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 period ended April 30, 2003
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 0-14812
EDISON CONTROL CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
New Jersey 22-2716367
- ---------- ----------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
777 Maritime Drive
PO Box 308
Port Washington, WI 53074-0308
------------------------------
(Address of principal executive offices)
(Zip Code)
(262) 268-6800
--------------
(Registrant's telephone number, including area code)
(Former name, former address and former
fiscal year, if changed since last report)
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 whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes No X
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Common Stock, $.01 par value: 1,638,595 as of April 30, 2003
EDISON CONTROL CORPORATION AND SUBSIDIARIES
INDEX
Page Number
Part I Financial Information -----------
Item 1: Financial Statements
--------------------
Condensed Consolidated Balance Sheets
April 30, 2003 and January 31, 2003 (Unaudited) 2 - 3
Condensed Consolidated Statements of Income and
Comprehensive Income
Three months ended April 30, 2003 and 2002 (Unaudited) 4
Condensed Consolidated Statements of Cash Flows
Three months ended April 30, 2003 and 2002 (Unaudited) 5 - 6
Notes to Condensed Consolidated Financial Statements
(Unaudited) 7 - 10
Item 2: Management's Discussion and Analysis of Operations
--------------------------------------------------
and Financial Condition 10 - 12
-----------------------
Item 3: Quantitative and Qualitative Disclosures About Risk 12 - 13
---------------------------------------------------
Item 4: Controls and Procedures 13
-----------------------
Part II Other Information
Item 6: Exhibits and Reports on Form 8-K 13 - 14
Certifications
1
PART I.
Item 1
Financial Statements
EDISON CONTROL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
April 30, 2003 and January 31, 2003
(Unaudited)
April 30, January 31,
2003 2003
----------- -----------
ASSETS
Current Assets:
Cash and cash equivalents $ 396,263 $ 586,520
Trading securities 35,411 37,475
Accounts receivable, net 5,298,808 4,249,057
Inventories, net 6,750,741 7,122,512
Prepaid expenses and other assets 283,282 297,017
Deferred income taxes 260,000 260,000
----------- -----------
Total current assets 13,024,505 12,552,581
Deferred income taxes 685,000 685,000
Property, plant and equipment, net 6,274,746 6,464,602
Goodwill 8,130,000 8,130,000
----------- -----------
TOTAL ASSETS $28,114,251 $27,832,183
=========== ===========
(Continued)
See Accompanying Notes.
2
EDISON CONTROL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
April 30, 2003 and January 31, 2003
(Unaudited)
(Continued)
April 30, January 31,
2003 2003
----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Trade accounts payable $ 1,029,279 $ 1,001,981
Accrued compensation 669,917 962,812
Taxes other than income taxes 44,695 16,325
Other accrued expenses 491,181 438,822
Income taxes payable 208,227 34,045
Current maturities on long-term debt 159,902 159,902
----------- -----------
Total current liabilities 2,603,201 2,613,887
Long-term debt, less current maturities 4,948,363 5,100,801
----------- -----------
Total Liabilities 7,551,564 7,714,688
Shareholders' Equity:
Preferred stock, $.01 par value: 1,000,000
shares authorized, none issued
Common stock, $.01 par value: 20,000,000
shares authorized, 2,390,223 shares issued 23,902 23,902
Additional paid-in capital 11,363,219 11,363,219
Retained earnings 14,442,326 13,980,740
Accumulated other comprehensive (loss) income (5,364) 11,030
----------- -----------
25,824,083 25,378,891
Less treasury stock at cost:
751,628 shares (5,261,396) (5,261,396)
----------- -----------
Total Shareholders' Equity 20,562,687 20,117,495
----------- -----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $28,114,251 $27,832,183
=========== ===========
See Accompanying Notes.
