Item 1. BUSINESS
General description
Tech/Ops Sevcon, Inc. ("Tech/Ops Sevcon", or the "Company") is a Delaware corporation organized on December 22, 1987 to carry on the electronic controller business previously performed by Tech/Ops, Inc. (Tech/Ops). Through wholly-owned subsidiaries located in the United States, England, and France, the Company designs, manufactures, sells, and services, under the Sevcon name, solid-state products which control motor speed and acceleration for battery powered electric vehicles in a number of applications, primarily electric fork lift trucks, aerial lifts and underground coal-mining equipment. Through another subsidiary located in the United Kingdom, Tech/Ops Sevcon manufactures special metalized film capacitors for electronics applications.
Marketing and sales
Sales are made primarily through a small full-time marketing staff. Sales in the United States were $10,012,000, $11,425,000, and $8,685,000, in 1997, 1996, and 1995, respectively, which accounted for approximately 37%, 42%, and 39%, respectively, of total sales. Approximately 49% of controller sales are made to ten manufacturers of such equipment in the United States, Europe and the Far East.
Patents
The Company believes that its business is not dependent on patent protection. Rather, it is primarily dependent upon the Company's technical competence, the quality of its products, and its prompt and responsive service performance. However, the rights to inventions of employees working for Tech/Ops Sevcon are assigned to the Company.
Backlog
Tech/Ops Sevcon's backlog at September 30, 1997 was $4,454,000 compared to $4,045,000 in September 30, 1996 and $3,391,000 in September 1995. Backlog increased by $409,000, or 10%, during fiscal 1997. The increase in backlog was mainly due to higher current business levels.
Raw Materials
Tech/Ops Sevcon's products require a wide variety of components and materials. The Company has many sources for most of such components and materials and produces certain of these items internally. The Company believes that its sources and availability of its raw materials are adequate.
Competition
In the United States, the Company competes primarily with a division of the General Electric Company, which has a significant share of the market. Overseas, Tech/Ops Sevcon has several international competitors, including General Electric Company, as well as a number of small competitors that operate only in local markets. In addition, several large manufacturers of
fork lift trucks make their own controllers, although their product is generally for internal use only. The Company believes that it is one of the largest independent suppliers of such devices outside of the United States.
Research and development
Tech/Ops Sevcon's technological expertise has been an important factor in its growth. The Company regularly pursues product improvements to maintain its technical position. Research and development expenditure amounted to $1,798,000 in 1997 compared to $1,579,000 in 1996 and $1,381,000 in 1995. Expenditure increased by 14% in both 1997 and 1996.
Environmental regulations
The Company complies, to the best of its knowledge, with federal, state and local provisions which have been enacted or adopted regulating the discharge of materials into the environment or otherwise protecting the environment. This compliance has not had, nor is it expected to have, a material effect on the capital expenditures, earnings, or competitive position of Tech/Ops Sevcon.
Employees and labor relations
As of September 30, 1997, the Company employed 271 full-time employees, of whom 31 were in the United States, 232 were in the United Kingdom, 6 were in France, and 2 were in the Far East. Tech/Ops Sevcon believes its relations with its employees are good.
ITEM 2.
ITEM 2. PROPERTIES
A subsidiary of the Company leases approximately 12,000 square feet in Burlington, Massachusetts, under a lease expiring in 1998, with two five- year options thereafter. The building is used for the manufacture of electronic controllers, together with sales and service offices. The United Kingdom electronic controller business of Tech/Ops Sevcon is carried on in a building owned by it located in Gateshead, England, containing 40,000 square feet of space. The land on which this building stands is held on a lease expiring in 2068. In October 1996, a 125 year lease was acquired for a newly constructed 20,000 square foot building in Gateshead, England, adjacent to the existing building. 5,000 square feet of space is also rented near Paris, France under a lease expiring in 2000. The capacitor subsidiary of the Company owns a 9,000 square foot building, built in 1981, in Wrexham, Wales.
