FORM 10Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarter Ended June 30, 1995 Commission File No. 0-147
HICKOK INCORPORATED
Incorporated in the State of Ohio I.R.S. No. 34-0288470
10514 Dupont Avenue Cleveland, Ohio 44108
Telephone Number (216) 541-8060
Indicated below are the number of shares outstanding of each of the issuer's
classes of Common Stock as of July 21, 1995.
Class A Common 737,484
Class B Common 454,866
Company or Group of Companies for which report is filed:
HICKOK INCORPORATED
SUPREME ELECTRONICS CORP.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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FORM 10Q
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS:
HICKOK INCORPORATED
CONSOLIDATED INCOME STATEMENTS
(Unaudited)
Three months ended Nine months ended
June 30 June 30
-------------------------- ---------------------------
1995 1994 1995 1994
----------- ----------- ------------ ------------
Net Sales $ 6,958,126 $ 5,233,411 $ 20,999,335 $ 14,998,365
Costs and Expenses:
Cost of Goods Sold 4,351,401 3,439,336 13,831,290 9,981,587
Product Development 828,443 450,471 2,234,531 1,546,161
Operating Expenses 1,114,728 808,478 2,872,428 2,303,678
Interest Charges 51,917 2,651 80,939 8,706
Other Income (29,284) (26,941) (93,901) (94,251)
----------- ----------- ------------ ------------
6,317,205 4,673,995 18,925,287 13,745,881
----------- ----------- ------------ ------------
Income before
Income Taxes 640,921 559,416 2,074,048 1,252,484
Income Taxes 249,900 227,700 808,900 510,000
----------- ----------- ------------ ------------
Net Income $ 391,021 $ 331,716 $ 1,265,148 $ 742,484
----------- ----------- ------------ ------------
----------- ----------- ------------ ------------
EARNINGS PER COMMON SHARE:
- --------------------------
Net Income $ .33 $ .28 $ 1.06 $ .62
----------- ----------- ------------ ------------
----------- ----------- ------------ ------------
Weighted Average Shares
of Common Stock Out-
standing 1,192,350 1,191,276 1,195,128 1,191,232
----------- ----------- ------------ ------------
----------- ----------- ------------ ------------
Dividends per Share $ .10 $ -0- $ .275 $ .15
----------- ----------- ------------ ------------
----------- ----------- ------------ ------------
See Notes to Consolidated Financial Statements.
(2)
HICKOK INCORPORATED
CONSOLIDATED BALANCE SHEETS
June 30, September 30, June 30,
1995 1994 1994
------------ ------------ ------------
(Unaudited) (Note) (Unaudited)
ASSETS
- ------
CURRENT ASSETS
- --------------
Cash and Cash Equivalents $ 276,689 $ 401,291 $ 354,038
Trade Accounts Receivable - Net 4,925,471 6,041,626 4,059,892
Inventories 6,270,966 3,844,402 3,989,742
Prepaid and Deferred Expenses 312,791 128,169 118,480
------------ ------------ ------------
TOTAL CURRENT ASSETS 11,785,917 10,415,488 8,522,152
-------------------- ------------ ------------ ------------
PROPERTY, PLANT AND EQUIPMENT
Land 139,192 139,192 132,692
Buildings 1,092,595 1,092,595 968,764
Machinery and Equipment 3,552,017 2,829,416 3,000,767
------------ ------------ ------------
4,783,804 4,061,203 4,102,223
Less: Allowance for Depreciation 2,584,150 2,161,662 2,159,740
------------ ------------ ------------
TOTAL PROPERTY - NET 2,199,654 1,899,541 1,942,483
-------------------- ------------ ------------ ------------
OTHER ASSETS
- ------------
Goodwill - Net of Amortization 163,000 172,000 175,000
Prepaid Rent and Other Deposits 13,444 13,444 13,444
------------ ------------ ------------
TOTAL OTHER ASSETS 176,444 185,444 188,444
------------------ ------------ ------------ ------------
TOTAL ASSETS $ 14,162,015 $ 12,500,473 $ 10,653,079
------------ ------------- ------------ ------------
------------ ------------- ------------ ------------
NOTE: Amounts derived from audited financial statements previously filed with
the Securities and Exchange Commission.
See Notes to Consolidated Financial Statements.