3
EDISON CONTROL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
THREE MONTHS ENDED APRIL 30, 2003 AND 2002
(Unaudited)
2003 2002
----------- -----------
NET SALES $ 7,176,743 $ 6,855,369
COST OF GOODS SOLD 4,455,790 4,424,547
----------- -----------
GROSS PROFIT 2,720,953 2,430,822
OTHER OPERATING EXPENSES:
Selling, engineering and
administrative expenses 2,003,247 1,483,089
----------- -----------
Total other operating expenses 2,003,247 1,483,089
----------- -----------
OPERATING INCOME 717,706 947,733
OTHER EXPENSE (INCOME):
Interest expense 37,517 44,239
Unrealized losses on trading securities 2,064 5,797
Miscellaneous income (74,017) (3,447)
----------- -----------
Total other (income) expense (34,436) 46,589
----------- -----------
INCOME BEFORE INCOME TAXES 752,142 901,144
PROVISION FOR INCOME TAXES 290,556 323,330
----------- -----------
NET INCOME 461,586 577,814
OTHER COMPREHENSIVE (LOSS) INCOME -
Foreign currency translation adjustment (16,394) 85,859
----------- -----------
COMPREHENSIVE INCOME $ 445,192 $ 663,673
=========== ===========
NET INCOME PER SHARE:
Net income per share - basic $ 0.28 $ 0.32
Net income per share - diluted $ 0.22 $ 0.25
See Accompanying Notes.
4
EDISON CONTROL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED APRIL 30, 2003 AND 2002
(Unaudited)
2003 2002
----------- -----------
OPERATING ACTIVITIES:
Net income $ 461,586 $ 577,814
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 234,137 251,217
Provision for doubtful accounts 72,677 128,828
Unrealized loss on trading securities 2,064 5,797
Changes in assets and liabilities:
Accounts receivable (1,122,428) (532,768)
Inventories 371,771 142,810
Prepaid expenses and other assets 13,735 44,056
Trade accounts payable 27,298 (201,464)
Accrued compensation (292,895) (698,920)
Taxes other than income taxes 28,370 (2,490)
Other accrued expenses 52,359 47,208
Deferred income taxes 0 (5,000)
Income taxes payable 174,182 278,962
----------- -----------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 22,856 36,050
----------- -----------
INVESTING ACTIVITIES:
Additions to plant and equipment (44,281) (245,040)
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (44,281) (245,040)
----------- -----------
(Continued)
See Accompanying Notes.
5
EDISON CONTROL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED APRIL 30, 2003 AND 2002
(Unaudited)
(Continued)
2003 2002
----------- -----------
FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt $ 0 $ 900,000
Purchases of treasury stock 0 (254,408)
Payments on long-term debt (152,438) (652,343)
---------- ----------
NET CASH USED IN FINANCING ACTIVITIES (152,438) (6,751)
---------- ----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (16,394) 85,859
---------- ----------
NET DECREASE IN CASH AND CASH EQUIVALENTS (190,257) (129,882)
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD 586,520 472,352
---------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 396,263 $ 342,470
========== ==========
Supplemental disclosure of cash flow information:
Cash paid during the period for income taxes $ 116,374 $ 64,007
Cash paid during the period for interest 33,056 33,928
See Accompanying Notes.
6
EDISON CONTROL CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 1 - Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these
statements do not include all of the information and footnotes required by
accounting principles generally accepted in the United States of America for
complete financial statements. In the opinion of management, all adjustments
(consisting of normal, recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three-month period
ending April 30, 2003 are not necessarily indicative of the results that may be
expected for other interim periods or for the fiscal year ended January 31,
2004. For further information, refer to the financial statements and footnotes
thereto included in the Company's Annual Report on Form 10-K for the year ended
January 31, 2003.
Note 2 - Nature of Business
Principles of Consolidation - The consolidated financial statements include the
accounts of Edison Control Corporation ("Edison") and subsidiaries, both of
which subsidiaries are wholly owned by Edison (collectively, the "Company"). All
material intercompany accounts and transactions have been eliminated in
consolidation.
Nature of Operations - The Company is currently comprised of the following
operations. Construction Forms ("ConForms") is a leading manufacturer and
distributor of systems of pipes, couplings, hoses and other equipment used for
the pumping of concrete. ConForms manufactures a wide variety of finished
products which are used to create appropriate configurations of systems for
various concrete pumps. Ultra Tech manufactures abrasion resistant piping
systems for use in industries such as mining, pulp and paper, power and waste
treatment. South Houston Hose ("SHH") is a distributor of industrial hose and
fittings.
