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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
(Mark One)
|X| Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the fiscal year ended September 30, 1995, 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 1-9789
TECH/OPS SEVCON, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 04-2985631
- ------------------------------- ----------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
ONE BEACON STREET, BOSTON, MASSACHUSETTS 02108
-----------------------------------------------------
(Address of Principal Executive Offices and Zip Code)
Registrant's Area Code and Telephone Number (617) 523-2030
Securities registered pursuant to Section 12(b) of the Act:
(Name of Exchange
(Title of Each Class) on Which Registered)
- -------------------------------------- -----------------------
COMMON STOCK, PAR VALUE $.10 PER SHARE AMERICAN STOCK EXCHANGE
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 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 10-K or any
amendment to this form 10-K. [X]
As of November 20, 1995, 3,048,330 common shares were outstanding, and the
aggregate market value of the common shares (based upon the closing price on
the American Stock Exchange) held by non-affiliates was approximately
$25,200,000.
Documents incorporated by reference: Proxy Statement for Annual Meeting of
Stockholders - January 31, 1996 - Items 10, 11, 12 and 13.
1
INDEX
(Information Required by Part II Item 8 and Part IV Item 14(a) of Form 10-K)
ITEM PAGE
- ----------------------------------------------------------------------------
PART I
1. BUSINESS
General Description ............................................. 3
Marketing and Sales ............................................. 3
Patents ......................................................... 3
Backlog ......................................................... 3
Raw Materials ................................................... 3
Competition ..................................................... 4
Research and Development ........................................ 4
Environmental Regulations ....................................... 4
Employees and Labor Relations ................................... 4
2. PROPERTIES .......................................................... 4
3. LEGAL PROCEEDINGS ................................................... 5
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ................. 5
PART II
5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS 5
6. SELECTED FINANCIAL DATA ............................................. 5
7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS ............................................... 6
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Consolidated Balance Sheets ..................................... 8
Consolidated Statements of Income ............................... 9
Consolidated Statements of Stockholders' Investment ............. 10
Consolidated Statements of Cash Flows ........................... 11
Notes to Consolidated Financial Statements ...................... 12
Report of Independent Public Accountants ........................ 20
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE ................................................ 21
PART III
10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT .................. 21
11. EXECUTIVE COMPENSATION .............................................. 21
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT ...... 21
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ...................... 21
PART IV
14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
Exhibits ........................................................ 22
Financial Statements and Schedules .............................. 22
Form 8-K ........................................................ 22
Signatures of Registrant and Directors .......................... 24
SCHEDULES
II RESERVES ............................................................ 26
Schedules other than the one referred to above have been omitted as]
inapplicable or not required, or the information is included elsewhere
in financial statements or the notes thereto.
2
PART I
Item 1. BUSINESS
General description
Tech/Ops Sevcon, Inc. ("Tech/Ops Sevcon", or the "Company"), is a Delaware
corporation organized on December 22, 1987 to carry on the electronic
controller business previously performed by Tech/Ops, Inc. (Tech/Ops).
Through wholly-owned subsidiaries located in the United States, England, and
France, the Company designs, manufactures, sells, and services, under the
Sevcon name, solid-state products which control motor speed and acceleration
for battery powered electric vehicles in a number of applications, primarily
electric fork lift trucks, aerial lifts and underground coal-mining
equipment. Through another subsidiary located in the United Kingdom,
Tech/Ops Sevcon manufactures special metalized film capacitors for
electronics applications.
Marketing and sales
Sales are made primarily through a small full-time marketing staff. Sales in
the United States were $8,685,000, $6,116,000 and $5,020,000, in 1995, 1994
and 1993, respectively, which accounted for approximately 39%, 39%, and 34%,
respectively, of total sales. Approximately 49% of controller sales are made
to 8 manufacturers of such equipment in Europe and the United States.
Patents
The Company believes that its business is not dependent on patent
protection. Rather, it is primarily dependent upon the Company's technical
competence, the quality of its products, and its prompt and responsive
service performance. However, the rights to inventions of employees working
for Tech/Ops Sevcon are assigned to the Company.
Backlog
Tech/Ops Sevcon's backlog at September 30, 1995 was $3,391,000 compared to
$2,429,000 in September 1994, and $1,495,000 in September 1993. Backlog
increased by $962,000, or 40%, during fiscal 1995. The increase in backlog
was mainly due to higher current business levels.
Raw Materials
Tech/Ops Sevcon's products require a wide variety of components and
materials. The Company has many sources for most of such components and
materials and produces certain of these items internally. During fiscal
1995, when volumes increased sharply, certain component manufacturers
significantly increased prices and extended their lead times. The Company
has taken action to mitigate the effect of these cost increases, and
believes that its sources and availability of its raw materials are
adequate.
3
Competition
In the United States, the Company competes primarily with a division of the
General Electric Company, which has a significant share of the market.
Overseas, Tech/Ops Sevcon has several international competitors, including
General Electric Company, as well as a number of small competitors that
operate only in local markets. In addition, several large manufacturers of
fork lift trucks make their own controllers, although their product is
generally for internal use only. The Company believes that it is one of the
largest independent suppliers of such devices outside of the United States.
Research and development
Tech/Ops Sevcon's technological expertise has been an important factor in
its growth. The Company regularly pursues product improvements to maintain
its technical position. Research and development expenditure amounted to
$1,381,000 in 1995 compared to $1,096,000 in 1994 and $895,000 in 1993.
Expenditure increased by 26% in 1995 and 22% in 1994.
Environmental regulations
The Company complies, to the best of its knowledge, with federal, state and
local provisions which have been enacted or adopted regulating the discharge
of materials into the environment or otherwise protecting the environment.
This compliance has not had, nor is it expected to have, a material effect
on the capital expenditures, earnings, or competitive position of Tech/Ops
Sevcon.
