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
For the fiscal year ended September 30, 1996, or
| | Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
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 Number)
ONE BEACON STREET, BOSTON, MASSACHUSETTS 02108
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(Address of Principal Executive Offices and Zip Code)
Registrant's Area Code and Telephone Number (617) 523-2030
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Securities registered pursuant to Section 12(b) of the Act:
(Name of Exchange
(Title of Each Class) on Which Registered)
- -------------------------------------- -----------------------
Common Stock, Par Value $.10 Per Share American Stock Exchange
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 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. [X]
As of November 20, 1996, 3,089,532 common shares were outstanding, and the
aggregate market value of the common shares (based upon the closing price on
the American Stock Exchange) held by non-affiliates was approximately
$29,700,000.
Documents incorporated by reference: Proxy Statement for Annual Meeting of
Stockholders - January 22, 1997 - Items 10, 11, 12 and 13.
1
INDEX
ITEM PAGE
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PART I
1. BUSINESS
General Description ............................................. 3
Marketing and Sales ............................................. 3
Patents ......................................................... 3
Backlog ......................................................... 3
Raw Materials ................................................... 3
Competition ..................................................... 3
Research and Development ........................................ 4
Environmental Regulations ....................................... 4
Employees and Labor Relations ................................... 4
2. PROPERTIES .......................................................... 4
3. LEGAL PROCEEDINGS ................................................... 4
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ................. 5
EXECUTIVE OFFICERS OF THE REGISTRANT................................. 5
PART II
5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS 5
6. SELECTED FINANCIAL DATA ............................................. 6
7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS ............................................... 6
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Consolidated Balance Sheets ..................................... 9
Consolidated Statements of Income ............................... 11
Consolidated Statements of Stockholders' Investment ............. 12
Consolidated Statements of Cash Flows ........................... 14
Notes to Consolidated Financial Statements ...................... 15
Report of Independent Public Accountants ........................ 23
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE ................................................ 24
PART III
10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT .................. 24
11. EXECUTIVE COMPENSATION .............................................. 24
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT ...... 24
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ...................... 24
PART IV
14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
Exhibits ........................................................ 24
Financial Statements and Schedules .............................. 24
Form 8-K ........................................................ 24
Signatures of Registrant and Directors .......................... 26
SCHEDULES
II RESERVES ............................................................ 28
Schedules other than the one referred to above have been omitted as
inapplicable or not required, or the information is included elsewhere
in financial statements or the notes thereto.
2
PART I
Item 1. BUSINESS
General description
Tech/Ops Sevcon, Inc. ("Tech/Ops Sevcon", or the "Company"), is a Delaware
corporation organized on December 22, 1987 to carry on the electronic
controller business previously performed by Tech/Ops, Inc. (Tech/Ops).
Through wholly-owned subsidiaries located in the United States, England, and
France, the Company designs, manufactures, sells, and services, under the
Sevcon name, solid-state products which control motor speed and acceleration
for battery powered electric vehicles in a number of applications, primarily
electric fork lift trucks, aerial lifts and underground coal-mining
equipment. Through another subsidiary located in the United Kingdom,
Tech/Ops Sevcon manufactures special metalized film capacitors for
electronics applications.
Marketing and sales
Sales are made primarily through a small full-time marketing staff. Sales in
the United States were $11,425,000, $8,685,000 and $6,116,000, in 1996, 1995
and 1994, respectively, which accounted for approximately 42%, 39%, and 39%,
respectively, of total sales. Approximately 48% of controller sales are made
to ten manufacturers of such equipment in the United States, Europe and the
Far East.
Patents
The Company believes that its business is not dependent on patent
protection. Rather, it is primarily dependent upon the Company's technical
competence, the quality of its products, and its prompt and responsive
service performance. However, the rights to inventions of employees working
for Tech/Ops Sevcon are assigned to the Company.
Backlog
Tech/Ops Sevcon's backlog at September 30, 1996 was $4,045,000 compared to
$3,391,000 in September 1995, and $2,429,000 in September 1994. Backlog
increased by $654,000, or 19%, during fiscal 1996. The increase in backlog
was mainly due to higher current business levels.
Raw Materials
Tech/Ops Sevcon's products require a wide variety of components and
materials. The Company has many sources for most of such components and
materials and produces certain of these items internally. The Company
believes that its sources and availability of its raw materials are
adequate.
Competition
In the United States, the Company competes primarily with a division of the
General Electric Company, which has a significant share of the market.
Overseas, Tech/Ops Sevcon has several international competitors, including
General Electric Company, as well as a number of small competitors that
operate only in local markets. In addition, several large manufacturers of
fork lift trucks make their own controllers, although their product is
3
generally for internal use only. The Company believes that it is one of the
largest independent suppliers of such devices outside of the United States.
Research and development
Tech/Ops Sevcon's technological expertise has been an important factor in
its growth. The Company regularly pursues product improvements to maintain
its technical position. Research and development expenditure amounted to
$1,579,000 in 1996 compared to $1,381,000 in 1995 and $1,096,000 in 1994.
Expenditure increased by 14% in 1996 and 26% in 1995.
Environmental regulations
The Company complies, to the best of its knowledge, with federal, state and
local provisions which have been enacted or adopted regulating the discharge
of materials into the environment or otherwise protecting the environment.
This compliance has not had, nor is it expected to have, a material effect
on the capital expenditures, earnings, or competitive position of Tech/Ops
Sevcon.
Employees and labor relations
As of September 30, 1996, the Company employed 263 full-time employees, of
whom 33 were in the United States, 222 were in the United Kingdom, 6 were in
France, and two were in the Far East. Tech/Ops Sevcon believes its relations
with its employees are good.