(3)
FORM 10Q
June 30, September 30, June 30,
1995 1994 1994
------------ ------------ ------------
(Unaudited) (Note) (Unaudited)
LIABILITIES
- -----------
CURRENT LIABILITIES
- -------------------
Notes Payable $ 2,465,000 $ 1,230,000 $ 1,050,000
Trade Accounts Payable 546,517 542,023 553,210
Accrued Payroll and Related Expenses 868,322 1,165,008 612,084
Dividends Declared 119,235 - -
Accrued Expenses 195,587 235,081 235,465
Accrued Income Taxes - 252,164 63,442
------------ ------------ ------------
TOTAL CURRENT LIABILITIES 4,194,661 3,424,276 2,514,201
------------------------- ------------ ------------ ------------
DEFERRED INCOME TAXES 106,000 106,000 -
- --------------------- ------------ ------------ ------------
REDEEMABLE COMMON STOCK
- -----------------------
9,800 Class B Shares at September
30, 1994(9,000 shares at June
30, 1994) - 235,000 235,000
STOCKHOLDERS' EQUITY
- --------------------
Class A, $1.00 par value;
authorized 3,750,000 shares;
737,484 shares outstanding(368,492
shares at September 30, 1994 and
365,992 shares at June 30, 1994)
excluding 19,172 shares in treasury
at June 30, 1995(9,586 shares at
September 30, 1994 and June 30, 1994) 737,484 368,492 365,992
Class B, $1.00 par value;
authorized 1,000,000 shares;
454,866 shares outstanding
(229,713 shares at September 30,
1994 and June 30, 1994 of which
9,800 shares were classified as
redeemable at September 30, 1994
and 9,000 shares at June 30, 1994)
excluding 36,774 shares in treasury
at June 30, 1995(16,107 shares at
September 30, 1994 and June 30, 1994) 454,866 219,913 220,713
Contributed Capital 910,816 726,690 710,890
Retained Earnings 7,758,188 7,420,102 6,606,283
--------- --------- ---------
TOTAL STOCKHOLDERS' EQUITY 9,861,354 8,735,197 7,903,878
-------------------------- --------- --------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 14,162,015 $ 12,500,473 $ 10,653,079
- -------------------- ------------ ------------ ------------
- -------------------- ------------ ------------ ------------
(4)
HICKOK INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED JUNE 30
(Unaudited)
1995 1994
--------------- -----------------
Cash Flows from Operating Activities:
Cash received from customers $ 22,115,490 $ 16,780,136
Cash paid to suppliers and employees (21,204,955) (14,486,474)
Interest paid (68,082) (5,305)
Interest received 2,630 6,335
Income taxes paid (1,198,420) (760,480)
--------------- -----------------
Net Cash Provided by (Used in)
Operating Activities (353,337) 1,534,212
Cash Flows from Investing Activities:
Capital expenditures (722,601) (589,799)
Decrease in cash surrender value of
officers' life insurance - 5,018
Fastening systems purchase - (730,675)
--------------- -----------------
Net Cash Used in Investing
Activities (722,601) (1,315,456)
Cash Flows from Financing Activities:
Change in short-term borrowing 1,235,000 (200,000)
Purchase of Class B Shares (77,752) -
Sale of Class A Shares under Option 3,460 1,384
Dividends paid (209,372) (178,682)
--------------- -----------------
Net Cash Provided by (Used in)
Financing Activities 951,336 (377,298)
--------------- -----------------
Net decrease in cash and
cash equivalents (124,602) (158,542)
Cash and cash equivalents at beginning
of year 401,291 512,580
--------------- -----------------
Cash and cash equivalents at end
of third quarter $ 276,689 $ 354,038
--------------- -----------------
--------------- -----------------
See Notes to Consolidated Financial Statements.
