-----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, Rg0YsMBDXJ/niY870/zat0x3u4V9VUR6KHGiMUFcaFYQntFdMpO7LBzxDFUBeUi2 1g6UgbLi8dmuYyV5uloqAQ== 0000205303-97-000004.txt : 19970912 0000205303-97-000004.hdr.sgml : 19970912 ACCESSION NUMBER: 0000205303-97-000004 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970731 FILED AS OF DATE: 19970905 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: SEC FILE NUMBER: 000-09880 FILM NUMBER: 97675786 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: July 31, 1997 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 August 29, 1997 was 2,800,052. Transitional Small Business Disclosure Format. Yes No X . Page 1 of 10 PART I - FINANCIAL INFORMATION Item 1. Financial Statements ENGINEERING MEASUREMENTS COMPANY CONSOLIDATED BALANCE SHEETS (Unaudited) ASSETS July 31, 1997 April 30, (unaudited) 1997 Current assets: Cash and cash equivalents $290,808 $547,837 Accounts receivable, net of allowance for doubtful accounts and allowance for sales returns of $63,940 at July 31, 1997 and $61,104 at April 30, 1997 1,323,685 1,557,566 Short-term investments 1,171,692 904,724 Inventories 1,325,938 1,256,597 Prepaid expenses 89,947 23,845 Income taxes receivable 178,160 160,848 Other receivables 25,348 62,602 Deferred income taxes 208,986 224,342 --------- --------- Total current assets 4,614,564 4,738,361 --------- --------- Property and equipment, at cost: Land 568,940 568,940 Building & improvements 1,619,595 1,619,595 Vehicles 22,196 22,196 Machinery and equipment 3,462,396 3,106,342 Office furniture and fixtures 955,509 950,271 --------- --------- 6,628,636 6,267,344 Less accumulated depreciation (4,078,410) (3,981,412) --------- --------- Net property and equipment 2,550,226 2,285,932 --------- --------- Other assets 105,534 109,335 TOTAL ASSETS: $7,270,324 $7,133,628 ========== ==========
The accompanying notes are an integral part of these consolidated financial statements. (Continued) Page 2 of 10 ENGINEERING MEASUREMENTS COMPANY CONSOLIDATED BALANCE SHEETS (Unaudited) LIABILITIES AND STOCKHOLDER'S EQUITY July 31, 1997 April 30, (unaudited) 1997 Current liabilities: Current portion of long-term debt $ 400,766 $ 418,382 Accounts payable 825,707 612,538 Accrued liabilities 468,924 515,848 --------- --------- Total current liabilities 1,695,397 1,546,768 --------- --------- Long-term liabilities: Deferred income taxes 183,300 188,100 --------- --------- Total long-term liabilities 183,300 188,100 --------- --------- Stockholders' equity: Common stock, $.01 par value; 5,000,000 shares authorized; 2,990,452 shares issued at July 31, 1997, 2,988,452 shares issued at April 30, 1997, 2,800,052 shares outstanding at July 31, 1997, 2,798,052 shares outstanding at April 30, 1997, 29,905 29,885 Capital in excess of par value 2,054,107 2,047,877 Unrealized holding losses (17,182) (30,409) Retained earnings 3,954,496 3,981,106 Treasury stock at cost; 190,400 shares at July 31, 1997, 190,400 shares at April 30, 1997 (629,699) (629,699) --------- --------- Total stockholders' equity 5,391,627 5,398,760 --------- --------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY: $7,270,324 $7,133,628 ========== ==========
The accompanying notes are an integral part of these consolidated financial statements. Page 3 of 10 ENGINEERING MEASUREMENTS COMPANY CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended July 31, 1997 1996 Sales $2,290,337 $2,452,302 Cost of sales 1,430,265 1,331,591 ---------- ---------- Gross margin on sales 860,072 1,120,711 ---------- ---------- Operating expenses: Selling 542,751 561,939 General and administrative 238,044 235,211 Research and development 170,729 138,459 ---------- ---------- Total operating expenses 951,524 935,609 ---------- ---------- Income from operations (91,452) 185,102 ---------- ---------- Other income/(expense): Gain/(loss) on sale of stock 45,533 (1,073) Interest expense (9,157) (10,919) Royalty and other income 14,911 33,010 ---------- ---------- Total other income 51,287 21,018 Income/(loss) from operations before income taxes (40,165) 206,120 Income tax provision/(benefit) (13,555) 82,193 ---------- ---------- Net income/(loss) (26,610) 123,927 ========== ========== Net earnings/(loss) per share ($0.01) $0.05 Net earnings/(loss) per share on a fully diluted basis ($0.01) $0.04 ========== ========== Weighted average number of shares outstanding 2,798,719 2,753,052 ========== ==========