Employees and labor relations
As of September 30, 1995, the Company employed 248 full-time employees, of
whom 30 were in the United States, 210 were in the United Kingdom, 6 were in
France, 1 was in Japan, and 1 was in Korea. Tech/Ops Sevcon believes its
relations with its employees are good.
ITEM 2. PROPERTIES
A subsidiary of the Company leases approximately 12,000 square feet in
Burlington, Massachusetts, under a lease expiring in 1998, with two five-
year options thereafter. The building is used for the manufacture of
electronic controllers, together with sales and service offices. The United
Kingdom electronic controller business of Tech/Ops Sevcon is carried on in a
building owned by it located in Gateshead, England, containing 40,000 square
feet of space. The land on which this building stands is held on a lease
expiring in 2068. 5,000 square feet of space is also rented near Paris,
France under a lease expiring in 1997. The capacitor subsidiary of the
Company owns a 9,000 square foot building, built in 1981, in Wrexham, Wales.
The properties and equipment of the Company are in good condition and, in
the opinion of the management, are suitable and adequate for the Company's
operations.
4
ITEM 3. LEGAL PROCEEDINGS
The Company is involved in various legal proceedings, but believes that
these matters will be resolved without a material effect on its financial
position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
The Common Stock of the Company is traded on the American Stock Exchange
under the symbol TO. A summary of the market prices of the Company's common
stock is shown in the table below. All prices have been restated to reflect
a two-for-one stock split effective August 28, 1995. At November 20, 1995,
there were approximately 600 shareholders of record.
First Second Third Fourth Total
Quarter Quarter Quarter Quarter Year
1995
High 8.50 7.94 14.63 15.50 15.50
Low 6.75 7.13 7.13 11.88 6.75
Dividend $ .10 $ .10 $ .10 $ .125 $ .425
1994
High 5.50 5.25 8.00 8.31 8.31
Low 4.88 4.44 4.50 5.88 4.44
Dividend $.0625 $.0625 $.0625 $ .10 $.2875
ITEM 6. SELECTED FINANCIAL DATA
For the five years ended September 30: (in 000's except per share data)
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
Net sales $22,431 $15,835 $14,635 $17,587 $17,528
Operating income 3,695 1,985 1,445 2,102 2.389
Net income 2,580 1,350 1,076 1,546 1,653
Income per share (a) $ .81 $ .44 $ .34 $ .48 $ .47
Dividends per share (a) (b) .425 .288 .25 .175 .15
Average shares outstanding (a) 3,171 3,102 3,194 3,232 3,448
Total assets $12,981 $10,595 $ 9,043 $10,436 $10,356
(a) Restated to reflect two for one stock split effective August 28, 1995.
(b) In September 1995, the Company increased its regular quarterly dividend
from $.10 per share to $.125 per share. In September 1994, the dividend was
raised, on a restated basis, from $.0625 per share to $.10 per share.
5
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Average shares outstanding, income per share and dividends per share have
all been restated to reflect the two-for-one stock split effective August
28, 1995.
A) Results of Operations
1995 compared to 1994
Sales increased by $6,596,000, or 42%, to $22,431,000. This sales increase
arose from improved worldwide market conditions, the expansion of sales to
the aerial lift industry and new business gains. Sales in the USA increased
by $2,529,000, or 42%. In other markets, mainly Europe and the Far East,
which accounted for 61% of sales, there was a 41% sales increase. Currency
fluctuations did not have a significant impact on sales in 1995. The effect
of price increases on fiscal 1995 sales was less than 2%. However, increased
material costs late in the fiscal year have resulted in the Company
increasing its selling prices, applicable mainly to the next fiscal year.
Gross profit was 42% of sales in both 1995 and 1994. As a result of
increased volumes, gross profit was $2,616,000 higher than last year.
Selling, general and administrative expenses increased by $906,000, or 19%,
in 1995. Within this, spending on research and development increased by 26%
to $1,381,000. Operating income increased by $1,710,000, or 86%, to
$3,695,000. This increase was due to both higher sales and control of
operating expense levels.
Income before income taxes in 1995 was $3,764,000, an increase of 86%.
Income taxes were 31% of pre-tax income compared to 33% last year. The
decrease in the average tax rate was mainly because a greater proportion of
the Company's profits were earned in foreign countries which have lower tax
rates than the USA. Net income increased by $1,230,000, or 91%, to
$2,580,000. Income per share was $.81 compared to $.44 last year, an
increase of 84%. Average shares outstanding increased by 2% mainly as a
result of stock options.
1994 compared to 1993
Sales increased by 8% in 1994 to $15,835,000. Sales in the second half year
of 1994 were 15% higher than the first six months and 33% ahead of the same
period of 1993. Volumes in the USA increased by 22%. In other markets, which
accounted for 60% of sales, volumes increased by 1%. Currency fluctuations
did not have a significant impact on sales in 1994. Selling price increases
were less than 2%.
Gross profit was 42% of sales in 1994 compared to 39% in 1993. Higher
margins on new business gained in 1994 and better manufacturing efficiency
contributed to the increase in gross profit. Research and development
spending increased by 22% in 1994 to $1,096,000, or 6.9% of sales. Operating
income was $1,985,000, an increase of $540,000, or 37%, compared to the
prior year. This increase was due to both greater volumes and improved
efficiency.
6
Income before income taxes was $2,010,000 compared to $1,556,000 in 1993, an
increase of 29%. Income taxes were 33% of pre-tax income compared to 31% in
1993, mainly due to lower foreign tax credits. Net income was $1,350,000, an
increase of $274,000, or 25%, compared to 1993. Income per share was $.44
compared to $.34 in fiscal 1993, an increase of 30%. Average shares
outstanding were 3% lower than 1993 as a result of stock repurchases late in
fiscal 1993.
Fourth quarter results
Sales in the fourth quarter of 1995 were $5,315,000, an increase of 29%
compared to the same quarter last year. Sales were 14% lower than the third
quarter of 1995 because of the traditional summer shutdowns at many of our
customers. Gross profit as a percentage of sales was lower than normal at
40% compared to 44% last year, and the average gross profit level of 42% for
both fiscal 1995 and 1994. This decrease was mainly due to increased
material costs which were not reflected in selling prices during the fourth
quarter. Gross profit was $339,000 higher than last year.