The properties and equipment of the Company are in good condition and, in the opinion of the management, are suitable and adequate for the Company's operations.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
The Company is involved in various legal proceedings, but believes that these matters will be resolved without a material effect on its financial position.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICERS OF THE REGISTRANT
Name of Officer Age Position - - --------------------------------------------------------------------------- Matthew Boyle 35 President and Chief Executive Officer
Paul A. McPartlin 52 Vice President and Chief Financial Officer
Paul B. Rosenberg 65 Treasurer - - ---------------------------------------------------------------------------
All officers have served in their present positions for more than five years, except for Mr. Boyle who was appointed Vice President and Chief Operating Officer on November 5, 1996, and President and Chief Executive Officer on November 13, 1997. From 1994 until he joined the Company in November 1996, Mr. Boyle was the General Manager of the Regulateurs Europa business of GEC Alsthom in Colchester, England. Prior to that, Mr. Boyle was General Manager of the Scottish Strategic Business Unit of Honeywell Control Systems, Ltd.
Mr. McPartlin has been the Financial Director of the Company's UK operations for more than five years. Mr. Rosenberg is President and CEO of Tech/Ops Corporation, a consulting firm.
There are no family relationships between any director or executive officer and any other director or executive officer of the Company.
PART II
ITEM 5.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The Common Stock of the Company is traded on the American Stock Exchange under the symbol TO. A summary of the market prices of, and dividends paid on, the Company's common stock is shown in Exhibit 13(a) to this Form 10-K.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
A summary of selected financial data for the last five years is shown in Exhibit 13 (b) to this Form 10-K.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
A) Results of Operations
1997 compared to 1996
Sales of $27,309,000 were $112,000 higher than last year. Foreign currency fluctuations resulted in a $200,000 increase in reported sales and the effect of price increases in fiscal 1997 was approximately $800,000, or 3%. Physical volumes were $888,000, or 3.3%, lower than last year. Sales in the USA decreased by $1,413,000, or 12% mainly due to depressed market conditions in the airline ground support, aerial lift, mining and fork lift markets. In other markets, which accounted for 63% of sales, there was a 10% sales increase, mainly to customers based in the Far East and to the aerial lift market in Europe.
Gross profit was 35.2% of sales in 1997 compared to 40.3% in 1996. Gross profit was $1,332,000 lower than last year. Foreign currency fluctuations accounted for a decrease in gross profit of $640,000, or 2.4%. The remainder of the decrease mainly related to a charge of $600,000 incurred in the third quarter of fiscal 1997, which principally involved product modification costs and associated warranty expense. Selling, general and administrative expenses increased by $272,000, or 4%, in 1997, mainly due to inflation and foreign currency fluctuations. As a result of lower gross profit and increased operating expense, operating income decreased by $1,604,000, or 35%, to $2,966,000. Foreign currency fluctuations accounted for $750,000 of the decrease in operating income, and the charge in the third quarter amounted to $600,000. The remaining $254,000 decrease in operating income was mainly due to lower physical volumes.
In fiscal 1997 income before income taxes was 35% lower than the previous year at $2,968,000. Income taxes were 36% of pre-tax income compared to 34% last year. The higher average tax rate was due to lower foreign tax credits and increased income tax rates in France. Net income decreased by $1,145,000, or 38%. Income per share was $.61 compared to $.97 last year, a decrease of 37%. Average shares outstanding decreased by 2% mainly because the dilutive effect of common stock equivalents was considered to be immaterial in 1997.
The company has considered the anticipated effects of new accounting standards and concluded that the effects would not be material. Under SFAS #128, fully diluted net income per share in 1997 would have been $.60 per share compared to $.61 as reported. Under SFAS #130 comprehensive income in 1997 would have been $54,000 lower than net income, due to the change in cumulative translation adjustment during 1997.
1996 compared to 1995
Sales increased by $4,766,000, or 21%, to $27,197,000. This sales increase arose from improved market conditions, particularly in the USA, the expansion of sales to the aerial lift industry and new business gains. Sales in the USA increased by $2,740,000, or 32%. In other markets, mainly Europe and the Far East, which accounted for 58% of sales, there was a 15% sales increase. Currency fluctuations did not have a significant impact on sales in 1996. The effect of price increases on fiscal 1996 sales was approximately 5%.