The accompanying notes are an integral part of these consolidated financial statements. Page 4 of 10 ENGINEERING MEASUREMENTS COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS: INCREASE/(DECREASE) IN CASH (Unaudited) Three Months Ended July 31, 1997 1996 Cash flows from operating activities: Net income $ (26,610) $123,927 Adjustments to reconcile net income to net cash provided by operating activities-- Depreciation and amortization 108,747 77,803 Deferred tax provision/(benefit) 2,100 26,325 Provision for doubtful accounts 2,836 (1,635) Gain/(Loss) on sales of investments (35,637) (6,917) Changes in assets and liabilities- Receivables 268,299 (323,004) Inventories (69,341) 100,841 Income taxes receivable and prepaid expenses (83,414) (40,019) Accounts payable and accrued liabilities 166,245 (36,617) --------- -------- Net cash provided/(used) by operating activities 333,225 (79,296) --------- -------- Cash flows from investing activities: Capital expenditures, net (367,698) (87,201) Expenditures for intangible assets (1,542) (2,119) Investment purchases (757,352) (10,345) Proceeds from sale of investments 547,704 121,374 ---------- -------- Net cash provided by/(used) in investing activities (578,888) 21,709 ---------- -------- Cash flows from financing activities: Payments of long and short term debt (17,616) (50,950) Proceeds from exercise of stock options 6,250 0 Principle payment under capital lease obligations 0 (4,531) ---------- -------- Net cash used in financing activities (11,366) (55,481) Net increase/(decrease) in cash and cash ---------- -------- equivalents (257,029) (113,068) Cash and cash equivalents at beginning of period 547,837 532,721 ---------- -------- Cash and cash equivalents at end of period $ 290,808 $419,653 ========== ======== Supplemental disclosure of cash flow information: Cash paid during period for-- Interest $ 9,157 $ 11,169 Income taxes 3,033 158,368
The accompanying notes are an integral part of these consolidated financial statements. Page 5 of 10 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 three months ended July 31, 1997 are not necessarily indicative of the results that may be expected for the fiscal year ending April 30, 1998. 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, 1997. 1. Inventories Inventories, stated at the lower of cost (first-in, first-out method) or market, are as follows: July 31, 1997 April 30, 1997 Raw materials and work-in-process $1,156,221 $1,081,823 Finished goods 169,717 174,774 ---------- ---------- $1,325,938 $1,256,597 ========== ==========
2. 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. 3. Income Taxes Deferred income taxes are provided for items which are reported for tax purposes in different periods than in the Statements of Operations. 4. 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. Also during the quarter ended July 31, 1997, there were a total of 213,275 shares outstanding under the Company's stock option plans. Any dillutive effect of the outstanding options and conversion of debt into common stock of 561,041 shares as of July 31, 1997 is reflected in the financial statements. The FASB issued Statements of Financial Accounting Standards (SFAS) 128, Earnings per Share, which will be effective for periods ending after December 15, 1997. Early application is not permitted. Had SFAS 128 been adopted, the following table illustrates the Basic and Diluted EPS for the quarter ended July 31, 1997: Page 6 of 10 For the Quarter Ended July 31, 1997 Income Shares Per Share (Numerator) (Denominator) Amount Net Loss ($26,610) ========= Basic EPS Net Loss available to common stockholders ($26,610) 2,798,719 ($0.01) Effective of Dilutive Securities Options and convertible debt 5,490 387,584 -------- --------- Diluted EPS Income available to stockholders plus assumed conversions ($21,120) 3,186,303 ($0.01) ========= ========= =======
