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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended June 30, 2002
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 0-10723
BOLT TECHNOLOGY CORPORATION
(Exact name of registrant as specified in its charter)
Connecticut 06-0773922
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Four Duke Place, Norwalk, Connecticut 06854
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203) 853-0700
Securities registered pursuant to Section 12(b) of the Act:
Title of Class Name of Each Exchange
-------------- on Which Registered
-------------------
Common Stock, without par value American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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]
The aggregate market value of Common Stock, without par value, held by
non-affiliates on September 12, 2002: $22,418,000.
As of September 20, 2002 there were 5,414,357 shares of Common Stock, without
par value, outstanding.
Documents Incorporated By Reference
Definitive Proxy Statement for 2002 Annual Meeting, which will be filed no
later than 120 days after June 30, 2002, is incorporated by reference
in Part III to the extent stated in this report.
Note Regarding Forward-Looking Statements
Forward-looking statements in this Form 10-K, future filings by the Company with
the Securities and Exchange Commission, the Company's press releases and oral
statements by authorized officers of the Company are intended to be subject to
the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Investors are cautioned that all forward-looking statements involve risks
and uncertainty, including without limitation (i) the risk of technological
change relating to the Company's products and the risk of the Company's
inability to develop new competitive products in a timely manner, (ii) the risk
of decreased demand for the Company's products due to fluctuations in energy
industry activity, (iii) the Company's reliance on certain significant
customers, (iv) risks associated with a significant amount of foreign sales, and
(v) the risk of fluctuations in future operating results. The Company believes
that forward-looking statements made by it are based on reasonable expectations.
However, no assurances can be given that actual results will not differ
materially from those contained in such forward-looking statements. The words
"estimate," "project," "anticipate," "expect," "predict," "believe" and similar
expressions are intended to identify forward-looking statements.
PART I
Preliminary Note: In this annual report on Form 10-K, we refer to Bolt
Technology Corporation and its subsidiaries as "we", "our", "us", "the
registrant" or "the Company", unless the context clearly indicates otherwise.
ITEM 1. Business
The Company was organized as a corporation in 1962. We operate in two business
segments: geophysical equipment and industrial products. Geophysical equipment
includes the development, manufacture and sale of marine seismic energy sources
and underwater electrical connectors and cables, air gun signature hydrophones
and pressure transducers used by the marine seismic industry. Our industrial
products segment manufactures and sells miniature industrial clutches, brakes
and sub-fractional horsepower electric motors. See Note 9 to the consolidated
financial statements for information regarding industry segments and sales by
geographic areas. A description of the Company's products follows. During fiscal
2000 and 2001, demand for the Company's geophysical products decreased due to
reductions in capital spending by seismic contractors, consolidations and
mergers among energy producers and excess geophysical equipment in the field
causing weak demand for new equipment. Market conditions have improved in the
last half of fiscal 2001 and into fiscal 2002.
Geophysical Equipment
Marine Air Guns
Energy sources, such as our air guns, used in seismic exploration create elastic
waves at frequencies that readily travel to great depths in the earth. As
elastic waves travel through the earth, portions are reflected by variations in
the underlying rock layers and the reflected energy is received as signals by
devices known as hydrophones. A shipboard unit containing electronic recording
equipment converts the signals to digital form. By using computer programs with
complex calculations to manipulate the processed seismic data, geoscientists can
model and visualize the subsurface through the creation and analysis of spatial
representations. The analysis of seismic and other geological data forms the
basis for decisions to drill exploratory and development wells. Because of the
significant expense associated with drilling oil and gas wells, decisions on
whether or where to drill are critical to the overall process. A seismic
exploration vessel may tow 60 to 70 air guns along with multiple hydrophone
streamers of 6,000 to 10,000 meters in length. The air guns are fired
simultaneously every 75 to 150 feet along the survey line. Over the past ten
years, improvements in drilling success rates through the
2
ITEM 1. Business (cont'd.)
Geophysical Equipment (cont'd.)
use of advanced seismic survey techniques, particularly 3-D techniques,
substantially increased the demand for seismic data. As a result, 3-D surveys
utilizing these advanced technologies have gained increasing acceptance in the
oil and gas industry as an exploration risk management tool. Moreover, 3-D
surveys are increasingly employed in field development and reservoir management
activities.
The precise shot to shot repeatability of our marine air guns and their
reliability of operation make them especially beneficial for use in 3-D surveys.
Our long-life marine air guns, introduced in the late 1990s, extend the period
between routine air gun maintenance cycles. These guns also provide improved
high peak sound pressure levels and improved frequency spectrum as compared with
older models. These improved characteristics are advantageous to geoscientists
in designing 3-D surveys. A retro-fit kit, which incorporates the improvements
of the long-life guns, allows users to easily upgrade older air gun models to
the long-life standard.
In fiscal 2000, we completed the initial development of our Annular Port Air Gun
("APG"). This new design provides significant improvements in both operating
efficiency and acoustic output. The principal feature of the Annular Port Air
Gun is an annulus containing the air chamber and shuttle valve surrounding a
hollow passage through which air supply hoses and electrical control cables are
routed. This new configuration permits the implementation of simplified
multi-gun arrays that produce less towing drag while being easier to deploy and
retrieve than conventional air gun arrays. Significant improvements in operating
efficiency are also achieved by shielding fragile hoses and cables from the
effects of the high pressure air blast released from the air gun. In fiscal 2001
and 2002, we continued to test and refine the APG technology, but to date we
have not sold any units.
We sell various models of air guns that range in price from $3,000 to $76,000. A
majority of the air guns sold are priced in the $10,000 range. A significant
source of our revenue comes from the sale of replacement parts.
Underwater Cables, Connectors and Hydrophones
Our marine cables and connectors are injection molded of thermoplastic
polyurethane designed for marine air gun firing lines, bulkhead connectors and
other connectors which are needed from the rear of the seismic vessel to the
marine air guns. The cables and connectors are primarily for use with marine air
guns and firing control systems where the connector is operating in close
proximity to the high pressure release of air from marine air guns. We
manufacture cables and connectors that can be used with marine air guns
manufactured by us as well as air guns manufactured by others.
Our signature hydrophones and pressure transducers are designed for marine
applications in a high shock environment. Their primary use is with marine air
gun firing and control systems. The purpose of the hydrophone and pressure
transducer is for near field measurements of the outgoing energy waveforms from
marine air guns.
Industrial Products
Our Industrial Products segment spans two basic disciplines: power transmission
(miniature industrial clutches and brakes) and motion control (sub-fractional
horsepower electric motors). Our clutch and brake products include a complete
line of mechanical and pneumatic precision miniature slip clutches, one-way
clutches,
3
ITEM 1. Business (cont'd.)
Industrial Products (cont'd.)
toothed jaw clutches and torque limiters. A slip clutch will start to slip once
its torque setting is exceeded. This feature is useful as overload protection,
constant tensioning or functional torque, in different industrial applications.
Among other applications, our clutches and brakes are used in airplane video
systems, hospital beds, barcode labelers and banking machines. Unit prices range
from $7 to $400.
In addition, we offer an electromagnetic clutch and brake product line which
includes high performance engage/disengage clutches and brakes, power off
brakes, magnetic particle clutches and brakes and multiple plate slip clutches.
Applications include high speed mailing machines, packaging machines, elevators,
machine tools and robotics. Unit prices range from $50 to $1,500.
Our motor line is comprised of A.C. and D.C. sub-fractional horsepower motors
and gear motors. These are available in various shapes and offer several design
options (speed, voltage, etc.). Applications include air conditioning systems,
valve timers, vending machines, point of purchase displays and business
machines. Capacity ranges from 3 to 10 watts. Unit prices range from $4 to $20.
Foreign Sales
During fiscal 2002, 2001 and 2000, approximately 58%, 46% and 41%, respectively,
of the Company's sales were derived from customers outside the United States.
See Note 9 to the consolidated financial statements for the geographic
distribution of sales.
Backlog
Geophysical Equipment
Because of the short period between order and shipment dates for the principal
portion of geophysical equipment sales, the dollar amount of current backlog is
not considered to be a reliable indication of future sales.
Industrial Products
As of June 30, 2002, we had an order backlog of $622,000 as compared to $816,000
at June 30, 2001. It is estimated that substantially all of the backlog as of
June 30, 2002 will be shipped during the fiscal year ending June 30, 2003.
Competition
Geophysical Equipment
Our marine air guns compete primarily with marine air guns manufactured by
Input/Output, Inc. and Seismic Systems, Inc. Our principal competitor for
connectors and cables is Input/Output, Inc. We believe that technology, product
reliability and durability are the primary bases of competition in the market
for geophysical equipment and that the remaining competitive factors in the
industry are field product support and price. We believe that we compete
effectively with respect to each of these factors, although there can be no
assurance that
4
ITEM 1. Business (cont'd.)
Competition (cont'd.)
the sales of our geophysical equipment will not be adversely affected if current
competitors or others introduce equipment with better performance or lower
price.
Industrial Products
It is not possible to determine with accuracy our relative competitive position
in the market for industrial products. The industry in which we operate is
characterized by active and substantial competition. No single company dominates
the market for the types of products we manufacture. Our competitors include
both larger and smaller manufacturers and divisions of larger diversified
companies with substantial financial resources. Principal competitive factors in
the market for our industrial products include quality, service, reliability and
price. Our products also compete with other torque control devices to solve
design problems.