(5)
FORM 10Q
1995 1994
--------------- -----------------
Reconciliation of Net Income to Net
Cash Provided by Operating Activities:
Net Income $ 1,265,148 $ 742,484
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 431,488 385,027
Non-cash compensation charge related
to stock options 28,908 216
Changes in assets and liabilities:
Decrease (Increase) in accounts
receivable 1,116,155 1,781,771
Decrease (Increase) in inventories (2,426,564) (348,558)
Decrease (Increase) in prepaid
and deferred expenses (184,622) (15,295)
Decrease (Increase) in prepaid
rents and deposits - -
Increase (Decrease) in trade
accounts payable 4,494 219,540
Increase (Decrease) in accrued
payroll and related expenses (296,686) (532,332)
Increase (Decrease) in accrued
expenses (39,494) (426,161)
Increase (Decrease) in accrued
income taxes (252,164) (272,480)
--------------- -----------------
Total Adjustments (1,618,485) 791,728
--------------- -----------------
Net Cash Provided by (Used in)
Operating Activities $ (353,337) $ 1,534,212
--------------- -----------------
--------------- -----------------
NON-CASH FINANCING ACTIVITY:
----------------------------
Dividends declared $ 119,235 $ -
-------------- ------------------
-------------- ------------------
(6)
FORM 10Q
HICKOK INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
JUNE 30, 1995
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles 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 and nine-month periods ended June 30, 1995 are not
necessarily indicative of the results that may be expected for the year
ended September 30, 1995. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's annual report on Form 10-K for the year ended September 30, 1994.
2. INVENTORIES
Inventories are valued at the lower of cost or market and consist of the
following:
June 30, Sept. 30, June 30,
1995 1994 1994
----------- ----------- ------------
Components $ 1,804,452 $ 1,347,496 $ 1,280,641
Work-in-Process 2,912,014 1,617,218 1,815,622
Finished Product 1,554,500 879,688 893,479
----------- ----------- ------------
$ 6,270,966 $ 3,844,402 $ 3,989,742
----------- ----------- -----------
----------- ----------- -----------
3. CAPITAL STOCK, TREASURY STOCK, CONTRIBUTED CAPITAL AND STOCK OPTIONS
On February 23, 1995 the number of authorized shares of Class A common
stock and Class B common stock were increased to 3,750,000 from 1,000,000
and 1,000,000 from 295,980, respectively. On April 10, 1995, the Company
distributed to stockholders of record on March 10, 1995 a 2 for 1 stock
split in the form of a 100% share dividend of Class A and Class B common
stock. One share of Class A common stock was issued for each share of
Class A outstanding and one share of Class B common stock was issued for
each share of Class B outstanding(including shares in treasury).
All per share amounts on the consolidated income statement have been
retroactively adjusted for the stock dividend. Additionally, $598,455, an
amount equal to the $1.00 par value of the combined Class A and Class B
common stock, has been transferred from retained earnings to common stock
($368,742 to Class A common stock and $229,713 to Class B common stock).
(7)
FORM 10Q
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - continued
The Company purchased 16,107 shares of Class B Common Stock from the Estate
of Robert D. Hickok (the "Estate") in January, 1993 and 4,560 shares in
March, 1995 pursuant to a Section 303 Stock Redemption Agreement (the
"Agreement"). No future redemption requests are anticipated from the
Estate. The Company has reclassified the remaining shares of Class B Common
Stock, approximately $157,248, previously listed as Redeemable Common
Stock. Excess of market value over par value of redeemable shares has been
added to contributed capital.
Under the Company's Key Employees Stock Option Plan and the 1995 Key
Employees Stock Option Plan (collectively the "Employee Plans"),
incentive stock options, in general, are exercisable for up to
ten years, at an exercise price of not less than the market price on
the date the option is granted. Non-qualified stock options may be
granted at such exercise price and such other terms and conditions as the
Stock Option Committee of the Board of Directors may determine. No options
may be granted at a price less than $2.925. On February 23, 1995 the Board
of Directors adopted the 1995 Outside Directors Stock Option Plan (the
"Directors Plan"), subject to approval by the Company's shareholders. The
Director's Plan provides for the automatic grant of options to purchase
shares of Class A Common Stock to members of the Board of Directors who are
not employees of the Company, at the fair market value on the date of
grant. Options for 40,300 Class A shares were outstanding and exercisable
under the Employees Plan at June 30, 1995 (33,600 shares at September 30,
1994 and 38,600 shares at June 30, 1994) at prices ranging from $2.925 to
$11.75. Options for 7,200 shares and 7,800 shares were granted under the
Employee Plans during the three month period ended December 31, 1994 and
December 31, 1993 respectively at a price of $8.31 and $6.92 per share
respectively. Options for 4,000 shares under the Employee Plans were
granted during the three month period ended March 31, 1994 at a price of
$11.75 per share. Options for 12,000 shares at an exercise price of
$16.125 were granted under the Director's Plan during the three month
period ended March 31, 1995 subject to shareholders approval. During the
second quarter period ended March 31, 1995, options for 500 Class A shares
were exercised at a price of $6.92 per share resulting in non-cash
compensation to the optionee of $540. During the third quarter period
ended June 30, 1994, options for 200 Class A shares were exercised at a
price of $6.92 per share resulting in non-cash compensation to the optionee
of $216. No other options were exercised during the three or nine month
periods ended June 30, 1995 and 1994.
