-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, ArmOAnCfeA2M02A495NWwkIT4+yihKIur+Db2MxbGw3k6h0PxQ8kDyylAUMkh+H1 YnfAchf72mHUhVGwoxxS1g== 0000002070-99-000030.txt : 19991227 0000002070-99-000030.hdr.sgml : 19991227 ACCESSION NUMBER: 0000002070-99-000030 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990928 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ACME ELECTRIC CORP CENTRAL INDEX KEY: 0000002070 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRICAL INDUSTRIAL APPARATUS [3620] IRS NUMBER: 160324980 STATE OF INCORPORATION: NY FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: SEC FILE NUMBER: 001-08277 FILM NUMBER: 99718615 BUSINESS ADDRESS: STREET 1: 400 QUAKER RD CITY: EAST AURORA STATE: NY ZIP: 14052 BUSINESS PHONE: 7166553800 MAIL ADDRESS: STREET 1: 400 QUAKER ROAD CITY: EAST AURORA STATE: NY ZIP: 14052 10-K405 1 SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-K (Mark one) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) For the fiscal year ended June 30, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) For the transition period from ________ to ________ Commission file number 1-8277 ACME ELECTRIC CORPORATION (Exact name of Registrant as specified in its charter) STATE OF NEW YORK 16-0324980 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 400 Quaker Road, East Aurora, New York 14052 (Address of principal corporate offices) (Zip Code) 716/655-3800 (Telephone Number) Securities registered pursuant to Section 12(b) of the Act: Name of each exchange Title of each class on which registered Common Stock - Par Value $1.00 per share New York 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 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] State the aggregate market value of the voting stock held by non-affiliates of the Registrant as of September 10, 1999. Common Stock, Par Value $1 Per Share, $35,211,172 Indicate the number of shares outstanding of each of the Registrant's classes of common stock as of September 10, 1999. Common Stock, Par Value $1 Per Share, 5,073,656 shares DOCUMENTS INCORPORATED BY REFERENCE Portions of the Registrant's Annual Report to Shareholders for the fiscal year ended June 30, 1999, are incorporated by reference into Parts I and II. Portions of the Registrant's definitive proxy statement for the annual meeting of shareholders to be held on October 29, 1999, are incorporated by reference into Part III. PART I ITEM 1 - BUSINESS Business - -------- The Registrant was duly organized and incorporated under the laws of the State of New York on April 26, 1946, as successor to a business founded in 1917. Its sole line of business is the design, manufacture and marketing of power conversion equipment for electronic and electrical systems. Principal markets encompass the computer, test equipment, information systems, military, aerospace and telecommunications and a variety of industrial, commercial and residential fields for applications that require conversion of electrical energy from one useable state to another. Products are distributed to customers through the Registrant's sales force, independent sales representatives and wholesale distributors. The business of the Registrant is not seasonal in nature. Competition - ----------- Competitive conditions within the power conversion industry are intense. The Registrant competes with many other companies, some of which have far greater resources than the Registrant. The principal methods of competition within the industry are price, service and product performance. To meet this competition, the Registrant attempts to maintain high standards of engineering, manufacturing and customer service. Due to the number and variety of competitors, reliable data relative to the Registrant's competitive position within the power conversion industry would be difficult to develop and is not known nor believed to exist. Customers - --------- Power conversation equipment sales encompass markets wherein the demands of any one customer may vary greatly due to changes in technology and market strategy. No customer of the Company accounted for more than 10% of sales in fiscal year 1999. One customer of the Company accounted for 17.2% and 16.2% of fiscal 1998 and 1997 sales, respectively. No customer accounted for greater than 10% of the Company's accounts receivable balance of June 30, 1999 or 1998. Backlog - ------- The backlog of orders believed to be firm totaled approximately $13,826,000 at June 30, 1999, compared with approximately $15,502,000 at June 30, 1998. The lower backlog at June 30, 1999, compared with the backlog at June 30, 1998, reflects a reduced backlog of orders in the Registrant's aerospace business, as improved production capabilities supported a return to on-time deliveries on several delinquent customer programs, thereby reducing the end of the year cumulative backlog. Backlog orders at June 30, 1999, are generally expected to be filled during the current fiscal year. Raw Materials - ------------- The Registrant purchases materials in a semi-finished state from other manufacturers and distributors. Availability of materials is considered adequate to maintain current production levels. Patents - ------- The Registrant holds several technical patents and trademarks and is a party to certain patent applications. The extent of the effect of such patents and trademarks is, however, in the opinion of management, not material at this time. Licenses - -------- The Registrant is a party to several license agreements. The only significant license, providing for the sale and manufacture of a proprietary fiber nickel cadmium battery (FNC), is an agreement with Hoppecke Batterie Systeme GmbH (formerly, Daug-Hoppecke Gesellschaft Fur Batteriesysteme mbH ("DAHO")) of Brilon, Germany. The Company recorded an impairment loss write- off as of June 30, 1994, assigning zero value to the FNC license agreement. Employees - --------- As of June 30, 1999, approximately 570 persons were employed by the Registrant. Research and Development - ------------------------ Approximately 7% of the Registrant's employees are engaged in engineering design and product development. New products are continuously designed to satisfy specific customer requirements, and the cost of such development is expensed as incurred. Since satisfaction of many customers' needs requires advancing applicable technology, applied research is an integral part of engineering-design and product-development activities. The cost of such activities during the fiscal years ended June 30, 1999, 1998 and 1997, was $3,638,000, $4,136,000 and $4,552,000, respectively. Environmental Matters - --------------------- On June 27, 1997, the Registrant settled the claim by the New York State Department of Environmental Conservation (DEC) for contribution toward the costs of remediation of a municipal waste landfill site upon payment of $725,000. In July 1999, the Registrant did receive a $350,000 settlement from its insurance carrier related to this matter. These proceeds will be included in the reported results of the first quarter of fiscal year 2000. ITEM 2 - PROPERTIES The Registrant owns one plant in Lumberton, North Carolina. The Registrant also leases two facilities, one in Cuba, New York, with a purchase option for a nominal amount. The Cuba facility is subject to three mortgages securing indebtedness, aggregating approximately $3,700,000 as of June 30, 1999, and is also subject to an additional mortgage securing a bond issued by the owner of the facility (an industrial development agency) to the County of Allegany in the outstanding amount of approximately $500,000, for which the Registrant is not personally liable, but which is being paid in installments through the application thereto of payments in lieu of taxes being made periodically by the Registrant. The second leased facility is located in Tempe, Arizona. The Registrant further leases facility space at a second location in Cuba, New York, and a warehouse in Tempe, Arizona. Square Footage Square Footage Lease Ex- Location Owned Leased piration Date Cuba, NY (New Plant) -- 91,000 April 2017 Cuba, NY (Old Plant) -- 72,000 August 1999* East Aurora, NY -- 10,000 April 2004 (Exec. Offices) Lumberton, NC 128,170 -- N/A Tempe, AZ -- 40,260 March 2005 *Registrant continues to lease this facility on a hold-over basis and believes that it can secure suitable renewal terms at market rates. ITEM 3 - LEGAL PROCEEDINGS The Registrant is involved in ordinary routine litigation incidental to its business, but none is expected to have a material impact upon the financial condition of the Registrant. ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matter was submitted during the fourth quarter of the fiscal year covered by this report to a vote of security holders through the solicitation of proxies or otherwise. PART II ITEM 5 - MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS Information relating to the market and market prices of the Registrant's common stock and the approximate number of Registrant's shareholders and its dividend history for the past two fiscal years appears on page 25 of the Registrant's Annual Report to Shareholders for the fiscal year ended June 30, 1999, submitted herewith as an exhibit and such information is incorporated by reference herein. Information relating to long-term debt for the past two fiscal years appears on page 19 of the Registrant's Annual Report to Shareholders for the fiscal year ended June 30, 1999, submitted herewith as an exhibit and such information is incorporated by reference. The Registrant suspended its quarterly cash dividend effective the third quarter of fiscal 1991. The loss in fiscal 1991 resulted in a deficit of retained earnings. As the Company continues to have a deficit of retained earnings, it does not expect to reinstate dividends in the foreseeable future. ITEM 6 - SELECTED FINANCIAL DATA A five-year summary of certain financial information relating to the finan cial condition and results of operations of the Registrant appears on page 13 of the Registrant's Annual Report to Shareholders for the fiscal year ended June 30, 1999, submitted herewith as an exhibit and such summary is incorporated by reference herein. ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management's discussion and analysis of financial condition and results of operations appears on pages 10 through 13 of the Registrant's Annual Report to Shareholders for the fiscal year ended June 30, 1999, submitted herewith as an exhibit and such management's discussion and analysis is incorporated by reference herein. ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The following financial statements of the Registrant and its subsidiaries, appearing on pages 14 through 24 of the Registrant's Annual Report to Shareholders for the fiscal year ended June 30, 1999, submitted herewith as an exhibit, are incorporated by reference herein: Statements of Operations - Years Ended June 30, 1999, 1998, 1997 Balance Sheets - June 30, 1999 and 1998 Statements of Cash Flows - Years Ended June 30, 1999, 1998, 1997 Statements of Shareholders' Equity - Years Ended June 30, 1999, 1998, 1997 Notes to Financial Statements ITEM 9 - DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURES There have been no disagreements with accountants on accounting and financial disclosure matters. PART III ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Identification of Directors - --------------------------- Information on directors of the Registrant is contained under the caption "Election of Directors," presented in the Registrant's Definitive Proxy Statement filed pursuant to Regulation 14A and used in conjunction with the Registrant's 1999 Annual Meeting of Shareholders to be held on October 29, 1999, and is incorporated by reference herein. Identification of Executive Officers - ------------------------------------ Summary of Business Experience Name, Age and Position Over the Last Five Years - ---------------------- ----------------------------------- Robert J. McKenna, 51, Chairman, Prior to assuming the position currently President and Chief held in October 1994, served as President Executive Officer and Chief Executive Officer since October 1993. John B. Drenning, Esq., 62 Partner, Phillips, Lytle, Hitchcock, Secretary Blaine,& Huber LLP since 1990. Michael A. Simon, 42 Prior to assuming the position currently Corporate Controller and held in August 1997, served as Controller Assistant Secretary since 1992. Daniel K. Corwin, 52, Prior to assuming the position currently Vice President and General held in April 1997, served as Vice Manager, Electronics Division President and Chief Financial Officer Treasurer since August 1994. Nicola T. Arena, 50 Prior to assuming the position currently Vice President and General held in February 1996, served as Director Manager, Power Distribution of Sales and Marketing for Aeroquip Cor- Products Division poration since 1991. John E. Gleason, 52, Prior to assuming the position currently Vice President and General held in April 1997, served as Acting Manager, Aerospace Division Manager of the Aerospace Division and Vice President and General Manager of the Electronics Division since August 1996. Prior thereto, served as Vice President and General Manager of the Electronics Division since May 1993. ITEM 11 - EXECUTIVE COMPENSATION The information required is incorporated by reference to "Report of the Compensation Committee of the Board of Directors," "Summary Compensation Table," "Option Grants in Last Fiscal Year," Aggregated Option Exercises in Last Fiscal Year and F/Y-End Option Values," "Total Shareholder Returns," "Employment and Change-in Control Arrangements," "1989 Stock Option Plan," "1996 Directors' Stock Option Plan," "1998 Stock Option Plan," and "Pension Plan" in the Registrant's definitive Proxy Statement for its 1999 Annual Meeting of Shareholders to be held on October 29, 1999. ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Information relating to security ownership of certain beneficial owners and management is contained under the captions "Voting Securities and Principal Holders Thereof," "Nominees For Election As Directors," and "Supplemental Requirement Information: Shares of Common Stock Beneficially Owned" in the Registrant's definitive proxy statement filed pursuant to Regulation 14A and used in conjunction with the Registrant's 1999 Annual Meeting of Shareholders to be held on October 29, 1999, and is incorporated by reference herein. ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Certain transactions have been referenced under Item 11. There are no other applicable relationships or related transactions. PART IV ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) 1. Financial Statements See the accompanying Index to Financial Statements and Financial Statement Schedules on page F-1 of this report. 2. Financial Statement Schedules See the accompanying Index to Financial Statements and Financial Statement Schedules on page F-1 of this report. 3. Exhibits Page Number or Incorporation by Reference ----------------------------- 3a Certificate of Incorporation, Exhibit (3a) to Report on as amended to date Form 10-K for fiscal year ended June 30, 1989. 3b Bylaws, as amended to date Exhibit (3b) to Report on Form 10-K for fiscal year ended June 30, 1990. 4 Rights Agreement between Exhibit 1 to Registration Acme Electric Corporation and Statement on Form 8-A filed American Stock Transfer and November 15, 1993. Trust Company dated as of November 9, 1993. 10a Acme Electric Corporation Definitive Proxy Statement 1989 Stock Option Plan* filed under Schedule 14A, September 18, 1989. 10b Acme Electric Corporation Definitive Proxy Statement 1996 Directors' Stock Option filed under Schedule 14A, Plan* September 18, 1996. 10c Acme Electric Corporation Definitive Proxy Statement 1998 Stock Option Plan* filed under Schedule 14A, September 16, 1998. 10d Employment Agreement Exhibit 10.1 to Report on effective February 1, 1999, Form 10-Q for Quarter Ended between Robert J. McKenna January 2, 1999. and Acme Electric Corporation* 10e Employment Agreement Exhibit 10.2 to Report on effective February 1, 1999, Form 10-Q for Quarter Ended between Daniel K. Corwin January 2, 1999. and Acme Electric Corporation* 10f Employment Agreement Exhibit 10.3 to Report on effective February 1, 1999, Form 10-Q for Quarter Ended between Nicola T. Arena January 2, 1999. and Acme Electric Corporation* 10g Employment Agreement Exhibit 10.4 to Report on effective February 1, 1999, Form 10-Q for Quarter Ended between John E. Gleason January 2, 1999. and Acme Electric Corporation* 10h Employment Agreement Exhibit 10.5 to Report on effective February 1, 1999, Form 10-Q for Quarter Ended between Michael A. Simon January 2, 1999. and Acme Electric Corporation* 11 Statement re. computation of Note (8) to Financial per share earnings Statements at page 21 of 1999 Annual Report to Shareholders. 13 Acme Electric Corporation 1999 Annual Report to Shareholders See Exhibit 13 attached. 23 Consent of Independent Pages F-4 through F-5 on Accountants Report on Form 10-K for fiscal year ended June 30, 1999. 27 Financial Data Schedule See Exhibit 27 attached. 99 Additional Exhibits - News Release, August 5, 1999, announcing fourth quarter and year-end results. See Exhibit 99-1 attached. News Release, August 11, 1999, announcing the opening of Mexican subsidiary. See Exhibit 99-2 attached. News Release, August 17, 1999, announcing selection as sole supplier to Powerware. See Exhibit 99-3 attached. News Release, September 2, 1999, announcing selection as primary supplier to Coca-Cola. See Exhibit 99-4 attached. News Release, September 21, 1999, announcing the Company's move See Exhibit 99-5 attached. to NASDAQ National Market. (b) Reports on Form 8-K There were no reports filed on Form 8-K during the fourth quarter ended June 30, 1999. Subsequent to the end of the fourth quarter, a report on Form 8-K was filed on September 21, 1999. *Management contract or compensatory plan or arrangement. 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. ACME ELECTRIC CORPORATION By: /s/ Date: 09/28/99 Robert J. McKenna Chairman, President and Chief Executive Officer (Principal Executive Officer) By: /s/ Date: 09/28/99 Michael A. Simon Corporate Controller and Assistant Secretary (Principal Financial Officer) SIGNATURES 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 and Title Date /s/ 09/28/99 Robert D. Batting Director /s/ 09/28/99 Robert T. Brady Director /s/ 09/28/99 Randall L. Clark Director /s/ 09/28/99 Terry M. Manon Director /s/ 09/28/99 Robert J. McKenna Director ACME ELECTRIC CORPORATION INDEX TO FINANCIAL STATEMENTS The financial statements together with the report thereon of PricewaterhouseCoopers LLP dated August 5, 1999, appearing on pages 14 through 25 of the accompanying 1999 Annual Report to Shareholders, are incorporated by reference in this Form 10-K Annual Report. With the exception of the aforementioned information and the information incorporated in Items 5, 6, 7, 8 and 14 of this Form 10-K, the 1999 Annual Report to Shareholders is not to be deemed filed as part of this report. The following financial statement schedules should be read in conjunction with the financial statements in such 1999 Annual Report to Shareholders. Financial statement schedules not included in this Form 10-K Annual Report have been omitted because they are not applicable or the required information is shown in the financial statements or notes thereto. FINANCIAL STATEMENT SCHEDULES 1999, 1998 AND 1997 Page ---- Report of independent accountants F-2 Valuation and qualifying accounts and F-3 reserves (Schedule VIII) Consents of independent accountants F-4 and F-5 Report of Independent Accountants on Financial Statement Schedule To the Board of Directors of Acme Electric Corporation Our audits of the financial statements referred to in our report dated August 5, 1999 appearing on page 25 of the 1999 Annual Report to Shareholders of Acme Electric Corporation (which report and financial statements are incorporated in this Annual Report on Form 10-K) also included an audit of the Financial Statement Schedule listed in the Index to Financial Statements and Financial Statement Schedules which appears on page F-1 of this Form 10-K. In our opinion, this Financial Statement Schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related financial statements. /s/ PRICEWATERHOUSECOOPERS LLP Buffalo, New York August 5, 1999 F-2 ACME ELECTRIC CORPORATION SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES (000's Omitted)
Additions Additions Balance At (Deductions) (Deductions) Deductions Balance Beginning Cost and Other From At End Of Year Expense Accounts Reserves Of Year Fiscal year ended June 30, 1999 Reserve deducted from assets: Allowance for doubtful accounts $ 466 $ (145) $ - $ 150 $ 171 Inventory obsolescence and impairment reserve $ 781 $ 502 $ - $ 66 $1,217 Fiscal year ended June 30, 1998 Reserve deducted from assets: Allowance for doubtful accounts $ 523 $ 70 $ - $ 127 $ 466 Inventory obsolescence and impairment reserve $ 546 $ 582 $ - $ 347 $ 781 Fiscal year ended June 30, 1997 Reserve deducted from assets: Allowance for doubtful accounts $ 389 $ 464 $ - $ 330 $ 523 Inventory obsolescence and impairment reserve $ 399 $ 147 $ - $ - - $ 546 Restructuring Cost Reserves $ 399 $ - $ - $ 399 $ -
