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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the quarterly period ended: December 28, 1996
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OF 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission File Number 1-4817
BOWMAR INSTRUMENT CORPORATION
(Exact name of registrant as specified in its charter)
INDIANA 35-0905052
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5080 NORTH 40TH STREET, SUITE 475
PHOENIX, ARIZONA 85018
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 602/957-0271
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
--- ---
At February 6, 1997, 6,658,933 shares of the Registrant's Common Stock, and
119,948 shares of the Registrant's Preferred Stock were outstanding.
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BOWMAR INSTRUMENT CORPORATION
AND
SUBSIDIARIES
INDEX
PART I FINANCIAL INFORMATION.......................................... 2-7
Item 1. Financial Statements
Consolidated Balance Sheets (Unaudited)
December 28, 1996 and
September 28, 1996................................ 2
Consolidated Statements of Income (Unaudited)
First Quarter Ended
December 28, 1996 and December 30, 1995........... 3
Consolidated Statements of Cash Flows (Unaudited)
First Quarter Ended December 28, 1996 and
December 30, 1995................................. 4
Notes to Consolidated Financial
Statements (Unaudited)............................ 5
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations........................................ 6
PART II OTHER INFORMATION.............................................. 7
Item 2. Changes in Securities.................................. 7
Item 6. Exhibits and Reports on Form 8-K....................... 7-8
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BOWMAR INSTRUMENT CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In thousands of dollars)
- ------------------------------------------------------------------------------------
DECEMBER 28, 1996 SEPTEMBER 28, 1996
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ASSETS
Current Assets
Cash $ 540 $ 108
Accounts receivable, net 3,879 3,992
Inventories 6,015 6,059
Prepaid expenses 418 402
Deferred income taxes 1,652 1,652
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Total Current Assets 12,504 12,213
Property, Plant and Equipment, net 1,363 1,122
Deferred Income Taxes 1,287 1,524
Other Assets, net 1,657 1,679
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Total Assets $16,811 $16,538
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt $ 608 $ 556
Accounts payable 1,266 933
Accrued salaries and benefits 676 1,503
Other accrued expenses 892 719
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Total Current Liabilities 3,442 3,711
Long-Term Debt 3,645 3,675
Other Long-Term Liabilities 339 339
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Total Liabilities 7,426 7,725
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Shareholders' Equity 9,385 8,813
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Total Liabilities and Shareholders' Equity $16,811 $16,538
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See Notes to Consolidated Financial Statements
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BOWMAR INSTRUMENT CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(In thousands of dollars, except share data)
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QUARTER ENDED
DECEMBER 28, 1996 DECEMBER 30, 1995
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Net sales $ 6,488 $ 5,979
Cost of sales 3,909 3,856
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Gross margin 2,579 2,123
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Expenses:
Selling, general and
administrative 1,764 1,617
Product development 103 153
Interest expense 105 139
Other income, net (107) (126)
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Total expenses 1,865 1,783
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Income before income taxes 714 340
Provision for income taxes 285 136
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NET INCOME $ 429 $ 204
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NET INCOME PER COMMON SHARE $ 0.05 $ 0.02
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Weighted average number of
common shares and equivalents 6,566,971 6,633,813
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See Notes to Consolidated Financial Statements
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BOWMAR INSTRUMENT CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands of dollars)
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QUARTER ENDED
DECEMBER 28, DECEMBER 30,
1996 1995
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OPERATING ACTIVITIES:
Net income $ 429 $ 204
Adjustments to reconcile net income
to net cash provided (used) by operations:
Depreciation and amortization 134 134
Deferred income taxes 237 104
Net changes in balance sheet accounts:
Accounts receivable 113 (56)
Inventories 44 (81)
Prepaid expenses (16) (2)
Accounts payable 333 (327)
Accrued expenses (654) (1,152)
Other 22 7
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Net cash provided (used) by operating activities 642 (1,169)
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INVESTING ACTIVITIES:
Purchases of property, plant and equipment (185) (56)
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Net cash used by investing activities (185) (56)
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FINANCING ACTIVITIES:
Borrowings under notes payable 0 4,784
Payment of debt (167) (3,689)
Issuance of common stock 232 0
Payment of dividends on preferred stock (90) (90)
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Net cash provided (used) by financing activities (25) 1,005
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Net change in cash 432 (220)
Cash at beginning of period 108 739
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Cash at end of period $ 540 $ 519
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SUPPLEMENTAL CASH FLOW INFORMATION:
Net cash paid during the period for:
Interest $ 100 $ 137
Income taxes $ 3 $ 122
Schedule of non-cash investing and financing activities:
Equipment acquired under capital leases $ 190 $ 0
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See Notes to Consolidated Financial Statements
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BOWMAR INSTRUMENT CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. CONSOLIDATED FINANCIAL STATEMENTS
The consolidated balance sheets as of December 28, 1996 and September 28,
1996, the consolidated statements of income for the first quarter ended
December 28, 1996 and December 30, 1995, and the consolidated statements of
cash flows for the first quarter ended December 28, 1996 and December 30,
1995, have been prepared by the Registrant without audit. In the opinion of
management all adjustments which are of a normal recurring nature necessary
to present fairly such financial statements have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been omitted. It is suggested that these consolidated
financial statements be read in conjunction with the financial statements
and notes thereto included in the Registrant's Annual Report on Form 10-K
for the fiscal year ended September 28, 1996. The results of operations for
the above noted quarter ended December 28, 1996, are not necessarily
indicative of the operating results for the full year.