Marketing
Geophysical Equipment
Our principal customers for geophysical equipment are seismic contractors, which
operate seismic vessels for collection of seismic data in accordance with their
customers' specifications or for their own seismic data libraries and foreign
national oil and gas companies.
Marketing of our geophysical equipment is principally performed by salaried
sales personnel, all of whom are based in the United States. We also use sales
agents for individual sales in certain foreign countries. In general, we market
our products and services through our sales force, together with our technical
services and engineering staffs, primarily to representatives of major
geophysical contractors. The principal marketing techniques used are direct
sales visits to current and potential customers, product demonstrations and
participation at industry trade shows and meetings.
In general, products are sold on standard 30-day credit terms. In certain
instances, we require our customers to furnish letters of credit payable upon
shipment or advance payments. In limited cases, the Company allows customers
extended payment terms of up to 12 months.
Industrial Products
Our industrial products are sold primarily to original equipment manufacturers
("OEMs"). OEMs use our products to solve torque related problems which will
provide lower installed cost and high reliability, thereby lowering production
and service costs. Our engineering staff and independent sales representatives
continually work in close collaboration with OEMs to determine the appropriate
product for the specific application. Sales are made on standard 30-day credit
terms. We sell our industrial products primarily in the United States, Canada
and Europe.
Research and Development
Our ability to compete successfully depends upon, among other things, the
development of new products as well as the improvement of the technical
capabilities of our existing products. During the fiscal years 2002, 2001, and
2000, we spent $253,000, $271,000, and $348,000, respectively, to develop new
products and to upgrade
5
ITEM 1. Business (cont'd.)
Research and Development (cont'd.)
existing products. The Company's primary research and development efforts over
the last three years have been focused on the development and field testing of
the Annular Port Air Gun.
Employees
As of June 30, 2002, we employed approximately 89 people on a full-time basis,
all of whom are employed in the United States. We are not a party to any
collective bargaining agreement and have had no work stoppages. We believe that
our employee relations are good.
Manufacturing and Raw Materials
We manufacture and assemble our geophysical equipment in Norwalk, Connecticut
and Cypress, Texas and manufacture our industrial products in North Haven,
Connecticut. Our manufacturing and assembly operations consist of machining or
molding the necessary components and assembling and testing the final product.
We maintain adequate levels of inventory to enable us to satisfy customer
requirements within the shortest amount of time. The raw materials used in our
products are generally in adequate supply. For some marine air gun orders, we
occasionally supply auxiliary equipment such as compressors, air gun controllers
or towing equipment manufactured by others. We have not experienced any supply
problems with respect to these auxiliary items. Because we manufacture based on
customer orders, no inventory of fully assembled finished products is
maintained.
Regulatory Matters
We believe that we are currently in compliance with the requirements of
environmental and occupational health and safety laws and regulations.
Compliance with such laws and regulations has not resulted in a significant
expense in the past and we do not foresee the need for material expenditures to
ensure compliance with such laws and regulations as they currently exist.
Intellectual Property
We seek to protect our intellectual property by means of patents, trademarks and
other measures. We currently own more than 22 United States patents and 30
patents in foreign countries relating to the manufacture of our products. These
patents have been of value in the growth of our business and may continue to be
of value in the future. However, our business is generally not dependent upon
the protection of any patent and would not be materially affected by the
expiration thereof.
Major Customers
Geophysical Equipment
Historically, a significant portion of our sales has been attributable to a few
large customers. In fiscal year 2002, WesternGeco and VeritasDGC accounted for
17% and 14%, respectively, of consolidated sales. The loss of WesternGeco or
VeritasDGC as a customer or a significant decrease in the amount of their
purchases could have a material adverse effect on the Company.
6
ITEM 1. Business (cont'd.)
Major Customers (cont'd.)
Industrial Products
No customer accounted for more than 10% of consolidated revenue in fiscal year
2002.
ITEM 2. Properties
The following table sets forth certain information with respect to the Company's
principal properties:
Approximate
Area Expiration
Location Nature of Property (Sq. Feet) Date of Lease
- -------- ------------------ ---------- -------------
Norwalk, Connecticut Manufacturing 22,300 month-to-month
Norwalk, Connecticut Administration/Engineering/Sales 6,600 month-to-month
Houston, Texas Sales Office 3,000 2004
North Haven, Connecticut Manufacturing 6,500 2004
Cypress, Texas Manufacturing 30,000 2005
Geophysical equipment is manufactured and assembled in the Norwalk, Connecticut
and Cypress, Texas facilities. Industrial Products are manufactured in the North
Haven, Connecticut facility. In the opinion of the Company's management, the
properties described above are in good condition and repair and are suitable and
adequate for the Company's purposes. The properties are currently fully utilized
on a one-shift basis, which provides sufficient productive capacity.
The building located in Cypress, Texas is leased from the former shareholder of
A-G Geophysical Products, Inc. which was acquired by the Company in April 1999.
Monthly rental payments are $10,750. The Company has an option to purchase the
facility for $1,000,000 during the term of the lease.
ITEM 3. Legal Proceedings
We are not aware of any current or pending litigation or proceedings that could
have a material adverse effect on our results of operations, cash flows or
financial condition.
ITEM 4. Submission of Matters to a Vote of Security Holders
None.
7
PART II
ITEM 5. Market for Registrant's Common Equity and Related Stockholder Matters
Our Common Stock is listed on the American Stock Exchange under the symbol
"BTJ". The following table sets forth the high and low sales prices for our
Common Stock for the quarters indicated:
Fiscal 2002 High Low
- ----------- ---- ---
First Quarter $5.93 $4.56
Second Quarter 4.95 4.25
Third Quarter 5.60 4.45
Fourth Quarter 4.74 4.00
Fiscal 2001 High Low
- ----------- ---- ---
First Quarter $5.44 $3.75
Second Quarter 5.89 3.13
Third Quarter 4.87 3.63
Fourth Quarter 6.25 4.50
The number of stockholders of record at September 17, 2002 was 288 and does not
include those stockholders who had shares in broker nominee accounts. We believe
that the number of beneficial owners is substantially greater than the number of
record holders, because a large portion of our Common Stock is held of record in
broker "street names".
We have not paid a dividend since 1985. We do not intend to pay cash dividends
on our Common Stock in the foreseeable future. Any future decision to pay cash
dividends will depend upon our growth, profitability, financial condition and
other factors that the Board of Directors may deem relevant.
Employee stock options to purchase an aggregate of 40,000 shares of Common Stock
were exercised during fiscal year 2002. The stock options were granted under the
Bolt Technology Corporation Amended and Restated 1993 Stock Option Plan. These
shares were acquired pursuant to cashless exercises which resulted in exercising
optionees receiving an aggregate of 5,624 shares of Common Stock. The issuance
of the Common Stock was exempt from registration under the Securities Act of
1933 (the "Act") pursuant to Section 4(2) of the Act.
Equity Compensation Plan Information
The following table sets forth aggregate information for the Bolt Technology
Corporation Amended and Restated 1993 Stock Option Plan, which is the Company's
only equity compensation plan in effect as of June 30, 2002, and which has been
approved by the Company's stockholders:
- ------------------------------------------------------------------------------------------------------------------------------------
Plan category Number of securities to be Weighted-average exercise Number of securities remaining
issued upon exercise of price of outstanding options, available for future issuance
outstanding options, warrants warrants and rights under equity compensation plans
and rights (excluding securities reflected
in column (a))
(a) (b) (c)
- ------------------------------------------------------------------------------------------------------------------------------------
Equity compensation plans
approved by security holders 169,000 $6.24 145,190
- ------------------------------------------------------------------------------------------------------------------------------------
Equity compensation plans not
approved by security holders - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Total 169,000 $6.24 145,190
- ------------------------------------------------------------------------------------------------------------------------------------
8
ITEM 6. Selected Financial Data
The following table has been derived form the Company's audited financial
statements and sets forth selected consolidated financial data with respect to
the Company and its subsidiaries. This information should be read in conjunction
with the consolidated financial statements provided elsewhere in this Form 10-K.
Years Ended June 30,
--------------------
2002 2001 2000 1999 1998
---- ---- ---- ---- ----
(In thousands, except per share amounts)
Income Statement Data:
Sales ........................................................ $ 17,991 $ 15,496 $ 14,748 $ 19,591 $ 18,053
-------- -------- -------- -------- --------
Costs and expenses:
Cost of sales ........................................... 9,967 8,912 7,968 10,091 9,745
Research and development ................................ 253 271 348 386 216
Selling, general and administrative ..................... 4,520 4,250 4,257 3,804 3,300
Amortization of intangibles ............................. - 660 660 335 114
Interest expense (income), net .......................... 162 332 425 (34) (98)
-------- -------- -------- -------- --------
14,902 14,425 13,658 14,582 13,277
-------- -------- -------- -------- --------
Income before income taxes ................................... 3,089 1,071 1,090 5,009 4,776
Provision (benefit) for income taxes ......................... 1,218 675 557 728 (358)(1)
-------- -------- -------- -------- --------
Net income ................................................... $ 1,871 $ 396 $ 533 $ 4,281 $ 5,134
======== ======== ======== ======== ========
Per Share Data:
Earnings per common share:
Basic ................................................. $ 0.35 $ 0.07 $ 0.10 $ 0.81 $ 1.00
Diluted ............................................... $ 0.35 $ 0.07 $ 0.10 $ 0.80 $ 0.97
Average number of common shares outstanding:
Basic ................................................. 5,412 5,409 5,387 5,293 5,146
Diluted ............................................... 5,416 5,414 5,408 5,379 5,287
Financial Data:
Working capital ......................................... $ 8,479 $ 5,572 $ 7,791 $ 7,651 $ 6,500
Total assets ............................................ 22,860 24,734 25,038 27,887 16,462
Current portion of note payable ......................... - 3,600 1,700 1,700 -
Long-term debt .......................................... - - 3,600 5,300 -
Stockholders' equity .................................... 20,700 18,829 18,433 17,865 13,043
Cash dividends paid ..................................... - - - - -
(1) Reflects recognition of previously reserved tax benefits.
