-----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, S6w1tBSyCRAQvGWFcRs4XRdVvKzqTevBF4XJvxQW++uVa57mKcqpfyBofVxLmv6E OHxTBee9XIKR9qi1IjC5Gg== 0000205303-95-000006.txt : 19951215 0000205303-95-000006.hdr.sgml : 19951215 ACCESSION NUMBER: 0000205303-95-000006 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19951031 FILED AS OF DATE: 19951214 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENGINEERING MEASUREMENTS CO CENTRAL INDEX KEY: 0000205303 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL INSTRUMENTS FOR MEASUREMENT, DISPLAY, AND CONTROL [3823] IRS NUMBER: 840572936 STATE OF INCORPORATION: CO FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-09880 FILM NUMBER: 95601502 BUSINESS ADDRESS: STREET 1: 600 DIAGONAL HWY CITY: LONGMONT STATE: CO ZIP: 80501 BUSINESS PHONE: 3036510550 MAIL ADDRESS: STREET 1: 600 DIAGONAL HWY CITY: LONGMONT STATE: CO ZIP: 80501 10QSB 1 FORM 10-QSB SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 [X] QUARTERLY REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: October 31, 1995 or [ ] TRANSITION REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission File No.: 0-9880 E N G I N E E R I N G M E A S U R E M E N T S C O M P A N Y (Exact name of Registrant as specified in its charter) Colorado 84-0572936 (State or other jurisdiction of (I.R.S. Identification No.) incorporation or organization) 600 Diagonal Highway, Longmont, Colorado 80501 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (303)651-0550 Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] . The number of shares outstanding of Registrant's $.01 par value common stock, as of October 31, 1995 was 2,733,052. Transitional Small Business Disclosure Format. Yes [ ] No [X] . Page 1 of 11 PART I - FINANCIAL INFORMATION Item 1. Financial Statements ENGINEERING MEASUREMENTS COMPANY CONSOLIDATED BALANCE SHEETS (Unaudited) ASSETS October 31,1995 (unaudited) April 30,1995 Current assets: Cash and cash equivalents $237,877 $312,183 Accounts receivable, net of allowance for doubtful accounts of $150,355 at October 31, 1995 and $135,913 at April 30, 1995 1,251,011 1,272,481 Short-term investments 674,897 744,672 Inventories 1,843,789 1,479,384 Prepaid expenses 93,536 34,296 Other receivables 24,000 67,020 Deferred income taxes 483,600 437,175 ---------- ---------- Total current assets 4,608,710 4,347,211 ---------- ---------- Property and equipment, at cost: Land 568,940 568,940 Building & improvements 1,562,109 1,534,811 Vehicles 16,791 16,791 Machinery and equipment 2,534,744 2,515,343 Office furniture and fixtures 1,069,529 1,004,285 ---------- ---------- 5,752,113 5,640,170 Less accumulated depreciation (3,889,457) (3,735,375) ---------- ---------- Net property and equipment 1,862,656 1,904,795 ---------- ---------- Other assets: Other 80,537 68,159 Investment in common stock of Marcum Natural Gas Services, Inc. 267,750 357,001 ---------- ---------- Total other assets 348,287 425,160 ---------- ---------- TOTAL ASSETS: $6,819,653 $6,677,166 ========== ==========
The accompanying notes are an integral part of these consolidated financial statements. (Continued) PAGE 2 OF 11 ENGINEERING MEASUREMENTS COMPANY CONSOLIDATED BALANCE SHEETS (Unaudited) LIABILITIES AND STOCKHOLDER'S EQUITY October 31, 1995 (unaudited) April 30, 1995 Current liabilities: Current portion of long-term debt $209,945 $220,556 Accounts payable 493,749 504,201 Accrued liabilities 685,574 582,226 --------- --------- Total current liabilities 1,389,268 1,306,983 --------- --------- Long-term liabilities: Loans from stockholder less current maturities 453,615 544,402 Leases less current maturities 2,946 11,608 Deferred income taxes 167,000 167,000 --------- --------- Total long-term liabilities 623,561 723,010 --------- --------- Stockholders' equity: Common stock, $.01 par value; 5,000,000 shares authorized; 2,923,452 shares issued at October 31, 1995, 2,923,452 shares issued at April 30, 1995, 2,733,052 shares out- standing at October 31, 1995, 2,733,052 shares outstanding at April 30, 1995 29,235 29,235 Capital in excess of par value 1,956,927 1,956,927 Deferred Compensation --- --- Unrealized holding losses (80,156) (18,555) Retained earnings 3,530,517 3,309,265 Treasury stock at cost; 190,400 shares at October 31, 1995, 190,400 shares at April 30, 1995 (629,699) (629,699) --------- --------- Total stockholders' equity 4,806,824 4,647,173 --------- --------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY: $6,819,653 $6,677,166 =========== ===========