2. INVENTORIES
Inventories consist of the following (in thousands of dollars):
DECEMBER 28, SEPTEMBER 28,
1996 1996
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Raw materials $3,177 $3,330
Work-in-process 2,531 2,531
Finished goods 307 198
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$6,015 $6,059
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ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
RESULTS OF OPERATIONS
NET SALES
Sales for the first quarter ended December 28, 1996, were $6,488,000 compared to
prior year sales for the first quarter of $5,979,000. Sales in the
microelectronic segment for the similar period of fiscal 1997 increased
approximately $240,000 versus the same period in the prior year. The increase in
sales was due to increased sales in military memories. Sales in the
electromechanical segment for the first quarter of fiscal 1997 increased by
approximately $270,000 due to lower sales in the same quarter last year as a
result of the temporary shutdown of the Ft. Wayne facility in December of 1995.
Although the first quarter of fiscal 1996 included RHT sterilizer sales, there
were no such sales in the first quarter of fiscal 1997 due to the disposition of
the RHT product line in the third quarter of fiscal 1996.
The Company continues to believe that changes in defense spending will not have
a material adverse affect on the Company's overall results. However, it appears
that although the Company's microelectronic segment could experience growth as a
result of changes in defense spending, the Company's electromechanical segment
has been negatively impacted. Accordingly, the Company continues to pursue its
goal of reduced dependency on the defense industry by pursuing commercial
business while emphasizing niche military markets, where it has a competitive
advantage.
GROSS MARGIN
Gross margins for the first quarter ended December 28, 1996, increased by
$456,000 versus the similar period of fiscal 1996. The higher gross margin is
attributable to the increased sales, improved efficiencies and product mix at
both divisions.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses for the first quarter ended
December 28, 1996, increased $147,000 versus the same period in fiscal 1996. The
increase was due to the increased selling expenses in both divisions. Legal
expenses were up as a result of the continuing investigation by the U. S.
Attorney's office.
PRODUCT DEVELOPMENT EXPENSES
Product Development expenses for the first quarter ended December 28, 1996 were
down $50,000 as compared to the first quarter in the prior year. Expenses were
lower at both segments, with the decline at the Microelectronics segment the
result of a major new product development effort in the first quarter of the
prior year which was not duplicated this fiscal year. The decline in the
electromechanical segment was a result of the sale of the RHT product line.
INTEREST EXPENSE
Interest expense in the first quarter of fiscal 1997 decreased $34,000 compared
to interest expense for the same period in fiscal 1996. The decline was due
primarily to the more favorable rates under the new loan agreement.
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OTHER INCOME
Other income for the first quarter ended December 28, 1996 approximated the same
amount for the same period in fiscal 1996.
PROVISION FOR INCOME TAXES
The provision for income taxes increased by $149,000 for the first quarter of
fiscal 1997 as compared to 1996. This increase was a result of higher income
before income taxes in fiscal 1997.
FINANCIAL CONDITION AND LIQUIDITY
In the first quarter of fiscal 1997 working capital increased to $9,062,000 from
$8,502,000, principally as a result of the cash provided by operations.
Changes in the components of working capital are detailed in the Consolidated
Statements of Cash Flows.
The Company's operations generated approximately $642,000 cash in the first
quarter of fiscal 1997. The Company projects positive cash flow for the
remainder of the year, which, when combined with the Company's revolving credit
facility, should be sufficient in Management's opinion to fund the Company's
cash needs for the foreseeable future.
PART II
ITEM 2
CHANGES IN SECURITIES
On December 6, 1996, the Board of Directors of Bowmar Instrument Corporation
(the "Corporation") declared a dividend of one common share purchase right (a
"Right" or "Rights") for each outstanding share of the Corporation's common
stock, without par value (the "Common Shares"), of the Corporation and entered
into a rights agreement. If and when the Rights become exercisable, each Right
will entitle the registered holder to purchase from the Corporation one Common
Share at a purchase price of $20.00, although the price may be adjusted as set
forth in the Plan. The description and terms of the Rights are set forth in the
Rights Agreement between the Corporation and American Stock Transfer and Trust
Company, as Rights Agent.
ITEM 6
EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits.
3.1 Amended and Restated Articles of Incorporation. (Previously filed as
Exhibit A to the Registrant's definitive Proxy Statement prepared in connection
with the 1993 Annual Meeting of Shareholders, which is incorporated herein by
this reference).
3.2 Amended and Restated Code of By-Laws, as further amended on July 28,
1995. (The former having been previously filed as Exhibit 3 to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1993, and the
latter having been previously filed as Exhibit 5(a) to the Current Report on
Form 8-K dated October 16, 1995, both of which are incorporated here by this
reference).
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4.1 Indenture, Bowmar Instrument Corporation 13-1/2% Convertible
Subordinated Debentures due December 15, 1995. (Previously filed as Exhibit 4.4
to the Registration Statement of Form S-7, File No. 2- 70025, on November 25,
1980, which is incorporated herein by this reference).
4.2 Amended and Restated Articles of Incorporation (see Exhibit 3.1,
above).
4.3 Rights Agreement, dated as of December 6, 1996 between Bowmar
Instrument Corporation and American Stock Transfer and Trust Corporation.
(Previously filed as Exhibit 5(c) to the Form 8-K filed by the Registrant on
December 19, 1996).
10 Management Incentive Program
11 Computation of Earnings Per Common Share
27 Financial Data Schedule
b. Reports on Form 8-K.
Form 8-K dated December 6, 1996 regarding the adoption of a Shareholder
Rights Agreement.
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 thereto duly authorized.
BOWMAR INSTRUMENT CORPORATION
/S/ Joseph G. Warren, Jr.
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Joseph G. Warren, Jr.
Vice President Finance
Dated: February 7, 1997
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