ITEM 2. PROPERTIES
A subsidiary of the Company leases approximately 12,000 square feet in
Burlington, Massachusetts, under a lease expiring in 1998, with two five-
year options thereafter. The building is used for the manufacture of
electronic controllers, together with sales and service offices. The United
Kingdom electronic controller business of Tech/Ops Sevcon is carried on in a
building owned by it located in Gateshead, England, containing 40,000 square
feet of space. The land on which this building stands is held on a lease
expiring in 2068. In October 1996, a 125 year lease was acquired for a
newly constructed 20,000 square foot building in Gateshead, England,
adjacent to the existing building. 5,000 square feet of space is also
rented near Paris, France under a lease expiring in 1997. The capacitor
subsidiary of the Company owns a 9,000 square foot building, built in 1981,
in Wrexham, Wales.
The properties and equipment of the Company are in good condition and, in
the opinion of the management, are suitable and adequate for the Company's
operations.
ITEM 3. LEGAL PROCEEDINGS
The Company is involved in various legal proceedings, but believes that
these matters will be resolved without a material effect on its financial
position.
4
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICERS OF THE REGISTRANT
Name of Officer Age Position
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Bernard F. Start 58 President and Chief Executive Officer
Matthew Boyle 34 Vice President and Chief Operating Officer
Paul A. McPartlin 51 Vice President & Chief Financial Officer
Paul B. Rosenberg 64 Treasurer
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All officers have served in their present positions for more than five
years, except for Mr. Boyle who was appointed Vice President and Chief
Operating Officer on November 5, 1996. Mr. Start was Managing Director of
the electronic controller business of the Company's predecessor, Tech/Ops,
Inc., since 1977 before becoming President of the Company. From 1994 until
he joined the Company in November 1996, Mr. Boyle was the General Manager of
the Regulateurs Europa business of GEC Alsthom in Colchester, England.
Prior to that, Mr. Boyle was General Manager of the Scottish Strategic
Business Unit of Honeywell Control Systems, Ltd.
Mr. McPartlin has been the Financial Director of the Company's UK operations
for more than five years. Mr. Rosenberg is President and CEO of Tech/Ops
Corporation, and was Vice President - Finance and Administration and
Treasurer of Tech/Ops, Inc. for more than five years.
There are no family relationships between any director or executive officer
and any other director or executive officer of the Company.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
The Common Stock of the Company is traded on the American Stock Exchange
under the symbol TO. A summary of the market prices of, and dividends paid
on, the Company's common stock is shown in the table below. All prices have
been restated to reflect a two-for-one stock split effective August 28,
1995. At November 20, 1996, there were approximately 600 shareholders of
record.
First Second Third Fourth Total
Quarter Quarter Quarter Quarter Year
Fiscal 1996
High $13.00 $14.50 $22.88 $17.13 $22.88
Low 9.75 10.50 14.00 12.50 9.75
Dividend $ .125 $ .125 $ .125 $ .15 $ .525
5
First Second Third Fourth Total
Quarter Quarter Quarter Quarter Year
Fiscal 1995
High $ 8.50 $ 7.94 $14.63 $15.50 $15.50
Low 6.75 7.13 7.13 11.88 6.75
Dividend $ .10 $ .10 $ .10 $ .125 $ .425
ITEM 6. SELECTED FINANCIAL DATA
For the five years ended September 30: (in 000's except per share data)
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
Net sales $27,197 $22,431 $15,835 $14,635 $17,587
Operating income 4,570 3,695 1,985 1,445 2,102
Net income 3,036 2,580 1,350 1,076 1,546
Income per share (a) $ .97 $ .81 $ .44 $ .34 $ .48
Dividends per share (a) (b) .525 .425 .288 .25 .175
Average shares outstanding (a) 3,036 3,171 3,102 3,194 3,232
Total assets $14,645 $12,981 $10,595 $ 9,043 $10,436
(a) Restated to reflect two for one stock split effective August 28, 1995.
(b) In September 1996, the Company increased its regular quarterly dividend
from $.125 per share to $.15 per share. In September 1995, the Company
increased its regular quarterly dividend from $.10 per share to $.125 per
share. In September 1994, the dividend was raised, on a restated basis,
from $.0625 per share to $.10 per share.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
A) Results of Operations
1996 compared to 1995
Sales increased by $4,766,000, or 21%, to $27,197,000. This sales increase
arose from improved market conditions, particularly in the USA, the
expansion of sales to the aerial lift industry and new business gains. Sales
in the USA increased by $2,740,000, or 32%. In other markets, mainly Europe
and the Far East, which accounted for 58% of sales, there was a 15% sales
increase. Currency fluctuations did not have a significant impact on sales
in 1996. The effect of price increases on fiscal 1996 sales was
approximately 5%.
Gross profit was 40.3% of sales in 1996 compared to 41.5% in 1995. The
decrease in gross profit was due to start-up costs of new products,
increased material costs and higher warranty costs. Gross profit was
$1,633,000 higher than last year. Selling, general and administrative
expenses increased by $758,000, or 13%, in 1996, mainly due to higher
6
volumes. Operating income increased by $875,000, or 24%, to $4,570,000.
This increase was due to higher sales.
In fiscal 1996, income before income taxes was 21% ahead of the previous
year at $4,570,000. Income taxes were 34% of pre-tax income compared to 31%
last year. The higher average tax rate was due to lower tax credits in 1996
and because a higher proportion of the Company's profits that were earned in
the USA where average tax rates are higher. Net income increased by
$456,000, or 18%. Income per share was $.97 compared to $.81 last year, an
increase of 20%. Average shares outstanding decreased by 1% mainly as a
result of stock repurchases, partially offset by the exercise of employee
stock options.
1995 compared to 1994
Sales increased by $6,596,000, or 42%, to $22,431,000. This sales increase
arose from improved worldwide market conditions, the expansion of sales to
the aerial lift industry and new business gains. Sales in the USA increased
by $2,529,000, or 42%. In other markets, mainly Europe and the Far East,
which accounted for 61% of sales, there was a 41% sales increase. Currency
fluctuations did not have a significant impact on sales in 1995. The effect
of price increases on fiscal 1995 sales was less than 2%. However,
increased material costs late in the fiscal year resulted in the Company
increasing its selling prices, applicable mainly to fiscal year 1996.