9
ITEM 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following management's discussion and analysis should be read together with
the consolidated financial statements and accompanying notes and other detailed
information appearing elsewhere in this Form 10-K. This discussion includes
forward-looking statements about the demand for our products and future results.
Please refer to the "Note Regarding Forward-Looking Statements" section of this
Form 10-K.
Overview
Sales of the Company's geophysical products are generally related to the level
of worldwide oil and gas exploration and development activity which is
dependent, primarily, on oil and gas prices. Because of the rapid decline in oil
prices in 1999, oil companies reduced exploration budgets which caused the
Company's customers, primarily seismic exploration contractors, to reduce
activities. This reduction in activity resulted in underutilized and idle
seismic vessels. With recent increases in oil and gas prices, seismic
contractors have gradually reduced excess vessel capacity but the industry
continues to remain cautious in its capital spending plans. During the last half
of fiscal 2001 and in fiscal 2002, there has been an increase in marine seismic
exploration activity which has benefited the Company's geophysical equipment
sales and profitability.
As for the industrial products segment of the Company's business, sales continue
to be adversely affected by the general slowdown in the national economy.
Liquidity and Capital Resources
At June 30, 2002, the Company had $1,474,000 in cash and cash equivalents. For
the year ended June 30, 2002, cash and cash equivalents increased by $145,000.
Cash flow from operating activities after changes in operating assets and
liabilities was $3,827,000 for the year ended June 30, 2002, primarily due to
net income and a decrease in the level of accounts receivable.
For the year ended June 30, 2002, the Company used $82,000 for capital
expenditures which was funded from operating cash flow. For fiscal year 2003,
capital expenditures are estimated to be $150,000 and are expected to be funded
from operating cash flow.
The Company used cash of $3,600,000 during the year ended June 30, 2002 for the
scheduled payments of a note issued in connection with the acquisition of A-G
Geophysical Products, Inc. in 1999. In April 2002, the final payment was made
and all obligations under this note were satisfied.
At June 30, 2001, the Company had $1,329,000 in cash and cash equivalents. For
the year ended June 30, 2001, cash and cash equivalents decreased by $1,198,000.
Cash flow from operating activities after changes in operating assets and
liabilities was $585,000 for the year ended June 30, 2001, primarily due to net
income and higher accounts payable and accrued liabilities partially offset by
higher accounts receivable.
For the year ended June 30, 2001, the Company used $83,000 for capital
expenditures and $1,700,000 for the scheduled payments of the A-G Geophysical
Products, Inc. note.
10
ITEM 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations (cont'd.)
Liquidity and Capital Resources (cont'd.)
In May 2002, the Company entered into a one-year $1,500,000 unsecured line of
credit agreement with a bank to support working capital requirements. The
details of this facility are summarized in Note 2 to the consolidated financial
statements under "Credit Facility".
Under the terms of the 1998 asset purchase agreement for Custom Products Inc.,
the Company could have been required to make additional annual payments to the
former owners in the maximum amount of $4,000,000 if net sales of Custom
Products increase to certain levels by December 2002. To date, additional
payments have not been required because the sales have not met amounts specified
in the agreement. In the opinion of management, no additional payments will have
to be made.
In October 1998, the Company's Board of Directors approved a stock repurchase
program under which the Company was authorized to buy up to 500,000 shares of
its Common Stock in open market or private transactions. Although the program
remains authorized, the Company has not repurchased any shares and currently has
no firm plan to make repurchases.
Current cash and cash equivalent balances, the borrowing capacity under the new
line of credit and projected cash flow from operations are considered adequate
to meet foreseeable operating needs.
The Company's liquidity is not dependent on the use of off-balance sheet
financing arrangements and the Company does not have any relationship with
unconsolidated entities or any special purpose entities. The Company has not
made any financial guarantees and all material obligations and commitments are
summarized in Note 8 to the consolidated financial statements. In addition, the
Company has not entered into any transactions with related persons or entities
which are material to the Company's financial statements.
Results of Operations
Year Ended June 30, 2002 Compared to Year Ended June 30, 2001
Sales for the year ended June 30, 2002 increased by $2,495,000 or 16% from the
year ended June 30, 2001. Sales of geophysical equipment increased by $2,939,000
or 24% reflecting an increase in marine seismic activity. This increase was
partially offset by a $444,000 or 15% sales decrease in sales of industrial
products compared to the year ended June 30, 2001, as that business was
adversely affected by the continuing general economic slowdown. During the first
three quarters of fiscal year 2001, sales of geophysical equipment were
depressed due to reduced activity by marine seismic contractors.
Cost of sales as a percentage of sales decreased from 58% for the year ended
June 30, 2001 to 55% for the year ended June 30, 2002. The major reason for this
improvement was increased manufacturing efficiencies associated with the higher
sales volumes for geophysical equipment, partially offset by decreased
manufacturing efficiencies for industrial products caused by the lower sales
volume in that segment.
Selling, general and administrative expenses increased by $270,000 or 6% for the
year ended June 30, 2002 versus the previous fiscal year primarily due to higher
compensation costs and professional fees.
11
ITEM 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations (cont'd.)
Results of Operations (cont'd.)
As indicated in Note 1 to the consolidated financial statements, SFAS No. 142,
"Goodwill and Other Intangible Assets," was adopted by the Company effective
July 1, 2001. Accordingly, there was no goodwill amortization for the year ended
June 30, 2002. For the year ended June 30, 2001, goodwill amortization was
$660,000. The Company had been amortizing goodwill prior to July 1, 2001 over 20
years. If the adoption of SFAS No. 142 had been in effect on July 1, 2000, the
reported net income of $396,000 would have increased to $963,000.
Interest expense for the year ended June 30, 2002 was $194,000 which was
$175,000 less than the previous fiscal year due to the lower average balance
outstanding on the A-G Geophysical Products, Inc. note.
The provision for income taxes for the year ended June 30, 2002 was $1,218,000,
an effective tax rate of 39%, which was higher than the federal statutory rate
of 34% primarily due to the effect of state income taxes. The Company's tax
provision for the year ended June 30, 2001 of $675,000 on income before taxes of
$1,071,000 was significantly higher than the federal statutory rate of 34%
primarily due to the effect of goodwill amortization relating to the A-G
Geophysical Products, Inc. acquisition which was not deductible for income tax
purposes and a reduction in the amount of investment tax credit carry-forwards.
Year Ended June 30, 2001 Compared to Year Ended June 30, 2000
Sales for the year ended June 30, 2001 increased by $748,000 or 5% from the year
ended June 30, 2000. Sales of geophysical equipment increased by $1,256,000 or
11% reflecting the increase in the level of marine seismic activity over the low
activity level in the previous year, including an increase in air gun systems
sales in the last half of fiscal year 2001. This increase was partially offset
by a $508,000 or 15% sales decrease in sales of industrial products compared to
the previous last year, as that business was adversely affected by the general
economic slowdown.
Cost of sales as a percentage of sales increased from 54% for the year ended
June 30, 2000 to 58% for the year ended June 30, 2001. Despite the sales
increase for geophysical equipment, cost of sales as a percentage of sales for
that segment increased from 57% for the year ended June 30, 2000 to 60% for the
year ended June 30, 2001 reflecting very low factory utilization in the first
half of the year and the negative impact of auxiliary equipment purchased for
marine air gun systems which have lower margins than the Company's proprietary
products. Cost of sales as a percentage of sales for industrial products
increased from 45% for the year ended June 30, 2000 to 47% for the year ended
June 30, 2001 primarily due to decreased manufacturing efficiencies caused by
the lower sales volume in that business segment.
Research and development costs decreased by $77,000 from $348,000 for the year
ended June 30, 2000 to $271,000 for the year ended June 30, 2001 primarily due
to the final development and testing of the "annular port gun," a new marine air
gun.
Selling, general and administrative expenses decreased by $7,000 from $4,257,000
for the year ended June 30, 2000 to $4,250,000 for the year ended June 30, 2001.
There was no significant change in any individual selling, general and
administrative expense item.
12
ITEM 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations (cont'd.)
Results of Operations (cont'd.)
Interest expense for the year ended June 30, 2001 was $369,000 which was
$141,000 less than the previous fiscal year due to the lower average balance
outstanding on the A-G Geophysical Products, Inc. note.