Trading Securities - Debt and equity securities purchased and held principally
for the purpose of sale in the near term are classified as "trading securities"
and reported at fair value with unrealized gains and losses included in
earnings. The cost of individual securities sold is based on the first-in,
first-out method.
Translation of Foreign Currencies - Assets and liabilities of foreign operations
are translated into United States dollars at current exchange rates. Income and
expense accounts are translated into United States dollars at average rates for
the periods and capital accounts have been translated using historical rates.
The resulting translation adjustments are recorded as other comprehensive income
or loss.
New Accounting Standards - In December 2002, the FASB issued SFAS No. 148,
"Accounting for Stock-Based Compensation--Transition and Disclosure, an
amendment of FASB Statement No. 123." SFAS No. 148 provides alternative methods
of transition to the fair value method of accounting for stock-based employee
compensation and also amends the disclosure provisions of SFAS No. 123. The
Company adopted only the disclosure portion of SFAS No. 148. Thus, such
statement
7
will not have an impact on the Company's consolidated financial statements.
There was no stock based compensation expense included in net income for the
three months ended April 30, 2003 or 2002, respectively. There would have been
no stock based compensation expense determined under the fair value based method
for the three months ended April 30, 2003 or 2002.
In November 2002, the FASB issued Interpretation ("FIN") No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others." FIN No. 45 requires that a guarantor must
recognize, at the inception of a guarantee, a liability for the fair value of
the obligation that it has undertaken in issuing a guarantee. FIN No. 45 also
addresses the disclosure requirements that a guarantor must include in its
financial statements ending after December 15, 2002. The initial recognition and
measurement provisions of this interpretation are applicable on a prospective
basis to guarantees issued or modified after December 31, 2002. FIN No. 45 also
requires disclosure regarding the Company's product warranty liability (see Note
5). Adoption of FIN No. 45 did not have an impact on the Company's consolidated
financial statements.
Net Income Per Share - Reconciliation of the numerator and denominator of the
basic and diluted per share computations for the three months ended April 30,
2003 and 2002 are summarized as follows:
2003 2002
Basic: ---------- ----------
Net income (numerator) $ 461,586 $ 577,814
Weighted average shares outstanding (denominator) 1,638,595 1,786,064
Net income per share - basic $ 0.28 $ 0.32
Diluted:
Net income (numerator) $ 461,586 $ 577,814
Weighted average shares outstanding 1,638,595 1,786,064
Effect of dilutive securities:
Stock options 57,803 136,727
Stock warrants 370,711 374,549
---------- ----------
Weighted average shares outstanding (denominator) 2,067,109 2,297,340
Net income per share - diluted $ 0.22 $ 0.25
Note 3 - Segment Information
The Company's operating segments are organized based on the nature of products
and services provided. A description of the nature of the segments' operations
and their accounting policies is contained in Note 2. Segment information for
the three months ended April 30, 2003 and 2002 follows:
2003 2002
--------------------------- ---------------------------
Net Operating Net Operating
Sales Income (Loss) Sales Income (Loss)
----------- ------------- ----------- -------------
ConForms $ 5,810,388 $ 1,214,060 $ 5,281,535 $ 1,020,382
Ultra Tech 795,869 137,262 927,466 27,147
SHH 570,486 (26,544) 646,368 1,701
Edison (607,072) (101,497)
----------- ----------- ----------- -----------
Total $ 7,176,743 $ 717,706 $ 6,855,369 $ 947,733
8
Note 4 - Inventories
Inventories consisted of the following:
April 30, January 31,
2003 2003
----------- -----------
Raw Materials $ 3,493,826 $ 3,639,169
Work-in-process 1,239,462 1,391,795
Finished Goods 2,147,453 2,206,548
----------- -----------
6,880,741 7,237,512
Less-reserve to reduce carrying value to LIFO cost (130,000) (115,000)
----------- -----------
Net inventories $ 6,750,741 $ 7,122,512
=========== ===========
Note 5 - Warranty Accrual
The Company provides warranties for specific product lines and accrues for
estimated future warranty cost in the period in which the sale is recorded. The
Company calculates its reserve requirements based on historic warranty loss
experience that is periodically adjusted for recent actual experience. The
following is an analysis of the Company's product warranty reserve for the three
months ended April 30, 2003 and 2002:
Three Months Ended April 30,
----------------------------
2003 2002
Warranty Reserve: ---------- ----------
Beginning of year balance $ 65,000 $ 120,000
Additions 27,000 30,000
Usage (6,337) (10,071)
End of Period Balance $ 85,663 $ 139,929
Note 6 - Going Private Transaction
On April 1, 2003, the Company filed a Form 8-K disclosing that its Board of
Directors approved a proposal from its majority shareholder and Chairman of the
Board and its Chief Executive Officer to engage in a going-private transaction.