Gross profit was 42% of sales in both 1995 and 1994. As a result of
increased volumes, gross profit was $2,616,000 higher than last year.
Selling, general and administrative expenses increased by $906,000, or 19%,
in 1995. Within this, spending on research and development increased by 26%
to $1,381,000. Operating income increased by $1,710,000, or 86%, to
$3,695,000. This increase was due to both higher sales and control of
operating expense levels.
Income before income taxes in 1995 was $3,764,000, an increase of 86%.
Income taxes were 31% of pre-tax income compared to 33% last year. The
decrease in the average tax rate was mainly because a greater proportion of
the Company's profits were earned in foreign countries which have lower tax
rates than the USA. Net income increased by $1,230,000, or 91%, to
$2,580,000. Income per share was $.81 compared to $.44 last year, an
increase of 84%. Average shares outstanding increased by 2% mainly as a
result of stock options.
B) Liquidity and capital resources
Cash balances increased by $194,000 during 1996 to $2,886,000. Dividends
paid during fiscal 1996 amounted to $1,534,000. Stock repurchases and
option activity resulted in a net cash outflow of $684,000. Operating
activities generated $2,172,000, and $229,000 was spent on capital
equipment. The increase in receivables reflected business levels in the
fourth quarter. Inventories increased by $665,000, or 22%, mainly due to
higher volumes.
7
The Company purchased in October 1996 a new manufacturing building in the UK
at a cost of $1,172,000. In connection with this, the Company has arranged
a 3 year term loan of $688,000. The Company has, since January 1990,
maintained a program of regular cash dividends. The regular quarterly cash
dividend, which currently amounts to $463,000 per quarter, was increased in
September 1996 by 20% to $.15 per share. 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.
8
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CONSOLIDATED BALANCE SHEETS
TECH/OPS SEVCON, INC. AND SUBSIDIARIES
September 30, 1996 and 1995 (in thousands of dollars)
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ASSETS 1996 1995
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Current assets:
Cash and cash equivalents $ 2,886 $ 2,692
Receivables, net of allowances for doubtful accounts of
$150,000 in 1996 and $153,000 in 1995 5,386 4,487
Inventories 3,628 2,963
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Total current assets 11,900 10,142
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Property, plant and equipment, at cost:
Land and improvements 22 22
Buildings and improvements 707 716
Equipment 3,425 3,275
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4,154 4,013
Less: accumulated depreciation and amortization 2,861 2,664
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Net property, plant and equipment 1,293 1,349
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Cost of purchased businesses in excess of net assets acquired 1,435 1,435
Other assets 17 55
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TOTAL ASSETS $14,645 $12,981
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LIABILITIES AND STOCKHOLDERS' INVESTMENT
- ----------------------------------------------------------------------------
Current liabilities:
Accounts payable $ 1,821 $ 2,019
Dividend payable 463 387
Accrued compensation and related costs 837 738
Other accrued expenses 1,451 1,111
Accrued and deferred taxes on income 801 423
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Total current liabilities 5,373 4,678
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Deferred taxes on income 161 178
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Commitments and contingencies (note 4)
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9
STOCKHOLDERS' INVESTMENT
Preferred stock, par value $.10 per share
- authorized - 1,000,000 shares; outstanding - none - -
Common stock, par value $.10 per share
- authorized - 8,000,000 shares in 1996 and
4,000,000 in 1995; outstanding 3,101,690
in 1996 and 3,097,523 in 1995 310 310
Treasury stock, 12,158 shares, at cost (122) -
Premium paid in on common stock 3,716 3,383
Retained earnings 5,787 4,926
Cumulative translation adjustment (580) (494)
- ----------------------------------------------------------------------------
Total stockholders' investment $ 9,111 $ 8,125
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TOTAL LIABILITIES AND STOCKHOLDERS' INVESTMENT $14,645 $12,981
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The accompanying notes are an integral part of these consolidated financial
statements.
10
CONSOLIDATED STATEMENTS OF INCOME
TECH/OPS SEVCON, INC. AND SUBSIDIARIES
For the Years ended September 30, 1996, 1995 and 1994 (in thousands except
per share data)
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1996 1995 1994
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Net sales $27,197 $22,431 $15,835
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Costs and expenses:
Cost of sales 16,249 13,116 9,136
Selling, general and administrative 6,378 5,620 4,714
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22,627 18,736 13,850
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Operating income 4,570 3,695 1,985
Interest income 45 70 40
Other (expense), net (45) (1) (15)
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Income before income taxes 4,570 3,764 2,010
Income taxes (1,534) (1,184) (660)
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Net income $ 3,036 $ 2,580 $ 1,350
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Income per share (a) $.97 $.81 $.44
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Average common and common equivalent
shares outstanding (a) 3,145 3,171 3,102
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(a) Restated to reflect two-for-one stock split effective August 28, 1995.
The accompanying notes are an integral part of these consolidated financial
statements.
11
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' INVESTMENT
TECH/OPS SEVCON, INC. AND SUBSIDIARIES
For the Years ended September 30, 1994, 1995 and 1996 (in thousands of
dollars)
- ----------------------------------------------------------------------------
Premium
paid Cumulative Total
in on trans- stock-
Common Treasury common Retained lation holders'
stock (a) stock stock (a) earnings adjustment investment
- ----------------------------------------------------------------------------
Balance Sept 30,
1993 $ 305 $ - $ 2,887 $ 3,386 $ (730) $ 5,848
Net income - - - 1,350 - 1,350
Dividends ($.2875
per share) - - - (875) - (875)
Currency
translation
adjustment - - - - 151 151
Tax benefit
on exercise
of stock options - - 96 - - 96
Exercise of
stock options - - 4 (6) - (2)
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Balance Sept 30,
1994 305 - 2,987 3,855 (579) 6,568
Net income - - - 2,580 - 2,580
Dividends ($.425
per share) - - - (1,301) - (1,301)
Currency
translation
adjustment - - - - 85 85
Tax benefit
on exercise of
stock options - - 257 - - 257
Exercise of
stock options 5 - 139 (208) - (64)
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Balance Sept 30,
1995 310 - 3,383 4,926 (494) 8,125
12
Net income - - - 3,036 - 3,036
Dividends ($.525
per share) - - - (1,610) - (1,610)
Currency
translation
adjustment - - - - ( 86) ( 86)
Purchase of
treasury stock - (529) - - - (529)
Tax benefit
on exercise of
stock options - - 330 - - 330
Exercise of
stock options - 407 3 (565) - (155)
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Balance Sept 30,
1996 $ 310 $(122) $3,716 $5,787 $(580) $9,111
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(a) Restated to reflect two-for-one stock split effective August 28,1995 and
change in par value effective January 27,1993.