Interest income for the year ended June 30, 2001 was $37,000 which was $48,000
less than the previous fiscal year due to lower average cash and cash
equivalents balances and lower interest rates.
The provision for income taxes for the year ended June 30, 2001 was $675,000, an
effective tax rate of 63%, which was higher than the federal statutory rate of
34% primarily due to the effect of the goodwill amortization relating to the A-G
Geophysical Products, Inc. acquisition which was not deductible for income tax
purposes and a reduction in the amount of the investment tax credit
carry-forwards. The Company's tax provision for the year ended June 30, 2000 of
$557,000 on income before taxes of $1,090,000 was significantly higher than the
federal statutory rate of 34% primarily due to the effect of goodwill
amortization relating to the A-G Geophysical Products, Inc. acquisition which
was not deductible for income tax purposes and state income taxes.
Critical Accounting Policies:
The methods, estimates and judgments we use in applying the accounting policies
most critical to our financial statements have a significant impact on the
results we report in our financial statements. The U.S. Securities and Exchange
Commission has defined the most critical accounting policies as the ones that
are most important to the portrayal of our financial condition and results, and
require us to make our most difficult and subjective judgments.
Based on this definition, our most critical policies include: recording of
inventory reserves; deferred taxes; and the assessment of recoverability of
goodwill and other intangible assets. Below, we discuss these policies further.
We also have other key accounting policies including policies for revenue
recognition. We believe that these other policies either do not generally
require us to make estimates and judgments that are as difficult or as
subjective, or it is less likely that they would have a material impact on our
reported results of operations for a given period. For additional information
see Note 1 to the consolidated financial statements. Although we believe that
our estimates and assumptions are reasonable, they are based upon information
presently available. Actual results may differ significantly from our estimates
and our estimates could be different using different assumptions or conditions.
Inventory Reserves
We establish reserves to reflect those conditions when the cost of the inventory
is not expected to be recovered. We review such circumstances including when
products are not expected to be saleable. The reserve recorded is equal to all
or a portion of the cost of the inventory based on the specific facts and
circumstances. We monitor inventory levels on a regular basis and record changes
in inventory reserves in cost of sales.
Deferred Taxes
We apply an asset and liability approach to accounting for income taxes.
Deferred tax assets and liabilities are recognized for the expected future tax
consequences of temporary differences between the financial statement and tax
basis of assets and liabilities using enacted tax rates in effect for the years
in which the differences are
13
ITEM 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations (cont'd.)
Critical Accounting Policies (cont'd.)
expected to reverse. The recoverability of deferred tax assets is dependent upon
our assessment of whether it is more likely than not that sufficient future
taxable income will be generated in the relevant tax jurisdiction to utilize the
deferred tax asset. We review our internal forecasted sales and pre-tax earnings
estimates to make our assessment about the utilization of deferred tax assets.
In the event we determine that future taxable income will not be sufficient to
utilize the deferred tax asset, a valuation allowance is recorded. If that
assessment changes, a charge or a benefit would be recorded in the consolidated
statement of income.
Goodwill and Intangible Assets
In connection with acquisitions, we determine the amounts and related useful
lives assigned to goodwill and intangibles based on purchase price allocations.
These allocations, including an assessment of estimated useful lives, have been
performed by qualified independent appraisers using generally accepted valuation
methodologies. Valuation of intangible assets is generally based on the
estimated cash flows related to those assets, while the value assigned to
goodwill is the residual of the purchase price over the fair value of all
identifiable assets acquired and liabilities assumed. Useful lives are
determined based on the expected future period of benefit of the asset, which
considers various characteristics of the asset, including historical cash flows.
As required by SFAS No. 142, "Goodwill and Other Intangible Assets", we will
review goodwill annually or more frequently if impairment indicators arise for
impairment.
Recent Accounting Developments:
Accounting for Asset Retirement Obligations
In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations" ("SFAS 143"). This statement addresses financial accounting and
reporting for obligations associated with the retirement of tangible long lived
assets and the associated asset retirement costs. It applies to legal
obligations associated with the retirement of long-lived assets that result from
the acquisition, construction, development and/or the normal operation of a
long-lived asset, except for certain obligations of lessees. The standard
requires entities to record the fair value of a liability for an asset
retirement obligation in the period incurred with a corresponding increase in
the carrying amount of the related long-lived asset. Over time, the liability is
accreted to its present value each period, and the capitalized cost is
depreciated over the useful life of the related asset. Upon settlement of the
liability, an entity either settles the obligation for its recorded amount or
incurs a gain or loss upon settlement. This statement is effective for financial
statements issued for fiscal years beginning after June 15, 2002. We believe
that the adoption of SFAS 143 will not have a material impact on our results of
operations or financial position.
Accounting for Impairment or Disposal of Long-Lived Assets
In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets" ("SFAS 144"). This statement addresses financial
accounting and reporting for the impairment of long-lived assets. This statement
supercedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed Of", and the accounting and reporting
provisions of APB Opinion No. 30, "Reporting the Results of Operations -
Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary,
Unusual and Infrequently Occurring Events and Transactions". This statement also
amends ARB No. 51, "Consolidated Financial Statements", to eliminate the
exception to consolidation for
14
ITEM 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations (cont'd.)
Recent Accounting Developments (cont'd.)
a subsidiary for which control is likely to be temporary. This statement
requires that one accounting model be used for long-lived assets to be disposed
of by sale, whether previously held and used or newly acquired. This statement
also broadens the presentation of discontinued operations to include more
disposal transactions. This statement is effective for financial statements
issued for fiscal years beginning after December 15, 2001. We believe that the
adoption of SFAS 144 will not have a material impact on our results of
operations or financial position.
Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No.
13, and Technical Corrections
In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No.
4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections"
("SFAS 145"). SFAS 145 rescinds SFAS 4, "Reporting Gains and Losses from
Extinguishment of Debt", and an amendment of that Statement, SFAS 64,
"Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements." SFAS 145
also rescinds SFAS 44, "Accounting for Intangible Assets of Motor Carriers."
SFAS 145 amends SFAS 13, "Accounting for Leases," to eliminate an inconsistency
between the required accounting for sale-leaseback transactions and the required
accounting for certain lease modifications that have economic effects that are
similar to sale-leaseback transactions. SFAS 145 also amends other existing
authoritative pronouncements to make various technical corrections, clarify
meanings, or describe their applicablity under changed conditions. This
statement is effective for financial statements issued for fiscal years
beginning after May 15, 2002. We believe that the adoption of SFAS 145 will not
have a material impact on our results of operations or financial condition.
Accounting for Costs Associated with Exit or Disposal Activities
In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities" ("SFAS 146"). SFAS 146 addresses financial
accounting and reporting for costs associated with exit or disposal activities
and nullifies EITF Issue No. 94-3, "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (Including Certain
Costs Incurred in a Restructuring")("EITF 94-3"). SFAS 146 requires recognition
of a liability for a cost associated with an exit or disposal activity when the
liability is incurred, as opposed to when the entity commits to an exit plan
under EITF 94-3. This statement is effective for exit or disposal activities
initiated after December 31, 2002. We believe that the adoption of SFAS 146 will
not have a material impact on our results of operations or financial position.
ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk
Not applicable.
ITEM 8. Financial Statements and Supplementary Data
See Item 14 for an Index to Financial Statements and Financial Statement
Schedule. Such Financial Statements and Schedule are incorporated herein by
reference.
ITEM 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
15
PART III
ITEM 10. Directors and Executive Officers of the Registrant
The information as to directors and executive officers required by Item 10 is
incorporated by reference to the information appearing under the captions
"Election of Directors," "Management" and "Section 16(a) Beneficial Ownership
Reporting Compliance" in the Company's definitive proxy statement relating to
the 2002 Annual Meeting of Stockholders to be filed with the Securities and
Exchange Commission within 120 days after the end of the fiscal year covered by
this Form 10-K (the "Definitive Proxy Statement").
ITEM 11. Executive Compensation
The information required by Item 11 is incorporated by reference to the
information appearing under the caption "Executive Compensation" in the
Definitive Proxy Statement.
ITEM 12. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
The information required by Item 12 is incorporated by reference to the
information under the caption "Equity Compensation Plan Information" under Item
5 of this Form 10-K and the information appearing under the captions "Security
Ownership of Certain Beneficial Owners" and "Security Ownership of Management"
in the Definitive Proxy Statement.
ITEM 13. Certain Relationships and Related Transactions
The information required by Item 13 is incorporated by reference to the
information appearing under the caption "Certain Relationships and Related
Transactions" in the Definitive Proxy Statement.
PART IV
ITEM 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
Consolidated Financial Statements Page Number
-----------
Independent Auditors' Report 18
Consolidated Balance Sheets as of June 30, 2002 and 2001 19
Consolidated Statements of Income for the
Years Ended June 30, 2002, 2001 and 2000 20
Consolidated Statements of Cash Flows for the
Years Ended June 30, 2002, 2001 and 2000 21
Notes to Consolidated Financial Statements 22-34
Financial Statement Schedule for the Years Ended
June 30, 2002, 2001 and 2000
II - Valuation and Qualifying Accounts 35
Schedules other than that listed above are omitted because they are not
applicable, or the required information is shown in the financial statements or
the notes thereto.