Gross profit was 40.3% of sales in 1996 compared to 41.5% in 1995. The decrease in gross profit was due to start-up costs of new products, increased material costs and higher warranty costs. Gross profit was $1,633,000 higher than last year. Selling, general and administrative expenses increased by $758,000, or 13%, in 1996, mainly due to higher volumes. Operating income increased by $875,000, or 24%, to $4,570,000. This increase was due to higher sales.
In fiscal 1996, income before income taxes was 21% ahead of the previous year at $4,570,000. Income taxes were 34% of pre-tax income compared to 31% last year. The higher average tax rate was due to lower tax credits in 1996 and because a higher proportion of the Company's profits that were earned in the USA where average tax rates are higher. Net income increased by $456,000, or 18%. Income per share was $.97 compared to $.81 last year, an increase of 20%. Average shares outstanding decreased by 1% mainly as a result of stock repurchases, partially offset by the exercise of employee stock options.
B) Liquidity and capital resources
Cash balances decreased by $525,000 during fiscal 1997 to $2,361,000. Net income of $1,891,000 was almost offset by dividend payments of $1,854,000. Spending on property, plant and equipment was $1,673,000, principally due to the purchase of a new building in the UK. Long term debt of $704,000 was incurred during fiscal 1997 in connection with the purchase of the new UK building, repayments of this debt during 1997 amounted to $201,000.
The Company has, since January 1990, maintained a program of regular cash dividends, which currently amounts to $463,000 per quarter. Repayments of long term debt are expected to amount to $235,000 in the next fiscal year. Tech/Ops Sevcon's resources, in the opinion of management, are adequate for projected operations and capital spending programs, as well as continuation of the cash dividend.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CONSOLIDATED BALANCE SHEETS TECH/OPS SEVCON, INC. AND SUBSIDIARIES
STOCKHOLDERS' INVESTMENT
The accompanying notes are an integral part of these consolidated financial statements.
CONSOLIDATED STATEMENTS OF INCOME TECH/OPS SEVCON, INC. AND SUBSIDIARIES
The accompanying notes are an integral part of these consolidated financial statements.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' INVESTMENT TECH/OPS SEVCON, INC. AND SUBSIDIARIES
(a) Restated to reflect two-for-one stock split effective August 28,1995.
The accompanying notes are an integral part of these consolidated financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS TECH/OPS SEVCON, INC. AND SUBSIDIARIES
The accompanying notes are an integral part of these consolidated financial statements. 13
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS TECH/OPS SEVCON, INC. AND SUBSIDIARIES
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Basis of presentation
The accompanying consolidated financial statements include the accounts of Tech/Ops Sevcon, Inc. (Tech/Ops Sevcon), Sevcon, Inc., Sevcon Limited and subsidiaries, and Sevcon SA. All material intercompany transactions have been eliminated.
The amount by which the cost of purchased businesses included in the accompanying financial statements exceeded the fair value of net assets at the date of acquisition has been charged to "Cost of purchased businesses in excess of net assets acquired". The Company assesses the carrying value of this asset whenever events or changes in circumstances indicate that this value has diminished. The Company considers the future profitability of the business in assessing the value of this asset. The excess related to acquisitions initiated prior to November 1, 1970 ($1,435,000) is not being amortized, since in the opinion of management there has been no diminution in the value of the excess related to these acquisitions. The excess related to subsequent acquisitions has been fully amortized.
During 1995,, the Financial Accounting Standards Board issued SFAS #123 which defines a fair value based method of accounting for employee stock options or similar equity instruments, and encourages all entities to adopt that method of accounting. However, it also allows an entity to continue to measure compensation costs using the method of accounting prescribed by APB #25. The Company has elected to account for its stock-based compensation plans under APB #25 (See Note 3).
B. Research and development
The cost of research and development programs is charged against income as incurred and amounted to approximately $1,798,000 in 1997, $1,579,000 in 1996, and $1,381,000 in 1995.
C. Depreciation and maintenance
Plant and equipment are depreciated on a straight-line basis over their estimated useful lives, which are primarily fifty years for buildings and seven years for equipment. Maintenance and repairs are charged to expense and renewals and betterments are capitalized.