The accompanying notes are an integral part of these consolidated financial statements. PAGE 3 OF 11 ENGINEERING MEASUREMENTS COMPANY CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended Six Months Ended October 31, October 31, 1995 1994 1995 1994 Sales $2,186,132 $2,544,959 $4,278,821 $5,056,562 Cost of sales 1,172,207 1,488,436 2,372,740 2,934,645 ---------- ---------- ---------- ---------- Gross margin on sales 1,013,925 1,056,523 1,906,081 2,121,917 ---------- ---------- ---------- ---------- Operating expenses: Selling 513,276 648,759 1,012,487 1,298,534 General and administrative 196,754 176,763 384,445 324,770 Research and development 103,581 106,065 197,172 222,658 Provision for doubtful accounts 25,876 12,659 36,267 14,367 ---------- ---------- ---------- ---------- Total operating expenses 839,487 944,246 1,630,371 1,860,329 ---------- ---------- ---------- ---------- Income from operations 174,438 112,277 275,710 261,588 ---------- ---------- ---------- ---------- Other income/(expense): Gain/(loss) on sale of stock 10,321 (3,717) 22,669 (3,780) Interest expense (14,218) (20,588) (30,269) (41,587) Royalty and other income 43,146 33,655 74,951 68,703 ---------- ---------- ---------- ---------- Total other income 39,249 9,350 67,351 23,336 ---------- ---------- ---------- ---------- Income from operations before income taxes 213,687 121,627 343,061 284,924 Income tax provision 74,392 51,726 121,809 111,175 ---------- ---------- ---------- ---------- Net income 139,295 69,901 221,252 173,749 ========== ========== ========== ========== Earnings per share from operations 0.05 0.02 0.08 0.06 Net earnings per share on a fully diluted basis $0.05 $0.02 $0.08 $0.05 ========== ========== ========== ========== Weighted average number of shares outstanding 2,733,052 2,836,402 2,733,052 2,838,069 ========== ========== ========== ==========
The accompanying notes are an integral part of these consolidated financial statements. PAGE 4 OF 11 ENGINEERING MEASUREMENTS COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS: INCREASE/(DECREASE) IN CASH (Unaudited) INCREASE/(DECREASE) IN CASH Six Months Ended October 31, 1995 1994 Cash flows from operating activities: Net income $221,252 $173,749 Adjustments to reconcile net income to net cash provided by operating activities- Depreciation and amortization 161,013 194,056 Deferred tax provision/(benefit) (7,040) (38,052) Provision for doubtful accounts 14,442 14,367 Gain on sales of investments (22,669) 3,717 Changes in assets and liabilities- Receivables 50,048 197,202 Inventories (364,405) 20,265 Prepaid expenses (59,240) (31,836) Accounts payable and accrued liabilities 92,896 (284,855) Net cash provided by ---------- ---------- operating activities 86,297 248,613 ---------- ---------- Cash flows from investing activities: Capital expenditures, net (111,943) (166,406) Expenditures for intangible assets (19,309) (4,215) Investment purchases (62,852) (1,656,825) Proceeds from sale of investments 143,561 1,679,424 Net cash provided by/(used) in ---------- ---------- investing activities (50,543) (148,022) ---------- ---------- Cash flows from financing activities: Payments of long and short term debt (101,897) (101,899) Purchase of treasury stock --- (84,650) Proceeds from exercise of stock options 0 31,600 Principle payment under capital lease obligations (8,163) (10,480) ---------- ---------- Net cash used in financing activities (110,060) (165,429) Net increase/(decrease) in cash and cash ---------- ---------- equivalents (74,306) (64,838) Cash and cash equivalents at beginning of period 312,183 810,631 ---------- ---------- Cash and cash equivalents at end of period $ 237,877 $ 745,793 ========== ========== Supplemental disclosure of cash flow information: Cash paid during period for-- Interest $39,789 $41,587 Income taxes 24,080 187,410
The accompanying notes are an integral part of these consolidated financial statements. PAGE 5 OF 11 ENGINEERING MEASUREMENTS COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The accompanying unaudited, condensed financial statements have been prepared in accordance with the instructions to the Form 10-QSB and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the six months ended October 31, 1995 are not necessarily indicative of the results that may be expected for the fiscal year ending April 30, 1996. These statements should be read in conjunction with the financial statements and footnotes thereto included in the Company's Form 10-KSB for the fiscal year ended April 30, 1995. 1. Principles of Consolidation The consolidated financial statements include the accounts of Engineering Measurements Company (the Company) and its subsidiary, General Metrology Corporation. All significant intercompany accounts and transactions have been eliminated in consolidation. 2. Inventories Inventories, stated at the lower of cost (first-in, first-out method) or market, are as follows: October 31, 1995 April 30, 1995 Raw materials and work-in-process $1,428,361 $1,259,015 Finished goods 415,428 220,369 ---------- ---------- $1,843,789 $1,479,384 ========== ==========