16
Exhibit Index
Exhibit
No.
- -------
2.1 Asset Purchase Agreement dated as of November 14, 1997, by and among Bolt
Technology Corporation and Gerald Shaff and Carole Shaff (incorporated by
reference to Exhibit 2.1 to Form 8-K dated January 14, 1998).
2.2 Stock Purchase Agreement for the acquisition at A-G Geophysical Products,
Inc. by Bolt Technology Corporation from Albert H. Gerrans, Jr., Stephen Clay
and Robert Bernard dated as of April 20, 1999 (incorporated by reference to
Exhibit 2.1 to Form 8-K dated April 30, 1999).
3.1 Amended and Restated Certificate of Incorporation of the Registrant, as
further amended (incorporated by reference to Exhibit 3.1 to Form 10-Q for the
quarter ended December 31, 2001).
3.2 By-laws of the Registrant, as amended and restated effective January 16,
2002 (incorporated by reference to Exhibit 3.1 to Form 10-Q for the quarter
ended March 31, 2002).
10.1 Bolt Technology Corporation Amended and Restated 1993 Stock Option Plan
(incorporated by reference to Exhibit 10.1 to Form 10-K for the year ended June
30, 1998).
10.2 Lease Agreement dated April 20, 1999 between Albert H. Gerrans, Jr. and
Bolt Technology Corporation (incorporated by reference to Exhibit 10.2 to Form
8-K dated April 30, 1999).
10.3 Employment Agreement between Bolt Technology Corporation and Raymond M.
Soto effective as of June 10, 1996; Amendment to Employment Agreement between
Bolt Technology Corporation and Raymond M. Soto effective as of September 20,
2001 (incorporated by reference to Exhibits 10.1 and 10.2 to Form 10-Q for the
quarter ended September 30, 2001).
10.4 Bolt Technology Corporation Severance Compensation Plan.*
10.5 Commercial Loan Agreement, dated May 15, 2002, by and among Bolt Technology
Corporation and Fleet National Bank.*
21. Subsidiaries of the Registrant.*
99.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer).*
99.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer).*
Reports on Form 8-K
None.
*filed herewith
17
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
Bolt Technology Corporation
Norwalk, Connecticut
We have audited the accompanying consolidated balance sheets of Bolt Technology
Corporation and subsidiaries as of June 30, 2002, and 2001, and the related
consolidated statements of income and cash flows for each of the three years in
the period ended June 30, 2002. Our audits also included the financial statement
schedule listed in the Index at Item 14. These consolidated financial statements
and financial statement schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on the consolidated
financial statements and financial statement schedule based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall consolidated financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the consolidated financial position of Bolt Technology
Corporation and subsidiaries as of June 30, 2002 and 2001, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended June 30, 2002 in conformity with accounting principles
generally accepted in the United States of America. Also, in our opinion, such
financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.
/s/ Deloitte & Touche LLP
Stamford, Connecticut
August 15, 2002
18
Bolt Technology Corporation and Subsidiaries
Consolidated Balance Sheets
June 30,
--------
Assets 2002 2001
---- ----
Current Assets:
Cash and cash equivalents .................................. $ 1,474,000 $ 1,329,000
Accounts receivable, less allowance for
uncollectible accounts of $199,000 in
2002 and $187,000 in 2001 ................................. 3,509,000 4,607,000
Inventories ................................................ 4,734,000 4,492,000
Deferred income taxes ...................................... 704,000 923,000
Other current assets ....................................... 93,000 126,000
------------ ------------
Total current assets ............................ 10,514,000 11,477,000
------------ ------------
Plant and Equipment:
Building and leasehold improvements ........................ 555,000 555,000
Geophysical equipment ...................................... 269,000 269,000
Machinery and equipment .................................... 6,017,000 5,978,000
Equipment held for rental .................................. 320,000 320,000
------------ ------------
7,161,000 7,122,000
Less accumulated depreciation ........................... (6,055,000) (5,777,000)
------------ ------------
1,106,000 1,345,000
Goodwill, net ................................................. 11,170,000 11,276,000
Deferred Income Taxes ......................................... - 603,000
Other Assets .................................................. 70,000 33,000
------------ ------------
Total assets .................................... $ 22,860,000 $ 24,734,000
============ ============
Liabilities and Stockholders' Equity
Current Liabilities:
Note payable ............................................... $ - $ 3,600,000
Accounts payable ........................................... 495,000 984,000
Accrued expenses ........................................... 1,540,000 1,321,000
------------ ------------
Total current liabilities........................ 2,035,000 5,905,000
Deferred Income Taxes.......................................... 125,000 -
------------ ------------
Total liabilities ............................... 2,160,000 5,905,000
------------ ------------
Stockholders' Equity:
Common stock, no par value, authorized
9,000,000 shares; issued and outstanding
5,414,357 shares in 2002 and 5,408,733
in 2001 ................................................. 26,152,000 26,152,000
Accumulated deficit ........................................ (5,452,000) (7,323,000)
---------- ------------
Total Stockholders' Equity .............................. 20,700,000 18,829,000
------------ ------------
Total liabilities and stockholders' equity ...... $ 22,860,000 $ 24,734,000
============ ============
See Notes to Consolidated Financial Statements.
19
Bolt Technology Corporation and Subsidiaries
Consolidated Statements of Income
For the Years Ended June 30,
----------------------------
2002 2001 2000
---- ---- ----
Revenues:
Sales ........................................... $ 17,991,000 $ 15,496,000 $ 14,748,000
Costs and Expenses:
Cost of sales ................................... 9,967,000 8,912,000 7,968,000
Research and development ........................ 253,000 271,000 348,000
Selling, general and administrative ............. 4,520,000 4,250,000 4,257,000
Amortization of intangibles ..................... - 660,000 660,000
Interest expense ................................ 194,000 369,000 510,000
Interest (income) ............................... (32,000) (37,000) (85,000)
------------ ------------ -------------
14,902,000 14,425,000 13,658,000
------------ ------------ -------------
Income before income taxes ......................... 3,089,000 1,071,000 1,090,000
Provision for income taxes ......................... 1,218,000 675,000 557,000
------------ ------------ -------------
Net income ................................... $ 1,871,000 $ 396,000 $ 533,000
============ ============ =============
Earnings per share:
Basic ........................................... $ 0.35 $ 0.07 $ 0.10
Diluted ......................................... $ 0.35 $ 0.07 $ 0.10
Average number of common shares outstanding:
Basic ........................................... 5,411,890 5,408,733 5,386,824
Diluted ......................................... 5,416,281 5,413,626 5,408,486
See Notes to Consolidated Financial Statements.
20
Bolt Technology Corporation and Subsidiaries
Consolidated Statements of Cash Flows
For the Year Ended June 30,
---------------------------
2002 2001 2000
---- ---- ----
Cash Flows From Operating Activities:
Net income .......................................... $ 1,871,000 $ 396,000 $ 533,000
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization .................... 321,000 954,000 940,000
Deferred income taxes ............................ 1,053,000 616,000 426,000
----------- ----------- -----------
3,245,000 1,966,000 1,899,000
Change in operating assets and liabilities:
Accounts receivable .............................. 1,098,000 (2,519,000) 120,000
Inventories ...................................... (242,000) 44,000 622,000
Other assets ..................................... (4,000) 94,000 (70,000)
Accounts payable ................................. (489,000) 564,000 (129,000)
Accrued liabilities .............................. 70,000 436,000 (913,000)
Income taxes payable ............................. 149,000 - (693,000)
----------- ----------- -----------
Net cash provided by operating activities........ 3,827,000 585,000 836,000
----------- ----------- -----------
Cash Flows From Investing Activities:
Purchase of property and equipment .................. (82,000) (83,000) (144,000)
----------- ----------- -----------
Net cash used in investing activities ........... (82,000) (83,000) (144,000)
----------- ----------- -----------
Cash Flows From Financing Activities:
Exercise of stock options ........................... - - 35,000
Repayment of debt ................................... (3,600,000) (1,700,000) (1,700,000)
----------- ----------- -----------
Net cash used in financing activities ........... (3,600,000) (1,700,000) (1,665,000)
----------- ----------- -----------
Net increase (decrease) in cash ........................ 145,000 (1,198,000) (973,000)
Cash and cash equivalents at beginning of year ......... 1,329,000 2,527,000 3,500,000
----------- ----------- -----------
Cash and cash equivalents at end of year ............... $ 1,474,000 $ 1,329,000 $ 2,527,000
=========== =========== ===========
Supplemental disclosure of cash flow information:
Cash transactions:
Interest paid .......................................... $ 194,000 $ 369,000 $ 510,000
Income taxes paid ...................................... $ 121,000 $ 62,000 $ 873,000
Non-cash transactions:
Transfer of inventory to plant and equipment ........... - $ 255,000 -
See Notes to Consolidated Financial Statements.
21
Bolt Technology Corporation
Notes To Consolidated Financial Statements
Note 1 - Description of Business and Significant Accounting Policies
Bolt Technology Corporation operates in two business segments: geophysical
equipment and industrial products. Geophysical equipment includes the
development, manufacture and sale of marine seismic energy sources, underwater
electrical connectors, cables, air gun signature hydrophones and pressure
transducers. The industrial products segment manufactures and sells miniature
industrial clutches, brakes and sub-fractional horsepower electric motors.