D. Inventories
Inventories are priced at the lower of cost or market. Inventory costs include materials, direct labor and manufacturing overhead, are relieved from inventory on a first-in, first-out basis and comprised of:
E. Income taxes
Tech/Ops Sevcon files tax returns in the respective countries in which it operates. The Company accounts for income taxes in accordance with Financial Accounting Standards Board Statement #109 (FAS 109). Under FAS 109, the financial statements reflect the current and deferred tax consequences of all events recognized in the financial statements or tax returns.
F. Translation of foreign currencies
Tech/Ops Sevcon translates the assets and liabilities of its foreign subsidiaries at the current rate of exchange, and income statement accounts at the average exchange rates in effect during the period. Gains or losses from foreign currency translation are credited or charged to cumulative translation adjustment included in stockholders' investment in the balance sheet. Foreign currency transaction gains and losses are included in costs and expenses.
G. Cash equivalents
The Company considers all highly liquid investments with a maturity of 90 days or less to be cash equivalents. Such investments are generally money market funds, bank certificates of deposit, US Treasury bills and short-term bank deposits in Europe.
H. Use of estimates in preparation of financial statements.
The presentation 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 disclosures of contingent assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the reporting periods. Operating results in the future could vary from the amounts derived from management's estimates and assumptions.
I. Fair value of financial instruments
The Company's financial instruments consist mainly of cash and cash equivalents, accounts receivable and accounts payable. The carrying amount of these financial instruments as of September 30, 1997, approximate fair value due to the short term nature of these instruments and the variable feature of the long-term debt.
(2) CAPITAL STOCK
All references to shares of common stock have been restated to reflect a two-for-one stock split, in the form of a stock dividend, effective August 28, 1995.
Tech/Ops Sevcon, Inc. has two classes of capital stock, preferred and common. There are authorized 1,000,000 shares of preferred stock, $.10 par value. In January 1996, the number of authorized shares of common stock, $.10 par value, was increased from 4,000,000 to 8,000,000.
In the year ended September 30, 1996, the Company purchased 52,500 shares for treasury stock at a total cost of $529,000. No such shares were purchased in 1997 or 1995.
In connection with the exercise of employee stock options, the Company repurchased from employees 28,777 shares in 1995, 25,466 shares in 1996, and 2,300 shares in 1997.
(3) STOCK-BASED COMPENSATION PLANS
There were 109,000 shares reserved under the Company's 1996 Equity Incentive Plan at September 30, 1997. Options for 20,000 shares were granted in November 1996 at market price on the date of grant.
Recipients of grants or options must execute a standard form of non- competition agreement. Options granted are exercisable at a price not less than fair market value on the date of grant. This plan also provides for the grant of stock appreciation rights, either separately, or in relation to options granted, and for the grant of bonus shares. No stock appreciation rights or bonus shares have been granted.
The Company accounts for these plans under APB Opinion #25, under which no compensation cost has been recognized. Had compensation cost for these plans been determined consistent with SFAS #123, the Company's net income and earnings per share would have equaled the following pro forma amounts:
The effects of applying SFAS #123 in this pro forma disclosure are not indicative of future amounts. SFAS #123 does not apply to awards prior to fiscal 1996 and additional awards in future years are anticipated.
Option transactions under the plan for the three years ended September 30, 1997 were as follows:
The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions used for the one grant in 1997: risk-free interest rate of 6%; expected dividend yield of 4.2%; expected life of 7 years; expected volatility of 52%. For options outstanding at September 30, 1997 the exercise prices were between $3.31 and $14.31 with a weighted average remaining contractual life of 5.7 years.
(4) INCOME TAXES
The domestic and foreign components of income before income taxes are as follows:
The components of the provision for income taxes for the years ended September 30, 1997, 1996 and 1995 are as follows:
The provision for income taxes in each period differs from that which would be computed by applying the statutory US Federal income tax rate to the income before income taxes. The following is a summary of the major items affecting the provision:
Deferred income taxes result from temporary differences in reporting transactions for financial reporting and tax purposes. The significant items comprising the domestic and foreign deferred tax accounts at September 30, 1997 and 1996 are as follows:
The valuation allowance is provided when it is probable that some portion of the deferred tax asset will not be realized.
