular quarterly cash dividends since the
first quarter of fiscal 1990.
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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 $381,000 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. In the quarter ended
December 31, 1995, working capital declined by $331,000, primarily
because of the purchase of 52,500 shares of the Company's common
stock for the treasury for $529,000, to be issued when options are
exercised.
Results of Operations
Sales in the first fiscal quarter ended December 31, 1995 were
$5,798,000, compared to $4,774,000 in the same quarter of the
previous year, an increase of 21%. The revenue increase in this
quarter was due to gains in business to new customers, shipments
of new products, and higher world-wide demand for fork lift truck
and aerial lift controllers.
The gross profit percentage was slightly lower this year (40.8%
compared to 41.1%), but as a result of higher revenues, the gross
profit increased by $404,000. Operating expenses for the quarter
were higher than 1994, reflecting higher volumes and increased
spending on new product development.
Income before income taxes was $921,000, compared to $791,000 last
year. Income taxes were 33% of pre-tax income compared to 30% in
1994 due to higher foreign tax rates and lower tax credits.
Mainly due to increased sales and higher operating costs, net income
was $616,000 compared to $533,000 last year, an increase of 11%.
Income per share was $.20 compared to $.18 in the first quarter of
fiscal 1995, on a post-split basis.
7
TECH/OPS SEVCON, INC.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits filed with this report.
(11) Calculation of earnings per share
(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: February 2, 1996 By: /s/ Paul B. Rosenberg
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Paul B. Rosenberg
Treasurer
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EXHIBIT 11
TECH/OPS SEVCON, INC.
Calculation of Earnings Per Share and Weighted Average Shares
Outstanding
(In thousands, except for per share amounts)
Quarters ended
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12/31/95 12/31/94
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Net income $ 616 $ 553
Weighted average shares outstanding 3,152 3,138
Net income per share $ .20 $ .18
Shares outstanding - beginning 3,098 3,045
Weighted average - option exercises 2 -
Weighted average shares issued 3,100 3,045
Weighted average treasury shares purchased ( 30) -
Weighted average shares outstanding 3,070 3,045
Effect of outstanding options on
primary EPS using average market
price for the period
a. # of options less than
average market price 137 224
b. $ value of options $ 636 $ 973
c. Average market price of stock $11.50 $ 7.42
d. Shares "purchased" (b/c) ( 55) ( 131)
e. Common equivalent shares (a-d) 82 93
f. Average issued and outstanding shares 3,070 3,045
g. Total average common and
common equivalent shares (f+e) 3,152 3,138
9