Principles of Consolidation:
The consolidated financial statements include the accounts of Bolt Technology
Corporation and its subsidiary companies. All significant intercompany balances
and transactions have been eliminated.
Cash and Cash Equivalents:
The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.
Inventories:
Inventories are valued at the lower of cost or market, with cost principally
determined on an average cost method which approximates the first-in, first-out
method. The Company reserves for all slow moving inventory. Amounts are charged
to the reserve when the Company scraps or disposes of inventory.
Fixed Assets and Depreciation:
Plant and equipment are stated at cost. Depreciation for financial accounting
purposes is computed using the straight-line method over the estimated useful
lives of 5 to l0 years for machinery and equipment and rental assets, 1 to l0
years for geophysical equipment, 15 to 30 years for buildings, and over the term
of the lease for leasehold improvements. Major improvements which add to the
productive capacity or extend the life of an asset are capitalized, while
repairs and maintenance are charged to expense as incurred.
Goodwill:
Goodwill represents the excess cost over the value of net tangible assets
acquired in business combinations and was being amortized using the
straight-line method over 20 years. Accumulated amortization at June 30, 2002
and 2001 was $1,750,000. Effective July 1, 2001, the Company adopted SFAS No.
142, "Goodwill and Other Intangible Assets." Under SFAS No. 142, goodwill
amortization ceased when the new standard was adopted. The standard also
requires an initial goodwill impairment assessment in the year of adoption and
annual impairment tests thereafter. The initial assessment for goodwill
impairment was completed and the results indicated no impairment of the
Company's recorded goodwill.
If the adoption of SFAS No. 142 had been in effect on July 1, 2000, net income
and earnings per share would have been as indicated below:
22
Bolt Technology Corporation
Notes To Consolidated Financial Statements
Note 1 - Description of Business and Significant Accounting Policies (cont'd.)
Goodwill:
Year ended June 30,
-------------------
2002 2001
---- ----
Reported net income $1,871,000 $ 396,000
Elimination of goodwill amortization, net of tax effect - 567,000
---------- ---------
Adjusted net income $1,871,000 $ 963,000
========== =========
Basic and diluted earning per share:
Reported net income $ 0.35 $ 0.07
Elimination of goodwill amortization, net of tax effect - 0.10
---------- ---------
Adjusted net income $ 0.35 $ 0.17
========== =========
As a result of an acquisition in fiscal year 1998, the Company generated tax
deductible goodwill which exceeded the goodwill recorded for book purposes. The
goodwill reduction during fiscal year 2002 of $106,000 is a result of the tax
benefits generated by the excess tax deductions.
Revenue Recognition and Warranty Costs:
Sales revenue is recognized when the risk of ownership has been transferred to
the buyer, which is generally upon shipment. In December 1999, the Securities
and Exchange Commission ("SEC") issued Staff Accounting Bulletin No. 101 ("SAB
101"), "Revenue Recognition in Financial Statements," summarizing certain
guidance in applying generally accepted accounting principles to revenue
recognition in financial statements. The Company adopted the provisions of SAB
101 in the fourth quarter of 2001, retroactive to July 1, 2000. The adoption of
SAB 101 had no effect on the Company's financial position or results of
operations. Warranty costs and product returns incurred by the Company have not
been significant.
Income Taxes:
The deferred tax provision is determined under the liability method. Deferred
tax assets and liabilities are recognized based on differences between the book
and tax bases of assets and liabilities using currently enacted tax rates. The
provision for income taxes is the sum of the amount of income tax paid or
payable for the year determined by applying the provisions of enacted tax laws
to the taxable income for that year and the net change during the year in the
Company's deferred tax assets and liabilities.
Stock-Based Compensation:
The Company adopted SFAS No. 123, "Accounting for Stock-Based Compensation," in
1997. Under SFAS No. 123, companies can, but are not required to, elect to
recognize compensation expense for all stock-based awards using a fair value
methodology. The Company has adopted the disclosure-only provisions, as
permitted by SFAS No. 123. The Company applies Accounting Principles Board
Opinion No. 25 and related interpretations in accounting for its stock-based
plans. Accordingly, no compensation expense has been recognized for grants under
the Company's stock option plan.
23
Bolt Technology Corporation
Notes To Consolidated Financial Statements
Note 1 - Description of Business and Significant Accounting Policies (cont'd.)
Long-Lived Assets:
The Company reviews for the impairment of long-lived assets and certain
identifiable intangibles whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. The carrying amount
of a long-lived asset is considered impaired when anticipated undiscounted cash
flows expected to result from the use of the asset and its eventual disposition
is less than its carrying amount. The Company believes that no material
impairment existed at June 30, 2002.
Use of Estimates:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of financial statements, and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Computation of Earnings Per Share:
Basic earnings per share is computed by dividing net income by the average
number of common shares outstanding during the period. Diluted earnings per
share is computed by dividing net income by the average number of common shares
outstanding assuming dilution, the calculation of which assumes that all stock
options are exercised at the beginning of the period and the proceeds used to
purchase shares at the average market price for the period. The following is a
reconciliation from basic earnings per share to diluted earnings per share for
each of the last three years:
Years Ended June 30,
--------------------
2002 2001 2000
---- ---- ----
Net income available to
common stockholders $ 1,871,000 $ 396,000 $ 533,000
=========== ========== ==========
Divided by:
Weighted average common shares 5,411,890 5,408,733 5,386,824
Weighted average common share equivalents 4,391 4,893 21,662
----------- ---------- ----------
Total weighted average common
shares and common share equivalents 5,416,281 5,413,626 5,408,486
=========== ========== ==========
Basic earnings per share $ 0.35 $ 0.07 $ 0.10
=========== ========== ==========
Diluted earnings per share $ 0.35 $ 0.07 $ 0.10
=========== ========== ==========
The above calculations do not include options to acquire 160,000 shares, 148,000
shares and 183,000 shares in the years ended June 30, 2002, 2001, and 2000,
respectively, since their inclusion would have been anti-dilutive.
24
Bolt Technology Corporation
Notes To Consolidated Financial Statements
Note 1 - Description of Business and Significant Accounting Policies (cont'd.)
Recent Accounting Developments:
Accounting for Asset Retirement Obligations
In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations" ("SFAS 143"). This statement addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. It applies to legal
obligations associated with the retirement of tangible long-lived assets that
result from the acquisition, construction, development and/or the normal
operation of a long-lived asset, except for certain obligations of lessees. The
standard requires entities to record the fair value of a liability for an asset
retirement obligation in the period incurred with a corresponding increase in
the carrying amount of the related long-lived asset. Over time, the liability is
accreted to its present value each period, and the capitalized cost is
depreciated over the useful life of the related asset. Upon settlement of the
liability, an entity either settles the obligation for its recorded amount or
incurs a gain or loss upon settlement. This statement is effective for financial
statements issued for fiscal years beginning after June 15, 2002. We believe
that the adoption of SFAS 143 will not have a material impact on our results of
operations or financial position.
Accounting for Impairment or Disposal of Long-Lived Assets
In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets" ("SFAS 144"). This statement addresses financial
accounting and reporting for the impairment of long-lived assets. This statement
supercedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed Of", and the accounting and reporting
provisions of APB Opinion No. 30, "Reporting the Results of Operations -
Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary,
Unusual and Infrequently Occurring Events and Transactions". This statement also
amends ARB No. 51, "Consolidated Financial Statements", to eliminate the
exception to consolidation for a subsidiary for which control is likely to be
temporary. This statement requires that one accounting model be used for
long-lived assets to be disposed of by sale, whether previously held and used or
newly acquired. This statement also broadens the presentation of discontinued
operations to include more disposal transactions. This statement is effective
for financial statements issued for fiscal years beginning after December 15,
2001. We believe that the adoption of SFAS 144 will not have a material impact
on our results of operations or financial position.
Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No.
13, and Technical Corrections
In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No.
4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections"
("SFAS 145"). SFAS 145 rescinds SFAS 4, "Reporting Gains and Losses from
Extinguishment of Debt", and an amendment of that Statement, SFAS 64,
"Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements." SFAS 145
also rescinds SFAS 44, "Accounting for Intangible Assets of Motor Carriers."
SFAS 145 amends SFAS 13, "Accounting for Leases," to eliminate an inconsistency
between the required accounting for sale-leaseback transactions and the required
accounting for certain lease modifications that have economic effects that are
similar to sale-leaseback transactions. SFAS 145 also amends other existing
authoritative pronouncements to make various technical
25
Bolt Technology Corporation
Notes To Consolidated Financial Statements
Note 1 - Description of Business and Significant Accounting Policies (cont'd.)
corrections, clarify meanings, or describe their applicability under changed
conditions. This statement is effective for financial statements issued for
fiscal years beginning after May 15, 2002. We believe that the adoption of SFAS
145 will not have a material impact on our results of operations or financial
condition.