Such transaction is to be structured as a one-for-66,666 reverse stock split in
which shareholders owning less than one share as a result of the reverse stock
split will receive cash in an amount equal to $7.00 per pre-split share in lieu
of receiving fractional shares. The Chairman and Chief Executive Officer
together currently beneficially own 71% of the Company's common shares. In
conjunction with the reverse stock split, the Company intends to enter into
individual option cancellation agreements with each person holding options to
acquire the Company's common stock (with the exception of the Chief Executive
Officer, whose options will remain outstanding). It is anticipated that as a
result of these transactions, the Chairman and Chief Executive Officer will
remain as the only two shareholders of the Company. The terms and conditions of
the reverse stock split and the cash consideration to be received by the
Company's minority shareholders were unanimously approved by the Board of
Directors (with the Chairman and Chief Executive Officer abstaining), based on
the recommendation of a Special Committee composed entirely of disinterested
directors.
9
The estimated total cost to cash-out fractional shares and options to acquire
shares is expected to be approximately $3.5 million, excluding transaction
costs. To fund the transaction, the Company has received a commitment, subject
to customary limitations, for a $5 million five-year term loan secured by assets
of the Company.
Item 2.
Management's Discussion and Analysis of Operations and Financial Condition
Certain matters discussed in this Quarterly Report on Form 10-Q are
"forward-looking statements" intended to qualify for the safe harbors from
liability established by the Private Securities Litigation Reform Act of 1995.
These forward-looking statements can generally be identified as such because the
context of the statement will include words such as the Company "believes",
"anticipates", "expects", or words of similar import. Similarly, statements that
describe the Company's future plans, objectives or goals are also
forward-looking statements. Such forward-looking statements are subject to
certain risks and uncertainties, including, but not limited to, new product
advancements by competition, significant changes in industry technology,
economic or political conditions in the countries in which the Company does
business, the continued availability of sources of supply, the availability and
consummation of favorable acquisition opportunities, increasing competitive
pressures on pricing and other contract terms, economic factors affecting the
Company's customers and stock price variations affecting the Company's
securities trading portfolio. These factors could cause actual results to differ
materially from those anticipated as of the date of this report. Shareholders,
potential investors and other readers are urged to consider these factors in
evaluating the forward-looking statements and are cautioned not to place undue
reliance on such forward-looking statements. The forward-looking statements
included herein are only made as of the date of this report and the Company
undertakes no obligation to publicly update such forward-looking statements to
reflect subsequent events or circumstances.
Net sales for the three months ended April 30, 2003 increased $321,374 (4.7%) to
$7,176,743 when compared with the same period of the prior year. ConForms sales
increased by $528,853 compared with the same period of the prior year. This was
partially offset by decreased Ultra Tech and SHH sales of $131,597 and $75,882,
respectively. The ConForms increase was due to a softer concrete pumping
accessories market for the three months of 2002 compared to the current year
combined with a general 3% price increase for the ConForms division. The Ultra
Tech decrease was due to lower project sales during the three months ended April
30, 2003 compared to the same period of the prior year. The decrease in the
SHH sales was due to a decrease in large contract orders for the three months
ended April 30, 2003 compared to the same period of the prior year.
As a percentage of net sales, gross profit margin for the three months ended
April 30, 2003 was 37.9% compared to 35.5% for the same period last year. This
was due largely to a price increase for ConForms combined with lower margins for
Ultra Tech sales for the three months ended April 30, 2002 due to a higher mix
of lower margin project sales. Selling, engineering and administrative expenses
increased by $520,158 or 35.1% for the first three months of 2003 compared with
the same period of the prior year. This is due primarily to legal and
professional fees incurred as part of the Company's pending going-private
transaction.