3. Investments Investments are carried at fair market value. The Company's investment securities are classified as available for sale and recorded on the balance sheet at fair market value with unrealized gains and losses on these investments shown as a separate component of stockholder's equity, net of related taxes. 4. Income Taxes Deferred income taxes are provided for items which are reported for tax purposes in different periods than in the Statements of Operations. 5. Earnings Per Share Earnings per share is computed by dividing net income by the weighted average number of shares outstanding during the period. Pursuant to the terms of a loan agreement, a stockholder may convert up to $353,790 in principal and accrued interest into 345,766 shares of common stock at an average price of $1.02 per share. There are a total of 219,775 shares subject to outstanding options under the Company's stock option plans at October 31, 1995. The effect of the outstanding options and conversion right to purchase the total of 565,541 shares as of October 31, 1995 is dilutive and reflected in the financial statements. Year to date earnings per share on a fully dilutive basis using the treasury stock method was $.08 at October 31, 1995. In 1995 the shares issuable pursuant to the terms of a stockholder loan agreement were dilutive. Earnings per share on a fully dilutive basis using the treasury stock method was $.05 at October 31, 1994. PAGE 6 OF 11 6. Changes in Accounting Principles There have been no changes in accounting principles during these reporting periods. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations A. Financial Condition The Company's net working capital increased approximately $179,000 during the six months ended October 31, 1995, primarily because of increases in inventories, prepaid expenses and deferred income taxes. The current ratio remained at 3.3. Cash and cash equivalents decreased approximately $74,000 at October 31, 1995 compared to April 30, 1995, due to the Company's investment in higher inventories and prepaid expenses during the year. The Company intends on investing excess cash in high grade investment securities until the cash is needed for operations. Accounts receivable decreased by approximately $21,000 at October 31, 1995, primarily due to continued collection efforts and lower sales. The Days Sales Outstanding (DSO) increased to 62.0 days for the six months ended October 31, 1995 compared to 55.4 days for the same period last year. Inventories increased approximately $364,000 in the first six months of the fiscal year. The inventory turnover ratio for the six months ended October 31, decreased from 2.56 in 1995 to 1.30 in fiscal 1996. The increase in inventories in part reflects management's decision to make more parts internally rather than buying them from vendors. Recent internal reorganization will add emphasis on inventory management. Investments in common stock of Marcum Natural Gas Services, Inc. decreased approximately $89,000 in accordance with FASB 115, in which available for trade securities will be carried on the books at fair value and unrealized gains and losses will be included in stockholders equity. The Company is making monthly payments of principal and interest, of approximately $22,000 to pay off the loans from shareholder. The company does not expect any material capital expenditures in the next six months, and anticipates all cash needs will be satisfied from operations. The Company currently does not have any line of credit arrangements. PAGE 7 OF 11 B. Results of Operations Six months ended October 31, 1995 compared to the six months ended October 31, 1994 Sales were approximately $778,000 lower in 1995 compared to 1994, a 15.4% decrease, due to lower demand in the domestic market. The Company's order backlog is slightly higher at October 31, 1995 at approximately $1,325,000, compared to $1,176,000 at October 31, 1994. Gross profit increased to 44.5% in 1995 compared to 42.0% in 1994, due to improved purchasing methods resulting in better material costs. Overhead was up 1.9% from last year to 10.7% of revenue. A significant factor in the increase was attributable to writing off inventory shipped to customers for repairs in prior years now deemed to be warranty. Operating expenses were down approximately $231,000 from last year including a $131,000 reduction in commissions expense, reflecting the lower sales level attained to date. Income from operations improved to 6.4% for the six months ended October 31, 1995 versus 5.2% for the same period a year ago. The company recognized gains on the sale of