(5) LONG-TERM DEBT
Long-term debt at September 30, 1997 consisted of bank debt of $513,000, of which current maturities were $235,000 and the balance of $278,000 was long- term, of which $256,000 is due in FY99, and the remaining $22,000 is due in FY2000. There was no long-term debt at September 30, 1996. The debt was for an original term of 3 years from October 1996, secured by a mortgage on the new UK building and is at a variable interest rate, currently 8.7%.
At September 30, 1997 the fair value of the Company's long-term debt approximated its carrying value based on the variable interest rate feature of the debt.
(6) COMMITMENTS AND CONTINGENCIES
Tech/Ops Sevcon is involved in various legal proceedings but believes that it is only remotely likely that the outcome will be material to operations.
Tech/Ops Sevcon has entered into a consulting agreement, which expires on December 31, 1998, with a company owned by two of its directors. Under the terms of the agreement, the annual cost of these services will not exceed $100,000. This cost covers the provision of the corporate office of the Company, administrative support services and a payment of $30,000 per year to Mr. Rosenberg.
In connection with the transfer in 1988 of the electronic controller business from Tech/Ops, Inc. (Tech/Ops), the former parent company, Tech/Ops Sevcon entered into a Liability Assumption and Sharing Agreement with Tech/Ops and another former subsidiary of Tech/Ops. Liabilities incurred and expensed in connection with this agreement have not been significant.
The Company maintains a directors' retirement plan which provides for certain retirement benefits to non-employee directors. Effective January 1997 the plan was frozen and no further benefits are being accrued. While the cost of the plan has been fully charged to expense, the plan is not separately funded. The maximum liability based on the cost of buying deferred annuities at September 30, 1997 was $238,000.
Minimum rental commitments under all non-cancelable leases are as follows for the years ended September 30: 1998 - $173,000; 1999 - $58,000; 2000 - $58,000; 2001 - $30,000; 2002 - $28,000 and $1,221,000 thereafter. Net rentals of certain land, buildings and equipment charged to expense were $175,000 in 1997, $176,000 in 1996, and $177,000 in 1995.
(7) EMPLOYEE BENEFIT PLANS
Tech/Ops Sevcon has defined benefit plans covering the majority of its US and UK employees. There is also a small defined contribution plan. The following table sets forth the funded status of these defined benefit plans and the amounts recognized by Tech/Ops Sevcon in accordance with SFAS #87.
The Tech/Ops Sevcon net pension cost included the following components as defined by SFAS #87.
Plan assets include marketable equity securities, corporate and government debt securities, deferred annuities, cash and other short-term investments. The average discount rate and rate of increase in future compensation levels used in determining the actuarial present value of the projected benefit obligation were 7.9% and 5.9%, respectively, and the expected long-term rate of return on assets was 8.0% in 1997, 1996, and 1995.
(8) SEGMENT INFORMATION AND FOREIGN OPERATIONS
Tech/Ops Sevcon's largest customer accounted for 9% of sales in 1997, 9% of sales in 1996, and 10% in 1995. Domestic and foreign revenues are composed of sales to unaffiliated customers, with intercompany sales eliminated. Pretax net income for US and foreign segments is stated before unallocated corporate expense.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Tech/Ops Sevcon, Inc.:
We have audited the accompanying consolidated balance sheets of Tech/Ops Sevcon, Inc. (a Delaware Corporation) as of September 30, 1997 and 1996, and the related consolidated statements of income, stockholders' investment, and cash flows for each of the three years in the period ended September 30, 1997. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based upon our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Tech/Ops Sevcon, Inc. as of September 30, 1997 and 1996, and the results of its operations and cash flows for each of the three years in the period ended September 30, 1997 in conformity with generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedule listed in the index of financial statements is presented for purposes of complying with the Securities and Exchange Commission's rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly states, in all material respects, the financial data required to be set forth therein in relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP Boston, Massachusetts November 10, 1997
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10
ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
This information is incorporated by reference from the information under the caption "Election of Directors" in the Company's Proxy Statement relating to the 1998 Annual Meeting of Stockholders.