Selling, general and administrative expenses were $235,000, or 20%, higher
than last year. This increase was in line with the year-to-year increase in
annual operating expenses. As a result, operating income was $730,000
compared to $626,000 last year, an increase of $104,000, or 17%. Net income
was $501,000, or $.16 per share, compared to $423,000, or $.14 per share,
last year.
B) Liquidity and capital resources
Cash balances increased by $356,000 during 1995 to $2,692,000. Dividends
paid during fiscal 1995 amounted to $1,219,000. Operating activities
generated $1,995,000 and $407,000 was spent on capital equipment. The
increase in receivables reflected business levels in the fourth quarter.
Inventories increased by $1,194,000, or 67%, due to both the 42% increase in
annual sales and to selective increases in inventory levels to cover for
extended lead times of certain key components. Payables increased by
$732,000, or 58%, mainly due to the higher level of inventories.
The Company has, since January 1990, maintained a program of regular cash
dividends. The regular quarterly cash dividend, which currently amounts to
$387,000 per quarter, was increased in September 1995 by 25% to $.125 per
quarter. Tech/Ops Sevcon's resources, in the opinion of management, are
adequate for projected operations and capital spending programs, as well as
continuation of the cash dividend.
7
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CONSOLIDATED BALANCE SHEETS
TECH/OPS SEVCON, INC. AND SUBSIDIARIES
September 30, 1995 and 1994 (in thousands of dollars)
- ----------------------------------------------------------------------------
ASSETS 1995 1994
- ----------------------------------------------------------------------------
Current assets:
Cash and cash equivalents $ 2,692 $ 2,336
Receivables, net of allowances for doubtful accounts of
$153,000 in 1995 and $166,000 in 1994 4,487 3,789
Inventories 2,963 1,769
- ----------------------------------------------------------------------------
Total current assets 10,142 7,894
- ----------------------------------------------------------------------------
Property, plant and equipment, at cost:
Land and improvements 22 22
Buildings and improvements 716 708
Equipment 3,275 3,148
- ----------------------------------------------------------------------------
4,013 3,878
Less: accumulated depreciation and amortization 2,664 2,721
- ----------------------------------------------------------------------------
Net property, plant and equipment 1,349 1,157
- ---------------------------------------------------------------------------
Cost of purchased businesses in excess of net assets acquired 1,435 1,435
Other assets 55 109
- ----------------------------------------------------------------------------
TOTAL ASSETS $12,981 $10,595
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' INVESTMENT
- ----------------------------------------------------------------------------
Current liabilities:
Accounts payable $ 2,019 $ 1,287
Dividend payable 387 305
Accrued compensation and related costs 738 575
Other accrued expenses 1,111 1,393
Accrued and deferred taxes on income 423 282
- ----------------------------------------------------------------------------
Total current liabilities 4,678 3,842
- ----------------------------------------------------------------------------
Deferred taxes on income 178 185
- ----------------------------------------------------------------------------
Commitments and contingencies (note 4)
- ----------------------------------------------------------------------------
8
STOCKHOLDERS' INVESTMENT
>
Preferred stock, par value $.10 per share
- authorized - 1,000,000 shares; outstanding - none - -
Common stock, par value $.10 per share
- authorized - 4,000,000 shares; outstanding 3,097,523
in 1995 and 3,045,202 in 1994 310 305
Premium paid in on common stock 3,383 2,987
Retained earnings 4,926 3,855
Cumulative translation adjustment (494) (579)
- ----------------------------------------------------------------------------
Total stockholders' investment $ 8,125 $ 6,568
- ----------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' INVESTMENT $12,981 $10,595
- ----------------------------------------------------------------------------
The accompanying notes are an integral part of these consolidated financial
statements.
CONSOLIDATED STATEMENTS OF INCOME
TECH/OPS SEVCON, INC. AND SUBSIDIARIES
For the Years ended September 30, 1995, 1994 and 1993 (in thousands except
per share data)
1995 1994 1993
- ----------------------------------------------------------------------------
Net sales $22,431 $15,835 $14,635
- ----------------------------------------------------------------------------
Costs and expenses:
Cost of sales 13,116 9,136 8,940
Selling, general and administrative 5,620 4,714 4,250
- ----------------------------------------------------------------------------
18,736 13,850 13,190
- ----------------------------------------------------------------------------
Operating income 3,695 1,985 1,445
Interest income 70 40 57
Other income (expense), net (1) (15) 54
- ----------------------------------------------------------------------------
Income before income taxes 3,764 2,010 1,556
Income taxes (1,184) (660) (480)
- ----------------------------------------------------------------------------
Net income $ 2,580 $ 1,350 $ 1,076
- ----------------------------------------------------------------------------
Income per share (a) $.81 $.44 $.34
- ----------------------------------------------------------------------------
Average common and common equivalent
shares outstanding (a) 3,171 3,102 3,195
- ----------------------------------------------------------------------------
(a) Restated to reflect two-for-one stock split effective August 28, 1995.
The accompanying notes are an integral part of these consolidated financial
statements.