Unissued shares of Class A common stock (495,166 shares) are reserved for
the share-for-share conversion rights of the Class B common stock and the
Company's stock options outstanding.
The Company declared a $.10 per share special dividend on its Class A and
Class B common shares on June 2, 1995 payable July 10, 1995 to
shareholdersof record June 19, 1995. A special dividend of $.175 per share
was declared
(8)
FORM 10Q
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - continued
by the Company on its Class A and Class B common shares on December 7, 1994
payable January 25, 1995 to shareholders of record January 3, 1995. A
special dividend of $.15 per share on Class A and Class B common shares,
payable January 25, 1994 to shareholders of record January 3, 1994, was
declared on December 14, 1993.
4. EARNINGS PER COMMON SHARE
Earnings per common share are based on the weighted average number of
shares outstanding during each period. All per share amounts on the
consolidated income statement have been adjusted to reflect the 100% share
dividend on a retroactive basis.
5. PURCHASE
On February 4, 1994, the Company purchased for $692,000 and subsequently
adjusted on April 6, 1994 to $730,675, certain assets and assumed certain
liabilities from Allen-Bradley Company, Inc. related to their fastening
systems business. The purchase consisted of inventory ($461,092),
machinery and equipment ($239,974) and accrued expenses ($150,391).
Goodwill of $180,000 was recorded in conjunction with this purchase and
will be amortized evenly over a 15 year period.
6. NAME CHANGE
The Board of Directors recommended and on February 23, 1995 the
shareholders approved changing the name of the Company to Hickok
Incorporated.
(9)
FORM 10Q
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Operating Results, Third Quarter April 1, 1995 through June 30, 1995
Fiscal 1995 Compared to Third Quarter Results Fiscal 1994
--------------------------------------------------------------------
Sales for the quarter ended June 30, 1995 were $6,958,126 versus $5,233,411 for
the quarter ended June 30, 1994. The 33.0% current quarter increase in sales is
primarily the result of the addition of the fastening systems product class
acquired in February, 1994 which contributed 29.7% of total sales in the current
quarter. Sales in the Company's other product classes also improved compared to
the third quarter of fiscal 1994 due to increased shipments.
Cost of goods sold in the third quarter of fiscal 1995 was $4,351,401 or 62.5%
of the sales dollar as compared to $3,439,336 or 65.7% of the sales dollar in
the third quarter of 1994. This change in the cost of goods sold percentage was
due primarily to the addition of the fastening systems line and a change in
product mix.
Product development expenses were $828,443 in the third quarter of fiscal 1995
or 11.9% of the sales dollar as compared to $450,471 or 8.6% of the sales dollar
in the third quarter of 1994. The absolute dollar increase in the third quarter
of 1995 is due primarily to an increase in development costs for new products
and costs incurred to enhance the Company's existing products, both of which are
expensed when incurred.
Operating expenses were $1,114,728, 16.0% of the sales dollar versus $808,478 or
15.4% of the sales dollar for the same period a year ago. The absolute dollar
increase in the third quarter of 1995 is due to increased marketing expenses
necessary to support higher sales volume and to an increase in profit sharing
expense.
Interest expense was $51,917 in the third quarter of fiscal 1995, which compares
with $2,651 in the third quarter of fiscal 1994. This was due to increased
borrowing in the current quarter.
Other income includes $20,619 of rental income from a sub-lease of excess space
during the current year and prior year third quarter.
Net income of $391,021 or 5.6% of the sales dollar was earned in the third
quarter of fiscal 1995 which compares with $331,716 or 6.3% of the sales dollar
in 1994. This increase was due primarily to an increase in shipments in the
current quarter.
Unshipped customer orders as of June 30, 1995 were $9,053,000 versus $7,019,000
at June 30, 1994. The increase is due primarily to an increase in both
fastening systems customer orders and orders for automotive test equipment.
