UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A1
[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 OF SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to
Commission file number: 1-4433.
ARMATRON INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter).
Massachusetts 04-1052250
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2 Main Street, Melrose MA 02176
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 321-2300
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock,
$1 Par
[X] 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 10K or any amendment to this Form 10K.
[ ] 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 requirement for the past 90 days.
Yes [X] No [ ].
The aggregate market value of common stock held by nonaffiliates on
December 2, 1996 was $472,775.
The number of shares of the Registrant's common stock outstanding on
December 2, 1996 was 2,606,481.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's definitive proxy statement for the Annual
Meeting of Stockholders to be held on January 16, 1997, to be filed pursuant
to Regulation 14A not later than 120 days after the end of the fiscal year
(September 30, 1996) are incorporated by reference in Part III. Portions of
the Registrant's Annual Report to Stockholders for the fiscal year ended
September 30, 1996 are incorporated by reference in Parts I, II, and III.
PART I
Item 1. Business
General Development of the Business:
Armatron International (the "Company") was organized in 1920 as
Automatic Radio. Until 1978, the Company was primarily involved
in the design and manufacture of automobile radios.
In 1978 the Company began to concentrate its efforts primarily
in manufacturing electronic insect killing devices in the
Flowtron Outdoor Products Division which continued until fiscal
1984.
Between 1984 and 1987 the Company acquired several companies in
order to grow and diversify. By the end of fiscal 1987 the
Company had divested itself of these acquisitions.
The Company's Automatic Radio Division supplied AMC/Chrysler
Corp. from 1986 to 1990 with radios for its JEEP. During fiscal
1990 the Company was notified by Chrysler Corporation that they
would terminate their supply agreement for radios. In 1994 this
Division completed field testing of its ultrasonic collision
avoidance/obstacle detection system for automotive applications
which is marketed under the trademark "ECHOVISION". ECHOVISION
devices monitor back blind spots and side blind spots to detect
objects and alert operators to potential hidden hazards and
features: intuitive audible warnings, visual warnings,
automatic activation, easy installation on any type vehicle and
a continuous system self-test. The advantages of using
ECHOVISION devices include: increased driver awareness which is
expected to result in fewer accidents, and potentially lower
damages and public liability costs and increased driver
awareness. The device is targeted to sell in a range of $200 to
$300. The Company warrants that the product is delivered defect
free. The Company began initial marketing in 1995. Production
began in the first quarter of 1996.
The Company's main Division, Flowtron Outdoor Products,
manufactures and distributes: insect control devices including
electronic bugkillers and biomisters, environmental products
including mulching leaf-eaters and compost bins, and yard work
and storage products including plastic yard carts and plastic
storage sheds. All products distributed in fiscal 1996 are in
full production. These products undergo periodic model changes
and product improvements.
Description of the Business:
The Company operates principally in two segments, the Consumer
Products segment and the Industrial Products segment. Information
regarding the Company's segments is incorporated herein by reference
to Note 11 of the Notes to Consolidated Financial Statements on page
12 of the Company's 1996 Annual Report to Stockholders.
The Consumer Products segment involves the manufacture , at the
Company's Melrose facility, of Flowtron leaf-eaters, bugkillers, and
biomisters. Two new products for the lawn and garden industry, a
yard cart and a storage shed, were introduced for the 1995 season.
These products are manufactured at sub-contractors. The Company
believes that alternative subcontracting manufacturing sources exist
for these products. The Company distributes its products primarily to
major retailers throughout the United States, with some products
distributed under customer labels. Substantially all of the Company's
sales in fiscal 1996 and accounts receivable as of September 30, 1996
related to business activities with such retailers.
Net sales to one customer, Sears Roebuck and Co., in the Consumer
Products Segment accounted for approximately $2,486,000 or 18% of
consolidated net sales in fiscal 1996. This represents 19% of net
sales in fiscal 1996 for the Consumer Products Segment. This customer
accounted
- 2 -
for $2,441,000 or 20% of net sales in fiscal 1995 and $4,125,000 or
31% of net sales in fiscal 1994. The loss of this customer would have
a material adverse effect on the Consumer Products Segment and the
financial operations of the Company. The Company anticipates that
sales to this customer will increase in fiscal 1997.