9
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' INVESTMENT
TECH/OPS SEVCON, INC. AND SUBSIDIARIES
For the Years ended September 30, 1993, 1994 and 1995 (in thousands of
dollars)
- ----------------------------------------------------------------------------
Premium
paid in on Cumulative Total
Common common Retained translation stockholders'
stock (a) stock (a) earnings adjustment investment
- ----------------------------------------------------------------------------
Balance Sept. 30, 1992 $301 $2,826 $3,314 $(8) $6,433
Net income - - 1,076 - 1,076
Dividends ($.25 per share) - - (778) - (778)
Currency translation
adjustment - - - (722) (722)
Exercise of stock options 14 259 - - 273
Purchase and retirement of
common stock (10) (198) (226) - (434)
- ----------------------------------------------------------------------------
Balance Sept. 30, 1993 305 2,887 3,386 (730) 5,848
Net Income - - 1,350 - 1,350
Dividends ($.2875 per
share) - - (875) - (875)
Currency translation
adjustment - - - 151 151
Tax benefit on exercise of
stock options - 96 - - 96
Exercise of stock options - 4 (6) - (2)
- ----------------------------------------------------------------------------
Balance Sept. 30, 1994 305 2,987 3,855 (579) 6,568
Net income - - 2,580 - 2,580
Dividends ($.425 per share) - - (1,301) - (1,301)
Currency translation
adjustment - - - 85 85
Tax benefit on exercise of
stock options - 257 - - 257
Exercise of stock options 5 139 (208) - (64)
- ----------------------------------------------------------------------------
Balance Sept. 30, 1995 $ 310 $3,383 $4,926 $(494) $8,125
- ----------------------------------------------------------------------------
(a) Restated to reflect two-for-one stock split effective August 28,1995 and
change in par value effective January 27, 1993.
The accompanying notes are an integral part of these consolidated financial
statements.
10
CONSOLIDATED STATEMENT OF CASH FLOWS
TECH/OPS SEVCON, INC. AND SUBSIDIARIES
For the Years ended September 30, 1995, 1994 and 1993 (in thousands of
dollars)
- ----------------------------------------------------------------------------
1995 1994 1993
- ----------------------------------------------------------------------------
Net cash flow from operating activities:
Net income $2,580 $1,350 $1,076
Adjustments to reconcile net income to net cash
from operating activities:
Depreciation and amortization 249 241 240
Deferred tax provision (7) 8 (26)
Increase (decrease) in cash resulting from changes
in operating assets and liabilities:
Receivables (698) (1,096) 1,142
Inventories (1,194) (74) 556
Accounts payable 732 251 (502)
Accrued compensation and expenses (119) 348 (404)
Accrued and deferred taxes on income 398 206 121
Other assets 54 42 15
- ----------------------------------------------------------------------------
Net cash generated from operating activities 1,995 1,276 2,218
- ----------------------------------------------------------------------------
Cash flow used by investing activities:
Acquisition of property, plant and equipment (407) (267) (141)
- ----------------------------------------------------------------------------
Cash flow used by financing activities:
Purchase of common stock (379) (10) (434)
Exercise of stock options 315 8 273
Dividends paid (1,219) (760) (775)
- ----------------------------------------------------------------------------
Net cash used by financing activities (1,283) (762) (936)
- ----------------------------------------------------------------------------
Effect of exchange rate changes on cash 51 116 (487)
- ----------------------------------------------------------------------------
Net increase in cash 356 363 654
Beginning balance - cash and cash equivalents 2,336 1,973 1,319
- ----------------------------------------------------------------------------
Ending balance - cash and cash equivalents $2,692 $2,336 $1,973
- ----------------------------------------------------------------------------
Supplemental disclosure of cash flow information:
Cash paid for income taxes $ 773 $ 317 $ 552
- ----------------------------------------------------------------------------
Supplemental disclosure of non-cash financing activity:
Dividend declared $ 387 $ 305 $ 190
- ----------------------------------------------------------------------------
The accompanying notes are an integral part of these consolidated financial
statements.
11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TECH/OPS SEVCON, INC. AND SUBSIDIARIES
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Basis of presentation
The accompanying consolidated financial statements include the accounts of
Tech/Ops Sevcon, Inc. (Tech/Ops Sevcon), Sevcon, Inc., Sevcon Limited and
subsidiaries, and Sevcon SA. All material intercompany transactions have
been eliminated.
The amount by which the cost of purchased businesses included in the
accompanying financial statements exceeded the fair value of net assets at
the date of acquisition has been charged to "Cost of purchased businesses in
excess of net assets acquired". The Company assesses the carrying value of
this asset whenever events or changes in circumstances indicate that this
value has diminished. The Company considers the future profitability of the
business in assessing the value of this asset. The excess related to
acquisitions initiated prior to November 1, 1970 ($1,435,000) is not being
amortized, since in the opinion of management there has been no diminution
in the value of the excess related to these acquisitions. The excess related
to subsequent acquisitions has been fully amortized.
B. Research and development
The cost of research and development programs is charged against income as
incurred and amounted to approximately $1,381,000 in 1995, $1,096,000 in
1994 and $895,000 in 1993.
C. Depreciation and maintenance
Plant and equipment are depreciated on a straight-line basis over their
estimated useful lives, which are primarily fifty years for buildings and
seven years for equipment. Maintenance and repairs are charged to expense
and renewals and betterments are capitalized.
D. Inventories
Inventories are priced at the lower of cost or market. Inventory costs
include materials, direct labor and manufacturing overhead, are relieved
from inventory on a first-in, first-out basis and comprised of:
- ----------------------------------------------------------------------------
(in thousands of dollars)
- ----------------------------------------------------------------------------
1995 1994
- ----------------------------------------------------------------------------
Raw materials $1,643 $ 950
Work-in-process 779 516
Finished goods 541 303
- ----------------------------------------------------------------------------
$2,963 $1,769
- ----------------------------------------------------------------------------
12
E. Income taxes
Tech/Ops Sevcon files tax returns in the respective countries in which it
operates. The Company accounts for income taxes in accordance with Financial
Accounting Standards Board Statement #109 (FAS 109). Under FAS 109, the
financial statements reflect the current and deferred tax consequences of
all events recognized in the financial statements or tax returns.
F. Translation of foreign currencies
Tech/Ops Sevcon translates the assets and liabilities of its foreign
subsidiaries at the current rate of exchange, and income statement accounts
at the average exchange rates in effect during the period. Gains or losses
from foreign currency translation are credited or charged to cumulative
translation adjustment included in stockholders' investment in the balance
sheet. Foreign currency transaction gains and losses are included in costs
and expenses.