Accounting for Costs Associated with Exit or Disposal Activities
In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities" ("SFAS 146"). SFAS 146 addresses financial
accounting and reporting for costs associated with exit or disposal activities
and nullifies EITF Issue No. 94-3,"Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit and Activity (Including Certain
Costs Incurred in a Restructuring)" ("EITF 94.3"). SFAS 146 requires recognition
of a liability for a cost associated with an exit or disposal activity when the
liability is incurred, as opposed to when the entity commits to an exit plan
under EITF 94-3. This statement is effective for exit or disposal activities
initiated after December 31, 2002. We believe that the adoption of SFAS 146 will
not have a material impact on our results of operations or financial position.
Note 2 - Debt
Note Payable
In connection with the 1999 acquisition of A-G Geophysical Products, Inc., the
Company issued a $7,000,000 note to the selling shareholder for a portion of the
purchase price. The balance of the note at June 30, 2001 was $3,600,000. The
Company made required quarterly principal payments of $425,000 on August 1,
2001, November 1, 2001 and February 1, 2002, with the final principal payment of
$2,325,000 in April 2002. Therefore, all obligations under this note have been
satisfied.
Credit Facility
In May 2002, the Company entered into a one-year $1,500,000 unsecured line of
credit agreement with a bank to support working capital requirements. The
agreement provides for, among other things, an interest rate option of prime
rate or libor plus 1.75 percent and a fee of .375 basis points per annum on the
unutilized portion of the facility. In addition, the agreement contains certain
financial covenants including (i) maintaining a debt service coverage ratio of
at least 3-to-1, (ii) maintaining a ratio of total liabilities to tangible net
worth of not greater than 2-to-1 and (iii) that the Company cannot report more
than two consecutive quarters of losses or a loss for any fiscal year. The
Company is in compliance with all covenants of the agreement at June 30, 2002,
and to date there have been no borrowings under this facility.
26
Bolt Technology Corporation
Notes To Consolidated Financial Statements
Note 3 - Inventories
Inventories, net of reserves, at June 30 consist of the following:
2002 2001
---- ----
Raw materials and sub-assemblies $4,233,000 $4,095,000
Work-in-process 501,000 397,000
---------- ----------
$4,734,000 $4,492,000
========== ==========
Note 4 - Income Taxes
Income tax expense consists of the following for the three years ended June 30:
2002 2001 2000
---- ---- ----
Current:
Federal $ - $ 21,000 $ 32,000
State 165,000 38,000 99,000
Deferred:
Federal 1,053,000 616,000 426,000
---------- ---------- ----------
Income tax expense $1,218,000 $ 675,000 $ 557,000
========== ========== ==========
A reconciliation of the federal statutory rate to the effective tax rate
reflected in the total provision for income taxes is as follows:
Year Ended June 30,
--------------------
2002 2001 2000
---- ---- ----
Federal income taxes at the statutory rate 34% 34% 34%
State income taxes, net of federal tax benefit 5 3 6
Nondeductible expenses, principally goodwill
in 2001 and 2000 1 17 11
Reduction in investment tax credit carry-forward 1 14 -
Exempt income from foreign sales (2) (5) -
--- --- ---
Federal income taxes at the effective rate 39% 63% 51%
=== === ===
27
Bolt Technology Corporation
Notes to Consolidated Financial Statements
Note 4 - Income Taxes (cont'd.)
Deferred income taxes under the liability method reflect the net tax effects of
temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes.
Components of the Company's net deferred income tax asset were as follows:
2002 2001
---- ----
Deferred tax assets:
Tax loss carry-forward $ - $ 841,000
Investment tax credit carry-forward - 49,000
Inventory reserves 347,000 339,000
Allowance for doubtful accounts 79,000 69,000
Plant and equipment 22,000 7,000
Alternative minimum tax credit carry-forward 278,000 318,000
---------- -----------
Gross deferred tax asset 726,000 1,623,000
Deferred tax liability:
Amortization of intangibles (147,000) (97,000)
---------- -----------
Gross deferred tax liability (147,000) (97,000)
---------- -----------
Net deferred tax asset $ 579,000 $ 1,526,000
========== ===========
Note 5 - Benefit Plans
The Company maintains defined contribution retirement plans covering
substantially all employees who satisfy the age and service requirements of the
plans. The Company's contributions to the plans for the years ended June 30,
2002, 2001, and 2000 amounted to $191,000, $200,000, and $150,000, respectively.
Note 6 - Stock Options
The Company's 1993 Stock Option Plan provides for the granting of options to
purchase up to 550,000 shares of Common Stock of the Company at a price not less
than fair market value at date of grant. Options granted to employees are
exercisable for a period of up to ten years. The plan also provides for the
granting to non-employee directors of options to purchase 3,000 shares of Common
Stock each time they are elected directors.
A summary of the Stock Option Plan at June 30, 2002, 2001, and 2000 and the
changes during the years ended on those dates is presented below.
2002 2001 2000
------------------ ------------------ -----------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
------ -------- ------ -------- ------ --------
Outstanding at beginning of year 224,000 $5.84 203,000 $5.97 236,750 $5.20
Granted 3,000 $4.55 21,000 $4.56 9,000 $4.38
Exercised (40,000) $4.13 -- -- (41,000) $1.15
Canceled (18,000) $5.70 -- -- (1,750) $6.63
------- ------- -------
Outstanding at end of year 169,000 $6.24 224,000 $5.84 203,000 $5.97
======= ======= =======
There were 145,190 options available for future grants under the plan at
June 30, 2002.
28
Bolt Technology Corporation
Notes to Consolidated Financial Statements
Note 6 - Stock Options (cont'd.)
The following table summarizes information concerning outstanding and
exercisable stock options at June 30, 2002:
Options Outstanding Options Exercisable
------------------------------------------------------ ---------------------------------
Range of Number Outstanding Weighted Average Weighted Number Weighted
Exercise at Remaining Average Exercisable Average
Prices June 30, 2002 Contractual Life Exercise Price At June 30, 2002 Exercise Price
- ----------- ------------------ ---------------- -------------- ---------------- --------------
$4.38-$4.56 31,000 3.0 Years $4.51 28,000 $4.50
$6.25-$7.75 138,000 0.7 Years $6.62 138,000 $6.62
------- -------
169,000 1.1 Years $6.24 166,000 $6.27
======= =======
The estimated fair value of options granted during 2002, 2001 and 2000 were
$1.36, $2.66 and $2.12 per share, respectively. The Company applies Accounting
Principles Board Opinion No. 25 and related interpretations in accounting for
its stock option plan. Accordingly, no compensation cost has been recognized for
its stock option grants. If compensation cost for the stock option grants had
been determined based on the fair value at option grant dates in accordance with
accounting provisions of FAS 123, the Company's net income and earnings per
share for the years ended June 30, 2002, 2001 and 2000 would have been reduced
to the pro forma amounts indicated below:
Net Income: 2002 2001 2000
- ----------- ---- ---- ----
As reported $1,871,000 $396,000 $533,000
Pro forma $1,870,000 $331,000 $448,000
Basic earnings per share:
- ------------------------
As reported $ 0.35 $ 0.07 $ 0.10
Pro forma $ 0.35 $ 0.06 $ 0.08
Diluted earnings per share:
- --------------------------
As reported $ 0.35 $ 0.07 $ 0.10
Pro forma $ 0.35 $ 0.06 $ 0.08
29
Bolt Technology Corporation
Notes to Consolidated Financial Statements
Note 6 - Stock Options (cont'd.)
The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option-pricing model with the following assumptions:
2002 2001 2000
---- ---- ----
Expected dividend yield 0% 0% 0%
Expected stock price volatility 58% 62% 46%
Risk-free interest rate 3.47% 6.00% 6.10%
Expected life (years) 5 5 5
Note 7 - Stockholders' Equity
Changes in issued Common Stock and stockholders' equity for the three years
ended June 30, 2002 were as follows:
Common Stock
-------------------- Accumulated
Shares Amount Deficit Total
------ ------ ------------ -----
Balance June 30, 1999 .................. 5,370,378 $ 26,117,000 $ (8,252,000) $ 17,865,000
Exercise of stock options ......... 38,355 35,000 - 35,000
Net income ........................ - - 533,000 533,000
--------- ------------ ------------ ------------
Balance June 30, 2000 .................. 5,408,733 26,152,000 (7,719,000) 18,433,000
Net income ........................ - - 396,000 396,000
--------- ------------ ------------ ------------
Balance June 30, 2001 .................. 5,408,733 26,152,000 (7,323,000) 18,829,000
Exercise of stock options ......... 5,624 - - -
Net income ........................ - - 1,871,000 1,871,000
--------- ------------ ------------ ------------
Balance June 30, 2002 .................. 5,414,357 $ 26,152,000 $ (5,452,000) $ 20,700,000
========= ============ ============ ============
Note 8 - Commitments and Contingencies
Concentration of Credit Risk:
Financial instruments which potentially subject the Company to concentrations of
credit risk are primarily cash and cash equivalents and trade accounts
receivable. The Company believes that the concentration of credit risk in its
trade receivables is substantially mitigated by the Company's ongoing credit
evaluation and its short collection terms. The Company does not generally
require collateral from its customers but, in certain cases, the Company does
require the customer to provide a letter of credit or an advance payment. In
limited cases the Company will grant customers extended payment terms of up to
12 months. The Company establishes an allowance for uncollectible accounts based
upon factors surrounding the credit risk of specific customers. Historically,
the Company has not incurred significant credit related losses. The Company
invests its excess cash in certificates of deposit with maturities of usually
less than one month in an effort to maintain safety and liquidity.