The Industrial Products segment consisted primarily of marketing and
manufacturing of its ECHOVISION collision avoidance/obstacle detection
system. The Company began initial marketing of its collision
avoidance/obstacle detection system in 1995. Production began in the
first quarter of 1996. The products are manufactured at the Company's
Melrose facility using components that the Company believes are
available from a variety of sources. The Company's current marketing
strategy is to focus on identifying potential customers and marketing
directly to them.
Net Sales to one customer, Federal Express, in the Industrial Products
Segment accounted for approximately $770,000 or 6% of consolidated net
sales in fiscal 1996. This represents 92% of net sales in fiscal 1996
for the Industrial Products Segment.
The raw materials used by the Company vary widely with many sources
available to meet normal product requirements.
Although the Company owns a number of design and mechanical patents in
the U.S. and foreign countries relative to its Consumer Products
Division, these patents are not believed to be material to the
operations of the Company. The Company has been awarded three patents
relative to the self-test function of its ECHOVISION obstacle
detection system. We believe this self-test will be important when
customers consider alternatives.
The Company's Consumer Products Division sales are seasonal. Heavy
shipments in spring and early summer of electronic insect killing
devices, yard carts and biomisters complement Flowtron storage sheds
which are shipped primarily in the late summer and fall.
In an effort to counteract seasonal tendencies and to level production
requirements, the Company follows the industry trade practice of
offering its customers extended payment terms when shipments are
accepted during certain limited periods, which results in seasonal
fluctuations of working capital. Sales terms for the Company's other
products are 30 days, net. The number of persons employed by the
Company varies from 60 to 130 full time employees due to the seasonal
production cycle of the Company's products. The Company's employment
levels are highest during the second and third quarters. Management
believes relations with employees are satisfactory.
Shipment backlog is not a significant factor in the Company's
operations.
Active competition exists in all product lines in the Consumer
Products Division, each with a number of well-established companies
which manufacture and sell products similar to those of the Company.
Price, service, warranty and product performance are the bases of
competition, with price becoming increasingly more important. With
reference to the Industrial Products Division, the Company expects
active competition and expects price and product performance will be
the basis of such competition.
The amount spent on Company-sponsored research and development was not
significant in any of the three years in the period ended September
30, 1996.
- 3 -
The Company's compliance with federal, state and local environmental
regulations had no material effect upon the expenditures, earnings or
competitive position of the Company and its subsidiaries.
In January 1991, the California Department of Health Services (DHS)
issued a Corrective Action Order (CAO) against the Company and a
former subsidiary. The CAO required the Company to comply with a
Cleanup and Abatement Order which had been issued in 1990 against the
Company for soil contamination at the site of the former subsidiary.
To date, no determination has been made with regard to the extent of
any environmental damage and who may be liable. The Company does not
believe, based on the information available at this time, that the
outcome of this matter will have a material adverse effect on its
financial position or results of operations.
The Company's export sales were not significant in any of the three
years in the period ended September 30, 1995.
Item 2. Properties
The Company's principal executive offices and main manufacturing plant
are leased facilities located at 2 Main Street, Melrose,
Massachusetts, a Boston suburb. The Company manufactures bugkillers,
leafeaters and biomisters at this facility. The Company leases
84,000 sq. ft. of this facility, which has been occupied by the
Company since 1964. The lease for the operating facility expires in
September 2000.
Item 3. Legal Proceedings
There are no material outstanding legal proceedings at this time.
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters.
The information required by this item is set forth under the
captions "Selected Financial Data" and "Common Stock
Information" on page 18 of the Company's 1996 Annual Report
to Stockholders, and is incorporated herein by reference.
Under its financing agreement, as set forth in Footnote 6
on Page 9 of the Company's 1996 Annual Report to
Stockholders, the Company is restricted from paying
dividends for the term of the agreement. The Company
currently intends to retain earnings rather than pay cash
dividends.
Item 6. Selected Financial Data
The information required by this item is set forth under the
caption "Selected Financial Data" on page 18 of the
Company's 1996 Annual Report to Stockholders, and is
incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial
Conditions and Results of Operations
The information required by this item is set forth under the
caption "Management's Discussion and Analysis of Financial
Condition and Results of Operations" on pages 16 through 17
of the Company's 1996 Annual Report to Stockholders, and is
incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data
The following financial statements and supplementary data of
the Company are located on pages 2 through 15 of the
Company's 1996 Annual Report to Stockholders and are
incorporated herein by references:
Consolidated Balance Sheets September 30, 1996 and 1995.
