SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q/A QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended July 29, 1995 Commission File Number 2-37706 Bowles Fluidics Corporation (exact name of registrant as specified in its charter) Maryland 52-0741762 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 6625 Dobbin Road, Columbia, Maryland 21045-4707 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (410)381-0400 Indicate by check mark whether the registrant has filed all annual, quarterly and other reports required to be filed with the Commission within the past 90 days and in addition has filed the most recent annual report required to be filed. Yes X No Indicate the number of shares outstanding of each issuer's classes of common stock, as of July 29, 1995. Class Outstanding at July 29, 1995 Common Stock, $.10 12,590,011 shares EXHIBIT 20 BOWLES FLUIDICS CORPORATION 6625 Dobbin Road, Columbia, Maryland 21045-4707 USA Phone: 410-381-0400 Fax: 410-381-2718 September 14, 1995 TO THE STOCKHOLDERS: The Company's net sales were only 2% above last year's third quarter at $3,757,758, but product sales were 20% higher principally due to the addition of windshield washer and defroster nozzles for new car models. Net income, however, due to greater costs of operations and income taxes, declined 17% to $311,308 from the prior year's third quarter. For the first nine months of the 1995 fiscal year, due to the higher volume of continuing products in the earlier part of the year and the introduction of new automotive nozzle products throughout the nine months, the Company was able to achieve 11% higher sales. However, as a result of additional engineering and manufacturing expenses and the lack of last year's revenue from a special engineering contract, operating income did not grow at the same rate and, with a higher provision for income taxes, net income fell 3% behind last year. Shipments of light vehicle products of $3,609,704 rose 20% in the third quarter above last year's similar period shipments of $3,013,385, half attributable to new defroster nozzles and half due to newly designed windshield washer nozzles. Sales of prototype and production tooling of $148,054 were, however, significantly less than the third quarter sales in FY 1994 of $670,136 as a result of the ebb in the timing for completion of tooling programs for new nozzles. In the first nine months of FY 1995, automotive product sales of $11,513,322 rose 18% compared with the same period in the prior fiscal year, as a result of larger shipments of continuing products consistent with automotive production in North America early in the fiscal year, as well as the introduction of newly customized windshield washer and defroster nozzles. Sales of prototype and production tooling of $856,874 for the first nine months of the 1995 fiscal year declined 39% or $545,804. Excluding last year's $250,000 of revenue from a specific application engineering customer contract, tooling sales declined $295,804, reflecting the culmination of a lower number of programs for new windshield washer and defroster nozzle tooling. Gross profit in the fiscal year's third quarter was $1,208,778, reflecting a 7% decline from last year's comparable period results of $1,298,785. The gain in product sales contributed to potentially higher gross profit, but generally higher manufacturing costs related to the greater complexity of our products and additional quality demands by our customers more than offset the gain from higher sales. Moreover, higher engineering expenses were incurred in customizing new auto products, and losses were recorded related to production tooling provided for our customers. TO THE STOCKHOLDERS - 2 - September 14, 1995 Gross profit in the first nine months of the 1995 fiscal year was essentially equal to last year's comparable period's results. The gain from the higher automotive product sales was offset by several factors, including the lack of last year's $250,000 of special contract revenue, costs of which were incurred in prior years; higher engineering expenses related to customizing new auto products; and losses associated with production tooling provided for our customers. Research and development costs declined 18% in the third quarter and 25% for the first nine months due to diversion of effort to customizing new versions of the current product line during the current period from new product development in the prior year. However, the Company anticipates R&D costs will increase in the future as more attention is placed on new product lines. As a result of the above, operating income was $475,628 for this fiscal year's third quarter, 10% lower than the FY 1994 third quarter income of $528,650. In this year's