5. 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 decreased approximately $272,000 during the three months ended July 31, 1997, primarily due to decreases in cash, receivables, and increases in inventory, accounts payable and short term investments. The current ratio decreased from 3.1 to 2.7 during the period. Cash and cash equivalents decreased approximately $257,000 at July 31, 1997 compared to April 30, 1997, due to capital expenditures of approximately $368,000 during the period. The Company intends to continue investing excess cash in high grade investment securities until the cash is needed for operations. Accounts receivable decreased by approximately $234,000 at July 31, 1997, primarily due to lower sales and improved collections. The Days Sales Outstanding (DSO) improved to 52.2 days for the three months ended July 31, 1997 compared to 57.7 days for the same period last year. Inventories increased approximately $69,000 in the first three months of the fiscal year. The inventory turnover ratio for the three months ended July 31, increased to 1.99 compared to 1.86 in fiscal 1997. Management will continue to emphasize inventory management. The Company is making monthly payments of principal and interest, of approximately $9,000 to pay off loans from a stockholder. 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 10 B. Results of Operations Three months ended July 31, 1997 compared to the three months ended July 31, 1996 Sales were approximately $162,000 lower in 1997 compared to 1996, a 6.6% decrease, due to lower demand in the international market for the current year. The Company's order backlog is lower at July 31, 1997 at approximately $1,237,000, compared to $1,580,000 at July 31, 1996. Gross profit decreased by approximately $261,000 to 37.6% of sales in 1997 compared to 45.7% in 1996. Lower sales volume than expected accounted for the decrease in the gross profit as labor and overhead were both higher at 4% and 5% respectively. Operating expenses are up approximately $16,000 from last year due to increased product development costs. Income from operations decreased approximately $276,000 for the three months ended July 31, 1997 compared to the same period a year ago. The Company recognized gains of approximately $46,000 from the sale of stock for the three months ended July 31, 1997, compared to a loss of approximately $1,000 for the three months ended July 31, 1996. Royalty and other income for the three months ended July 31, 1997, decreased approximately $18,000 to approximately $15,000 due to lower interest and dividend income from high grade investment securities and the termination of the royalty agreement at April 30, 1997, compared the same period last year. The Company's interest expense has decreased approximately $2,000 for the period ended July 31, 1997 compared to the same period ended in 1996, due to the Company's lower outstanding debt. The income tax benefit for the three months ended July 31, 1997 was approximately $14,000 compared to an income tax provision of approximately $82,000 the same period in 1996. The impact of deferred tax items resulted in current tax rates of approximately 33.7% and 39.9% in 1997 and 1996, respectively. Net cash provided by operating activities was $333,225 due primarily to dereases in receivables. Page 8 of 10 PART II -- OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K A. Exhibits None filed in the quarter ended July 31, 1997. B. Reports on Form 8-K None filed in the quarter ended July 31, 1997. Page 9 of 10 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: September 5, 1997 By: /s/ Charles E. Miller Charles E. Miller, Chairman (Principal Financial Officer and Chief Accounting Officer) Page 10 of 10 September 5, 1997 ENGINEERING MEASUREMENTS COMPANY (NASDAQ SYMBOL: EMCO) First Quarter Results Corporate Contact: Charles E. Miller (303) 651-0550 Longmont, Colorado: Engineering Measurements Company announced today a net loss of $26,610 ($.01) per share for the first quarter ended July 31, 1997. Sales for the period were approximately $2.29 million; compared to sales of approximately $2.45 million for the same period last year. Net loss for the first quarter was 1.2% of sales, compared to net income of 5.1% for the same period 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 First Quarter Ended July 31, 1997 Three Months Ended July 31, 1997 1996 Net sales $2,290,337 $2,452,302 Income (loss) from operations before taxes (91,452) 206,120 Net income(loss) (26,610) 123,927 Net earnings(loss) per share ($.01) $.05 Number of shares outstanding 2,798,719 2,753,052
EX-27 2 ART. 5 FDS FOR 1ST QUARTER 10-QSB
5 This schedule contains summary financial information extrated 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 3-MOS APR-30-1998 JUL-31-1997 291 1,172 1,388 64 1,326 4,615 6,629 4,078 7,270 1,695 0 30 0 0 5,362 7,270 2,290 2,290 1,430 1,430 888 3 9 (40) (13) (27) 0 0 0 (27) (.01) (.01) -----END PRIVACY-ENHANCED MESSAGE-----