- 4 -
Statements of Consolidated Operations for the Years Ended
September 30, 1996, 1995 and 1994
Statements of Consolidated Cash Flows for the Years Ended
September 30, 1996, 1995 and 1994.
Consolidated Statements of Stockholders' Equity for the
Years Ended September 30, 1996, 1995 and 1994.
Notes to Consolidated Financial Statements.
Reports of Independent Accountants.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
Not applicable.
PART III
Item 10. Directors and Executive Officers of the Registrant
The information required by this item is set forth under the captions
"Election of Directors; Security Ownership of Management" and "Other
Executive Officers" and "Section 16(a) Beneficial Ownership Reporting
Compliance" on pages 2 through 4 and page 9 of the Company's Proxy
Statement dated December 30, 1996, and is incorporated herein by
reference. Mr. Charles Housman, a Director and President of the
Company, is the brother of Mr. Edward Housman, a Director.
Item 11. Executive Compensation
The information required by this item is set forth under the captions
"Executive Compensation" and "Benefit Plans" on pages 5 through 6 of
the Company's Proxy Statement dated December 30, 1996 and is
incorporated herein by reference.
Item 12. Security Ownership of certain Beneficial Owners and Management.
The information required by this item is set forth under the captions
"Election of Directors' Security Ownership of Management" and
"Principal Shareholder" on pages 2 through 4 of the Company's Proxy
Statement dated December 30, 1996, and is incorporated herein by
reference.
Item 13. Certain Relationships and Related Transactions
The information required by this item is set forth under the caption,
"Certain Transactions" on page 7 of the Company's Proxy Statement
dated December 30, 1996, and in Footnote 6 to the Company's 1996
Annual Report to Stockholders on page 9 and is incorporated herein by
reference.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a)The following documents are filed as part of this report:
(1)Financial Statements
All financial statements of the Registrant as set forth under Item 8
of this report on Form 10-K.
- 5 -
(2)Financial Statement Schedules
SCHEDULE PAGE
NUMBER DESCRIPTION NUMBER
-------------------------------------------------------------------
Reports of Independent Accountants 7
VIII Valuation & Qualifying Accounts 8
All other financial statement schedules not listed have been omitted
because they are either not required, not applicable, or the
information has been included elsewhere in the financial statements or
notes thereto.
Columns omitted from schedules filed have been omitted because the
information is not applicable.
(3)Exhibits (numbered in accordance with Item 601 of Regulation S-K):
PAGE NUMBER OR
EXHIBIT INCORPORATION BY
NUMBER DESCRIPTION REFERENCE TO
- ----------------------------------------------------------------------------------------
3.1 Restated Articles of Organization of January 23, 1984 ***
3.2 By-laws, as amended, through December 20, 1989 ***
10.1 Revolving Line of Credit *****
10.2 1981 Non-qualified Stock Option Plan ***
10.7 Loan and Security Agreement *
10.8 Armatron International Inc./Dreyfus 401(k) Profit ******
Sharing Plan and Trust: Summary Plan Description
10.9 Facility Lease ******
11.0 Not Applicable
13.0 Annual Report to Stockholders for FY1996
19.1 $7,000,000 Line of Credit with a Related Party **
21.0 List of Subsidiaries
23.0 Consent of Independent Accountants
<F1>
* Filed as an Exhibit to the Company's Annual Report on Form 10K for
the fiscal year ended September 30, 1994.
<F2>
** Filed as an Exhibit to the Company's Form 10-Q for the quarter ended
March 31, 1990.
<F3>
*** Filed as an Exhibit to the Company's Annual Report on Form 10-K for
the fiscal year ended September 30, 1990 and incorporated herein by
reference.
<F4>
***** Filed as an Exhibit to the Company's annual report on Form 10-K for
the fiscal year ended September 30, 1993 and incorporated herein by
reference.
<F5>
****** Filed as an Exhibit to the Company's annual report on Form 10K for
the fiscal year ended September 30, 1995 and incorporated herein by
reference.