ITEM 11
ITEM 11 EXECUTIVE COMPENSATION
This information is incorporated by reference from the information under the captions "Election of Directors - Director Compensation", "Executive Compensation", "Compensation Committee Report" and "Performance Graph" in the Company's Proxy Statement relating to the 1998 Annual Meeting of Stockholders.
ITEM 12
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
This information is incorporated by reference from the information under the captions "Beneficial Ownership of Common Stock" and "Election of Directors" in the Company's Proxy Statement relating to the 1998 Annual Meeting of Stockholders.
ITEM 13
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
This information is incorporated by reference from the information under the caption "Election of Directors" in the Company's Proxy Statement relating to the 1998 Annual Meeting of Stockholders.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) Exhibits
The exhibits filed as part of this Form 10-K are listed on the Exhibit Index below.
(b) Financial statements and schedule
The financial statements and financial statement schedule listed in the index on page 5 are filed as part of this Annual Report on Form 10-K.
(c) Form 8-K
None filed during the quarter ended September 30, 1997.
INDEX TO EXHIBITS
(3)(a) *Certificate of Incorporation of the registrant (incorporated by reference to Exhibit (3)(a) to Annual Report for the fiscal year ended September 30, 1994).
(3)(b) *By-laws of the registrant (incorporated by reference to Exhibit (3)(b) to Annual Report for the fiscal year ended September 30, 1994).
(4)(a) *Specimen common stock of registrant (incorporated by reference to Exhibit (4)(a) to Annual Report for the fiscal year ended September 30, 1994).
(10)(a)*Tech/Ops Sevcon, Inc. 1966 Equity Incentive Plan (incorporated by reference to Exhibit 99.1 to the registrant's Registration Statement on Form S-8 File no. 333-02113).
(10)(b)*Corporate Services Agreement dated September 22, 1994 between Tech/Ops Corporation and the registrant (incorporated by reference to Exhibit (10)(c) to Annual Report for the fiscal year ended September 30, 1994).
(10)(c)*Liability Assumption and Sharing Agreement dated January 4, 1988 among Tech/Ops, Inc., Tech/Ops Landauer, Inc., and the registrant (incorporated by reference to Exhibit (10)(d) to Annual Report for the fiscal year ended September 30, 1994).
(10)(d)*Form of Indemnification Agreement dated January 4, 1988 between the registrant and each of its directors (incorporated by reference to Exhibit (10)(e) to Annual Report for the fiscal year ended September 30, 1994).
(10)(e) Board resolution terminating Directors' Retirement Plan.
(11) Calculation of earnings per share and weighted average shares outstanding.
(13)(a) Market prices of, and dividends paid on, registrant's common stock.
(13)(b) Selected Financial Data.
(22) *Subsidiaries of the registrant (incorporated by reference to Exhibit (22) to Annual Report for the fiscal year ended September 30, 1993).
(23) Consent of Arthur Andersen LLP.
(27) Financial Data Schedule.
*Indicates exhibit previously filed and incorporated by reference. Exhibits filed with periodic reports were filed under File No. 1-9789.
Instruments defining the rights of holders of long-term debt of the registrant and its consolidated subsidiaries authorizing securities not exceeding 10% of total assets on a consolidated basis are not filed
herewith. The registrant will furnish copies of such instruments to the Securities and Exchange Commission upon request.
Executive Compensation Plans and Arrangements: Exhibits (10)(a), (10)(b), (10)(d) and (10)(e) are management contracts or compensatory plans or arrangements in which the executive officers or directors of the registrant participate.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
TECH/OPS SEVCON, INC.
By /s/ Matthew Boyle December 12, 1997 ----------------------- Matthew Boyle 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/ Matthew Boyle President, Chief Executive December 12, 1997 - - -------------------- Officer and Director Matthew Boyle (Principal Executive Officer)
/s/ Paul A. McPartlin Vice President & Chief December 12, 1997 - - --------------------- Financial Officer Paul A. McPartlin (Principal Financial and Accounting Officer)
/s/ Milton C. Lauenstein Director December 12, 1997 - - ------------------------ Milton C. Lauenstein
/s/ Harold C. Mayer, Jr. Director December 12, 1997 - - ------------------------ Harold C. Mayer, Jr.