10
Interest expense decreased to $37,517 for the three months ended April 30, 2003
compared to $44,239 for the three months ended April 30, 2002 due to slightly
lower debt balances combined with lower interest rates.
Miscellaneous income increased $70,570 from the prior year due largely to a
settlement of $72,847 received by the Company in the first fiscal quarter of
2003 from Cendant Corporation litigation regarding previously recognized trading
securities losses relating to Cendant Corporation.
The Company recorded tax expense of $290,556 for the three months ended April
30, 2003, which represents an estimated effective rate of 38.6% applied to
pre-tax book income. Deferred income taxes reflect the net tax effects of
temporary differences between the carrying amount of assets and liabilities for
financial statement reporting purposes and the amounts used for income tax
purposes.
Net income of $461,586, or $0.28 and $0.22 per share, basic and diluted,
respectively, for the first three months of 2003 was a decrease of $116,228
(20.1%), from net income of $577,814, or $0.32 and $0.25 per share, basic and
diluted, for the comparable period last year. The decrease in net income is due
largely to higher selling, engineering and administrative expenses offset by
higher ConForms' sales and higher margins on Ultra Tech sales for the three
month period ended April 30, 2003 compared to the same period from the previous
year.
Liquidity and Capital Resources
The Company generated $22,856 in cash from operations during the first three
months of 2003, compared to cash generated from operations of $36,050 for the
same period last year. The Company used $44,281 in cash to acquire capital
equipment and $152,438 in payments of long-term debt. The result was a net
decrease in cash and cash equivalents of $190,257 for the three months ended
April 30, 2003 compared to a net decrease of $129,882 for the same period of the
prior year.
The Company believes that it can fund proposed capital expenditures and
operational requirements from operations and currently available cash and cash
equivalents, and existing bank credit lines. Proposed capital expenditures for
the fiscal year ending January 31, 2004 are expected to total approximately
$735,000, compared to $569,977 for fiscal 2002.
The estimated total cost to cash-out fractional shares and options to acquire
shares in the aforementioned going private transaction is expected to be
approximately $3.5 million, excluding transaction costs. To fund the
transaction, the Company has received a commitment, subject to customary
limitations, for a $5 million five-year term loan secured by assets of the
Company.
Critical Accounting Policies - The consolidated financial statements and related
notes contain information that is pertinent to management's discussion and
analysis. The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities, the disclosure of contingent assets and liabilities at
the date of the financial statements, and the reported amounts of revenues and
expenses during the period. Actual results could differ from those estimates.
Edison Control Corporation considers the following policies to be the most
critical in understanding the judgments that are involved in
11
the preparation of the Company's consolidated financial statements and the
uncertainties that could impact the Company's financial position, results of
operations and cash flows.
Revenue Recognition - The Company recognizes revenue, net of expected returns,
upon shipment of products, which is when title passes to the customer, the price
is fixed, the customer is obligated to pay and the Company has no remaining
obligations.
Allowance for Doubtful Accounts -The Company's accounts receivable are reported
net of bad debt reserves, which are regularly evaluated by management for
adequacy. The evaluation includes and is not limited to a review of individual
customer accounts that have balances beyond the agreed upon terms of the sale.
Reserve values are assigned to individual accounts based on the Company's recent
payment experience with the customer and knowledge of the customer's
creditworthiness. In addition, a general reserve is established to cover the
exposure presented by the remainder of account balances.
Excess and Obsolete Inventory - The Company's inventories are reported net of
excess and obsolete reserves, which are maintained and evaluated on a regular
basis by management. A reserve for excess inventory is calculated by an analysis
of items with on-hand quantities in excess of historical usage over a reasonable
time frame. Management identifies obsolete inventory on a regular basis and
disposes of the quantities through sale to scrap dealers or commercial waste
haulers. On rare occasions obsolete inventory may remain in the Company's
inventory for a period of time and would be reserved for.
Warranties - The Company warrants its products sold to customers to be free from
defects in material and workmanship. The warranty does not vary based on
customer, product sold or any other factor. The company accrues for future
warranty costs in the period in which the sale is recorded, and the estimated
reserve is adjusted periodically based on recent actual experience.
Item 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to interest rate risk and foreign currency risk. These
risks include changes in U.S interest rates and changes in foreign currency
exchange rates as measured against the U.S. dollar.
