SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended JanuaryApril 27, 1996 Commission File Number 2-37706
Bowles Fluidics Corporation
(exact name of registrant as specified in its charter)
MARYLAND 52-0741762
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6625 Dobbin Road, Columbia, Maryland 21045
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (410) 381-0400
Indicate by check mark whether the registrant has filed all annual,
quarterly and other reports required to be filed with the Commission within
the past 90 days and in addition has filed the most recent annual report
required to be filed.
Yes X No
Indicate the number of shares outstanding of each issuer's classes of common
stock, as of January 27, 1996.
Class Outstanding at JanuaryApril 27, 1996
Common Stock, $.10 12,610,011 shares
INDEX
BOWLES FLUIDICS CORPORATION
FOR THE THREESIX MONTHS ENDED JANUARYAPRIL 27, 1996
Page
PART I. Financial Information Number
Item 1. Financial Statements
Consolidated Statements of Income
For the three and six months ended
JanuaryApril 27, 1996 and January 28, 1995............................April 29, 1995 ............. 3
Consolidated Balance Sheets
JanuaryApril 27, 1996 and October 28, 1995 ..................... 4
Consolidated Statements of Cash Flows
For the threesix months ended
JanuaryApril 27, 1996 and January 28, 1995............................April 29, 1995 ............. 5
Notes to Consolidated Financial Statements........ 6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations ............................................................. 7
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K ............... 9
Exhibit 11......................... 10
Exhibit 20......................... 12
(2)11 ............................ 11
Exhibit 20 ............................ 13
Form 8-K .............................. 15
2
BOWLES FLUIDICS CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
For the three months ended
January 27, January 28
1996 1995
----------- -------
Net Sales $ 4,550,061 $ 4,193,318
Cost of Sales 3,062,121 2,726,033
----------- -----------
Gross profit 1,487,940 1,467,285
Selling, general and
administrative expenses 663,375 588,744
Research and development costs 215,474 153,536
----------- -----------
Operating Income 609,091 725,005
Interest expense (5,954) (18,091)
Other income, net 16,448 16,898
----------- -----------
Income before taxes 619,585 723,812
Provision for income taxes 226,616 270,880
----------- -----------
Net Income 392,969 452,932
Preferred stock
dividends accrued (18,662) (18,662)
----------- -----------
Income applicable to
common shareholders $ 374,307 $ 434,270
=========== ===========
Primary earnings per share $.03 $.03
==== ====
Fully diluted earnings per share $.02 $.03
==== ====
For the three months ended For the six months ended
April 27, April 29, April 27, April 29,
1996 1995 1996 1995
---------- ---------- ---------- ----------
Net Sales $4,687,296 $4,419,120 $9,237,357 $8,612,438
Cost of Sales 2,872,639 2,723,350 5,934,760 5,449,382
---------- ---------- ---------- ----------
Gross profit 1,814,657 1,695,770 3,302,597 3,163,056
Selling, general and
administrative expenses 1,168,405 689,576 1,831,780 1,278,320
Research and development costs 363,532 151,675 579,006 305,212
---------- ---------- ---------- ----------
Operating Income 282,720 854,519 891,811 1,579,524
Interest expense (63) (7,132) (6,018) (25,223)
Other income, net 21,400 28,881 37,848 45,780
---------- ---------- ---------- ----------
Income before taxes 304,057 876,268 923,641 1,600,081
Provision for income taxes 106,220 328,869 332,836 599,749
---------- ---------- ---------- ----------
Net Income 197,837 547,399 590,805 1,000,332
Preferred stock
dividends accrued (18,662) (18,662) (37,324) (37,324)
---------- ---------- ---------- ----------
Income applicable to
common shareholders $ 179,175 $ 528,737 $ 553,481 $ 963,008
========== ========== ========== ==========
Primary earnings per share $ .01 $ .04 $ .04 $ .08
========== ========== ========== ==========
Fully diluted earnings per share $ .01 $ .03 $ .04 $ .06
========== ========== ========== ==========
The accompanying notes are an integral part of these financial statements.