first nine months, operating income increased 8% or $148,510 to $2,055,151 versus $1,906,641 in last year's comparable period. Interest expense was lower in this fiscal year's third quarter and first nine months principally as a result of lower debt levels. Other income was higher due to gains in interest income from larger investments of available cash and higher interest rates. Provision for income taxes, both federal and state, has been determined based upon an estimate of the total fiscal year's pretax income. Last year's provisions for the third quarter and the first nine months were lower because of the anticipated use of the research and development and investment tax credit carryforwards which were fully utilized during FY 1994. Net income of $311,308 for the third quarter of FY 1995 decreased 17% from the last fiscal year's comparable period due to both lower operating income and the higher provision for income taxes. Net income of $1,311,638 decreased 2% from last year's first nine months results due to the larger provision for income taxes this year even though income before taxes increased $248,689 or 13%. The Company's working capital at July 29, 1995, increased $938,156 from the previous year-end at October 29, 1994. The current ratio advanced from 2.16 to 3.52 during this nine-month period. Capital expenditures were $566,219 during the first nine months of FY 1995, $280,187 lower than last year as there were delays in ordering equipment of approximately $300,000. The Company expects the full year capital expenditures to approximate the prior year's level. Additionally, the Company added net investments of $274,687 to total $770,932 at July 29, 1995, all of which is invested in U.S. Treasury Bills. TO THE STOCKHOLDERS - 3 - September 14, 1995 Financing activities included the payment of debt, primarily the early payment of certain notes due in January 1995 and 1996, and $74,646 of preferred stock dividends. North American light vehicle production (excluding Mexican output for local markets) by the three major U.S. automotive companies, which generates most of the Company's sales, decreased 0.5% and 5.2% in the first and second calendar quarters of 1995 from 1994, respectively. Production for the third calendar quarter of 1995 is forecasted by Ward's Automotive Reports to decline 3% below last year's third quarter, and the fourth quarter production is also expected to decline in the 4% to 5% range. Condensed consolidated balance sheets and income statements are appended for your review. Sincerely, Ronald D. Stouffer President RDS:lto BOWLES FLUIDICS CORPORATION CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three Months Ended Nine Months Ended 7/29/95 7/30/94 7/29/95 7/30/94 Net Sales $3,757,758 $3,683,521 $12,370,195 $11,129,496 Cost of Sales 2,548,980 2,384,736 7,998,362 6,776,186 Gross Profit 1,208,778 1,298,785 4,371,833 4,353,310 Selling, General, and Administrative Expenses 576,291 578,738 1,854,611 1,830,931 Research and Development Costs 156,859 191,397 462,071 615,738 Interest Expense and Other (Income) and Expenses, Net (18,051) 14,705 (38,607) 61,572 Income before Taxes $ 493,679 $ 513,945 $2,093,758 $1,845,069 Provision for Taxes 182,371 137,377 782,120 488,637 Net Income $ 311,308 $ 376,568 $1,311,638 $1,356,432 Net Income per Share Primary $ .02 $ .03 $ .10 $ .10 Fully Diluted $ .02 $ .02 $ .08 $ .08 CONSOLIDATED BALANCE SHEETS Unaudited Audited as of as of 7/29/95 10/29/94 Assets Cash and Cash Equivalents $1,182,035 $1,557,230 Investments 770,932 484,807 Accounts Receivable 1,750,579 1,916,885 Inventories 1,753,626 1,696,500 Prepaid Expense 83,214 22,514 Deferred Income Taxes 137,000 137,000 Total Current Assets 5,677,386 5,814,936 Property, Plant and Equipment, Net 2,579,951 2,500,258 Other Assets 150,358 163,033 Total Assets $8,407,695 $8,478,227 Liabilities and Stockholders' Equity Accounts Payable--Trade $ 698,181 $1,066,077 Accrued Expenses and Dividend 753,558 794,805 Income Taxes Payable 93,159 543,156 Current Portion of Long-Term Debt 67,373 283,939 Total Current Liabilities 1,612,271 2,687,977 Long-Term Debt 220,710 512,831 Other Liabilities and Deferred Income Taxes 411,399 369,755 Total Liabilities 2,244,380 3,570,563 8% Conv. Pfd. Stock (933,080 shares outstanding) 933,080 933,080 Common Stock (12,590,011 shares outstanding) 1,259,001 1,259,001 Additional Paid-in Capital 2,715,582 2,715,583 Retained Earnings 1,255,652 -- Stockholders' Equity 6,163,315 4,907,664 Total Liabilities and Stockholders' Equity $8,407,695 $8,478,227 FORM 10-Q/A BOWLES FLUIDICS CORPORATION 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. BOWLES FLUIDICS CORPORATION Date By Ronald D. Stouffer President Date By David A. Quinn Vice President, Finance