G. Cash equivalents
The Company considers all highly liquid investments with a maturity of 90
days or less to be cash equivalents. Such investments are generally money
market funds, bank certificates of deposit, US Treasury bills and short-term
bank deposits in Europe.
(2) INCOME TAXES
The domestic and foreign components of income before income taxes are as
follows:
(in thousands of dollars)
- ----------------------------------------------------------------------------
1995 1994 1993
- ----------------------------------------------------------------------------
Domestic $1,028 $ 824 $ 353
Foreign 2,736 1,186 1,203
- ----------------------------------------------------------------------------
$3,764 $2,010 $1,556
- ----------------------------------------------------------------------------
The components of the provision for income taxes for the years ended
September 30, 1995, 1994 and 1993 are as follows:
13
(in thousands of dollars)
- ----------------------------------------------------------------------------
1995 Current Deferred Total
- ----------------------------------------------------------------------------
Federal $ 221 $ - $ 221
State 102 - 102
Foreign 854 7 861
- ----------------------------------------------------------------------------
$1,177 $ 7 $1,184
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
1994 Current Deferred Total
- ----------------------------------------------------------------------------
Federal $ 103 $ - $ 103
State 95 - 95
Foreign 454 8 462
- ----------------------------------------------------------------------------
$ 652 $ 8 $ 660
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
1993 Current Deferred Total
- ----------------------------------------------------------------------------
Federal $ 35 $ - $ 35
State 44 - 44
Foreign 427 (26) 401
- ----------------------------------------------------------------------------
$ 506 $ (26) $ 480
- ----------------------------------------------------------------------------
The provision for income taxes in each period differs from that which would
be computed by applying the statutory US Federal income tax rate to the
income before income taxes. The following is a summary of the major items
affecting the provision:
(in thousands of dollars)
- ----------------------------------------------------------------------------
1995 1994 1993
- ----------------------------------------------------------------------------
Statutory Federal income tax rate 34% 34% 34%
Computed tax provision
at statutory rate $1,280 $ 683 $ 529
Increases (decreases) resulting from:
Foreign tax rate differentials (1) (9) (5)
Foreign tax credits and other (95) (14) (44)
Income tax provision in
the Statement of Income $1,184 $ 660 $ 480
- ----------------------------------------------------------------------------
14
Deferred income taxes result from temporary differences in reporting
transactions for financial reporting and tax purposes. The significant items
comprising the domestic and foreign deferred tax accounts at September 30,
1995 and 1994 are as follows:
- ----------------------------------------------------------------------------
(in thousands of dollars)
- ----------------------------------------------------------------------------
1995
- ----------------------------------------------------------------------------
Domestic Foreign Foreign
current current long-term
- ----------------------------------------------------------------------------
Assets:
Pension accruals $ 149 $ - $ -
Inventory basis differences 40 - -
Warranty reserves 60 - -
Other (net) 51 26 -
- ----------------------------------------------------------------------------
300 26 -
Liabilities:
Prepaid pension - (66) -
Property basis differences - - (178)
- ----------------------------------------------------------------------------
Net asset (liability) 300 (40) (178)
Valuation allowance (300) - -
- ----------------------------------------------------------------------------
Net deferred tax asset
(liability) $ - $ (40) $ (178)
- ----------------------------------------------------------------------------
1994
- ----------------------------------------------------------------------------
Domestic Foreign Foreign
current current long-term
- ----------------------------------------------------------------------------
Assets:
Pension accruals $ 119 $ - $ -
Inventory basis differences 36 - -
Warranty reserves 48 - -
Other (net) 102 32 -
- ----------------------------------------------------------------------------
305 32 -
Liabilities:
Prepaid pension - (64) -
Property basis differences - - (185)
- ----------------------------------------------------------------------------
Net asset (liability) 305 (32) (185)
Valuation allowance (305) - -
- ----------------------------------------------------------------------------
Net deferred tax asset
liability) $ - $ (32) $ (185)
- ----------------------------------------------------------------------------
15
(3) CAPITAL STOCK
All references to shares of common stock have been restated to reflect a
two-for-one stock split, in the form of a stock dividend, effective August
28, 1995 and the change in par value effective January 27, 1993.
Tech/Ops Sevcon, Inc. has two classes of capital stock, preferred and
common. There are authorized 1,000,000 shares of preferred stock, $.10 par
value, and 4,000,000 shares of common stock, $.10 par value.
There are 171,952 shares reserved under the Company's Key Employee Stock
Bonus and Option Plan. Recipients of grants or options must execute a
standard form of non-competition agreement. Options granted are exercisable
over a ten year period at a price not less than fair market value on the
date of grant. This plan also provides for the grant of stock appreciation
rights, either separately, or in relation to options granted, and for the
grant of bonus shares. No stock appreciation rights or bonus shares have
been granted. Option transactions under the plan for the three years ended
September 30, 1995 were as follows:
- ----------------------------------------------------------------------------
Shares under option Price range
- ----------------------------------------------------------------------------
Outstanding at September 30, 1992 370,800 $1.81-$4.97
Exercised in 1993 (145,000) $1.81-$4.09
- ----------------------------------------------------------------------------
Outstanding at September 30, 1993 225,800 $1.88-$4.97
Exercised in 1994 (1,750) $4.97
- ----------------------------------------------------------------------------
Outstanding at September 30, 1994 224,050 $1.88-$4.97
Exercised in 1995 (81,098) $1.88-$4.97
- ----------------------------------------------------------------------------
Outstanding at September 30, 1995 142,952 $3.31-$4.97
Exercisable at September 30, 1995 107,702 $3.31-$4.97
- ----------------------------------------------------------------------------
In the year ended September 30, 1993, the Company purchased and retired
95,022 shares of common stock (restated for the two-for-one split in August
1995) at a total cost of $434,000. No such shares were purchased in 1994 or
1995. In accordance with provision of the Company stock option plan, the
Company repurchased from employees 1,336 shares in 1994 and 28,777 shares in
1995.