30
Bolt Technology Corporation
Notes to Consolidated Financial Statements
Note 8 - Commitments and Contingencies (cont'd.)
Financial Instruments:
The Company does not hold or issue financial instruments for trading or hedging
purposes, nor does it hold interest rate, leveraged, or other types of
derivative financial instruments. Fair values of accounts receivable, note
payable, accounts payable and accrued expenses reflected in the June 30, 2002
and 2001 balance sheets approximate carrying values at those dates.
Lease Commitments:
Rent expense amounted to $470,000, $453,000, and $455,000 for the years ended
June 30, 2002, 2001, and 2000, respectively. Minimum annual rental commitments
under operating leases with terms in excess of one year are as follows: 2003 -
$189,000; 2004 - $183,000; and 2005 - $107,000.
The Company leases a building from the former shareholder of A-G Geophysical
Products, Inc. for $10,750 per month. The lease agreement expires in April 2005.
Employment Agreements:
The Company has a severance compensation plan for certain executive officers and
key employees of the Company which becomes operative upon their termination if
such termination occurs within 24 months subsequent to a change in ownership of
the Company, as defined in the plan. The Company also has an employment
agreement with its president and chief executive officer which provides for
severance in the case of voluntary or involuntary termination or change in
control. The employment agreement has a term through June 30, 2005, subject to
extension as set forth in the agreement. The aggregate severance commitment
under these agreements approximates $3,488,000 at June 30, 2002. The Company
also has employment contracts with two other key executives. The aggregate
amount due under these agreements, which expire in January and February 2003,
respectively, is $234,000 at June 30, 2002.
Litigation:
From time to time, the Company is a party to routine litigation and proceedings
that are considered part of the ordinary course of its business. The Company is
not aware of any current or pending litigation.
31
Bolt Technology Corporation
Notes to Consolidated Financial Statements
Note 9 - Segment and Customer Information
The Company's reportable segments are geophysical equipment and industrial
products. The following table provides selected financial information for each
segment for the years ended June 30, 2002, 2001 and 2000.
Geophysical Industrial
Fiscal Year ended June 30, 2002 Equipment Products Total
- ------------------------------- --------- -------- -----
Sales $15,447,000 $ 2,544,000 $ 17,991,000
Interest income 32,000 - 32,000
Interest expense 194,000 - 194,000
Depreciation and amortization 284,000 37,000 321,000
Income before income taxes 2,738,000 351,000 3,089,000
Segment assets 18,165,000 4,695,000 22,860,000
Fixed asset additions 65,000 17,000 82,000
Geophysical Industrial
Fiscal Year ended June 30, 2001 Equipment Products Total
- ------------------------------- --------- -------- -----
Sales $12,508,000 $ 2,988,000 $ 15,496,000
Interest income 37,000 - 37,000
Interest expense 369,000 - 369,000
Depreciation and amortization 694,000 260,000 954,000
Income before income taxes 590,000 481,000 1,071,000
Segment assets 18,786,000 5,948,000 24,734,000
Fixed asset additions 76,000 7,000 83,000
Geophysical Industrial
Fiscal Year ended June 30, 2000 Equipment Products Total
- ------------------------------- --------- -------- -----
Sales $11,252,000 $ 3,496,000 $ 14,748,000
Interest income 85,000 - 85,000
Interest expense 510,000 - 510,000
Depreciation and amortization 684,000 256,000 940,000
Income before income taxes 283,000 807,000 1,090,000
Segment assets 18,820,000 6,218,000 25,038,000
Fixed asset additions 84,000 60,000 144,000
The Company does not allocate income taxes to segments.
32
Bolt Technology Corporation
Notes to Consolidated Financial Statements
Note 9 - Segment and Customer Information (cont'd.)
The following table reports sales by country for the years ended June 30, 2002,
2001 and 2000. Sales are attributed to each country based on the location of the
customer.
2002 2001 2000
---- ---- ----
United States .................... $ 7,509,000 $ 8,321,000 $ 8,703,000
Norway ........................... 3,501,000 2,546,000 2,025,000
Peoples Republic of China ........ 852,000 1,269,000 866,000
United Kingdom ................... 1,786,000 689,000 602,000
Former Soviet Union .............. 1,101,000 178,000 81,000
Singapore ........................ 1,598,000 1,171,000 1,385,000
France ........................... 765,000 513,000 484,000
Other ............................ 879,000 809,000 602,000
----------- ------------ -----------
$17,991,000 $ 15,496,000 $14,748,000
=========== ============ ===========
A relatively small number of customers has accounted for the Company's
geophysical equipment segment sales. Customers accounting for 10% or more of
consolidated sales for 2002, 2001 and 2000 are as follows:
2002 2001 2000
---- ---- ----
Customer A ....................... 17% 17% 30%
Customer B ....................... 14 11 11
Note 10 - Supplementary Information
Accrued expenses at June 30 consist of the following:
2002 2001
---- ----
Compensation and related taxes ....... $ 685,000 $ 259,000
Compensated absences ................. 242,000 274,000
Commissions payable .................. 309,000 609,000
Professional fees .................... 106,000 64,000
Income taxes payable ................. 118,000 -
Other ................................ 80,000 115,000
----------- -----------
$ 1,540,000 $ 1,321,000
=========== ===========
33
Bolt Technology Corporation
Notes to Consolidated Financial Statements
Note 11 - Quarterly Results (unaudited)
The following table summarizes results for each of the four quarters in the
years ended June 30, 2002 and 2001.
Three Months Ended
------------------
Sept. 30 Dec. 31 March 31 June 30
-------- ------- -------- -------
2002
- ----
Sales $ 4,191,000 $ 4,280,000 $ 4,760,000 $ 4,760,000
Cost of sales 2,505,000 2,350,000 2,640,000 2,472,000
Income before taxes 491,000 674,000 769,000 1,155,000
Net income 302,000 409,000 469,000 691,000
Basic and diluted earnings per share $ 0.06 $ 0.07 $ 0.09 $ 0.13
Three Months Ended
------------------
Sept. 30 Dec. 31 March 31 June 30
-------- ------- -------- -------
2001
- ----
Sales $3,076,000 $ 3,000,000 $ 4,405,000 $ 5,015,000
Cost of sales 1,891,000 1,724,000 2,457,000 2,840,000
Income (loss) before taxes (256,000) 14,000 480,000 833,000
Net income (loss) (214,000) (48,000) 253,000 405,000
Basic and diluted earnings (loss) per share: $ (0.04) $ (0.01) $ 0.05 $ 0.07
34
Bolt Technology Corporation
Schedule II - Valuation and Qualifying Accounts
For the Three Years Ended June 30, 2002
Additions Charged
Balance At To
Beginning Of Costs And Balance At
Description Year Expenses Deductions End of Year
----------- ------------ ----------------- ---------- ------------
Allowance for uncollectible
accounts:
2000 $360,000 $147,000 $ (33,000) $474,000
2001 474,000 125,000 (412,000) 187,000
2002 187,000 97,000 (85,000) 199,000
Reserve for inventory
valuation:
2000 $860,000 $ 13,000 - $873,000
2001 873,000 42,000 - 915,000
2002 915,000 - - 915,000
35
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.
BOLT TECHNOLOGY CORPORATION
By: /s/ Raymond M. Soto
--------------------------------
Raymond M. Soto
(Chairman of the Board, 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/ Raymond M. Soto Chairman of the Board, September 26, 2002
- ----------------------------- President, Chief Executive
(Raymond M. Soto) Officer and Director
(Principal Executive Officer)
/s/ Joseph Espeso Senior Vice President - Finance, September 26, 2002
- ----------------------------- Chief Financial Officer and
(Joseph Espeso) Director (Principal Financial
Officer and Principal
Accounting Officer)
/s/ Kevin M. Conlisk Director September 26, 2002
- -----------------------------
(Kevin M. Conlisk)
/s/ Michael H. Flynn Director September 26, 2002
- -----------------------------
(Michael H. Flynn)
/s/ George R. Kabureck Director September 26, 2002
- -----------------------------
(George R. Kabureck)
/s/ John H. Larson Director September 26, 2002
- -----------------------------
(John H. Larson)
/s/ Joseph Mayerick, Jr. Director September 26, 2002
- -----------------------------
(Joseph Mayerick, Jr.)
/s/ Gerald H. Shaff Director September 26, 2002
- -----------------------------
(Gerald H. Shaff)
/s/ Gerald A. Smith Director September 26, 2002
- -----------------------------
(Gerald A. Smith)
36
CERTIFICATIONS
I, Raymond M. Soto, certify that:
1. I have reviewed this annual report on Form 10-K of Bolt Technology
Corporation;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report; and
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual report.
Date: September 26, 2002
/s/ Raymond M. Soto
-------------------------------
Chairman of the Board, President
and Chief Executive Officer
I, Joseph Espeso, certify that:
1. I have reviewed this annual report on Form 10-K of Bolt Technology
Corporation;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report; and
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual report.
Date: September 26, 2002
/s/ Joseph Espeso
-------------------------------
Senior Vice President - Finance
and Chief Financial Officer
37