The accompanying notes are an integral part of these consolidated financial
statements.
13
CONSOLIDATED STATEMENT OF CASH FLOWS
TECH/OPS SEVCON, INC. AND SUBSIDIARIES
For the Years ended September 30, 1996, 1995 and 1994 (in thousands of
dollars)
- ----------------------------------------------------------------------------
1996 1995 1994
- ----------------------------------------------------------------------------
Net cash flow from operating activities:
Net income $3,036 $2,580 $1,350
Adjustments to reconcile net income to net cash
from operating activities:
Depreciation and amortization 270 249 241
Deferred tax provision (17) ( 7) 8
Increase (decrease) in cash resulting from changes
in operating assets and liabilities:
Receivables (899) (698) (1,096)
Inventories (665) (1,194) ( 74)
Accounts payable (198) 732 251
Accrued compensation and expenses 439 (119) 348
Accrued and deferred taxes on income 708 398 206
Other assets 38 54 42
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Net cash generated from operating activities 2,712 1,995 1,276
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Cash flow used by investing activities:
Acquisition of property, plant and equipment (229) (407) (267)
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Cash flow used by financing activities:
Purchase of common stock (1,007) (379) ( 10)
Exercise of stock options 323 315 8
Dividends paid (1,534) (1,219) (760)
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Net cash used by financing activities (2,218) (1,283) (762)
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Effect of exchange rate changes on cash ( 71) 51 116
- ----------------------------------------------------------------------------
Net increase (decrease) in cash 194 356 363
Beginning balance - cash and cash equivalents 2,692 2,336 1,973
- ----------------------------------------------------------------------------
Ending balance - cash and cash equivalents $2,886 $2,692 $2,336
- ----------------------------------------------------------------------------
Supplemental disclosure of cash flow information:
Cash paid for income taxes $ 884 $ 773 $ 317
- ----------------------------------------------------------------------------
Supplemental disclosure of non-cash financing activity:
Dividend declared $ 463 $ 387 $ 305
- ----------------------------------------------------------------------------
The accompanying notes are an integral part of these consolidated financial
statements.
14
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TECH/OPS SEVCON, INC. AND SUBSIDIARIES
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Basis of presentation
The accompanying consolidated financial statements include the accounts of
Tech/Ops Sevcon, Inc. (Tech/Ops Sevcon), Sevcon, Inc., Sevcon Limited and
subsidiaries, and Sevcon SA. All material intercompany transactions have
been eliminated.
The amount by which the cost of purchased businesses included in the
accompanying financial statements exceeded the fair value of net assets at
the date of acquisition has been charged to "Cost of purchased businesses in
excess of net assets acquired". The Company assesses the carrying value of
this asset whenever events or changes in circumstances indicate that this
value has diminished. The Company considers the future profitability of the
business in assessing the value of this asset. The excess related to
acquisitions initiated prior to November 1, 1970 ($1,435,000) is not being
amortized, since in the opinion of management there has been no diminution
in the value of the excess related to these acquisitions. The excess related
to subsequent acquisitions has been fully amortized.
During 1995,, the Financial Accounting Standards Board issued SFAS #123
which defines a fair value based method of accounting for employee stock
options or similar equity instruments, and encourages all entities to adopt
that method of accounting. However, it also allows an entity to continue to
measure compensation costs using the method of accounting prescribed by APB
#25. The Company has elected to account for its stock-based compensation
plans under APB #25.
B. Research and development
The cost of research and development programs is charged against income as
incurred and amounted to approximately $1,579,000 in 1996, $1,381,000 in
1995, and $1,096,000 in 1994.
C. Depreciation and maintenance
Plant and equipment are depreciated on a straight-line basis over their
estimated useful lives, which are primarily fifty years for buildings and
seven years for equipment. Maintenance and repairs are charged to expense
and renewals and betterments are capitalized.
15
D. Inventories
Inventories are priced at the lower of cost or market. Inventory costs
include materials, direct labor and manufacturing overhead, are relieved
from inventory on a first-in, first-out basis and comprised of:
(in thousands of dollars)
- ----------------------------------------------------------------------------
1996 1995
- ----------------------------------------------------------------------------
Raw materials $1,706 $1,643
Work-in-process 1,060 779
Finished goods 862 541
- ----------------------------------------------------------------------------
$3,628 $2,963
- ----------------------------------------------------------------------------
E. Income taxes
Tech/Ops Sevcon files tax returns in the respective countries in which it
operates. The Company accounts for income taxes in accordance with Financial
Accounting Standards Board Statement #109 (FAS 109). Under FAS 109, the
financial statements reflect the current and deferred tax consequences of
all events recognized in the financial statements or tax returns.
F. Translation of foreign currencies
Tech/Ops Sevcon translates the assets and liabilities of its foreign
subsidiaries at the current rate of exchange, and income statement accounts
at the average exchange rates in effect during the period. Gains or losses
from foreign currency translation are credited or charged to cumulative
translation adjustment included in stockholders' investment in the balance
sheet. Foreign currency transaction gains and losses are included in costs
and expenses.
G. Cash equivalents
The Company considers all highly liquid investments with a maturity of 90
days or less to be cash equivalents. Such investments are generally money
market funds, bank certificates of deposit, US Treasury bills and short-term
bank deposits in Europe.