(3)3
BOWLES FLUIDICS CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited) (Audited)
JanuaryApril 27, October 28,
1996 1995
---------- --------------------- -----------
Assets
Current
Cash and cash equivalents $ 771,590$1,169,217 $ 676,981
Investments 689,513available for sale 195,784 679,513
Accounts receivable 2,939,0892,934,193 2,761,394
Inventories 1,789,8721,735,374 1,899,346
Other current assets 366,977387,625 306,974
---------- ---------------------
Total current assets 6,557,0416,422,193 6,324,208
---------- ---------------------
Property and equipment, net 2,835,8453,020,804 2,821,804
Other assets 134,510284,587 146,434
---------- ---------------------
Total assets $9,527,396$9,727,584 $9,292,446
========== ===================== ===========
Liabilities and Stockholders' Equity
Current
Accounts payable - trade $ 909,061691,526 $ 995,421
Accrued expenses and other liabilities 617,735755,499 852,121
Income taxes payable 278,335191,555 111,441
Current portion of long-term debt 260,524- 68,857
---------- ---------------------
Total current liabilities 2,065,6551,638,580 2,027,840
Long-term debt - 202,811
Other liabilities 308,542756,630 282,904
Deferred income taxes 149,000 149,000
---------- ---------------------
Total liabilities 2,523,1972,544,210 2,662,555
---------- ---------------------
Commitments and Contingencies
Stockholders' Equity
8% Convertible preferred stock 933,080 933,080
Common stock 1,261,001 1,261,001
Additional paid-in capital 2,726,583 2,726,583
Retained earnings
2,083,535($2,407,467 deficit eliminated
at 10/29/94) Note 5 2,262,710 1,709,227
---------- ---------------------
Total stockholders' equity 7,004,1997,183,374 6,629,891
---------- ---------------------
Total liabilities and stockholders'equity $9,527,396 $9,292,446stockholders' equity $9,727,584 $ 9,292,446
========== ===========
The accompanying notes are an integral part of these financial statements.
4
BOWLES FLUIDICS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
For the six months ended
April 27, April 29,
1996 1995
---------- ----------
Net Income $ 590,805 $1,000,332
Adjustments to reconcile net income
provided by operating activities:
Depreciation and amortization 353,866 327,708
Deferred income taxes (162,000) -
(Gain)/Loss on disposal of assets 15,217 (8,877)
Accretion of interest on investments (5,329) (7,977)
---------- ----------
792,559 1,311,186
---------- ----------
Change in operating accounts:
Accounts receivable (172,799) (162,238)
Inventories 163,972 111,875
Other assets (80,651) (53,197)
Accounts payable (303,895) (276,190)
Accrued expenses (59,299) (81,999)
Income taxes payable 80,114 (385,168)
Other liabilities 473,726 26,652
---------- ----------
Change in operating accounts 101,168 (820,265)
---------- ----------
Cash provided by operating activities 893,727 490,921
---------- ----------
Investing activities:
Capital expenditures (544,233) (241,310)
Proceeds from sale of equipment - 31,025
Purchase of investments - (475,814)
Proceeds from sale of investments 489,058 390,105
---------- ----------
Net cash used in investing activities (55,175) (295,994)
---------- ----------
Financing activities:
Principal payment of debt (271,668) (492,626)
Preferred stock dividend (74,648) (74,646)
---------- ----------
Net cash used in financing activities (346,316) (567,272)
---------- ----------
Increase (decrease) in cash and cash
equivalents 492,236 (372,345)
Cash and cash equivalents - beginning of period 676,981 1,557,230
---------- ----------
Cash and cash equivalents - end of period $1,169,217 $1,184,885
========== ==========
The accompanying notes are an integral part of these financial statements.