(b)Reports on Form 8-K
No reports were filed on Form 8-K for the last quarter of the
Company's fiscal year ended September 30, 1996.
- 6 -
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
of Armatron International, Inc.:
Our report on the consolidated financial statements of Armatron
International, Inc. has been incorporated by reference in this Form 10-K
from page 15 of the 1996 Annual Report to Stockholders of Armatron
International, Inc. In connection with our audits of such financial
statements, we have also audited the related financial statement schedules
listed in the index on page 6 of this Form 10-K.
In our opinion, the financial statement schedules referred to above,
when considered in relation to the basic financial statements taken as a
whole, present fairly, in all material respects, the information required to
be included therein.
Needham, Massachusetts
December 9, 1996 R. J. GOLD & COMPANY P.C.
December 20, 1996 as to Note 13
ARMATRON INTERNATIONAL, INC.
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- ------------------------------------------------------------------------------------
Balance at Charged to Balance at
Beginning Costs and End of
of Period Expenses Deductions Period
---------- ---------- ---------- ----------
Year Ended
September 30, 1994:
Allowance for
doubtful accounts $292,000 $(146,000) $ 46,000 $100,000
Warranty costs 90,000 (34,000) 43,000 40,000
-------- --------- -------- --------
$382,000 $(180,000) $ 89,000 $140,000
======== ========= ======== ========
Year Ended
September 30, 1995:
Allowance for
doubtful accounts $100,000 $ 65,000 $(14,000) $179,000
Warranty costs 40,000 71,000 47,000 64,000
-------- --------- -------- --------
$140,000 $ 136,000 $ 33,000 $243,000
======== ========= ======== ========
Year Ended
September 30, 1996:
Allowance for
doubtful accounts $179,000 $ 2,000 $ 5,000 $176,000
Warranty costs 64,000 77,000 101,000 40,000
-------- --------- -------- --------
$243,000 $ 79,000 $106,000 $216,000
======== ========= ======== ========
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
ARMATRON INTERNATIONAL, INC.
December 26, 1996 By:/s/ Charles J. Housman
Charles J. Housman
Chairman of the Board,
President and Director
By:/s/ Richard M. Housman
Richard M. Housman
Controller
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 on December 26, 1996, in the capacities indicated.
By:/s/ Edward L. Housman By:/s/ Charles J. Housman
Edward L. Housman Charles J. Housman
Director Chairman of the Board,
President and Director
By:/s/ Elliot J. Englander
Elliot J. Englander
Director
EXHIBIT INDEX
PAGE NUMBER OR
EXHIBIT INCORPORATION BY
NUMBER DESCRIPTION REFERENCE TO
- -----------------------------------------------------------------------
3.1 Restated Articles of Organi- ***
zation as of January 23, 1989
3.2 By laws, as amended, through ***
December 20, 1989
10.1 Revolving Line of Credit *****
10.2 1981 Non-qualified Stock
Option Plan ***
10.7 Loan and Security Agreement *
10.8 Armatron International, Inc./Dreyfus
401(k) Profit Sharing Plan and Trust:
Summary Plan Description ******
10.9 Facility Lease ******
13.0 Annual Report to Stockholders for
FY 1996
19.1 $7,000,000 Line of Credit with a
Related Party **
21.0 List of Subsidiaries
23.0 Consents of Independent Accountants
<F1>
* Filed as an Exhibit to the Company's Annual Report on Form 10-K for
the fiscal year ended September 30, 1994 and incorporated herein by
reference.
<F2>
** Filed as an Exhibit to the Company's Form 10-Q for the quarter ended
March 31, 1990.
<F3>
*** Filed as an Exhibit to the Company's Annual Report on Form 10-K for
the fiscal year ended September 30, 1990 and incorporated herein by
reference.
<F4>
**** Filed as an Exhibit to the Company's Form 8-K dated February 28, 1994
and incorporated herein by reference.
<F5>
***** Filed as an Exhibit to the Company's Annual Report on Form 10-K for
the fiscal year ended September 30, 1993 and incorporated herein by
reference.
<F6>
****** Filed as an Exhibit to the Company's annual report on Form 10-K for
the fiscal year ended September 30, 1995 and incorporated herein by
reference.