Interest Rate Risk
The Company's revolving credit borrowings and variable rate term loans, which
totaled $5,050,000 as of April 30, 2003, are subject to interest rate risk. Most
of the borrowings float at the prime rate or LIBOR plus a certain number of
basis points. Based on the April 30, 2003 balance, an increase of one percent in
the interest rate on the Company's loans would cause interest expense to
increase by approximately $50,500 or $0.02 per diluted share, net of taxes, on
an annual basis. The Company currently does not use derivatives to fix variable
rate interest obligations.
12
Foreign Currency Risk
The Company has foreign operations in the United Kingdom and Malaysia. Sales and
purchases are typically denominated in the British pound, Malaysian ringgit,
German mark, Singapore dollar or U.S. dollar, thereby creating exposures to
changes in exchange rates. The changes in exchange rates may positively or
negatively affect the Company's sales, gross margins and retained earnings. The
Company does not enter into foreign exchange contracts but attempts to minimize
currency exposure risk through working capital management. There can be no
assurance that such an approach will be successful, especially in the event of a
significant and sudden decline in the value of a currency.
Item 4.
Controls and Procedures
The Chief Executive Officer and the Chief Financial Officer of the Company (its
principal executive officer and principal financial officer, respectively) have
concluded, based on their evaluation as of a date within 90 days prior to the
date of the filing of this Report, that the Company's disclosure controls and
procedures are effective to ensure that information required to be disclosed by
the Company in the reports filed or submitted by it under the Securities
Exchange Act of 1934, as amended, is recorded, processed, summarized and
reported within the time periods specified in the SEC's rules and forms, and
includes controls and procedures designed to ensure that information required to
be disclosed by the Company in such reports is accumulated and communicated to
the Company's management, including the Chief Executive Officer and Chief
Financial Officer, as appropriate to allow timely decisions regarding required
disclosure.
There were no significant changes in the Company's internal controls or in other
factors that could significantly affect these controls subsequent to the date of
such evaluation.
PART II.
Item 6.
Exhibits and Reports on Form 8-K
(a) Exhibits
99.1 Written Statement of the President and Chief Executive Officer,
pursuant to 18 U.S.C. Section 1350, dated June 16, 2003
99.2 Written Statement of the Chief Financial Officer, pursuant to
18 U.S.C. Section 1350, dated June 16, 2003
(b) Reports on Form 8-K
The Company filed the following reports on Form 8-K during the quarter to which
this report relates:
o On March 12, 2003, the Company disclosed under Item 9 preliminary results
for 2002 and a press release regarding receipt of a "going private"
proposal from its majority shareholder and Chairman of the Board, William
B. Finneran, and its Chief Executive Officer, Alan J. Kastelic.
13
o On April 2, 2003, the Company disclosed under Item 9 that its board had
approved a "going private" proposal.
o On April 9, 2003, the Company disclosed under Item 9 that its board had
approved amendments to the "going private" proposal.
14
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.
EDISON CONTROL CORPORATION
(Registrant)
Date: June 16, 2003 /s/ Gregory L. Skaar
--------------------------
Gregory L. Skaar
(Chief Financial Officer)
15
CERTIFICATIONS UNDER SECTION 302
OF THE SARBANES-OXLEY ACT
I, Alan J. Kastelic, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Edison Control
Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of Edison Control Corporation as of, and for, the periods presented
in this quarterly report.
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for Edison Control Corporation and
we have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a. all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b. any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
June 16, 2003 /s/ Alan J. Kastelic
-------------------------------------
Alan J. Kastelic
President and Chief Executive Officer
16
I, Gregory L. Skaar, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Edison Control
Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of Edison Control Corporation as of, and for, the periods presented
in this quarterly report.
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for Edison Control Corporation and
we have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a. all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b. any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
June 16, 2003 /s/ Gregory L. Skaar
--------------------------
Gregory L. Skaar
Chief Financial Officer
17
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
99.1 Written Statement of the President and Chief Executive Officer,
pursuant to 18 U.S.C. ss.1350, dated June 16, 2003
99.2 Written Statement of the Chief Financial Officer, pursuant to 18
U.S.C. ss.1350, dated June 16, 2003
18