(4)
BOWLES FLUIDICS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
For the three months ended
January 27, January 28,
1996 1995
----------- ----------
Net Income $ 392,969 452,933
Adjustments to reconcile net income
provided by operating activities:
Depreciation and amortization 167,179 164,730
(Gain)/Loss on sale of assets 2,073 (4,052)
Accretion of interest on investments 10,000 -
----------- ---------
552,221 613,611
----------- -----------
Change in operating accounts:
Accounts receivable (177,695) (396,803)
Inventories 109,474 181,950
Other assets (60,003) (26,700)
Accounts payable (86,360) (229,444)
Accrued expenses (178,400) (230,878)
Income taxes payable 166,894 (266,037)
Other liabilities 25,638 (10,247)
----------- -----------
Change in operating accounts (200,452) (978,159)
----------- -----------
Cash provided by(used in) operating
activities 351,769 (364,548)
----------- -----------
Investing activities:
Capital expenditures (172,368) (73,446)
Proceeds from sale of equipment 1,000 31,025
Proceeds from sale of investments - 97,619
----------- -----------
Net cash provided by(used in)
investing activities (171,368) 55,198
----------- -----------
Financing activities:
Principal payment of debt (11,144) (476,911)
Preferred stock dividend (74,648) (74,646)
----------- -----------
Net cash used in financing
activities (85,792) (551,557)
----------- -----------
Increase(decrease) in cash and cash
equivalents 94,609 (860,907)
Cash and cash equivalents - beginning
of period 676,981 1,557,230
----------- -----------
Cash and cash equivalents - end of
period $ 771,590 $ 696,323
=========== ===========
The accompanying notes are an integral part of these financial statements.
(5)5
BOWLES FLUIDICS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - General
In the opinion of the Company, the accompanying unaudited financial
statements contain all adjustments (consisting of only normal recurring
adjustments) necessary to present fairly the financial position as of JanuaryApril 27,
1996, the results of operations and cash flows for three and six months ended
JanuaryApril 27, 1996 and January 28,April 29, 1995.
While the Company believes that the disclosures presented are adequate to
make the information not misleading, it is suggested that these financial
statements be read in conjunction with the financial statements and the notes
included in the Company's latest annual report on Form 10-K.
NOTE 2 - Inventories Inventories are comprised of:
JanuaryApril 27, October 28,
1996 1995
Raw Material $ 735,915603,463 $ 703,864
Work and tooling in process 191,425132,675 416,090
Finished Goods 862,532999,236 779,392
---------- ----------
Total $1,789,872$1,735,374 $1,899,346
========== ==========
NOTE 3 - Property and Equipment, and Accumulated Depreciation Property and
Equipment, and Accumulated Depreciation are comprised of:
JanuaryApril 27, October 28,
1996 1995
Production machinery and equipment $ 4,095,4374,110,704 $ 4,047,602
Office furniture and equipment 1,652,3481,850,805 1,580,026
Laboratory and machine shop equipment 1,180,0941,268,050 1,159,087
Leasehold improvements 546,698566,681 539,274
----------- -----------
Total property and equipment 7,474,5777,796,240 7,325,989
Less accumulated depreciation (4,638,732)(4,775,436) (4,504,185)
----------- -----------
Net property and equipment $ 2,835,8453,020,804 $ 2,821,804
=========== ===========
NOTE 4 - Debt
The Board of Directors have authorized management to pay all of the outstanding
debt with Mercantile-Safe Deposit & Trust Company as of February 1, 1996.
NOTE 5 - Quasi reorganization
Effective October 29, 1994, the Board of Directors approved a
quasi-
reorganizationquasi-reorganization which had the impact of eliminating the retained earnings
deficit as an adjustment to the additional paid-in capital.
(6)NOTE 6 - Termination of sales agreement
In the second quarter ended April 27, 1996, the Company accrued an
additional selling expense of $258,000, net of income taxes, related to the
planned termination of the sales agreement with one of its manufacturers'
representatives. The payments are expected to commence in May 1997.
6
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The following discussion should be read in conjunction with the attached
financial statements and notes thereto, and with the Company's audited financial
statements and notes thereto for the fiscal year ended October 28, 1995.