F-3 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statements on Forms S-8 (No. 2-45985, No. 33-79488, No. 33-59521, No. 33-59523, No. 333-27243 and No. 333-87129) of Acme Electric Corporation of our report dated August 5, 1999 appearing on page 25 of the 1999 Annual Report to Shareholders which is incorporated in this Annual Report on Form 10-K. We also consent to the incorporation by reference of our report on the Financial Statement Schedule, which appears on page F-2 of this Form 10-K. /s/ PRICEWATERHOUSECOOPERS LLP Buffalo, New York September 28, 1999 F-4 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Prospectus constituting part of the Registration Statement on Form S-3 (No. 2-89587) of Acme Electric Corporation of our report dated August 5, 1999 appearing on page 25 of the 1999 Annual Report to Shareholders which is incorporated in this Annual Report on Form 10-K. We also consent to the incorporation by reference of our report on the Financial Statement Schedule, which appears on page F-2 of this Form 10-K. /s/ PRICEWATERHOUSECOOPERS LLP Buffalo, New York September 28, 1999 F-5 EX-13 2 EXHIBIT 13 PORTIONS OF THE REGISTRANT'S ANNUAL REPORT TO SHAREHOLDERS FOR THE FISCAL YEAR ENDED JUNE 30, 1999. PAGES 10-11 OF ANNUAL REPORT FINANCIAL CONDITION Capital Resources and Liquidity The Company has financed its working capital requirements and capital spending with cash from operating revenues. Total outstanding debt, including capital lease obligations, was reduced by approximately $7,342,000 in 1999. Debt reduction was achieved as a result of strong cash flows generated from improved operational performances, including margin improvements throughout the Company's businesses. Further contributing to the positive cash flows were reduced inventory positions and receivable balances, as a result of improved manufacturing processes (Demand Flow Technology) and lower working capital requirements in the Company's Electronics business. The Company's working capital was reduced 20% from the prior year-end while sales declined 12%. The Company received performance incentive payments in the amount of $915,000 during the year as a result of meeting delivery schedules on one of its Aerospace customer programs. Approximately $600,000 of these payments remain on the June 30, 1999, balance sheet as deferred revenue. Income of $620,000 was recognized within the fiscal year, associated with this performance incentive program. No further incentive payments are due from this customer, however, price negotiations have commenced for the supply of product for periods beyond the current contract schedule. The Company utilized its remaining federal tax-loss carry-overs of approximately $412,000 to reduce the current year tax return liabilities by approximately $140,000. Dollars in thousands Years ended June 30 1999 1998 1997 Working Capital $12,188 $15,242 $16,719 Average Working Capital, as a percent of sales 17.2% 17.6% 20.0% Cash provided from Operations $ 8,163 $ 7,585 $ 5,748 Current Ratio 2.2 2.3 2.3 Long-Term Debt to Equity .3 .7 1.2 Capital expenditures were $1,345,000, $1,255,000 and $2,531,000 for 1999, 1998 and 1997, respectively. Fiscal year 1997 capital expenditures included $1,200,000 of new business system costs, compared to none in 1999 and less than $125,000 in 1998. The Company anticipates that fiscal 2000 capital expenditures will approximate $3,000,000, including new and refurbished equipment to be used in its recently established Monterrey, Mexico, operation. The Company expects that operating activities in 2000 will generate the required cash to fund these capital expenditures with ample credit facility to support any additional working capital needs. The Company currently has a secured credit agreement which provides for two secured term loans, with a combined outstanding balance at June 30, 1999, of $1,845,000 with interest terms of the lower of prime plus .5% to 1.0% range, or the London Interbank Eurodollar rate plus 2.1% to 2.6% range, as determined by a debt-to-worth threshold measure. Further included is a secured line of credit allowing for revolving loans and letters of credit up to $21,000,000, with interest at the lower of prime plus .25% to .75% range, or the London Interbank Eurodollar rate plus 1.8% to 2.4% range, with an outstanding balance at June 30, 1999, of $1,500,000. The credit agreement provides for a maturity date on the line of credit of December 31, 2000, while the $1,012,000 and $833,000 term loans have principal payments due through January 2, 2000, and July 1, 2001, respectively. The credit agreement contains certain restrictive covenants, including, but not limited to, interest coverage and debt-to-worth ratios and an annual capital expenditure threshold. At June 30, 1999, the Company was in compliance with the covenants under the credit agreement. Management believes that the current financing arrangement provides adequate liquidity for the immediate future, with plans to negotiate a new credit facility within the next six months. Expectation for Year 2000 Compliance - ------------------------------------ The Company is reliant on systems which utilize time-based mechanisms for asset and information management, and management recognizes that such systems may encounter problems affecting the capability thereof due to the year 2000 (Y2K) date change. The Company also has business relationships with vendors, product purchasers and financial institutions, among others, who are reliant on such systems. It is possible that, given problems encountered by the Company or these parties, the Company could send or receive improper billings, produce products which are unaccounted for, experience production shortages or delays, encounter collection delays, or report inaccurate data, among other things. The Company organized its Year 2000 Task Group during the third quarter of fiscal 1998, with member participation from all operating units, as well as the corporate office. Assessment programs were developed and implemented at each of the locations. The assessment, which included an inventory and identification of the Company's mission critical information technology (IT) systems as well as non-IT systems (i.e. equipment microcontrollers), is complete. The most significant mission critical elements associated with the IT system area included the necessity to: (1) transition from the AIX operating system version 4.1 to 4.2 and Oracle business application and data-base software version 10.6.1 and 7.1 to the year 2000 compliant Oracle versions 10.7.1 and 7.3, respectively; and (2) receive and install third- party software upgrades used in support of certain manufacturing routines, to include inventory management areas. The Company completed the installation of its new client-server based business information system in April 1998. This system, which runs vendor-provided off-the-shelf business enterprise software (Oracle) in a client-server environment, was installed by the Company as an enhancement to the business, replacing the legacy mainframe system. This system provided the basis for a relatively inexpensive transition to the Y2K-compliant business system through vendor- provided software upgrades. Other third-party-provided customized software critical to the business operation was identified and upgraded with vendor provided year 2000 compliant modifications. The Company has completed the implementation of Y2K compliant operating systems and Oracle software upgrades. All such costs were expensed as incurred. The Company has tested its embedded systems used in the manufacture and distribution of its products for year 2000 compliance. Equipment manufacturers were contacted for verification and solutions for potential Y2K issues where mission critical equipment utilizing microcontrollers had been identified. The Company is unaware of any unresolved issues relative to this process. The Company has, and will continue to, assess the year 2000 readiness on the part of its supply base, as well as customer base. Both vendor and customer letters requesting responses and/or certifications to their year 2000 readiness were sent with high response rate received, documenting their own efforts to be Y2K compliant. The Company has also contacted, and, in certain instances, visited vendor locations in the endeavor to gain assurance that its critical suppliers are preparing for year 2000. The total costs directly associated with the Company's effort to be year 2000 ready, to date, has approximated $50,000. The Company has not yet fully developed a year 2000 contingency plan. The Company is currently reviewing the potential critical risk areas of the business and will consider the appropriate contingency actions or alternative solutions. It is anticipated that contingency plans will include the ability to do temporary manual processing of customer orders and increased safety stock purchases of identified critical parts and materials prior to 2000. While third parties (customers, suppliers and service providers) are engaged in efforts intended to address and resolve their year 2000 issues on a timely basis, it is possible that a series of failures by third parties could have a material adverse effect on the Company's results of operations in future periods. Portions of the narrative set forth in this Financial Condition and Results of Operations, which are not historical in nature, are forward- looking statements, based upon current expectations, all of which are subject to risk and uncertainties, and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. One can identify these forward-looking statements by their use of words such as "anticipates," "believes," "intends," "budgeted," and other words of similar meaning. The Company's actual performance may differ materially from that contemplated by the forward-looking statements due to a variety of factors, which include, among other things, inaccurate assumptions, the condition of the economy, the condition of the markets that the Company serves, and the success of the Company's strategic plans and contemplated capital investments. The Company does not assume the obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. PAGES 12-13 OF ANNUAL REPORT RESULTS OF OPERATIONS Acme Electric Corporation reported net income of $2,707,000, or $.53 per share, on net sales of $79,813,000 for the year ended June 30, 1999, compared with net income of $2,529,000, or $.50 per share, and $136,000, or $.03 per share on sales of $90,916,000 and $94,062,000 for 1998 and 1997, respectively. Included in the 1999 net earnings is $437,000 (net of tax) of pension income, compared to a pension expense in 1998 and 1997, of $3,000 and $37,000, respectively. Total net income for the fourth quarter 1999 was $1,021,000 on sales of $19,232,000, or net income per share of $.20, compared with the results of the prior year's quarter of $23,633,000 of sales, $1,276,000 net income, and a net income per share of $.25. Sales were lower by $4,101,000 (17%) when compared to the prior year fourth quarter, as a result of the void created by the loss of the Cisco Systems program in the Electronics business. The Company was able to minimize the overall impact on quarterly earnings ($255,000 reduction) with a prompt response, which included adjustments to the labor and overhead areas. Quarterly Unaudited Financial Information ______________________________________________________________________ Dollars in thousands ______________________________________________________________________ Fiscal Year 1999 1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr. ______________________________________________________________________ Net Sales $22,378 $18,803 $19,100 $19,532 ______________________________________________________________________ Net Income 522 402 762 1,021 ______________________________________________________________________ The Company adopted SFAS No. 131, Disclosures About Segments of an Enterprise and Related Information, which requires segment data to be measured and analyzed on a basis that is consistent with how business activities are reported internally to management. For additional information, including a description of the business segments in which the Company operates, see note 13. Annual sales decreased $11,103,000, or 12.2%, from the previous year, compared with a decrease of $3,146,000, or 3.3%, from 1997 to 1998. A decrease in sales of $9,113,000, or 32%, from 1998 sales of $28,708,000 to 1999 sales of $19,595,000, was experienced in the Company's Electronics business. Reduced sales were due to the loss of the Cisco program. Sales in the Company's Aerospace business increased slightly ($119,000 or 1%) from $11,190,000 in 1998 to $11,309,000 in 1999 due to increased customer demand for Fiber Nickel Cadmium (FNC) batteries. Sales in the Company's Power Distribution Products business were down $2,109,000, or 4%, generally reflective of the overall non-residential electrical distributors market. The Company's share in this market segment remained essentially unchanged. Future sale trends will be largely dependent upon several factors, including the Company's ability to continue to attract new original equipment manufacture (OEM) accounts within its Power Distribution Products business, as well as expand its international sales and manufacturing efforts, with a first step being its entrance into Latin America. Sales further will be affected by the degree of success achieved by its efforts in the Aerospace business to secure new programs (engineering and production), as well the extension of existing programs. Future sales can be affected by the success of the business strategies introduced in the Company's Electronics business, in an effort to rebuild its customer base. Cost of sales as a percentage of sales was 71.4% in 1999, 72.5% in 1998, and 76.2% in 1997. The gross margin percentage improved from 23.8% in 1997 to 27.5% in 1998 and to 28.6% in 1999. The margin improvement from 1998 to 1999 reflects the continued operational efficiency improvements experienced in the Company's Aerospace business, where gross margins climbed from 20.6% to 23.5%. Gross margins in the Company's Power Distribution Products business remained essentially constant at 35.7% in 1999 and 35.8% in 1998. Gross profit margins in the Company's Electronics business declined from 15.7% in 1998 to 13.8% in 1999. This occurred as a result of fewer sales over which fixed operating costs could be allocated, combined with an unusually large and significant expense accrual established for obsolete inventory (in excess of $400,000 in 1999) associated with one end-of-life customer program. The significant improvement in gross margin percent from 1997 to 1998 was primarily due to price increases, as well as significant manufacturing overhead cost reductions made in the Company's Electronics business, where the gross margin percent climbed from 10.3% in 1997 to 15.7% in 1998. Further contributing to the improved profit margin in 1998 was the increased sales volume in the Company's Aerospace business, allowing for improved efficiencies and fixed cost economies. Gross margins in this business moved from 16.1% in 1997 to 20.6% in 1998. The Power Distribution Products segment also contributed to improved margins (34.2% in 1997 to 35.8% in 1998), as manufacturing process flows were realigned for efficiency and a slightly more profitable mix of products were sold in the period. On a combined basis, research and engineering efforts were relatively constant in the three-year comparison, as expenses as a percent of sales were 4.6% in 1999, compared to 4.5% in 1998 and 4.8% in 1997. Actual 1999 expenditures were reduced approximately $500,000 from 1998 levels, and 1998 expenditures were lower by $400,000 from 1997, as a result of resizing of the Electronics business, with focused engineering efforts correlated to the business strategies employed. Engineering costs in the Company's Aerospace and Power Distribution Products businesses were relatively constant in the 1999 versus 1998, and 1998 versus 1997 comparisons, both as a percent of sales and in absolute dollars spent. Selling and administrative expenses as a percentage of sales were 17.4% in 1999, compared with 16.8% in 1998 and 16.9% in 1997. Included within the 1999 and 1998 selling and administrative expense is offsetting income of $620,000 and $566,000, respectively, related to performance incentives earned in the Company's Aerospace business, based upon meeting specified customer delivery schedules. As a percent of sales, 1999 versus 1998 selling and administrative expense increased, however, actual selling and administrative expenses incurred (exclusive of the performance incentive offset) declined $1,313,000. The most significant portion of this reduction is attributable to lower selling and administrative costs in the Company's Power Distribution Products business (reduction of $960,000), where lower shipping and commission costs were experienced due to a sales mix that included more non-commissioned OEM direct sales, combined with overall fewer sales in total. The business also incurred lower costs associated with advertising literature, as well as experiencing a favorable effect from bad debt recoveries. The Company realized additional cost savings of nearly $300,000 related to its management information systems area during 1999, as a result of the completion of the system conversion (mainframe to client/server) in the prior year, thus avoiding the mainframe system costs that were experienced in 1998. Selling and administrative expenses in the Company's Aerospace and Electronics operations were similar in amounts when comparing 1999 with 1998. Included in the 1997 expenses are one-time charges of $725,000 and $237,000 associated with the municipal landfill settlement in New York State and the MD-90 contract modification charge, respectively. With the exclusion of these income and expense items from the comparison, 1998 selling and administrative costs increased approximately $950,000. The 1998 increase included additional depreciation expense of approximately $400,000 associated with the new business system, accrued incentives in excess of 1997 amounts of $200,000, higher shipping costs in the Power Distribution Products business of $400,000, increased commissions and royalties of $100,000 in its Aerospace business, all partly offset by the Company's reduced corporate investment in international business development. Interest expense decreased $775,000 from 1998 to 1999 and $136,000 from 1997 to 1998. The lower interest expense reflects the significantly lower average outstanding debt balances maintained during 1999 and 1998 as a result of the strong operating cash flows and the lower average working capital requirements. Debt has been reduced $18,355,000 since June 30, 1996. The Company's long-term debt originated from financing the Aerospace business during its first ten years of operation. Effective tax rates for the most recent three years were 39.5%, 38.2% and 44.6%, respectively. The fluctuations in the effective rates are generally reflective of the year-to-year variations in the permanent book-to-tax differences as a percent of pre-tax earnings and the Company's estimations as to the probable realizations of certain deferred state tax assets and minimum tax effects thereon. The Financial Accounting Standards Board (FASB) has issued FAS 133 to be effective for all fiscal quarters of fiscal years beginning after June 15, 1999. FAS 133 requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. The accounting for changes in the fair value of a derivative will depend on the intended use of the derivative and the resulting designation. The Company is currently evaluating the impact of FAS 133. The American Institute of Certified Public Accountants (AICPA) has issued Statement of Position (SOP) 98-5, Reporting on the Costs of Start-up Activities, to be effective for periods beginning after December 15, 1998. SOP 98-5 provides guidance on accounting for costs incurred to open new facilities, conduct business in new territories, or otherwise commence some new operations. The application of SOP 98-5 is not expected to have a material effect on the Company's consolidated financial statements. PAGE 13 OF ANNUAL REPORT FIVE-YEAR COMPARISON OF SELECTED FINANCIAL DATA Dollars in thousands (except per share and employee data) Years ended June 30 1999 1998 1997 1996 1995 ---- ---- ---- ---- ---- Net sales $79,813 $90,916 $94,062 $96,551 $91,127 Net income (loss) 2,707 2,529 136 (280) 992 Net income (loss) per common share: (Basic and Diluted) .53 .50 .03 (.06) .20 AT END OF YEAR Total assets $41,388 $45,495 $50,144 $54,180 $56,178 Working capital 12,188 15,242 16,719 21,095 22,599 Average working capital, as a percent of sales 17.2% 17.6% 20.0% 22.6% 23.0% Ratio of current assets to current liabilities 2.2 2.3 2.3 2.8 2.5 Investment in property, plant and equipment-- net 14,252 15,115 16,039 16,469 14,657 Long-term debt 5,987 12,833 19,198 24,394 24,419 Total shareholders' equity 21,876 19,075 16,488 15,684 15,849 Equity per common share 4.32 3.78 3.27 3.18 3.22 Weighted average number of shares outstanding used to compute income (loss) per common share: Basic 5,060 5,046 4,960 4,927 4,881 Diluted 5,091 5,060 4,974 4,927 4,928 Average number of hourly employees 400 434 473 534 505 Average number of salaried employees 198 211 229 248 251 Sales per full-time employee equivalent (000's) $133 $141 $134 $123 $120 PAGE 14 OF ANNUAL REPORT STATEMENT OF OPERATIONS Dollars in thousands (except per share amounts) Years ended June 30 1999 1998 1997 Net Sales $79,813 $90,916 $94,062 Costs and Expenses Cost of sales 57,007 65,871 71,681 Research and engineering expenses 3,638 4,136 4,552 Selling and administrative expenses 13,896 15,263 15,896 Interest expense 797 1,552 1,688 Total Costs and Expenses 75,338 86,822 93,817 Income before income taxes 4,475 4,094 245 Income tax expense 1,768 1,565 109 Net Income 2,707 2,529 $ 136 Net Income per Common Share: (Basic and Diluted) $ .53 $ .50 $ .03 The accompanying notes are an integral part of these financial statements. PAGE 15 OF ANNUAL REPORT BALANCE SHEET Dollars in thousands JUNE 30, 1999 JUNE 30, 1998 ASSETS Current Assets Cash $ 203 $ 629 Accounts receivable, net 11,304 12,552 Inventories, net 9,270 11,961 Deferred income taxes 1,311 1,269 Other current assets 652 695 Total Current Assets 22,740 27,106 Property, plant and equipment, at cost: Land and buildings 10,775 10,406 Machinery and equipment 28,253 27,388 Total property, plant and equipment 39,028 37,794 Less accumulated depreciation and amortization (24,776) (22,679) Property, plant and equipment, net 14,252 15,115 Other assets 4,396 3,274 TOTAL ASSETS $41,388 $45,495 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts payable $3,766 $ 4,734 Accrued compensation and other 4,528 4,376 Current portion of long-term debt 2,258 2,754 Total Current Liabilities 10,552 11,864 Long-term debt 5,987 12,833 Deferred income taxes 1,375 223 Other long-term liabilities 1,598 1,500 TOTAL LIABILITIES 19,512 26,420 SHAREHOLDERS' EQUITY Common Stock, $1 par value authorized 8,000,000 shares, issued 5,071,658 and 5,051,444 shares 5,072 5,051 Capital in excess of par value 19,134 19,061 Accumulated deficit (2,322) (5,029) Total capital and accumulated deficit 21,884 19,083 Less treasury stock, at cost: 699 shares (8) (8) Total shareholders' equity 21,876 19,075 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $41,388 $45,495 The accompanying notes are an integral part of these financial statements. PAGE 16 OF ANNUAL REPORT STATEMENT OF CASH FLOWS Dollars in thousands Years ended June 30 1999 1998 1997 Cash flows from operating activities: Net income $2,707 $2,529 $136 Adjustments to reconcile net income to net cash flows from operating activities: Depreciation and amortization 2,169 2,158 1,979 Loss on sale/retirement of fixed assets 35 5 58 Deferred income taxes 1,110 1,332 93 Change in assets and liabilities: Accounts receivable, net 1,248 1,467 1,426 Inventories, net 2,691 1,579 1,468 Other assets (1,079) (422) 189 Accounts payable (968) (1,761) 450 Accrued compensation and other 250 698 (51) Net cash provided from operating activities 8,163 7,585 5,748 Cash flows from investing activities: Additions to property, plant and equipment (1,345) (1,255) (2,531) Proceeds from dispositions of fixed assets 4 16 525 Net cash used in investing activities (1,341) (1,239) (2,006) Cash flows from financing activities: Increase of long-term debt 19,000 10,960 9,438 Reduction of long-term debt (26,342) (17,133) (14,278) Proceeds from employee stock purchase and stock option plans 94 58 124 Sale of treasury stock -- -- 544 Net cash used in financing activities (7,248) (6,115) (4,172) Net (decrease) increase in cash (426) 231 (430) Cash at beginning of year 629 398 828 Cash at end of year $203 $629 $398 Supplemental disclosures of cash flow information: Cash paid (received) during the year for: Interest $780 $1,586 $1,943 Income Taxes $801 $(220) $(14) The accompanying notes are an integral part of these financial statements. PAGE 17 OF ANNUAL REPORT STATEMENT OF SHAREHOLDERS' EQUITY Dollars in thousands Capital Common in stock excess Treasury $1 par of par Accumulated stock, value value deficit at cost Balance June 30, 1996 $ 5,020 $18,910 $ (7,352) $ 894 Stock options exercised 7 23 Sale of treasury shares (342) (886) Sales of authorized shares: Employee Stock Purchase Plan 3 15 Employee Savings Plan (401[K]) 10 66 Net income 136 Balance June 30, 1997 $ 5,040 $19,014 $ (7,558) $ 8 Sales of authorized shares: Employee Stock Purchase Plan 4 17 Employee Savings Plan (401[K]) 7 30 Net income 2,529 Balance June 30, 1998 $ 5,051 $19,061 $(5,029) $ 8 Stock options exercised 7 28 Sales of authorized shares: Employee Stock Purchase Plan 4 13 Employee Savings Plan (401[K]) 10 32 Net income 2,707 Balance June 30, 1999 $ 5,072 $19,134 $(2,322) $ 8 None of the Company's authorized 500,000 shares of $10 par value preference stock has been issued. The accompany notes are an integral part of these financial statement. PAGES 18-24 OF ANNUAL REPORT NOTES TO FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES AND PRACTICES: Business Acme Electric Corporation designs, manufactures and markets power conversion equipment for electronic and electrical systems. Principal markets encompass computers, test equipment, information systems, military, aerospace, telecommunications, and a variety of industrial, commercial and residential applications requiring conversion of electrical energy from one useable state to another. 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 the financial statements and the reported amounts of revenues and expenses during the reporting period. Certain prior year balances have been reclassified to conform with the current year presentation. The major areas in which the Company utilizes estimates include deferred tax assets, reserves for insurance and legal claims, environmental liabilities, customer receivable and inventory obsolescence reserves, product warranty reserves, revenue recognition on long-term contracts, and the net realizable value of certain assets. The amounts contained within these financial statements represent management's best estimate of expected outcomes based on available information. However, the Company realizes that certain events could occur or fail to occur which would impact the estimates by a material amount in the future. Inventories - ----------- Inventories are costed at the lower of cost or market and determined on a FIFO (first in, first out) basis. Property and Depreciation - ------------------------- Depreciation of property, plant and equipment is computed on the straight- line and the sum-of-the-year's-digits methods over the estimated service lives of the assets. At the time of retirement or other disposition of properties, the cost and accumulated depreciation are removed from the accounts and any gains or losses are reflected in income. Maintenance and repairs are charged to expense as incurred; renewals and betterments are capitalized. The range of lives used as a basis for calculating depreciation is as follows: Years Buildings 20-45 Machinery and equipment 5-12 Furniture and fixtures 8-10 Computers and software 3-5 Revenue Recognition - ------------------- The Company's operations generally recognize revenue for the sale of their respective products in the period of delivery. The Company does, however, utilize the percentage-of-completion method for long-term contracts in its aerospace business. Revenues or long-term contracts (primarily engineering or development contracts) are recognized on the percentage-of-completion basis, measured by the percentage of material, labor and overhead costs incurred to date to total estimated material, labor and overhead costs for each long-term contract. Income Taxes - ------------ The Company follows the asset and liability approach in accounting for income taxes. The asset and liability approach requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the financial carrying values and the tax bases of the related assets and liabilities and operating loss and tax credit carry forwards. Earnings Per Share - ------------------ Basic earnings per share (EPS) is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that would occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company. 2. ACCOUNTS RECEIVABLE: Dollars in thousands 1999 1998 Billed $11,475 $12,921 Unbilled -- 97 Subtotal $11,475 $13,018 Less allowance for doubtful accounts (171) (466) Accounts receivable, net $11,304 $12,552 Unbilled receivables are comprised of revenue amounts on long-term contracts which have been earned, but not yet billed. 3. INVENTORIES: Dollars in thousands 1999 1998 Raw Material $5,029 $ 5,875 Work in Process 1,759 1,685 Finished Goods 2,482 4,401 Total Inventories $9,270 $11,961 Inventories are reported net of the reserves for obsolescence of $1,217,000 and $781,000 in 1999 and 1998, respectively. 4. LONG-TERM DEBT: Dollars in thousands 1999 1998 Secured revolving loan $1,500 $6,088 Secured term loan with quarterly principal installments of $337,360 each, and interest paid monthly at the lower of prime plus .5% - 1.0% range, or the Eurodollar (London Interbank Eurodollar) rate plus 2.1% - 2.6% range, as determined by debt-to-worth ratio thresholds, through January 2, 2000. 1,012 2,362 Secured term loan with monthly principal installments of $33,333 each, and interest paid monthly at the lower of prime plus .5% - 1.0% range, or the Eurodollar (LIBOR) rate plus 2.1% - 2.6% range, as determined by debt-to- worth ratio thresholds, through July 1, 2001. 833 1,233 Secured loan on the Cuba facility payable over 20 years with monthly payments for the first four years of interest only of $6,666, with monthly payments of $14,120, consisting of principal and interest at 4%, commencing September 1, 1997, and continuing over the remaining 16 years. 1,822 1,917 Secured loan on the Cuba facility payable, with interest only, at 2% through September 30, 1998, 36 monthly principal and interest payments of $10,146 at 4%, commencing October 1, 1998, and 168 monthly principal and interest payments of $12,193 at 7% due through September 2015. 1,448 1,500 Capital lease secured by the business information system equipment and a $300,000 letter of credit, payable in monthly installments of $42,662, consisting of principal and interest of 10.09%, due through December 2001. 673 1,094 Capital lease obligation secured by related building, machinery and equipment at the Cuba facility, payable in quarterly principal installments of $5,208, with interest paid monthly on the unpaid balance at the rate of prime plus 1.5% due through April 1, 2017. 385 406 Capital lease secured by the business information system equipment with monthly installments of $20,546, consisting of principal and interest at 9.85%, due through November 1999. 81 307 Other debt 491 680 Total debt 8,245 15,587 Current portion (2,258) (2,754) Long-term portion $5,987 $12,833 The Company has a credit agreement with a banking institution, which provides for borrowings and letters of credit up to a maximum of $22,845,000. This credit agreement is comprised of two secured term loans in the amount of $1,012,000 and $833,000 and a $21,000,000 secured revolving loan. The revolving loan carries an interest rate equal to the lower of prime plus .25% to .75% range, or the London Interbank Eurodollar rate plus 1.8% to 2.4% range, determined by a debt- to-worth ratio threshold, with a maturity date of December 31, 2000. Outstanding borrowings against the revolving credit facility are limited by formula to specified amounts of accounts receivable and inventory, reduced by outstanding term debt. The Company pays a maximum annual commitment fee of 1/5 of 1% per annum on the unused portion. Under the terms of the credit agreement, the Company is required to meet certain restrictive covenants with respect to interest coverage and debt-to-worth ratios. The covenants further limit the Company's annual capital expenditure to a maximum of $2,500,000. At June 30, 1999, the Company was in compliance with the covenants under the credit agreement. During the next five years, long-term debt matures as follows: 2000 - $2,258,000; 2001 - $857,000; 2002 - $264,000; 2003 - $223,000; and 2004 - - $231,000. These amounts do not include any maturities relating to the revolving loan. 5. STOCK OPTION PLANS: Upon approval by the Company's shareholders at their Annual Shareholder Meeting on October 30, 1998, the 1998 Stock Option Plan became effective retroactive to August 28, 1998. Options are granted at the fair market value on the date of grant and become exercisable in whole, or in such installments, and at such times as may be determined by the Board of Directors. A total of 500,000 shares are available for grant under the Plan. The 1996 Directors' Stock Option Plan was adopted on April 29, 1996, by the Company's Board of Directors and approved by the Company's shareholders on October 31, 1996. Options are granted quarterly to each eligible director in lieu of Director Fees and are exercisable six months after the date of grant. The option price and number of shares optioned are determined by formula to replace the value of cash directors' fees otherwise due for the preceding quarter. A total of 50,000 shares are available for grant under the Plan. Options were granted under the 1989 Stock Option Plan at the fair market value on the day preceding the date of the grant and are exercisable in varying amounts through 2007, with vesting at 25% a year from date of grant. Granting of stock options under the 1989 Plan ceased in October 1998. Options were granted under the 1981 Incentive Stock Option Plan at the fair market value on the day preceding the date of the grant. The 1981 Plan expired in October 1992, and all outstanding options granted under the Plan expired in October 1998.
