-----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, NcmpgRcE9J7UkJiHjrRLIqyvqXE8MBrTBMlbnCeROQoRH4v0hclF2N9FPV8di+r8 /5mZDqjpU6VYhBKwQlN62A== 0000033533-96-000009.txt : 19961115 0000033533-96-000009.hdr.sgml : 19961115 ACCESSION NUMBER: 0000033533-96-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961113 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: ESPEY MANUFACTURING & ELECTRONICS CORP CENTRAL INDEX KEY: 0000033533 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPONENTS, NEC [3679] IRS NUMBER: 141387171 STATE OF INCORPORATION: NY FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04383 FILM NUMBER: 96661428 BUSINESS ADDRESS: STREET 1: PO BOX 422 STREET 2: CONGRESS & BALLSTON AVENUES CITY: SARATOGA SPRINGS STATE: NY ZIP: 12866 BUSINESS PHONE: 5185844100 10-Q 1 1ST QUARTER 10Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20459 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended September 30, 1996 Commission File Number I-4383 ESPEY MFG. & ELECTRONICS CORP. (Exact name of registrant as specified in charter) NEW YORK 14-1387171 (State of Incorporation) (I.R.S. Employer's Ident No.) P. O. Box 422, Saratoga Springs, New York 12866 (Address of principal executive offices) (Zip Code) Registrant's telephone number, include area code 518-584-4100 Number of shares outstanding of issuer's class of common stock $.33-1/3 par value as at the end of the period covered by this report 1,111,220 . 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 (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 ESPEY MFG. & ELECTRONICS CORP. I N D E X PART I FINANCIAL INFORMATION PAGE Item 1 Financial Statments: Balance Sheets - September 30, 1996 1 and June 30, 1996 Statements of Earnings - Three Months 3 Ended September 30, 1996 and 1996 Statements of Cash Flows - Three Months 4 September 30, 1996 and 1995 Notes to Financial Statements 5 September 30, 1996 and 1995 Item 2 Management's Discussion and Analysis of 7 Financial Condition and Results of Operations. PART II OTHER INFORMATION 9 SIGNATURES 10
ESPEY MFG. & ELECTRONICS CORP. Balance Sheets September 30, 1996 and June 30, 1996 A S S E T S Unaudited 1996 1996 September 30 June 30 CURRENT ASSETS: Cash and cash equivelents $ 219,920 $ 1,112,767 Short-term investments at cost (market value September 30, 1996, $6,969,532 and June 30, 1996, $4,577,305) 6,904,263 4,484,312 Total Cash and Short-term Investments 7,124,183 5,597,079 Marketable investment securities - current 1,073,403 3,021,195 Trade accounts receivable net of $3,000 allowance September 30, 1996 and June 30, 1996 3,826,767 1,556,404 Other receivables 500 18,177 Net Receivables 3,827,267 1,574,581 Inventories: Raw materials and supplies 511,520 499,900 Work-in-process 2,823,110 1,561,742 Costs relating to contracts in process 6,319,662 8,971,704 Net Inventories 9,654,292 11,033,346 Deferred income taxes 796 796 Prepaid expenses and other current assets 172,150 272,808 Total Current Assets 21,852,091 21,499,805 Deferred income taxes 43,920 9,088 PROPERTY, PLANT AND EQUIPMENT AT COST 11,923,814 11,813,137 Less: Accumulated depreciation and amortization (8,538,999) (8,371,987) Net Property, Plant and Equipment 3,384,815 3,441,150 Total $ 25,280,826 $ 24,950,043 - 1 - (Continued) ESPEY MFG. & ELECTRONICS CORP. Balance Sheets, Continued September 30, 1996 and June 30, 1996 LIABILITIES AND STOCKHOLDERS' EQUITY Unaudited 1996 1996 September 30 June 30 CURRENT LIABILITIES: Accounts Payable $ 133,150 $ 158,631 Accrued expenses: Salaries, wages and commissions 168,884 116,351 Employees' insurance costs 48,310 54,739 ESOP payable 110,249 - Other 11,397 17,440 Payroll and other taxes withheld and accrued 70,985 156,890 Dividends payable 777,854 - Income taxes payable 252,297 119,857 TOTAL CURRENT LIABILITIES 1,573,126 623,908 STOCKHOLDERS' EQUITY: Common stock, par value .33-1/3 per share. Authorized 2,250,000 shares; issued 1,514,937 shares September 30, 1996 and June 30, 1996. 504,979 504,979 Capital in excess of par value 10,496,287 10,496,287 Retained earnings 23,813,997 24,316,400 34,815,263 35,317,666 Less: Common stock subscribed ( 4,469,299) ( 4,469,299) Cost of 403,717 shares on September 30, 1996 and 396,291 shares on June 30, 1996 of common stock in treasury ( 6,638,264) ( 6,522,232) TOTAL STOCKHOLDERS' EQUITY 23,707,700 24,326,135 TOTAL $ 25,280,826 $ 24,950,043 See accompanying notes to financial statements - 2 - ESPEY MFG. & ELECTRONICS CORP. Statements of Earnings Three Months Ended September 30, 1996 and 1995 Unaudited Three Months September 1996 September 1995 Net Sales $ 4,586,892 $ 4,000,805 Cost of sales 3,888,874 3,596,130 GROSS PROFIT 698,018 404,675 Selling, general and administrative expenses 447,335 411,535 OPERATING INCOME (LOSS) 250,683 ( 6,860) Other Income: Interest income 124,661 159,462 Sundry income 375 6,838 125,036 166,300 Earnings before income taxes 375,719 159,440 Provision for income taxes 147,000 61,000 NET EARNINGS $ 228,719 $ 98,440 Earnings per Share: Net earnings $ .21 $ .07 Average number of shares outstanding 1,114,610 1,341,350 See accompanying notes to financial