RESULTS OF OPERATIONS
FirstSecond Quarter FY 1996 Compared with FirstSecond Quarter FY 1995
The Company achieved record sales levels for a firstin the second quarter but lower netFY 1996 in spite of the
unfavorable effect of the two-week shutdown of the General Motors plants in
March. Net income, however, was less than last year's first quarter. The gain insecond quarter as an
additional charge related to the planned termination of the Company's sales
agreement with one of its manufacturers' representatives was provided from
larger volume shipments and products withrecorded, higher
pricing. Net income was
negatively affected by increases in applications engineering,additional expenses were incurred for research and development,develop-ment, and general and administrative expenses.product
profit margins decreased.
Net sales in the firstsecond quarter of FY 1996 rose 8.5% to $4,550,061.$4,687,296, 6% above last
year's second quarter sales of $4,419,120. Net income was $392,969, 13% less$197,837, 64% or
$349,562 lower than the priorlast year's firstsecond quarter results.
Shipmentsof $547,399.
Sales of light vehicle windshield washer nozzles and defroster outletsnozzles of $4,171,177$4,640,865
increased 9% in this14% over last year's first quarter above the FY 1995 firstsecond quarter sales of $3,828,393. Sales rose$4,075,225, principally
becausedue to a larger volume of higher pricesshipments of washer nozzles with multiple parts and larger volumes of new windshield washer
nozzles and defroster outlets.newly designed products. Sales of
prototype and production tooling of $378,884$46,431 for future product manufacturing
increased 4% overdecreased 86% from last year's first
quarter.
Gross profit in the FY 1996 firstsecond quarter, was $1,487,940, 1.4% above last year's
first quarterreflecting a much lower rate of
$1,467,285. Theculmination of new washer and defroster nozzle programs. This decline in gross profit margin, despite higher
sales, occurred due to lower profit realized on these products in this year's
first quarter resulting from customer pressure on prices. This trend is
expected to continue through the 1996 fiscal year.
Gross profit in this year's second quarter was $1,814,657, 7% above last year's
second quarter of $1,695,770, principally because of the higher volume. However,
lower margins on new products reduced overall profit margins and are expected to
continue to do so in the future. While not impactinghaving little net impact on gross profit,
engineering resources were redirected in the FY 1996 firstsecond quarter more towardtowards
applications engineering, i.e., the customizationcustom-ization of new auto products, with
less emphasis on tooling and product qualification activities. One significant
new product is the air conditioning outlets for an automotive customer, for
which prototypes are scheduled for delivery in the fall.
Selling, general and administrative expenses were 69% higher due to increases in
sales commissions and personnel costs andcosts. The sales commissions.commissions include an
additional charge of $420,000 related to the planned termination of the
Company's sales agreement with one of its manufacturers' representatives.
Research and development costs rose 41%140% as greater efforts were applied to the
development of new products for both for the
auto industryautomotive and for nonautomotive applications.
Operating income decreased 16%67% or $115,914$571,799 to $609,091$282,720 in this year's firstsecond
quarter versus $725,005$854,519 in last year's comparable period.
Provision for income taxes, both federal and state, has beenwas determined based upon an
estimate of the total fiscal year's pretax income. The effective tax rates for both
years' firstsecond quarters were essentially the same.
(7)7
Six Months Ended April 27, 1996, Compared with Six Months Ended April 29, 1995
For the first six months of the 1996 fiscal year ended April 27, 1996, sales
rose but net income declined primarily due to an additional charge related to
the termination of the Company's sales agreement, product profit margin
pressures, and increases in expenses for research and development.
Net sales gained 7% to $9,237,357 for the first six months of the 1996 fiscal
year compared with $8,612,438 in the comparable period in 1995. Net income of
$590,805 was 41% below the results of the prior fiscal year's first six months.