H. Use of estimates in preparation of financial statements.
The presentation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities as of the date of the
financial statements and the reported amounts of income and expenses during
the reporting periods. Operating results in the future could vary from the
amounts derived from management's estimates and assumptions.
16
I. Fair value of financial instruments
The Company's financial instruments consist mainly of cash and cash
equivalents, accounts receivable and accounts payable. The carrying amount
of these financial instruments as of September 30, 1996, approximate fair
value due to the short term nature of these instruments.
(2) CAPITAL STOCK
All references to shares of common stock have been restated to reflect a
two-for-one stock split, in the form of a stock dividend, effective August
28, 1995 and the change in par value effective January 27, 1993.
Tech/Ops Sevcon, Inc. has two classes of capital stock, preferred and
common. There are authorized 1,000,000 shares of preferred stock, $.10 par
value. In January 1996, the number of authorized shares of common stock,
$.10 par value, was increased from 4,000,000 to 8,000,000.
In the year ended September 30, 1996, the Company purchased 52,500 shares
for treasury stock at a total cost of $529,000. No such shares were
purchased in 1995 or 1994.
In January 1996, stockholders approved the Company's 1996 Equity Incentive
Plan which superseded the Company's 1987 Key Employee Stock Bonus & Option
Plan. There were 29,000 shares remaining available for award under the
Company's 1987 plan and an additional 100,000 shares were approved by the
stockholders, making a total number of shares available for award under the
1996 plan of 129,000. No awards have yet been made under the 1996 plan.
Recipients of grants or options must execute a standard form of non-
competition agreement. Options granted are exercisable at a price not less
than fair market value on the date of grant. This plan also provides for
the grant of stock appreciation rights, either separately, or in relation to
options granted, and for the grant of bonus shares. No stock appreciation
rights or bonus shares have been granted. Option transactions under the
plan for the three years ended September 30, 1996 were as follows:
Shares under option Price range
Outstanding at September 30, 1993 225,800 $1.88-$4.97
Exercised in 1994 (1,750) $4.97
- ----------------------------------------------------------------------------
Outstanding at September 30, 1994 224,050 $1.88-$4.97
Exercised in 1995 (81,098) $1.88-$4.97
- ----------------------------------------------------------------------------
Outstanding at September 30, 1995 142,952 $3.31-$4.97
Exercised in 1996 ( 69,975) $3.31-$4.97
- ----------------------------------------------------------------------------
Outstanding at September 30, 1996 72,977 $3.31-$4.97
- ----------------------------------------------------------------------------
Exercisable at September 30, 1996 72,977 $3.31-$4.97
- ----------------------------------------------------------------------------
In connection with the exercise of employee stock options, the Company
repurchased from employees 1,336 shares in 1994, 28,777 shares in 1995, and
25,466 shares in 1996.
17
(3) INCOME TAXES
The domestic and foreign components of income before income taxes are as
follows:
- ----------------------------------------------------------------------------
(in thousands of dollars)
- ----------------------------------------------------------------------------
1996 1995 1994
- ----------------------------------------------------------------------------
Domestic $1,691 $1,028 $ 824
Foreign 2,879 2,736 1,186
- ----------------------------------------------------------------------------
$4,570 $3,764 $2,010
- ----------------------------------------------------------------------------
The components of the provision for income taxes for the years ended
September 30, 1996, 1995 and 1994 are as follows:
- ----------------------------------------------------------------------------
(in thousands of dollars)
- ----------------------------------------------------------------------------
1996
- ----------------------------------------------------------------------------
Current Deferred Total
- ----------------------------------------------------------------------------
Federal $ 578 $( 171) $ 407
State 195 ( 53) 142
Foreign 997 ( 12) 985
- ----------------------------------------------------------------------------
$1,770 $( 236) $1,534
- ----------------------------------------------------------------------------
1995
- ----------------------------------------------------------------------------
Current Deferred Total
- ----------------------------------------------------------------------------
Federal $ 221 $ - $ 221
State 102 - 102
Foreign 854 7 861
- ----------------------------------------------------------------------------
$1,177 $ 7 $1,184
- ----------------------------------------------------------------------------
1994
- ----------------------------------------------------------------------------
Current Deferred Total
- ----------------------------------------------------------------------------
Federal $ 103 $ - $ 103
State 95 - 95
Foreign 454 8 462
- ----------------------------------------------------------------------------
$ 652 $ 8 $ 660
- ----------------------------------------------------------------------------
18
The provision for income taxes in each period differs from that which would
be computed by applying the statutory US Federal income tax rate to the
income before income taxes. The following is a summary of the major items
affecting the provision:
- ----------------------------------------------------------------------------
(in thousands of dollars)
- ----------------------------------------------------------------------------
1996 1995 1994
- ----------------------------------------------------------------------------
Statutory Federal income tax rate 34% 34% 34%
Computed tax provision
at statutory rate $1,554 $1,280 $ 683
Increases (decreases) resulting from:
Foreign tax rate differentials 7 (1) (9)
State taxes net of federal tax benefit 94 67 63
Foreign tax credits and other (121) (162) (77)
Income tax provision in
the Statement of Income $1,534 $1,184 $ 660
- ----------------------------------------------------------------------------
Deferred income taxes result from temporary differences in reporting
transactions for financial reporting and tax purposes. The significant items
comprising the domestic and foreign deferred tax accounts at September 30,
1996 and 1995 are as follows:
- ----------------------------------------------------------------------------
(in thousands of dollars)
- ----------------------------------------------------------------------------
1996
- ----------------------------------------------------------------------------
Domestic Foreign Foreign
current current long-term
- ----------------------------------------------------------------------------
Assets:
Pension accruals $ 178 $ - $ -
Inventory basis differences 43 - -
Warranty reserves 73 - -
Other (net) 92 20 -
- ----------------------------------------------------------------------------
386 20 -
Liabilities:
Prepaid pension - (65) -
Property basis differences - - (161)
- ----------------------------------------------------------------------------
Net asset (liability) 386 (45) (161)
Valuation allowance (288) - -
- ----------------------------------------------------------------------------
Net deferred tax asset
(liability) $ 98 $ (45) $ (161)
- ----------------------------------------------------------------------------
19
1995
- ----------------------------------------------------------------------------
Domestic Foreign Foreign
current current long-term
- ----------------------------------------------------------------------------
Assets:
Pension accruals $ 149 $ - $ -
Inventory basis differences 40 - -
Warranty reserves 60 - -
Other (net) 51 26 -
- ----------------------------------------------------------------------------
300 26 -
Liabilities:
Prepaid pension - (66) -
Property basis differences - - (178)
- ----------------------------------------------------------------------------
Net asset (liability) 300 (40) (178)
Valuation allowance (300) - -
- ----------------------------------------------------------------------------
Net deferred tax asset
(liability) $ - $ (40) $ (178)
- ----------------------------------------------------------------------------
(4) COMMITMENTS AND CONTINGENCIES
Tech/Ops Sevcon is involved in various legal proceedings but believes that
it is only remotely likely that the outcome will be material to operations.