(4) COMMITMENTS AND CONTINGENCIES
Tech/Ops Sevcon is involved in various legal proceedings but believes that
it is only remotely likely that the outcome will be material to operations.
Tech/Ops Sevcon has entered into an agreement with its President which
provides that, in the event of termination of employment, within two years
after a change in control of Tech/Ops Sevcon not approved by the Board of
Directors, such officer would receive benefits of up to an amount
16
approximating twice annual compensation (as defined). In addition, the
Company has entered into agreements with six senior employees which provide
that, in the event of a change in control of Tech/Ops Sevcon, such
employees would be entitled to continuation of their compensation for
periods of up to 30 months.
Tech/Ops Sevcon has entered into a consulting agreement, which expires on
December 31, 1996, with a company owned by two of its directors. Under the
terms of the agreement, the annual cost of these services will not exceed
$100,000. This cost covers the provision of the corporate office of the
Company, administrative support services and a payment of $30,000 per year
to Mr. Rosenberg.
In connection with the transfer in 1988 of the electronic controller
business from Tech/Ops, Inc. (Tech/Ops), the former parent company, Tech/Ops
Sevcon entered into a Liability Assumption and Sharing Agreement with
Tech/Ops and another former subsidiary of Tech/Ops. Liabilities incurred and
expensed in connection with this agreement have not been significant.
The Company maintains a directors' retirement plan which provides for
certain retirement benefits to non-employee directors. While the cost of the
plan has been fully charged to expense, the plan is not separately funded.
The maximum liability based on the cost of buying deferred annuities at
September 30, 1995 was $195,000.
Minimum rental commitments under all non-cancelable leases are as follows
for the years ended September 30: 1996 - $178,000; 1997 - $63,000; 1998 -
$63,000; 1999 - $63,000; 2000 - $63,000 and $1,344,000 thereafter. Net
rentals of certain land, buildings and equipment charged to expense were
$177,000 in 1995, $170,000 in 1994, and $162,000 in 1993.
17
(5) EMPLOYEE BENEFIT PLANS
Tech/Ops Sevcon has defined benefit plans covering the majority of its US
and UK employees. There is also a small defined contribution plan. The
following table sets forth the funded status of these defined benefit plans
and the amounts recognized by Tech/Ops Sevcon in accordance with SFAS #87.
(in thousands of dollars)
- ----------------------------------------------------------------------------
1995 1994
- ----------------------------------------------------------------------------
Actuarial present value of benefit obligations:
Vested benefits $4,407 $3,708
Nonvested benefits 9 5
- ----------------------------------------------------------------------------
Accumulated benefit obligation 4,416 3,713
Effect of projected future compensation levels 614 531
- ----------------------------------------------------------------------------
Projected benefit obligation 5,030 4,244
Plan assets at fair value 5,589 5,073
- ----------------------------------------------------------------------------
Plan assets in excess of projected benefit
obligation 559 829
Unrecognized net gain (110) (122)
Unrecognized transition amount (342) (629)
- ----------------------------------------------------------------------------
Prepaid pension cost $ 107 $ 78
- ----------------------------------------------------------------------------
The Tech/Ops Sevcon net pension cost included the following components as
defined by SFAS #87.
(in thousands of dollars)
- ----------------------------------------------------------------------------
1995 1994 1993
- ----------------------------------------------------------------------------
Service costs/benefits earned during
the period $ 239 $ 204 $ 195
Interest cost on projected benefit
obligation 343 293 257
Actual return on plan assets (462) (293) (342)
Net amortization and deferred items 18 (124) (68)
- ----------------------------------------------------------------------------
Net pension cost calculated
in accordance with SFAS #87 $ 138 $ 80 $ 42
- ----------------------------------------------------------------------------
Net cost of defined contribution plans $ 24 $ 19 $ 20
- ----------------------------------------------------------------------------
18
Plan assets include marketable equity securities, corporate and government
debt securities, deferred annuities, cash and other short-term investments.
The average discount rate and rate of increase in future compensation levels
used in determining the actuarial present value of the projected benefit
obligation were 7.9% and 5.9%, respectively, and the expected long-term rate
of return on assets was 8.0% in 1995, 1994 and 1993.
(6) SEGMENT INFORMATION AND FOREIGN OPERATIONS
Tech/Ops Sevcon's largest customer accounted for 10% of sales in 1995, 12%
in 1994, and 11% in 1993.
Domestic and foreign revenues are composed of sales to unaffiliated
customers, with intercompany sales eliminated. Pretax net income for US and
foreign segments is stated before unallocated corporate expense.