Sales of light vehicle windshield washer and defroster nozzles of $8,812,042
increased 11.5% in the first six months compared with the same period in the
prior fiscal year, principally because of increased shipments of newly designed
products. Sales of prototype and production tooling of $425,315 in 1996 for
future product manu-facturing declined 40% versus sales of $708,820 for the
first six months of the 1995 fiscal year. This decline reflects the lower rate
of culmination of new washer and defroster nozzle programs.
Gross profit in the first six months of the 1996 fiscal year gained 4% to
$3,302,597 from $3,163,056 in the similar 1995 period as a result of the larger
sales volume. However, lower margins on new products reduced overall profit
margins. During the first six months of this fiscal year, with little net impact
on gross profit, engineering resources were redirected towards more applications
engineering, i.e., the customization of new auto products, from tooling and
product qualification activities. One significant new product is the air
conditioning outlets for an automotive customer, for which prototypes are
scheduled for delivery in the fall.
Selling, general and administrative expenses were 43% higher in the first six
months of fiscal year 1996 compared with the similar 1995 period because of
increases in sales commissions and personnel costs. The sales commissions
include an additional charge of $420,000 related to the planned termination of
the Company's sales agreement with one of its manufacturers' representatives.
Research and development costs rose 90% in the same period as greater efforts
were applied to the development of new products for both automotive and
nonautomotive applications.
Operating income decreased 44% or $687,713 to $891,811 in this year's first six
months versus $1,579,524 in last year's comparable period.
Provision for income taxes, both federal and state, was determined based upon an
estimate of the total year's pretax income. The effective tax rates for both
years' six months were essentially the same.
FINANCIAL CONDITION
The Company's working capital at JanuaryApril 27, 1996, increased $195,018$487,245 from the
previous year end at October 28, 1995. The current ratio increasedrose from 3.123.1 to 3.173.9
during the first quarter.six months. Accounts receivable increased as a result of the
higher sales, and inventories decreased as a resultbecause of the sale of tooling from
work in processwork-in-process inventory. Current liabilities would have been lowerdeclined with the paymentpaydown of
accounts payable and year-end accruals
but were somewhat higher due to the reclassification of long-term bank debt to
current since the Board of Directors approved early payment of all of the
outstanding bank debt.accruals.
Cash provided by operations was $351,769 in$893,727 during the first quartersix months of FYthe 1996
fiscal year compared with cash used by operations$490,921 in last year's comparable quarter of
$364,548.similar period. This year's higher
cash flow from net income was lower but was used to a lowerlesser extent than last
year due to the lower investment in accounts receivable and
lower paydowns of accruedpay down income taxes and accounts payable.tax accruals.
Capital expenditures were $172,368 during the$544,233 in this fiscal year's first quarter of FY 1996, $98,922six months,
$302,923 greater than last year as more funds were spent on computer facilities
and production equipment.
8
Cash used byfor financing activities was significantly lower duringthan last year as the early payment
of all outstanding bank debt this year's
first quarter since last year's payments includedyear was less than the early payment of
certain notes.notes last year.
The quasi-reorganization that was carried out at October 29, 1994, was
implemented in order to eliminate the deficit in retained earnings. The deficit
had occurred due to the settlement of a lawsuit in 1991 related to prior years'
activities and operating losses related to discontinued products prior to 1980.
With new products and profitable operations, management desired to reflect the
current financial strength of the Company. The only impact on the financial
statements was to record the elimination of the retained earnings deficit to
date and the corresponding reduction in additional paid-in capital. Upon
evaluation, the Company's assets and liabilities did not require readjustments.
North American light vehicle production (excluding Mexican output) by the three
major U.S. automotive companies, which generates most of the Company's sales,
decreased 6%14% in the fourthfirst calendar quarter of 19951996 versus the same period in
1994.1995. Production for the firstsecond calendar quarter of 1996 is forecasted by Ward's
Automotive Reports to decrease 7% belowincrease 6% over last year's first quarter, and for the
second quarter is forecasted to be the same as the prior year's comparable
period.quarter.