stock of approximately $23,000 in the six months ended October 31, 1995, compared to a loss of approximately $4,000 for the six months ended October 31, 1994. Royalty and other income increased approximately $6,000 to approximately $75,000 due to higher interest and dividend income from high grade investment securities for the six months ended October 31, 1995 compared the same period last year. The Company's interest expense has decreased approximately $11,000 for the period ended October 31, 1995 compared to the same period ended in 1994, due to the Company's lower outstanding debt. The income tax provision for the six months ended October 31, 1995 increased approximately $11,000 compared to the same period in 1994. The impact of deferred tax items resulted in current tax rates of approximately 35.5% and 39.0% in 1995 and 1994, respectively. Three months ended October 31, 1995 compared to the three months ended October 31, 1994 Sales were approximately $359,000 lower in 1995 compared to 1994, a 14% decrease, due to lower demand in the domestic market. Gross margin on sales has decreased approximately $43,000 on the lower sales noted above but improved significantly as a percentage of sales from 41.5% in 1994 to 46.4% in the three months ended October 31, 1995. Reduced material costs were a significant factor in this improvement. Operating expenses decreased by approximately $105,000, but as a percent to sales for the quarter ended October 31, increased from 37.1% in 1994 to 38.4% in 1995 due to higher general and administrative expenses. For the quarter ended October 31, 1995, the Company recognized gains of approximately $10,000 on sales of available for sales securities. A loss of approximately $4,000 was reported for the same period a year ago. For the quarter ended October 31, Royalty and other income increased approximately $10,000 in 1995 compared to 1994, due to higher interest and dividend income from the Company's high grade investment securities. The income tax provision for the three months ended October 31, decreased as a percent of income from 42.5% in 1994 to 34.8% in 1995. This year's tax provision is lower because of the effect of deferred tax items and the tax treatment of interest income and dividends received. PAGE 8 OF 11 PART II -- OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K A. Exhibits None filed in the quarter ended October 31, 1995. B. Reports on Form 8-K None filed in the quarter ended October 31, 1995. PAGE 9 OF 11 S I G N A T U R E S Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, Engineering Measurements Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ENGINEERING MEASUREMENTS COMPANY Registrant Date: December 14, 1995 By: /s/ Charles E. Miller ________________________________________________________________ Charles E. Miller, Chairman Principal Financial Officer and Principal Accounting Officer) PAGE 10 OF 11 December 14, 1995 ENGINEERING MEASUREMENTS COMPANY (NASDAQ SYMBOL: EMCO) Third Quarter Results Corporate Contact: Charles E. Miller (303) 651-0550 Longmont, Colorado: Engineering Measurements Company announced today a net income of $139,295 ($.05 per share) for the second quarter ended October 31, 1995. Net income for the six-month period ended October 31, 1995 was $221,252 ($.08 per share). Sales for the quarter were approximately $2.2 million, and for the six-month period approximately $4.3 million; a 14% and a 15% decrease respectively over the comparable periods last year. Income from operations for the three and six month periods ended October 31, 1995, were approximately $174,000 and $276,000, as compared to approximately $112,000 and $262,000 for the same periods last year. E N G I N E E R I N G M E A S U R E M E N T S C O M P A N Y Operating Results Second Quarter Ended October 31, 1995 Three Months Ended Six Months Ended October 31, October 31, 1995 1994 1995 1994 Net sales $2,186,132 $2,544,959 $4,278,821 $5,056,562 Income from operations 174,438 112,277 275,710 261,588 Other income 39,249 9,350 67,351 23,336 Income taxes 74,392 51,726 121,809 111,175 Net income 139,295 69,901 221,252 173,749 Net earnings per share $.05 $.02 $.08 $.06 Number of shares outstanding 2,733,052 2,836,402 2,733,052 2,838,069
PAGE 11 OF 11 EX-27 2 ART. 5 FDS FOR 2ND QUARTER 10-QSB
5 This schedule contains summary financial information extracted from the Balance Sheet and Statement of Operations found on pages 2, 3 and 4 of the company's form 10-QSB for the year-to-date, and is qualified in its entirety by reference to such financial statements. 1000 6-MOS APR-30-1996 OCT-31-1995 238 675 1387 136 1844 4609 5752 3889 6820 1389 454 29 0 0 4778 6820 4279 4279 2373 2373 1594 36 30 343 122 221 0 0 0 221 .08 .08 -----END PRIVACY-ENHANCED MESSAGE-----