- ----------------------------------------------------------------------------
(in thousands of dollars)
- ----------------------------------------------------------------------------
Identi-
Net Pretax fiable
Sales Income Assets
- ----------------------------------------------------------------------------
Geographic Segments
- ----------------------------------------------------------------------------
US 1995 $ 8,685 $ 1,562 $ 4,104
1994 6,116 997 3,481
1993 5,020 516 1,957
- ----------------------------------------------------------------------------
Foreign 1995 13,746 2,735 8,877
1994 9,719 1,186 7,114
1993 9,615 1,203 7,086
- ----------------------------------------------------------------------------
Sub-total 1995 22,431 4,297 12,981
1994 15,835 2,183 10,595
1993 14,635 1,719 9,043
- ----------------------------------------------------------------------------
Unallocated 1995 - (533) -
corporate 1994 - (173) -
expense 1993 - (163) -
- ----------------------------------------------------------------------------
Total 1995 $22,431 $ 3,764 $12,981
1994 15,835 2,010 10,595
1993 14,635 1,556 9,043
- ----------------------------------------------------------------------------
19
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Tech/Ops Sevcon, Inc.:
We have audited the accompanying consolidated balance sheets of Tech/Ops
Sevcon, Inc. (a Delaware Corporation) as of September 30, 1995 and 1994, and
the related consolidated statements of income, stockholders' investment, and
cash flows for each of the three years in the period ended September 30,
1995. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based upon our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Tech/Ops Sevcon, Inc. as
of September 30, 1995 and 1994, and the results of its operations and cash
flows for each of the three years in the period ended September 30, 1995 in
conformity with generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index of
financial statements is presented for purposes of complying with the
Securities and Exchange Commission's rules and is not part of the basic
financial statements. This schedule has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in
our opinion, fairly states, in all material respects, the financial data
required to be set forth therein in relation to the basic financial
statements taken as a whole.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
November 7, 1995
20
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Name of Officer Age Position
- ---------------------------------------------------------------------------
Bernard F. Start 57 President and Chief Executive Officer
Paul A. McPartlin 50 Vice President & Chief Financial Officer
Paul B. Rosenberg 63 Treasurer
- ---------------------------------------------------------------------------
All officers have served in their present positions since the inception of
the Company on December 22, 1987, except for Mr. McPartlin who was appointed
Vice President and Chief Financial Officer on November 7, 1990. Mr. Start
was Managing Director of the electronic controller business of the Company's
predecessor, Tech/Ops, Inc., since 1977 before becoming President of the
Company. Mr. McPartlin has been the Financial Director of the Company's UK
operations for more than five years. Mr. Rosenberg is President and CEO of
Tech/Ops Corporation, and was Vice President - Finance and Administration
and Treasurer of Tech/Ops, Inc. for more than five years.
There are no family relationships between any director or executive officer
and any other director or executive officer of the Company.
This information is incorporated by reference from the information under the
caption "Election of Directors" in the Company's Proxy Statement relating to
the 1996 Annual Meeting of Stockholders.
ITEM 11. EXECUTIVE COMPENSATION
This information is incorporated by reference from the information under the
captions "Election of Directors - Director Compensation" and "Executive
Compensation" in the Company's Proxy Statement relating to the 1996 Annual
Meeting of Stockholders.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
This information is incorporated by reference from the information under the
caption "Share Ownership" in the Company's Proxy Statement relating to the
1996 Annual Meeting of Stockholders.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
This information is incorporated by reference from the information under the
caption "Election of Directors" in the Company's Proxy Statement relating to
the 1996 Annual Meeting of Stockholders.
21
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) Exhibits
The exhibits filed as part of this Form 10-K are listed on the
Exhibit Index below.
(b) Financial statements and schedule
The financial statements and financial statement schedule listed in
the index on page 5 are filed as part of this Annual Report on Form
10-K.
(c) Form 8-K
None filed during the quarter ended September 30, 1995.
INDEX TO EXHIBITS
(a) Exhibits [Management Contracts, Compensation Plans and
Arrangements are identified by an asterisk (*)]
(3)(a) Certificate of Incorporation of the registrant (incorporated by
reference to Exhibit (3)(a) to Annual Report for the fiscal year
ended September 30, 1994).
(3)(b) By-laws of the registrant (incorporated by reference to Exhibit (3)(b)
to Annual Report for the fiscal year ended September 30, 1994).
(4)(a) Specimen common stock of registrant (incorporated by reference to
Exhibit (4)(a) to Annual Report for the fiscal year ended September
30, 1994).
(10)(a)*Tech/Ops Sevcon, Inc. Key Employee Stock Option and Bonus Plan
(incorporated by reference to Exhibit (10)(a) to Annual Report for
the fiscal year ended September 30, 1994).
(10)(b)*Severance Agreement dated December 22, 1987 between Bernard F. Start
and the registrant (incorporated by reference to Exhibit (10)(b) to
Annual Report for the fiscal year ended September 30, 1994).
(10)(c)*Corporate Services Agreement dated September 22, 1994 between
Tech/Ops Corporation and the registrant (incorporated by reference
to Exhibit (10)(c) to Annual Report for the fiscal year ended
September 30, 1994).
(10)(d) Liability Assumption and Sharing Agreement dated January 4, 1988
among Tech/Ops, Inc., Tech/Ops Landauer, Inc., and the registrant
(incorporated by reference to Exhibit (10)(d) to Annual Report for
the fiscal year ended September 30, 1994).
22
(10)(e)*Form of Indemnification Agreement dated January 4, 1988 between the
registrant and each of its directors (incorporated by reference to
Exhibit (10)(e) to Annual Report for the fiscal year ended September
30, 1994).
(10)(f)*Directors' retirement plan (incorporated by reference to Exhibit
(10)(f) to Annual Report for the fiscal year ended September 30,
1990).
(11) Calculation of earnings per share and weighted average shares
outstanding.
(22) Subsidiaries of the registrant (incorporated by reference to Exhibit
(22) to Annual Report for the fiscal year ended September 30, 1993).
(27) Financial Data Schedule (EDGAR Filing only).
23
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
TECH/OPS SEVCON, INC.
By /s/ Bernard F. Start December 12, 1995
-----------------------
Bernard F. Start
President and Chief
Executive Officer
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 and in the capacities and on the dates indicated:
SIGNATURE TITLE DATE
/s/ Bernard F. Start President, Chief Executive December 12, 1995
- -------------------- Officer and Director
Bernard F. Start (Principal Executive Officer)
/s/ Paul A. McPartlin Vice President & Chief December 12, 1995
- --------------------- Financial Officer
Paul A. McPartlin (Principal Financial
and Accounting Officer)
/s/ Milton C. Lauenstein Director December 12, 1995
- ------------------------
Milton C. Lauenstein
/s/ Harold C. Mayer, Jr. Director December 12, 1995
- ------------------------
Harold C. Mayer, Jr.
/s/ Paul B. Rosenberg Director December 12, 1995
- ---------------------
Paul B. Rosenberg
/s/ Herbert Roth, Jr. Director December 12, 1995
- ---------------------
Herbert Roth, Jr.