In September 1996, a UK subsidiary entered into an agreement to purchase a
125 year lease of a newly constructed 20,000 square foot manufacturing
facility adjacent to its present building, at a total cost of $1,172,000.
The purchase of this lease was completed during October 1996 and in
connection with this, a three-year term loan of $688,000 was obtained in the
UK. The loan is repayable by equal monthly installments.
Tech/Ops Sevcon has entered into an agreement with its President which
provides that, in the event of termination of employment, within two years
after a change in control of Tech/Ops Sevcon not approved by the Board of
Directors, such officer would receive benefits of up to an amount
approximating twice annual compensation (as defined). In addition, the
Company has entered into agreements with six senior employees which provide
that, in the event of a change in control of Tech/Ops Sevcon, such
employees would be entitled to continuation of their compensation for
periods of up to 30 months.
Tech/Ops Sevcon has entered into a consulting agreement, which expires on
December 31, 1998, with a company owned by two of its directors. Under the
terms of the agreement, the annual cost of these services will not exceed
$100,000. This cost covers the provision of the corporate office of the
Company, administrative support services and a payment of $30,000 per year
to Mr. Rosenberg.
In connection with the transfer in 1988 of the electronic controller
business from Tech/Ops, Inc. (Tech/Ops), the former parent company, Tech/Ops
Sevcon entered into a Liability Assumption and Sharing Agreement with
Tech/Ops and another former subsidiary of Tech/Ops. Liabilities incurred and
20
expensed in connection with this agreement have not been significant.
The Company maintains a directors' retirement plan which provides for
certain retirement benefits to non-employee directors. While the cost of the
plan has been fully charged to expense, the plan is not separately funded.
The maximum liability based on the cost of buying deferred annuities at
September 30, 1996 was $213,000.
Minimum rental commitments under all non-cancelable leases are as follows
for the years ended September 30: 1997 - $177,000; 1998 - $61,000; 1999 -
$61,000; 2000 - $61,000; 2001 - $30,000, and $1,297,000 thereafter. Net
rentals of certain land, buildings and equipment charged to expense were
$176,000 in 1996, $177,000 in 1995, and $170,000 in 1994.
(5) EMPLOYEE BENEFIT PLANS
Tech/Ops Sevcon has defined benefit plans covering the majority of its US
and UK employees. There is also a small defined contribution plan. The
following table sets forth the funded status of these defined benefit plans
and the amounts recognized by Tech/Ops Sevcon in accordance with SFAS #87.
(in thousands of dollars)
1996 1995
Actuarial present value of benefit obligations:
Vested benefits $4,829 $4,407
Nonvested benefits 15 9
- ----------------------------------------------------------------------------
Accumulated benefit obligation 4,844 4,416
Effect of projected future compensation levels 803 614
- ----------------------------------------------------------------------------
Projected benefit obligation 5,647 5,030
Plan assets at fair value 6,074 5,589
- ----------------------------------------------------------------------------
Plan assets in excess of projected benefit
obligation 427 559
Unrecognized net gain ( 84) (110)
Unrecognized transition amount (291) (342)
- ----------------------------------------------------------------------------
Prepaid pension cost $ 52 $ 107
The Tech/Ops Sevcon net pension cost included the following components as
defined by SFAS #87.
(in thousands of dollars)
1996 1995 1994
Service costs/benefits earned during
the period $ 252 $ 239 $ 204
Interest cost on projected benefit
obligation 391 343 293
Actual return on plan assets (441) (462) (293)
Net amortization and deferred items ( 43) 18 (124)
- ----------------------------------------------------------------------------
21
Net pension cost calculated
in accordance with SFAS #87 $ 159 $ 138 $ 80
- ----------------------------------------------------------------------------
Net cost of defined contribution plans $ 21 $ 24 $ 19
- ----------------------------------------------------------------------------
Plan assets include marketable equity securities, corporate and government
debt securities, deferred annuities, cash and other short-term investments.
The average discount rate and rate of increase in future compensation levels
used in determining the actuarial present value of the projected benefit
obligation were 7.9% and 5.9%, respectively, and the expected long-term rate
of return on assets was 8.0% in 1996, 1995 and 1994.
(6) SEGMENT INFORMATION AND FOREIGN OPERATIONS
Tech/Ops Sevcon's largest customer accounted for 9% of sales in 1996, 10% in
1995, and 12% in 1994.
Domestic and foreign revenues are composed of sales to unaffiliated
customers, with intercompany sales eliminated. Pretax net income for US and
foreign segments is stated before unallocated corporate expense.