/s/ Paul B. Rosenberg Director December 12, 1997 - - --------------------- Paul B. Rosenberg
/s/ Herbert Roth, Jr. Director December 12, 1997 - - --------------------- Herbert Roth, Jr.
/s/ Marvin G. Schorr Director December 12, 1997 - - -------------------- Marvin G. Schorr
/s/ Bernard F. Start Director December 12, 1997 - - -------------------- Bernard F. Start
/s/ David R. Steadman Director December 12, 1997 - - -------------------- David R. Steadman
/s/ C. Vincent Vappi Director December 12, 1997 - - -------------------- C. Vincent Vappi
QUARTERLY FINANCIAL DATA (UNAUDITED) TECH/OPS SEVCON, INC. AND SUBSIDIARIES
TECH/OPS SEVCON, INC. AND SUBSIDIARIES SCHEDULE II Reserves for the three years ended September 30, 1996
(a) Write-off of uncollectible accounts $24 (b) Accounts collected $5, write-off of uncollectible accounts $2 (c) Accounts collected $29
TECH/OPS SEVCON, INC. Exhibit 10 (e)
Resolution of The Board of Directors of Tech/Ops Sevcon, Inc. at a Meeting Held on January 22, 1997.
Upon motions duly made and seconded, it was unanimously:
Voted to terminate the corporation's Directors' Retirement Plan as of the date of this vote, with no further accrual of benefits thereunder, subject to the following terms and conditions:
(a) The following directors shall be entitled to receive an annual pension in the amounts set forth below, such amounts representing the benefits accrued as of the date of this vote based upon the directors' fees fixed as of this date, commencing upon retirement of the director and payable for life as provided in the Plan, with an annual death benefit payable for the life of the director's spouse in am amount equal to one-half of the amount payable to the director:
Annual Name Pension ---- ------- Harold C. Mayer, Jr. $6,250 Herbert Roth, Jr. 6,250 C. Vincent Vappi 6,250 Milton C. Lauenstein 5,750
(b) Paul B. Rosenberg shall be entitled to receive an annual pension in the amount of $5,000, commencing on the later of Mr. Rosenberg's retirement or attainment of age 72 and payable for life, with an annual death benefit payable for the life of Mr. Rosenberg's spouse of $2,500, such amount representing his benefits accrued as of the date of this vote increased to recognize his probable future service as a director.
(c) At his request, Marvin G. Schorr shall not be entitled to receive any benefits under the Plan.
TECH/OPS SEVCON, INC. EXHIBIT 11
Calculation of Earnings Per Share and Weighted Average Shares Outstanding
(In thousands, except for per share amounts)
A calculation of fully diluted shares outstanding for the above periods indicates an immaterial difference from the net income per share for the years shown above.
TECH/OPS SEVCON, INC. EXHIBIT 13(a)
Summary of the Market Prices of, and Dividends Paid on, the Company's Common Stock
The Common Stock of the Company is traded on the American Stock Exchange under the symbol TO. A summary of the market prices of, and dividends paid on, the Company's common stock is shown in the table below. All prices have been restated to reflect a two-for-one stock split effective August 28, 1995. At November 20, 1997, there were approximately 600 shareholders of record.
TECH/OPS SEVCON, INC. EXHIBIT 13(b)
Selected Financial Data
A summary of selected financial data for the last five years is shown in the table below:
(a) Restated to reflect two-for-one stock split effective August 28, 1995.
(b) In September 1996, the Company increased its regular quarterly dividend from $.125 per share to $.15 per share. In September 1995, the Company increased its regular quarterly dividend from $.10 per share to $.125 per share. In September 1994, the dividend was raised, on a restated basis, from $.0625 per share to $.10 per share.
TECH/OPS SEVCON, INC. EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorp- oration of our report included in this Form 10-K, into the Company's previously filed Registration Statements on Form S-8 (File No. 33-42960 and No. 333-02113.
ARTHUR ANDERSEN LLP
Boston, Massachusetts December 29, 1997