________________________________________________________________________________ ________________ Weighted Weighted 1996 Weighted Weighted 1981 Average 1989 Average Directors' Average 1998 Average Plan Exercise Plan Exercise Plan Exercise Plan Exercise Shares Price Shares Price Shares Price Shares Price ________________________________________________________________________________ ________________ Options outstanding at June 30, 1996 16,547 $6.46 91,500 $8.41 -- $ -- -- $ -- Options granted -- -- -- -- 5,426 1.97 -- -- Options exercised -- -- (6,500) 4.56 -- -- -- -- Options canceled (5,512) 5.72 (14,000) 11.25 -- -- -- -- ________________________________________________________________________________ ________________ Options outstanding at June 30, 1997 11,035 6.83 71,000 8.20 5,426 1.97 -- -- Options granted -- -- 45,000 6.34 11,907 1.80 -- -- Options exercised -- -- (200) 4.88 -- -- -- -- Options canceled (2,300) 7.00 (8,000) 8.06 -- -- -- -- ________________________________________________________________________________ ________________ Options outstanding at June 30, 1998 8,735 6.79 107,800 7.44 17,333 1.85 -- -- Options granted -- -- -- -- 13,537 1.42 105,000 4.00 Options exercised -- -- -- -- (7,323) 1.61 -- -- Options canceled (8,735) 6.79 (15,000) 6.21 -- -- (4,000) 4.00 ________________________________________________________________________________ ________________ Options outstanding at June 30, 1999 -- -- 92,800 7.64 23,547 1.68 101,000 4.00 ________________________________________________________________________________ ________________ Options exercisable at June 30, 1999 -- $ -- 55,050 $7.83 17,183 $1.81 50,500 $4.00 ________________________________________________________________________________ ________________ Exercise prices per share $4.88-$11.25 $1.28-$2.11 $4.00 Shares available for options at June 30, 1999 -- -- 19,130 399,000 ________________________________________________________________________________ ________________
A Summary of Stock Options at June 30, 1999, follows: _______________________________________________________________________ Options Outstanding Options Exercisable Range of Weighted Average Weighted Average Exercise Life Exercise Exercise Price($) Shares (in years) Price Shares Price _______________________________________________________________________ $1.28-2.11 23,547 8.7 $1.68 17,183 $1.81 4.00 101,000 9.2 4.00 50,500 4.00 4.88 21,800 1.8 4.88 21,800 4.88 6.34 40,000 8.2 6.34 10,000 6.34 11.25 31,000 6.2 11.25 23,250 11.25 _______________________________________________________________________ The Company applies Accounting Principles Board Opinion No. 25 "Accounting for Stock Issued to Employees," and related interpretations in accounting for the stock option plans. Accordingly, no compensation expense was recognized in 1999, 1998, or 1997 for stock option awards made from either the 1998 or the 1989 Stock Option Plans, since the exercise price of the stock options granted under the Stock Option Plan was not less than the fair market value of the Common Stock at date of grant. Compensation expense of $45,000, $50,000, and $25,000 was recognized in 1999, 1998, and 1997, respectively, for stock awards under the 1996 Directors' Stock Option Plan. Had compensation expense for stock option awards granted from the 1998 and 1989 Plans in 1999, 1998, and 1997 been determined consistent with SFAS No. 123, net income and earnings per share would be reduced to the pro forma amounts indicated below: Dollars in thousands (except per share amounts) Years ended June 30 1999 1998 1997 Net income As reported $2,707 $2,529 $136 Pro forma 2,579 2,420 66 Net income per common share As reported $.53 $.50 $.03 Pro forma .51 .48 .01 The Company used the Black Scholes pricing model to estimate the grant date present value of stock options granted in 1999, 1998, and 1997. The estimated value per option averaged approximately $1.64, $2.64, and $3.80 for options granted in 1999, 1998, and 1997, respectively. The values were calculated using the following assumptions: (i) an option term of 5.5 years (representing the estimated period between grant date and exercise date based on historical data); (ii) a risk-free interest rate approximating 4.86%, 5.99%, and 6.48%, in 1999, 1998, and 1997, respectively (representing the yield on a U.S. Treasury Security with remaining term equal to the expected option term); (iii) expected volatility of 53% for 1999, 52% for 1998 and 58% for 1997; (iv) no future dividends paid; and (v) a 30% forfeiture rate used to reflect the estimate of the probability of forfeiture prior to vesting. The pro forma effects presented above are in accordance with the requirements of SFAS No. 123, however, such effects are not representative of the effects to be reported in future years due to the fact that options vest over several years and additional awards generally are made each year. 6. LEASES: The Company leases certain manufacturing facilities and equipment, described in Note 4, under lease agreements which have been capitalized, and various other equipment under operating leases. Under the terms of the capital leases, the Company has included $3,254,000 and $3,333,000 in the cost of property, plant and equipment June 30, 1999, and June 30, 1998, respectively. Accumulated depreciation of such assets was $1,280,000 at June 30, 1999, and $1,051,000 at June 30, 1998. Total rental expense under operating leases, which includes the headquarters facility, was $850,000, $940,000 and $829,000 in 1999, 1998 and 1997, respectively. Minimum future rental commitments under non-cancelable operating leases are approximately $781,000 in 2000, $502,000 in 2001, $449,000 in 2002, $414,000 in 2003, and $344,000 in 2004. 7. INCOME TAXES: The provision for income taxes includes the following: Years Ended June 30 Dollars in thousands 1999 1998 1997 Current Tax Provision Federal $556 $216 $-- State 102 17 16 Deferred Tax Provision Federal 952 1,073 130 State 158 259 (37) Total Provision $1,768 $1,565 $109 The provision for income taxes differs from the federal statutory rate of 34% due to the following: 1999 1998 1997 Statutory rate 34.0% 34.0% 34.0% Foreign losses not tax effected -- -- 5.8% State taxes, net of federal benefit 3.8% 4.5% (5.6%) Other 1.7% (.3%) 10.4% Effective tax rate 39.5% 38.2% 44.6% At June 30, the deferred tax assets (liabilities) were comprised of the following: Dollars in thousands 1999 1998 1997 Deferred tax assets: Accounts receivable $62 $264 $206 Inventory 769 560 446 Accrued expenses 723 667 696 Restructuring and impairment charges 152 314 463 Supplemental Executive Retirement 444 427 415 Other 89 51 201 Loss and credit carry forwards 191 742 1,680 2,430 3,025 4,107 Deferred tax liabilities: Pensions (1,542) (1,160) (1,023) State taxes (65) (119) (207) Property, plant and equipment (887) (700) (250) (2,494) (1,979) (1,480) Net deferred tax asset (liability) $(64) $1,046 $2,627 The Company has certain state loss carry forwards available to offset future taxable income. Portions of the state loss carry forwards, if not used, will begin to expire in 2001. 8. EARNINGS PER SHARE The computation of basic earnings per share is reconciled with diluted earnings per share as follows. Dollars and shares in thousands, except per share amounts 1999 1998 1997 Income available to common shareholders $2,707 $2,529 $ 136 Basic earnings per share Weighted average shares outstanding 5,060 5,046 4,960 Basic earnings per share $ .53 $ .50 $ .03 Diluted earnings per share Weighted average shares outstanding 5,060 5,046 4,960 Dilutive effect of: Stock options 31 14 14 _____________________________ Adjusted weighted average shares outstanding 5,091 5,060 4,974 Diluted earnings per share $ .53 $ .50 $ .03 _____________________________ 9. BENEFIT PLANS: Net periodic pension expense for the three years ended June 30, 1999, included the following components: ______________________________________________________________________ Pension Benefits Other Benefits Dollars in thousands 1999 1998 1997 1999 1998 1997 Service cost - Benefits earned during the period $ 544 $ 551 $ 589 $ 59 $ 45 $ 47 Interest cost on projected benefit obligation 1,519 1,482 1,442 138 122 126 Expected return on assets (2,777) (2,282)(2,203) -- -- -- Amortization of transition obligation (asset) (135) (160) (160) 97 97 97 Actuarial (gain)loss (505) (153) (172) -- -- -- Amortization of prior service cost 313 300 299 24 3 2 Net periodic pension (income) expense $(1,041) $ (262)$ (205) $318 $267 $272 The Company maintains two non-contributory defined benefit pension plans covering substantially all employees. The formula covering salaried employees provides pension benefits based upon the employee's individual yearly compensation. Formulas covering hourly employees provide benefits of stated amounts for each year of credited service. It is the Company's policy to fund for each qualified plan at least an amount necessary to satisfy the minimum requirements of the Employee Retirement Income Security Act. The amount to be funded is subject to annual review by management and its consulting actuary. In recent years, funding contributions have been restricted due to application of Internal Revenue Code full-funding limitations to one or more of the plans. The Company also maintains a non-qualified Supplemental Executive Retirement Plan (SERP) and a non-qualified post-retirement benefits plan for certain executive officers of the Company. The SERP provides benefits based upon an executive's compensation in the last year of service and is reduced by benefits received from the salaried plan. The nonqualified benefits plan provides post retirement health care. Six participants of this plan are retired and receiving payments under the plan. Approximately 1% of the plans' assets are invested in cash and equivalents, 67% are invested in equities, and the remaining 32% are invested in fixed-income securities and annuities. Data relating to the funding