- ----------------------------------------------------------------------------
(in thousands of dollars)
- ----------------------------------------------------------------------------
Identi-
Net Pretax fiable
Sales Income Assets
- ----------------------------------------------------------------------------
Geographic Segments
- ----------------------------------------------------------------------------
US 1996 $11,425 $ 2,269 $ 4,790
1995 $ 8,685 $ 1,562 $ 4,104
1994 6,116 997 3,481
- ----------------------------------------------------------------------------
Foreign 1996 15,772 2,893 9,855
1995 13,746 2,735 8,877
1994 9,719 1,186 7,114
- ----------------------------------------------------------------------------
Sub-total 1996 27,197 5,162 14,645
1995 22,431 4,297 12,981
1994 15,835 2,183 10,595
- ----------------------------------------------------------------------------
Unallocated 1996 - (592) -
corporate 1995 - (533) -
expense 1994 - (173) -
- ----------------------------------------------------------------------------
Total 1996 $27,197 $ 4,570 $14,645
1995 $22,431 $ 3,764 $12,981
1994 15,835 2,010 10,595
- ----------------------------------------------------------------------------
22
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Tech/Ops Sevcon, Inc.:
We have audited the accompanying consolidated balance sheets of Tech/Ops
Sevcon, Inc. (a Delaware Corporation) as of September 30, 1996 and 1995, and
the related consolidated statements of income, stockholders' investment, and
cash flows for each of the three years in the period ended September 30,
1996. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based upon our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Tech/Ops Sevcon, Inc. as
of September 30, 1996 and 1995, and the results of its operations and cash
flows for each of the three years in the period ended September 30, 1996 in
conformity with generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index of
financial statements is presented for purposes of complying with the
Securities and Exchange Commission's rules and is not part of the basic
financial statements. This schedule has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in
our opinion, fairly states, in all material respects, the financial data
required to be set forth therein in relation to the basic financial
statements taken as a whole.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
November 5, 1996
23
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
This information is incorporated by reference from the information under the
caption "Election of Directors" in the Company's Proxy Statement relating to
the 1997 Annual Meeting of Stockholders.
ITEM 11. EXECUTIVE COMPENSATION
This information is incorporated by reference from the information under the
captions "Election of Directors - Director Compensation" and "Executive
Compensation" in the Company's Proxy Statement relating to the 1997 Annual
Meeting of Stockholders.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
This information is incorporated by reference from the information under the
caption "Share Ownership" in the Company's Proxy Statement relating to the
1997 Annual Meeting of Stockholders.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
This information is incorporated by reference from the information under the
caption "Election of Directors" in the Company's Proxy Statement relating to
the 1997 Annual Meeting of Stockholders.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) Exhibits
The exhibits filed as part of this Form 10-K are listed on the
Exhibit Index below.
(b) Financial statements and schedule
The financial statements and financial statement schedule listed in
the index on page 2 are filed as part of this Annual Report on Form
10-K.
(c) Form 8-K
None filed during the quarter ended September 30, 1996.
24
INDEX TO EXHIBITS
(3)(a) Certificate of Incorporation of the registrant (incorporated by
reference to Exhibit (3)(a) to Annual Report for the fiscal year
ended September 30, 1994).
(3)(b) By-laws of the registrant (incorporated by reference to Exhibit
(3)(b) to Annual Report for the fiscal year ended
September 30, 1994).
(4)(a) Specimen common stock of registrant (incorporated by reference to
Exhibit (4)(a) to Annual Report for the fiscal year ended September
30, 1994).
(10)(a)*Tech/Ops Sevcon, Inc. 1966 Equity Incentive Plan (incorporated by
reference to Exhibit (99.1) to the registrant's Registration
Statement on Form S-8 File no. 333-02113).
(10)(b)*Severance Agreement dated December 22, 1987 between Bernard F. Start
and the registrant (incorporated by reference to Exhibit (10)(b) to
Annual Report for the fiscal year ended September 30, 1994).
(10)(c)*Corporate Services Agreement dated September 22, 1994 between
Tech/Ops Corporation and the registrant (incorporated by reference
to Exhibit (10)(c) to Annual Report for the fiscal year ended
September 30, 1994).
(10)(d) Liability Assumption and Sharing Agreement dated January 4, 1988
among Tech/Ops, Inc., Tech/Ops Landauer, Inc., and the registrant
(incorporated by reference to Exhibit (10)(d) to Annual Report for
the fiscal year ended September 30, 1994).
(10)(e)*Form of Indemnification Agreement dated January 4, 1988 between the
registrant and each of its directors (incorporated by reference to
Exhibit (10)(e) to Annual Report for the fiscal year ended September
30, 1994).
(10)(f)*Directors' retirement plan (incorporated by reference to Exhibit
(10)(f) to Annual Report for the fiscal year ended September 30,
1990).
(11) Calculation of earnings per share and weighted average shares
outstanding.
(22) Subsidiaries of the registrant (incorporated by reference to Exhibit
(22) to Annual Report for the fiscal year ended September 30, 1993).
(23) Consent of Arthur Andersen LLP.
(27) Financial Data Schedule (EDGAR Filing only).
* Indicates management contract and compensatory plans and
arrangements in which the executive officers or directors of the
registrant participate.
25
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.
TECH/OPS SEVCON, INC.
By /s/ Bernard F. Start December 12, 1996
-----------------------
Bernard F. Start
President and Chief
Executive Officer
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 TITLE DATE
/s/ Bernard F. Start President, Chief Executive December 12, 1996
- -------------------- Officer and Director
Bernard F. Start (Principal Executive Officer)
/s/ Paul A. McPartlin Vice President & Chief December 12, 1996
- --------------------- Financial Officer
Paul A. McPartlin (Principal Financial
and Accounting Officer)
/s/ Milton C. Lauenstein Director December 12, 1996
- ------------------------
Milton C. Lauenstein
/s/ Harold C. Mayer, Jr. Director December 12, 1996
- ------------------------
Harold C. Mayer, Jr.
/s/ Paul B. Rosenberg Director December 12, 1996
- ---------------------
Paul B. Rosenberg
/s/ Herbert Roth, Jr. Director December 12, 1996
- ---------------------
Herbert Roth, Jr.