The Company's management believes that the present and planned production
capacity should be satisfactory to meet the anticipated demands referred to
above, as well asadditional market penetration, and new product deliveries. Cash flow from
operations isand available cash are expected to provide the cashfunds needed for
future product development, capital expenditures, and working capital
requirements and capital expenditures.
(8)requirements. The Company currently has no debt.
9
BOWLES FLUIDICS CORPORATION
PART II. OTHER INFORMATION
FOR THE THREESIX MONTHS ENDED JANUARYAPRIL 27, 1996
Item 6. Exhibits and Reports on Form 8-K
ExhibitExhibits Description
(a) Exhibit 11 Computation of Earnings
Per Common Share
Exhibit 20 Report furnished to Security Holders
(b) Reports on Form 8-K
none
(9)10
BOWLES FLUIDICS CORPORATION
PART II. OTHER INFORMATION
Item 6. (a) EXHIBIT 11 - CALCULATION OF EARNINGS PER SHARE
A. PRIMARY EARNINGS PER COMMON SHARE AND COMMON EQUIVALENT SHARES
For the three months ended
January 27, January 28,
1996 1995
----------- -----------
Calculation of Net Income
Net income per books $ 392,969 $ 452,932
Less: Dividends on convertible
preferred stock 18,662 18,662
----------- -----------
Net income as adjusted $ 374,307 $ 434,270
============
For the three months ended For the six months ended
April 27, April 29, April 27, April 29,
1996 1995 1996 1995
---------- ---------- ---------- ----------
Calculation of Net Income
Net income per books $ 197,837 $ 547,399 $ 590,805 $ 1,000,332
Less: Dividends on convertible
preferred stock 18,662 18,662 37,324 37,324
----------- ----------- ----------- -----------
Net income as adjusted $ 179,175 $ 528,737 $ 553,481 $ 963,008
=========== =========== =========== ===========
Calculation of Outstanding Shares
Weighted average of common
shares outstanding 12,610,011 12,590,011 12,610,011 12,590,011
Add: Assumed exercise of stock
options 86,726 108,644 114,837 97,959
----------- ----------- ----------- -----------
Number of common shares
outstanding adjusted 12,696,737 12,698,655 12,724,848 12,687,970
=========== =========== =========== ===========
Primary earnings per common share $ .01 $ .04 $ .04 $ .08
=========== =========== =========== ===========
Calculation of Outstanding Shares
Weighted average of common
shares outstanding 12,610,011 12,590,011
Add: Assumed exercise of stock
options 104,364 *
Number of common shares
outstanding adjusted 12,714,375 12,590,011
============ ============
Primary earnings per common share $ .03 $ .03
============ ============
* Under the treasury stock method, the assumed exercise of stock options would
be anti-dilutive; accordingly, such amounts are excluded from the
computation.
(10)
11
BOWLES FLUIDICS CORPORATION
PART II. OTHER INFORMATION
Item 6. (a) EXHIBIT 11 - CALCULATION OF EARNINGS PER SHARE (continued)
B. FULLY DILUTED EARNINGS PER SHARE
For the three months ended
January 27, January 28,
1996 1995
----------- --------
Net Income per books $ 392,969 $ 452,932
For the three months ended For the six months ended
April 27, April 29, April 27, April 29,
1996 1995 1996 1995
---------- ---------- ---------- ----------
Net Income per books $ 197,837 $ 547,399 $ 590,805 $ 1,000,332
=========== =========== =========== ===========
Weighted average of common
shares outstanding 12,610,011 12,590,011 12,610,011 12,590,011
Add: Assumed conversion of
preferred stock 3,732,320 3,732,320 3,732,320 3,732,320
Assumed exercise of stock
options 87,556 130,667 114,837 130,667
----------- ----------- ----------- -----------
Number of shares 16,429,887 16,452,998 16,457,168 16,452,998
=========== =========== =========== ===========
Fully diluted earnings
per share $ .01 $ .03 $ .04 $ .06
=========== =========== ============
Weighted average of common
shares outstanding 12,610,011 12,590,011
Add: Assumed conversion of
preferred stock 3,732,320 3,732,320
Assumed exercise of stock
options 104,364 *
Number of shares 16,446,695 16,322,331 =========== ===========
Fully diluted earnings
per share $ .02 .03
=========== ===========
* Same as footnote (1) on prior page.