statements - 3 - ESPEY MFG. & ELECTRONICS CORP. Statements of Cash Flows Three Months Ended September 30, 1995 and 1994 Unaudited September 30 1995 1994 Cash Flows From Operating Activities: Net earnings $ 98,440 $ 174,765 Adjustments to reconcile net earnings to net cash provided by operating activities: Tax effect of dividends on unallocated ESOP shares 45,063 50,070 Depreciation 104,919 102,073 Changes in assets and liabilities: Decrease (increase) in receivables, net ( 82,162) ( 1,301,772) Decrease (increase) in inventories, net ( 923,873) 761,620 Decrease (increase) in other current assets 275,488 94,432 Decrease (increase) in income tax refund receivable 31,920 143,691 Increase (decrease) in accounts payable 302,067 229,842 Increase (decrease) in accrued salaries, 66,717 67,353 wages and commissions Increase (decrease) in accrued employee ( 2,673) ( 14,096) insurance costs Increase (decrease) in other accrued expenses ( 1,235) ( 3,390) Increase (decrease) in payroll & other ( 67,849) ( 68,926) taxes withheld and accrued Decrease in deferred income taxes ( 15,983) ( 20,761) Increase (decrease) in accrued ESOP contributions 106,572 108,148 Net cash provided by (used by) operating activities ( 62,589) 323,049 Cash Flows From Investing Activities: Additions to property, plant & equipment ( 21,881) ( 341,819) Proceeds from sale of marketable investment securities 971,174 - Purchases of marketable investment securities ( 1,891,913) - Net cash provided by (used in) investing activities ( 942,620) ( 341,819) Cash Flows From Financing Activities: Purchase of treasury stock ( 67,075) ( 31,837) Net cash used in financing activities ( 67,075) ( 31,837) Increase (decrease) in cash and short-term investments ( 1,072,284) ( 50,607) Cash and short-term investments, beginning of period 1,699,215 13,469,584 Cash and short-term investments, end of period $ 626,931 $ 13,418,977 Income Taxes Paid $ - $ - See accompanying notes to financial statements. - 4 -
ESPEY MFG. & ELECTRONICS CORP. Notes to Financial Statements ___________________ 1. In the opinion of management, the accompanying unaudited financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position of the Company as of September 30, 1996, and the results of operations for each of the three months ended September 30, 1996 and 1995 and cash flows for each of the three months ended September 30, 1996 and 1995. 2. The earnings per share computations for September 30, 1996 were based on 1,114,610 shares and on 1,341,350 shares for September 30, 1995. These represent the average number of shares outstanding for each respective period. 3. Other income consists principally of interest on Certificates of Deposit, Treasury Bills and money market accounts. 4. There were no material unusual charges or credits to operations or a change in accountants during the most recently completed quarter which would require the filing of a Form 8-K. 5. There were no securities sold by the Company during the current quarter which were not registered under the Securities Act of 1934 in reliance upon an exemption from registration provided in Section 4 (2) of the Act. 6. For purposes of the statements of cash flows, the Company considers all liquid debt instruments with original maturities of three months or less to be cash equivalents. 7. In fiscal 1989 the Company established an Employee Stock Ownership Plan (ESOP) for eligible non-union employees. The ESOP used the proceeds of a loan from the Company to purchase 316,224 shares of the Company's common stock for approximately $8.4 million and the Company contributed approximately $400,000 to the ESOP which was used by the ESOP to purchase an additional 15,000 shares of the Company's common stock. - 5 - The loan from the Company to the ESOP is repayable in annual installments of $1,039,605, including interest, through June 30, 2004. Interest is payable at a rate of 9% per annum. The Company's receivable from the ESOP is recorded as common stock subscribed in the accompanying balance sheets. Each year, the Company will make contributions to the ESOP which will be used to make loan interest and principal payments. With each loan and interest payment, a portion of the common stock will be allocated to participating employees. As of September 30, 1996 there were 132,571 shares allocated to participants. 8. The Company adopted the provisions of SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of", as of July 1, 1995. This accounting standard required that certain long-lived assets be reviewed for impairment when events or circumstances indicate that the carrying amount of the assets may not be recoverable. If such review indicates that the carrying value is written down to fair value. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell. The adoption of this accounting standard had no effect on the financial position or results of operations of the Company. - 6 - ESPEY MFG. & ELECTRONICS CORP. Management's Discussion and Analysis of Financial Condition and Results of Operations Sales for the three months ended September 30, 1996 were $4,586,892 as compared to $4,000,805 for the same period in 1995. Sales volume is largely dependent on both lead times required for new orders and the specific delivery needs of our customers. Net earnings for the three month period were $228,719 or $.21 per share compared to $98,440 or $.07 per share for the corresponding period of last year. Many of the contracts shipped in the current quarter carried a somewhat higher gross profit margin than those shipped during the corresponding quarter of last year. As a result, cost of sales dropped to 85% compared to the 90% reflected last year. This factor, together with the increase in sales, are the primary reasons for the increase in net profits. In an effort to continue this positive trend we have enhanced and expanded our Sales and Marketing departments. Various specifics concerning the products we are concentrating on are addressed in both the President's message acompanying our 1996 Annual Report and in our most recently filed Form 10K. Management has confidence that the Company can accomplish its goals. Selling and G & A expenses show an increase of approximately 9% during the current period. This is principally due to the reclassification of certain salaries from manufacturing expenses to general and administrative expenses. In the Statements of Cash Flows the decrease in inventories is in line with the increase in Sales. The increase in Accounts Receivable is due to a large volume of shipments made toward the end of the quarter. Most of these receivables have already been paid, and the Company feels that its reserve is adequate. Investment income declined by approximately 22% for the current three month period primarily due to a reduction in our investment base brought about by a major repurchase of our common stock during the latter part of our last fiscal year. The Company does not feel that there is any risk associated with its investment policy, since the majority of our investments are represented by U.S. Government securities, Certificates of Deposit and money market accounts. Since the debt of the Company's ESOP is not to an outside party, we have eliminated from the Statements of Earnings the offsetting items of interest income and interest expense relating to the ESOP. We have also eliminated the offsetting accruals from the Balance Sheets. -7- The Company, when possible, funds all of its operations including Financing Activities and Investing Activities with cash flows resulting from Operating Activities. It is currently felt that during the next fiscal year, funds from Operating Activities will continue to be adequate to meet these needs. For the current three month period capital expenditures were approximately $110,677. During the three month period ended September 30, 1996 the Company repurchased 7,426 shares of its common stock. Under existing authorizations, as of September 30, 1996, funds in the amount of $1,883,969 were available for the continuing repurchase of the Company's shares. The backlog as of September 30, 1995 was $18,319,247. The backlog as of September 30, 1996 was $12,218,320. Although customer order patterns are inherently difficult to predict, the Company believes that it will continue to obtain contracts consistent with our past experience. We are currently anticipating a new contract for our high power radar transmitters, which, if received, along with our other anticipated new business will result in substantially increasing our backlog. A dividend in the amount of $.70 per share was declared payable November 22, 1996 to shareholders of record on October 28, 1996. -8- ESPEY MFG. & ELECTRONICS CORP. PART II: Other Information and Signatures Item 4. Submission of Matters to a Vote of Security Holders None during the quarter. Item 5. Other Information On August 1, 1996 Mr. Joseph Canterino assumed the duties of President and Chief Executive Officer of the Company in accordance with the Form 8-K described below. Item 6. Exhibits and Reports on Form 8-K On July 15, 1996 a Form 8-K was filed with an attached press release dated July 10, 1996 indicating that Mr. Sol Pinsley would retire as President and Chief Executive Officer but pursuant to his employment contract would remain as Chairman of the Board and a non-executive officer employee of the Corporation at a reduced compensation level. Mr. Joseph Canterino, Vice-President of Manufacturing, would assume the duties of President and Chief Executive Officer. - 9 - S I G N A T U R E S Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ESPEY MFG. & ELECTRONICS CORP. Joseph Canterino, President Herbert Potoker, Treasurer and Chief Financial Officer 13 November 1996 Date - 10 - EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 1ST QUARTER 10-Q FILING AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS JUN-30-1997 SEP-30-1996 7,124,183 1,073,403 3,827,267 0 9,654,292 21,852,091 11,923,814 8,538,999 25,280,826 1,573,126 0 0 0 504,979 23,707,700 25,280,826 4,586,892 4,586,892 3,888,874 3,888,874 447,335 0 0 375,719 147,000 228,719 0 0 0 228,719 .21 0
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