/s/ Marvin G. Schorr Director December 12, 1996
- --------------------
Marvin G. Schorr
/s/ C. Vincent Vappi Director December 12, 1996
- --------------------
C. Vincent Vappi
26
QUARTERLY FINANCIAL DATA (UNAUDITED)
TECH/OPS SEVCON, INC. AND SUBSIDIARIES
Selected quarterly financial data for fiscal years 1996 and 1995 is set out
below:
(in thousands except per share data)
- ----------------------------------------------------------------------------
First Second Third Fourth Total
Quarter Quarter Quarter Quarter Year
- ----------------------------------------------------------------------------
1996 Quarters
- ----------------------------------------------------------------------------
Net sales $ 5,798 $ 7,481 $ 7,692 $ 6,226 $27,197
Gross profit 2,366 3,042 3,113 2,427 10,948
Operating income 907 1,425 1,436 802 4,570
Net income 616 944 948 528 3,036
- ----------------------------------------------------------------------------
Net income per share (a) $ .20 $ .30 $ .30 $ .17 $ .97
- ----------------------------------------------------------------------------
Average shares (a) 3,152 3,135 3,145 3,139 3,145
- ----------------------------------------------------------------------------
Cash dividends per share (a) $ .125 $ .125 $ .125 $ .15 $ .525
- ----------------------------------------------------------------------------
Common stock price per share (a)
- High $ 13.00 $ 14.50 $ 22.88 $ 16.88 $ 22.88
- Low 9.75 10.50 14.00 12.50 9.75
- ----------------------------------------------------------------------------
1995 Quarters
- ----------------------------------------------------------------------------
Net sales $ 4,774 $ 6,165 $ 6,177 $ 5,315 $22,431
Gross profit 1,962 2,577 2,626 2,150 9,315
Operating income 772 1,089 1,104 730 3,695
Net income 553 777 749 501 2,580
- ----------------------------------------------------------------------------
Net income per share (a) $ .18 $ .25 $ .24 $ .16 $ .81
- ----------------------------------------------------------------------------
Average shares (a) 3,138 3,138 3,180 3,198 3,171
- ----------------------------------------------------------------------------
Cash dividends per share (a) $ .10 $ .10 $ .10 $ .125 $ .425
- ----------------------------------------------------------------------------
Common stock price per share (a)
- High $ 8.50 $ 7.94 $ 14.63 $ 15.50 $ 15.50
- Low 6.75 7.13 7.13 11.88 6.75
- ----------------------------------------------------------------------------
(a) Restated to reflect a two-for-one stock split effective August 28,
1995.
27
TECH/OPS SEVCON, INC. AND SUBSIDIARIES SCHEDULE II
Reserves for the three years ended September 30, 1996
(in thousands of dollars)
- ----------------------------------------------------------------------------
Balance Additions Balance
at Charged to Deductions at
Beginning Costs & from Close
of Year Expenses Reserves of Year
- ----------------------------------------------------------------------------
For the year ended September 30, 1996:
Allowance for doubtful accounts $ 153 $ 4 $ ( 7)(a) $ 150
- ----------------------------------------------------------------------------
For the year ended September 30, 1995:
Allowance for doubtful accounts $ 166 $ 16 $ (29)(b) $ 153
- ----------------------------------------------------------------------------
For the year ended September 30, 1994:
Allowance for doubtful accounts $ 192 $ 10 $ (36)(c) $ 166
- ----------------------------------------------------------------------------
(a) Accounts collected $5; write-off of uncollectible accounts $2
(b) Accounts collected $29
(c) Write-off of uncollectible accounts $16; accounts collected $20
28
TECH/OPS SEVCON, INC. EXHIBIT 11
Calculation of Earnings Per Share and Weighted Average Shares Outstanding
(In thousands, except for per share amounts)
Quarters ended Fiscal
Period ended 12/31/95 4/2/96 7/2/96 9/30/96 1996
Net income $ 616 $ 944 $ 948 $ 528 $3,036
Weighted average shares
outstanding 3,152 3,135 3,145 3,139 3,145
Net income per share $ .20 $ .30 $ .30 $ .17 $ .97
Shares outstanding - beginning 3,045 3,045 3,045 3,045 3,045
Weighted average - option exercises 0 0 0 0 0
Weighted average shares
outstanding 3,152 3,135 3,145 3,139 3,145
Effect of outstanding options on
primary EPS using average market
price for the period
a. # of options less than
Average market price 226 226 225 224 225
b. $ value of options $ 981 $ 981 $ 978 $ 973 $ 979
c. Average market price of stock $ 5.21 $ 4.85 $ 6.34 $ 6.87 $ 5.82
d. Shares "purchased" (b/c) (189) (203) (156) (141) (168)
e. Common equivalent shares (a-d) 37 23 71 83 57
f. Average outstanding shares 3,045 3,045 3,045 3,045 3,045
g. Total average common and
common equivalent shares (f+e) 3,082 3,068 3,116 3,128 3,102
Quarters ended Fiscal
Period ended 12/31/94 3/31/95 6/30/95 9/30/95 1995
Net income $ 553 $ 777 $ 749 $ 501 $2,580
Weighted average shares
outstanding 3,138 3,138 3,180 3,198 3,171
Net income per share $ .18 $ .25 $ .24 $ .15 $ .81
Shares outstanding - beginning 3,045 3,045 3,045 3,046 3,045
Weighted average - option exercises 0 0 1 12 3
Weighted average shares outstanding 3,045 3,045 3,046 3,058 3,048
Effect of outstanding options on
primary EPS using average market
price for the period
a. # of options less than
Average market price 224 224 222 208 219
b. $ value of options $ 973 $ 973 $ 962 $ 901 $ 952
c. Average market price of stock $ 7.42 $ 7.40 $11.00 $13.84 $ 9.91
d. Shares "purchased" (b/c) (131) (132) (87) (65) (96)
e. Common equivalent shares (a-d) 93 92 134 142 123
f. Average outstanding shares 3,045 3,045 3,046 3,058 3,048
g. Total average common and
common equivalent shares (f+e) 3,138 3,138 3,180 3,198 3,171
29
TECH/OPS SEVCON, INC. EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorp-
oration of our report included in this Form 10-K, into the Company's
previously filed Registration Statements on Form S-8 (File No. 33-42960
and No. 33-02113.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
December 27, 1996
30