/s/ Marvin G. Schorr Director December 12, 1995
- --------------------
Marvin G. Schorr
/s/ C. Vincent Vappi Director December 12, 1995
- --------------------
C. Vincent Vappi
24
QUARTERLY FINANCIAL DATA (UNAUDITED)
TECH/OPS SEVCON, INC. AND SUBSIDIARIES
Selected quarterly financial data for fiscal years 1995 and 1994 is set out
below:
(in thousands except per share data)
- ----------------------------------------------------------------------------
First Second Third Fourth Total
Quarter Quarter Quarter Quarter Year
- ----------------------------------------------------------------------------
1995 Quarters
- ----------------------------------------------------------------------------
Net sales $ 4,774 $ 6,165 $ 6,177 $ 5,315 $22,431
Gross profit 1,962 2,577 2,626 2,150 9,315
Operating income 772 1,089 1,104 730 3,695
Net income 553 777 749 501 2,580
- ----------------------------------------------------------------------------
Net income per share (a) $ .18 $ .25 $ .24 $ .16 $ .81
- ----------------------------------------------------------------------------
Average shares (a) 3,138 3,138 3,180 3,198 3,171
- ----------------------------------------------------------------------------
Cash dividends per share (a) $ .10 $ .10 $ .10 $ .125 $ .425
- ----------------------------------------------------------------------------
Common stock price per share (a)
- High $ 8.50 $ 7.94 $ 14.63 $15.50 $ 15.50
- Low 6.75 7.13 7.13 11.88 6.75
- ----------------------------------------------------------------------------
1994 Quarters
- ----------------------------------------------------------------------------
Net sales $ 3,431 $ 3,935 $ 4,358 $ 4,111 $15,835
Gross profit 1,358 1,682 1,848 1,811 6,699
Operating income 242 463 654 626 1,985
Net income 169 309 449 423 1,350
- ----------------------------------------------------------------------------
Net income per share (a) $ .05 $ .10 $ .14 $ .14 $ .44
- ----------------------------------------------------------------------------
Average shares (a) 3,082 3,068 3,116 3,128 3,102
- ----------------------------------------------------------------------------
Cash dividends per share (a) $ .0625 $ .0625 $ .0625 $ .10 $ .2875
- ----------------------------------------------------------------------------
Common stock price per share (a)
- High $ 5.50 $ 5.25 $ 8.00 $ 8.31 $ 8.31
- Low 4.88 4.44 4.50 5.88 4.44
- ----------------------------------------------------------------------------
(a) Restated to reflect a two-for-one stock split effective August 28, 1995.
25
TECH/OPS SEVCON, INC. AND SUBSIDIARIES SCHEDULE II
Reserves for the three years ended September 30, 1995
(in thousands of dollars)
- ----------------------------------------------------------------------------
Balance Additions Balance
at Charged to Deductions at
Beginning Costs & from Close
of Year Expenses Reserves of Year
- ----------------------------------------------------------------------------
For the year ended September 30, 1995:
Allowance for doubtful accounts $ 166 $ 16 $ (29)(a) $ 153
- ----------------------------------------------------------------------------
For the year ended September 30, 1994:
Allowance for doubtful accounts $ 192 $ 10 $ (36)(b) $ 166
- ----------------------------------------------------------------------------
For the year ended September 30, 1993:
Allowance for doubtful accounts $ 188 $ 34 $ (30)(c) $ 192
- ----------------------------------------------------------------------------
(a) Accounts collected $29
(b) Write-off of uncollectible accounts $16; accounts collected $20
(c) Currency translation effect
26
TECH/OPS SEVCON, INC. EXHIBIT 11
Calculation of Earnings Per Share and Weighted Average Shares Outstanding
(In thousands, except for per share amounts)
Quarters ended Fiscal
Period ended 12/31/94 3/31/95 6/30/95 9/30/95 1995
Net income $ 553 $ 777 $ 749 $ 501 $2,580
Weighted average shrs outstanding 3,138 3,138 3,180 3,198 3,171
Net income per share $ .18 $ .25 $ .24 $ .15 $ .81
Shares outstanding - beginning 3,045 3,045 3,045 3,046 3,045
Weighted average - option exercises 0 0 1 12 3
Weighted average shares outstanding 3,045 3,045 3,046 3,058 3,048
Effect of outstanding options on
primary EPS using average market
price for the period
a. # of options less than
Average market price 224 224 222 208 219
b. $ value of options $ 973 $ 973 $ 962 $ 901 $ 952
c. Average market price of stock $ 7.42 $ 7.40 $11.00 $13.84 $ 9.91
d. Shares "purchased" (b/c) (131) (132) (87) (65) (96)
e. Common equivalent shares (a-d) 93 92 134 142 123
f. Average outstanding shares 3,045 3,045 3,046 3,058 3,048
g. Total average common and
common equivalent shares (f+e) 3,138 3,138 3,180 3,198 3,171
Quarters ended Fiscal
Period ended 12/31/93 4/2/94 7/2/94 9/30/94 1994
Net income $ 169 $ 309 $ 449 $ 423 $1,350
Weighted average shrs outstanding 3,082 3,068 3,116 3,128 3,102
Net income per share $ .05 $ .10 $ .14 $ .14 $ .44
Shares outstanding - beginning 3,045 3,045 3,045 3,045 3,045
Weighted average - option exercises 0 0 0 0 0
Weighted average shares
outstanding 3,045 3,045 3,046 3,058 3,045
Effect of outstanding options on
primary EPS using average market
price for the period
a. # of options less than
Average market price 226 226 225 224 225
b. $ value of options $ 981 $ 981 $ 978 $ 973 $ 979
c. Average market price of stock $ 5.21 $ 4.85 $ 6.34 $ 6.87 $ 5.82
d. Shares "purchased" (b/c) (189) (203) (156) (141) (168)
e. Common equivalent shares (a-d) 37 23 71 83 57
f. Average outstanding shares 3,045 3,045 3,045 3,045 3,045
g. Total average common and
common equivalent shares (f+e) 3,082 3,068 3,116 3,128 3,102
27