(10)
FORM 10Q
Operating Results, Nine Months Ended June 30, 1995
Compared to Nine Months Ended June 30, 1994
------------------------------------------------------------
Sales for the nine months ended June 30, 1995 were $20,999,335 versus
$14,998,365 at June 30, 1994. The 40.0% increase is due primarily to increased
shipments in fastening systems related products and services. Sales in other
product classes were flat compared to sales for the same period in 1994.
Cost of goods sold was $13,831,290 or 65.9% of the sales dollar as compared to
$9,981,587 or 66.6% of the sales dollar for the nine months ended June 30,
1994. This change in the cost of goods sold percentage was due to a change in
product mix.
Product development expenses were $2,234,531 or 10.6% of the sales dollar for
the nine months ended June 30, 1995 compared to $1,546,161 or 10.3% of the
sales dollar for the nine months ended June 30, 1994. Costs associated with the
planned introduction of new products and costs incurred to enhance the Company's
existing products are the primary reasons for the absolute dollar increase
during the current fiscal year.
Operating expenses were $2,872,428 or 13.6% of the sales dollar for the nine
months ended June 30, 1995 compared to $2,303,678 or 15.4% of the sales dollar
for the nine months ended June 30, 1994. This dollar increase is due primarily
to increased marketing and administrative expenditures associated with the
addition of the fastening systems product line. The percentage change is the
result of increased shipments in the current year which covered more of the
Company's fixed expenses necessary to support this period's higher sales volume.
Interest expense was $80,939 for the nine months ended June 30, 1995, and $8,706
for the same period in 1994. This was due to increased borrowing in the current
period.
Other income includes $61,856 of rental income from a sub-lease of excess space
during the first nine months of fiscal 1995. In the first nine months of fiscal
1994, other income includes $68,729 of rental income from this lease.
Net income of $1,265,148 or 6.0% of the sales dollar for the nine months ended
June 30, 1995 compares with net income of $742,484 or 5.0% of the sales dollar
for the nine months ended June 30, 1994. This increase is due primarily to the
increase in sales volume in the current nine months.
(11)
FORM 10Q
Liquidity and Capital Resources
-------------------------------
Total current assets were $11,785,917, $10,415,488 and $8,522,152 at June 30,
1995, September 30, 1994 and June 30, 1994, respectively. The increase from
June to June is primarily due to an increase in inventory necessary to support
anticipated higher sales during the last quarter of fiscal 1995 and an increase
in accounts receivable due to an increase in sales during the current quarter
versus a year ago. These increases were financed by earnings retention and by
an increase in short-term financing and higher payables. As a result, there was
an increase in current liabilities from $2,514,201 at June 30, 1994 to
$3,424,276 at September 30, 1994. At June 30, 1995 current liabilities amounted
to $4,194,661.
Working capital as of June 30, 1995 amounted to $7,591,256. This compares to
$6,007,951 a year earlier. Current assets were 2.8 times current liabilities
and total cash and receivables were 1.2 times current liabilities. These ratios
compare to 3.4 and 1.8, respectively, at the nine months ended June 30, 1994.
Shareholders' equity during the nine months ended June 30, 1995 increased by
$1,126,157 ($.94 per share) resulting from $1,265,148 of net income, $28,368
stock options granted, $4,000 sale of common stock, $235,000 from the
reclassification of redeemable common stock, less $209,372 payment of special
dividend, $119,235 special dividend declared and $77,752 purchase of Class B
shares.
In January, 1995, the Company amended its credit agreement with its financial
lender. The agreement provides a revolving credit facility of $5,000,000 with
interest at the bank's prime commercial rate and is unsecured.
Management of the Company believes that cash and cash equivalents, together with
funds generated by operations and funds available under the Company's credit
agreement, will provide the liquidity necessary to support its current and
anticipated operations and to finance approved capital expenditures.
(12)
FORM 10Q
PART II. OTHER INFORMATION
ITEMS 1 through 5: Not applicable
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K:
The following exhibit is included herein: (11) Statement re: Computation of
earnings per share.
The Company did not file any reports on Form 8-K during the three months ended
June 30, 1995.
SIGNATURE
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.
Date 8-2-95 HICKOK INCORPORATED
---------------- -------------------
(Registrant)
/s/ E. T. Nowakowski
-----------------------------------------
E. T. Nowakowski, Chief Financial Officer
(13)