position of the plans were as follows: Change in PBO and ABO: Change in the actuarial Projected Benefit Obligation (PBO) for Pension and SERP Benefits and Accumulated Benefit Obligation (ABO) for Other Post-Retirement Benefits. ______________________________________________________________________ Pension Benefits Other Benefits Dollars in Thousands 1999 1998 1999 1998 PBO/ABO at July 1 $22,467 $21,933 $1,804 $1,862 Service cost 544 551 60 45 Interest cost 1,519 1,482 138 122 Benefits paid (1,652) (1,427) (221) (217) Plan amendments 193 -- 308 -- Changes in assumptions 1,229 -- 155 -- Actuarial (gain) loss (53) (72) (29) (8) ______________________________________________________________________ PBO/ABO at June 30 $24,247 $22,467 $2,215 $1,804 ______________________________________________________________________ Change in Plan Assets: ______________________________________________________________________ Pension Benefits Other Benefits Dollars in Thousands 1999 1998 1999 1998 Fair value of plan assets at July 1 $33,393 $27,512 $ -- $ -- Actual return on plan assets 2,152 7,246 -- -- Actual distributions (1,652) (1,427) (218) (217) Actual contributions 56 62 218 217 ______________________________________________________________________ Fair value of plan assets at June 30 $33,949 $33,393 $ - $ - ______________________________________________________________________ Reconciliation of Funded Status: ______________________________________________________________________ Pension Benefits Other Benefits Dollars in Thousands 1999 1998 1999 1998 Funded status at June 30 $9,701 $10,926 $(2,480) $(2,146) Unrecognized transition obligation (asset) (256) (390) 416 513 Unrecognized prior service cost 2,389 2,509 324 40 Unrecognized net (gain) loss (7,848)(10,156) 184 60 Changes in minimim liability -- -- 53 77 ______________________________________________________________________ Prepaid (Accrued) pension cost $3,986 $ 2,889 $(1,503) $(1,456) ______________________________________________________________________ The Company has recorded an intangible asset related to the SERP Plan of $212,328 and $265,167 at June 30, 1999 and 1998, respectively. No additional minimum liability was recognized as a separate component of accumulated other comprehensive income at June 30, 1999 and 1998. The assumed rates used in the actuarial computations were: ______________________________________________________________________ Pension Benefits Other Benefits 1999 1998 1999 1998 Discount rate 6.5% 7.0% 6.5% 7.0% Average compensation growth 4.5% 4.5% 4.5% 4.5% Expected return on assets 8.5% 8.5% N/A N/A ______________________________________________________________________ For measurement purposes, a 5.0% annual trend rate of increase in the cost of covered health care benefits was assumed, with claim costs to increase from .5% to 6.0% per annum, based on age. The rate is assumed to remain the same over later years. A one percentage point change in assumed health care cost trend rates would have the following effects: ______________________________________________________________________ One Percent Change Dollars in Thousands +1% -1% Increase (decrease) in: Service and interest cost $ 4 $(3) Accumulated post-retirement benefit obligation $48 $(42) ______________________________________________________________________ The Company further maintains two 401(k) defined contribution plans, for which it bears the costs of operating, but makes no direct or matching contributions. Eligible employees of the Company may contribute up to 12% of qualified compensation, subject to certain revenue code thresholds. Employees' accounts are at all times fully vested and nonforfeitable. The Company, through its Employee Stock Purchase Plan, provides to employees with one or more years of service the opportunity to purchase stock of the Company at 90% of its fair market value, limited to a maximum of 465 shares in any calendar year. During fiscal year 1999, the Company adopted the provisions of FASB Statement No. 132, "Employers' Disclosures about Pensions and Other Post-retirement Benefits." This statement specified changes in the disclosure requirements related to pension and other post-retirement benefits. 10. MAJOR CUSTOMERS: Power conversion equipment sales encompass markets wherein the demands of any one customer may vary greatly due to changes in technology and market strategy. No customer of the Company accounted for more than 10% of sales in fiscal year 1999. One customer of the Company accounted for 17.2% and 16.2% of fiscal 1998 and 1997 sales, respectively. No customer accounted for greater than 10% of the Company's accounts receivable balance at June 30, 1999 or 1998. 11. SHAREHOLDERS' RIGHTS PLAN: The Company's Board of Directors has adopted a shareholders' rights plan (the "Rights Plan") and declared a dividend of one Right for each two shares of the Company's Common Stock outstanding. Each Right entitles the registered holder to purchase one share of Common Stock at a purchase price of $50.00 per share. In the event that, at any time following distribution of the Rights, (i) the Company is the surviving corporation in a merger with a third party and its Common Stock is not changed or exchanged, (ii) a Person becomes the beneficial owner of more than 20% of the then outstanding shares of Common Stock ("Acquiring Person"), (iii) an Acquiring Person engages in one or more "self-dealing" transactions as set forth in the Rights Agreement between the Company and its transfer agent, or (iv) during such time as there is an Acquiring Person, an event occurs which results in such Acquiring Person's ownership interest being increased by more than 1% (e.g., a reverse stock split), each holder of the Rights, other than the Acquiring Person, will thereafter have the right to receive, upon exercise, Common Stock (or, in certain circumstances, cash, property or other securities of the Company) having a value equal to two times the exercise price of the Rights. 12. COMMITMENTS AND CONTINGENCIES In the normal course of business, certain contingent liabilities are outstanding which are not reflected in the financial statements. The Company does not expect such contingencies to have a material adverse effect on the Company's financial position or results of operations in any future reporting period. The Company was subject to liability for the cost of site investigation and remediation of a municipal landfill. This matter was settled on June 27, 1997, upon payment by the Company of $725,000 to the New York State Department of Environmental Conservation. In July 1999, the Company received a $350,000 settlement from its insurance carrier related to this matter. These proceeds will be included in the reported results of the first quarter of fiscal year 2000. 13. SEGMENT REPORTING DISCLOSURES The Company has adopted FASB Statement No. 131, "Disclosures about Segments of an Enterprise and Related Information." This statement revised the manner in which the Company reports information concerning its operating segments. The Company operates in three business segments: Aerospace, Electronics, and Power Distribution Products. The Company's reportable segments are strategic business units that offer different products and services to different markets. The segments are managed separately, based on the fundamental differences of their operations. Each business segment has a separate manufacturing facility. Operations in the Aerospace segment provide design, manufacturing, and support services to the military and commercial aerospace market. Electronic power systems include battery chargers, power supplies, and battery backup systems for a variety of commercial and military aircraft applications, as well as certain ground-based military applications. The Electronics segment is focused on the electronic systems integration market and products for the emerging cable industry. The Power Distribution Products segment provides power conditioning solutions to industrial customers, delivered primarily through electrical distributors and related distribution channels. The core products are industrial transformers and related power conditioning products. Typical customers in all segments are well known companies in the aerospace, electronics, and power distribution business. Total net sales by segment consist entirely of sales to unaffiliated customers. Operating profit does not include the following items: general corporate income and expense, investment income, interest expense, or income taxes. Identifiable assets by segment consist of those assets that are, or will be, used in the segmental operations. Corporate assets consist principally of cash, business enterprise system, deferred taxes, and other assets. Information by industry segment is as follows: _______________________________________________________________________ Dollars in Thousands 1999 1998 1997 _______________________________________________________________________ Net Sales Aerospace $11,309 $11,190 $ 8,645 Electronics 19,595 28,708 34,439 Power Distribution Products 48,909 51,018 50,978 _______________________________________________________________________ Combined $79,813 $90,916 $ 94,062 _______________________________________________________________________ Operating Income(Loss) Aerospace $ 1,036 $ 295 $(1,157) Electronics (963) 479 (994) Power Distribution Products 9,061 9,010 8,842 _______________________________________________________________________ Combined 9,134 9,784 6,691 General Corporate Expense (3,862) (4,138) (4,758) Interest Expense (797) (1,552) (1,688) _______________________________________________________________________ Earnings Before Income Taxes $ 4,475 $ 4,094 $ 245 _______________________________________________________________________ Identifiable Assets Aerospace $ 4,704 $ 5,218 $ 6,625 Electronics 15,071 16,831 18,111 Power Distribution Products 15,935 17,145 17,414 General Corporate 5,678 $6,301 7,994 _______________________________________________________________________ Combined $41,388 $45,495 $50,144 _______________________________________________________________________ Depreciation and Amortization Aerospace $ 364 $ 377 $ 394 Electronics 841 881 1,001 Power Distribution Products 455 421 444 General Corporate 509 479 140 _______________________________________________________________________ Combined $2,169 $2,158 $1,979 _______________________________________________________________________ Capital Expenditures Aerospace $ 263 $ 341 $ 222 Electronics 428 516 505 Power Distribution Products 516 266 404 General Corporate 138 132 1,400 _______________________________________________________________________ Combined $1,345 $1,255 $2,531 _______________________________________________________________________ PAGE 25 OF ANNUAL REPORT REPORT OF INDEPENDENT ACCOUNTANTS To The Board of Directors and Shareholders of Acme Electric Corporation: In our opinion, the accompanying balance sheet and the related statements of operations, shareholders' equity and of cash flows present fairly, in all material