(11)
Exhibit 20
BOWLES FLUIDICS CORPORATION
6625 Dobbin Road, Columbia, Maryland 21045-4707 USA
Phone: 410-381-0400 Fax: 410-381-2718
March
12
1996
TO THE STOCKHOLDERS:
As the first quarter figures show, BFC's sales increased in spite of a decline
in auto production. Net income, however, was adversely affected by increased
customer pressures on pricing as well as the change in mix of products when
compared to last year.
The larger commitments in R & D expenses reflect our renewed emphasis on basic
research to address our longer-term needs for new fluidic devices.
Increased engineering application efforts were aimed at improving manufacturing
processes and developing new products.
The most significant event during the first quarter is the receipt of a letter
of intent in response to our recent proposal for air conditioning outlets for an
automotive customer. A dedicated core team has been formed to achieve a
production-ready stage as quickly and economically as possible. We hope that
this new entry product will pave the way to other opportunities.
Although North American auto production is predicted to be less than last year,
we believe we can continue to support these efforts to assure our future based
on our sales remaining above the industry trend.
Sincerely,
Ronald Stouffer
President
RS:lto
Enclosure
(12)
Exhibit 20
BOWLES FLUIDICS CORPORATION
- -------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Three Months Ended
January 27,1996 January 28,1995
Net Sales $ 4,550,061 $ 4,193,318
Cost of Sales 3,062,121 2,726,033
Selling, General and Administrative Expenses 663,375 588,744
Research and Development Costs 215,474 153,536
Interest Expense and Other (Income)
and Expense, Net (10,494) 1,193
---------------- ------------
Income before Taxes $ 619,585 $ 723,812
Provision for Taxes 226,616 270,880
---------------- ------------
Net Income $ 392,969 $ 452,932
================ ============
Net Income per Share
Primary $ 0.03 $ 0.03
Fully Diluted $ 0.02 $ 0.03
- -----------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
Unaudited Audited
January 27,1996 October 28,1995
Assets
Cash and Cash Equivalents $ 771,590 $ 676,981
Investments 689,513 679,513
Accounts Receivable 2,939,089 2,761,394
Inventories 1,789,872 1,899,346
Other Current Assets 366,977 306,974
------------ ------------
Total Current Assets 6,557,041 6,324,208
Property, Plant and Equipment, Net 2,835,845 2,821,804
Other Assets 134,510 146,434
------------ ------------
Total Assets $ 9,527,396 $ 9,292,446
============ ============
Liabilities and Stockholders' Equity
Accounts Payable--Trade $ 909,061 $ 995,421
Accrued Expenses and Other Liabilities 617,735 852,121
Income Taxes Payable 278,335 111,441
Current Portion of Long-Term Debt 260,524 68,857
------------ ------------
Total Current Liabilities 2,065,655 2,027,840
Long-Term Debt - 202,811
Other Liabilities and Deferred
Income Taxes 457,542 431,904
------------ ------------
Total Liabilities 2,523,197 2,662,555
------------ ------------
8% Convertible Preferred Stock 933,080 933,080
Common Stock 1,261,001 1,261,001
Additional Paid-in Capital 2,726,583 2,726,583
Retained Earnings 2,083,535 1,709,227
------------- ------------
Stockholders' Equity 7,004,199 6,629,891
------------- ------------
Total Liabilities
and Stockholders' Equity $ 9,527,396 $ 9,292,446
============== ===========
(13)
FORM 10-Q
BOWLES FLUIDICS CORPORATION
Pursuant to the requirements of the Securities Exchange act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BOWLES FLUIDICS CORPORATION
Date By
Ronald D. Stouffer
President
Date By
David A. Quinn
Vice President-Finance