respects, the financial position of Acme Electric Corporation at June 30, 1999 and 1998, and the results of its operations and its cash flows for each of the three years ended June 30, 1999, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards, which 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. /s/ PricewaterhouseCoopers LLP Buffalo, New York August 5, 1999 PAGE 25 OF ANNUAL REPORT COMMON STOCK PRICES _________________________________________________________________ Stock price Year Ended June 30, 1999 High Low Fourth Quarter 5 13/16 4 1/16 Third Quarter 5 3/8 4 Second Quarter 5 11/16 4 1/2 First Quarter 5 7/8 3 15/16 _________________________________________________________________ Year Ended June 30, 1998 High Low Fourth Quarter 6 5/16 4 5/8 Third Quarter 6 1/2 4 5/8 Second Quarter 8 1/8 4 11/16 First Quarter 7 7/16 6 1/8 Acme Electric Corporation's Common Stock is traded on the New York, Chicago, and Philadelphia Stock Exchanges. The approximate number of shareholders of record at June 30, 1999, was 1,499. _________________________________________________________________ SHAREHOLDER INQUIRIES The Company welcomes comments from shareholders and the opportunity to answer their questions. Correspondence should be directed to: Richard P. Becht or Cora M. Martin, Acme Electric Corporation, 400 Quaker Road, East Aurora, New York 14052, (716)655-3800 or e-mail cmartin@acmepower.com In addition, the Company will provide to any shareholder, without charge, a copy of the Company's current form 10-K annual report. Requests for this and any other Company publication should be directed to Ms. Martin. Company news is available by FAX: dial 1-800-758-5804, and input extension 0066775; or visit our web site at acmeelec.com EX-27 3
5 1,000 YEAR JUN-30-1999 JUN-30-1999 203 0 11,475 171 9,270 22,740 39,028 24,776 41,388 10,552 5,987 0 0 24,106 (2,322) 41,388 79,813 79,813 57,007 74,541 0 0 797 4,475 1,768 2,707 0 0 0 2,707 .53 .53
EX-99.1 4 EXHIBIT 99-1 NEWS RELEASE Contact: Dick Becht 716/655-3800 FOR IMMEDIATE RELEASE ACME ELECTRIC ANNOUNCES YEAR-END RESULTS EAST AURORA, N.Y., August 5, 1999 -- Acme Electric Corporation (NYSE: ACE) reported today that, for the year ended June 30, 1999, sales were $79,813,000 with net income of $2,707,000, or $.53 per share, compared to sales of $90,916,000 and net income of $2,529,000, or $.50 per share, for the prior year. Robert J. McKenna, Chairman and CEO, said, "During the year, we have achieved many of our strategic objectives, including establishing a basis for increased sales over time, strengthening our balance sheet, and significantly improving the efficiency and profitability of our operations. We are particularly pleased that these efforts enabled Acme to report higher earnings on a smaller revenue base. The decline in sales was attributable to the previously announced loss of a major customer in our electronics business, due to a consolidation process that favored multi-national suppliers much larger than Acme. Our prompt response to this situation helped produce improved financial performance reported for the year. A key driver of Acme's future revenue growth is our continuing commitment to developing both new products and customer relationships. We have made considerable progress in both areas. During the year, we introduced several new products, including a line of quick-to-install DIN-rail mounted power supplies and a new line of back- up power units for the cable industry. Customer response has been very positive. We also established new relationships with several major OEM customers. As an important strategic supplier to each company, we expect these new relationships to provide Acme with many new profitable growth opportunities in the future." Founded in 1917, Acme Electric Corporation is a leader in the design and manufacture of power conversion equipment for electronic and electrical systems for industrial, commercial, residential, military and aerospace applications. Corporate headquarters are in East Aurora, N.Y., with operations in Cuba, N.Y., Lumberton, N.C., and Tempe, Ariz. # # # # ACME ELECTRIC CORPORATION Comparative Analysis (in thousands, except for per share data) For the Year Ended For the 13 Weeks Ended 06/30/99 06/30/98 06/30/99 06/30/98 Net Sales $79,813 $90,916 $19,532 $23,633 Net Income $2,707 $ 2,529 $1,021 $1,276 Net Income Per Common Share (Basic and Diluted) $.53 $.50 $.20 $.25 Weighted Number of Shares Outstanding Used to Compute Net Income Per Common Share: Basic 5,060 5,046 5,068 5,050 Diluted 5,091 5,060 5,110 5,065 EX-99.2 5 EXHIBIT 99-2 NEWS RELEASE Contact: Dick Becht 716/655-3800 FOR IMMEDIATE RELEASE ACME ELECTRIC OPENS MEXICAN SUBSIDIARY TO SERVICE MEXICO AND CENTRAL AMERICA -- Jorge A. Luna Appointed Plant Manager -- EAST AURORA, N.Y., August 11, 1999 -- Acme Electric Corporation (NYSE: ACE) announced the opening of a Mexican subsidiary and the appointment of Jorge A. Luna as Plant Manager of the new facility. The new subsidiary is operating under the name Acme Electric de Mexico S. de R.L. de C.V., and will be housed in a new 45,000-square-foot facility near Monterrey, Mexico, to support Acme's growing base of distribution in the region. Acme Electric is expanding its international presence in response to the growing demand for its products. "Establishing a new facility to meet growing demand in the Mexican and Central American markets will strengthen Acme's position there, enhance our support to customers, and build our growth potential in these important regions," said Robert J. McKenna, Chairman and Chief Executive Officer. McKenna continued, "This new operation will also increase the effectiveness of Acme's global sales channels and will facilitate the manufacturing and distribution of Acme products in the Latin American market." "I am excited to be involved with Acme's commitment to its sales and business development initiatives," said Jorge Luna, who has held several management positions with a shelter company under the direction of Lucent Technologies and holds a degree in Electronics Engineering from the University of Nuevo Leon. The new subsidiary will be located at the Monterrey Industrial Park in Apodaca, Mexico, and will be in full production by November 1999. Founded in 1917, Acme Electric Corporation is a leader in the design and manufacture of power conversion equipment for electronic and electrical systems for industrial, commercial, residential, military and aerospace applications. Corporate headquarters are in East Aurora, N.Y., with operations in Cuba, N.Y., Lumberton, N.C., and Tempe, Ariz. # # # # EX-99.3 6 EXHIBIT 99-3 NEWS RELEASE Contact: Dick Becht 716/655-3800 ACME ELECTRIC TO BE A SOLE SUPPLIER TO POWERWARE EAST AURORA, N.Y., August 17, 1999 -- Acme Electric Corporation (NYSE: ACE), announced today that its Lumberton, N.C.-based Power Distribution Products Division has been selected by Powerware (formerly Exide Electronics Corporation) as Powerware's sole supplier of custom electrical transformers for use in its uninterruptible power supply (UPS) products. Acme said it expects to generate in excess of $6 million of additional sales per year from this new supply agreement. Robert J. McKenna, Acme's Chairman and Chief Executive Officer, said, "By leveraging our continuous flow manufacturing process and years of electrical transformer design experience, Acme can deliver just-in-time service and superior product designs at a lower cost than competing products. All of the transformers to be supplied to Powerware will be manufactured in our Lumberton, N.C., facility." Founded in 1917, Acme Electric Corporation is a leader in the design and manufacture of power conversion equipment for electronic and electrical systems for industrial, commercial, residential, military and aerospace applications. Corporate headquarters are in East Aurora, N.Y., with operations in Cuba, N.Y., Lumberton, N.C., and Tempe Ariz. # # # # EX-99.4 7 EXHIBIT 99-4 NEWS RELEASE CONTACT: Richard Becht (716) 655-3800 FOR IMMEDIATE RELEASE ACME ELECTRIC'S POWER DISTRIBUTION PRODUCTS DIVISION SELECTED TO BE PRIMARY SUPPLIER TO COCA-COLA EAST AURORA, N.Y., September 2, 1999 -- Acme Electric Corporation's (NYSE:ACE) Power Distribution Products Division in Lumberton, N.C., announced that it has been selected by Coca-Cola (NYSE:KO) as that company's primary supplier of specialty transformers for its Fountain Division. These transformers are an integral part of a special project Coca-Cola is launching for a new product introduction. Acme was selected as Coca Cola's primary supplier by demonstrating its unique ability to respond to the special requirements of the application, including performance and product availability. Leveraging its existing product design platform, Acme incorporated specific connector assemblies and color-coding for each application, enabling Coca-Cola to "kit" its final product into a turn-key package for rapid field installation. Utilizing Demand Flow Technology, Acme was able to meet Coca Cola's aggressive delivery schedule, which is essential for the success of the project's rollout. The agreement has the potential for Coca-Cola to become one of the Power Distribution Products Division's largest customers, and represents another significant step in building Acme's market share in the OEM market through strong technical product and process capabilities. Founded in 1917, Acme Electric Corporation is a leader in the design and manufacture of power conversion equipment for electronic and electrical systems for industrial, commercial, residential, and military and aerospace applications. Corporate headquarters are in East aurora, N.Y., with operations in Cuba, N.Y., Lumberton, N.C., and Tempe, Ariz. # # # # EX-99.5 8 EXHIBIT 99-5 PRESS RELEASE CONTACT: Richard Becht (716) 655-3800 FOR IMMEDIATE RELEASE ACME ELECTRIC CORPORATION MOVES TO NASDAQ EAST AURORA, N.Y., September 21, 1999 -- Acme Electric Corporation (NYSE:ACE) stated today that, in response to The New York Stock Exchange's (NYSE) decision to raise the standards for listing requirements, Acme Electric has made application to and has been enthusiastically accepted for inclusion in the NASDAQ National Market ("NASDAQ"). Upon effectiveness of the registration statement, Acme Electric will commence trading under the NASDAQ symbol "ACEE." Acme Electric noted that the NYSE took this action with regard to several hundred smaller companies that did not comply with the new requirements for continued listing. Robert J. McKenna, Chairman and Chief Executive Officer of Acme Electric, stated, "We look forward to joining the rapidly growing NASDAQ market system and fully expect a smooth transition." Founded in 1917, Acme Electric Corporation is a leader in the design and manufacture of power conversion equipment for electronic and electrical systems for industrial, commercial, residential, and military and aerospace applications. Corporate headquarters are in East Aurora, N.Y., with operations in Cuba, N.Y., Lumberton, N.C., and Tempe, Ariz. # # # # -----END PRIVACY-ENHANCED MESSAGE-----