-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, Gt86EFsVsZZnKA2T5Q0LnQ6dj1yyfRjQF728ODyRAjeknc/ywwRo8qvlV6kGgbHc 3kwQjvid9cHSQzFkgtXgPw== 0000033533-95-000002.txt : 19950512 0000033533-95-000002.hdr.sgml : 19950512 ACCESSION NUMBER: 0000033533-95-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950511 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: 95536612 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 3RD 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 March 31, 1995 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 IdentNo.) 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 1,343,448 . Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of theSecurities 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 - March 31, 1995 1 and June 30, 1994 Statements of Earnings - Nine and Three 3 Months Ended March 31, 1995 and 1994 Statements of Cash Flows - Nine Months 4 Ended March 31, 1995 and 1994 Notes to Financial Statements 5 March 31, 1995 and 1994 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 March 31, 1995 and June 30, 1994 A S S E T S Unaudited 1995 1994 March 31 June 30 CURRENT ASSETS: Cash $ 206,404 $ 178,696 Short-term investments at cost (market value March 31, 1995, $12,558,682 and June 30, 1994, $13,335,488) 12,408,898 13,290,888 Total Cash and Short-term Investments 12,615,302 13,469,584 Trade accounts receivable net of $3000 allowance March 31, 1995 and June 30, 1994 1,851,456 1,156,093 Other receivables 150,285 15,861 NET RECEIVABLES 2,001,741 1,171,954 Inventories: Raw materials and supplies 286,367 501,337 Work-in-process 1,188,363 1,599,148 Costs relating to contracts in process, net of progress payments of $3,109,300 - March 31, 1995 and $1,991,300 - June 30,1994 8,012,768 8,078,077 NET INVENTORIES 9,487,498 10,178,562 Income tax refund receivable 298,201 358,418 Prepaid expenses and other current assets 246,647 185,917 TOTAL CURRENT ASSETS 24,649,389 25,364,435 MARKETABLE SECURITIES AT COST 100,000 100,000 PROPERTY, PLANT AND EQUIPMENT AT COST 11,348,050 10,385,193 Less: Accumulated depreciation and amortization (7,689,289) (7,375,092) NET PROPERTY, PLANT AND EQUIPMENT 3,658,761 3,010,101 TOTAL $ 28,408,150 $ 28,474,536 - 1 - (Continued) ESPEY MFG. & ELECTRONICS CORP. Balance Sheets, Continued March 31, 1995 and June 30, 1994 LIABILITIES AND STOCKHOLDERS' EQUITY Unaudited 1995 1994 March 31 June 30 CURRENT LIABILITIES: Accounts Payable $ 423,346 $ 336,882 Accrued expenses: Salaries, wages and commissions 270,960 99,552 Employees' insurance costs 57,086 58,272 ESOP payable 324,443 - Other 13,906 17,018 Payroll and other taxes withheld and accrued 128,923 140,802 Dividends payable - - Deferred income taxes - current 32,169 69,644 TOTAL CURRENT LIABILITIES 1,250,833 722,170 Deferred income taxes 99,806 124,619 TOTAL LIABILITIES 1,350,639 846,789 STOCKHOLDERS' EQUITY: Common stock, par value .33-1/3 per share. Authorized 2,250,000 shares; issued 1,514,937 shares March 31, 1995 and June 30, 1994. 504,979 504,979 Capital in excess of par value 10,496,287 10,496,287 Retained earnings 24,468,761 24,945,412 35,470,027 35,946,678 Less: Common stock subscribed ( 5,586,624) ( 5,586,624) Cost of 171,489 shares on March 31, 1995 and 164,229 shares on June 30, 1994 of common stock in treasury ( 2,825,892) ( 2,732,307) TOTAL STOCKHOLDERS' EQUITY 27,057,511 27,627,747 TOTAL $ 28,408,150 $ 28,474,536 See accompanying notes to financial statements - 2 - ESPEY MFG. & ELECTRONICS CORP. STATEMENTS OF EARNINGS Nine and Three Months Ended March 31, 1995 and 1994 Unaudited Unaudited Three Months Nine Months 1995 1994 1995 1994 Net Sales $ 3,496,584 $ 1,989,770 $ 10,472,748 $ 10,861,269 Cost of sales 3,229,122 1,402,732 9,297,301 8,551,503 Gross profit 267,462 587,038 1,175,447 2,309,766 Selling, general and administrative expenses 320,759 318,855 1,122,442 1,069,980 Operating income ( 53,297) 268,183 53,005 1,239,786 Other income Interest income and dividends 202,043 103,333 505,207 308,645 Sundry income 403 885 4,109 1,821 202,446 104,218 509,316 310,466 Earnings before income taxes and cumulative 149,149 372,401 562,321 1,550,252 effect of change in accounting principle Provision for income taxes 75,000 149,000 280,000 625,513 Net earnings before cumulative effect of 74,149 223,401 282,321 924,739 change in accounting principle Cumulative effect of change in accounting - - - 201,653 for income taxes Net earnings $ 74,149 $ 223,401 $ 282,321 $ 1,126,392 Earnings per share: Earnings before cumulative effect of change $ .06 $ .17 $ .21 $ .69 in accounting principle Net earnings $ .06 $ .17 $ .21 $ .84 Average number of shares outstanding 1,346,044 1,350,708 1,347,855 1,350,708 See accompanying notes to Financical Statements - 3 - ESPEY MFG. & ELECTRONICS CORP. Statements of Cash Flows Nine Months Ended March 31, 1995 and 1994 Unaudited March 31 1995 1994 Cash Flows From Operating Activities: Net earnings $ 282,321 $ 1,126,392 Adjustments to reconcile net earnings to net cash provided by operating activities: Tax effect of dividends on unallocated ESOP shares 50,070 55,007 Depreciation 314,197 316,832 Changes in assets and liabilities: Decrease (increase) in receivables, net ( 829,787) 24,627 Decrease (increase) in inventories, net 691,064 5,636 Decrease (increase) in other current assets ( 60,730) ( 1,998) Decrease (increase) in income tax refund receivable 60,217 ( 240,718) Increase (decrease) in accounts payable 86,464 324,816 Increase (decrease) in accrued salaries, 171,408 112,221 wages and commissions Increase (decrease) in accrued employee ( 1,186) ( 67,547) insurance costs Increase (decrease) in other accrued expenses ( 3,112) 47,825 Increase (decrease) in payroll & other ( 11,879) ( 33,549) taxes withheld and accrued Increase (decrease) in income tax payable - ( 8,279) Decrease in deferred income taxes ( 62,288) ( 261,689) Increase (decrease) in accrued ESOP contributions 324,443 314,537 Net cash provided by operating activities 1,011,202 1,714,113 Cash Flows From Investing Activities: Additions to property, plant & equipment ( 962,857) ( 96,813) Net cash used in investing activities ( 962,857) ( 96,813) Cash Flows From Financing Activities: Dividends on common stock ( 809,042) ( 810,424) Purchase of treasury stock ( 93,585) - Net cash used in financing activities ( 902,627) ( 810,424) Increase (decrease) in cash and short-term investments ( 854,282) 806,876 Cash and short-term investments, beginning of period 13,469,584 12,262,467 Cash and short-term investments, end of period $ 12,615,302 $ 13,069,343 Income Taxes Paid $ 232,000 $ 879,538 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 March 31, 1995, and the results of operations for each of the three and nine month periods ended March 31, 1995 and 1994 and cash flows for each of the nine month periods ended March 31, 1995 and 1994. 2. The earnings per share computations for March 31, 1995 were based on 1,347,855 shares and on 1,350,708 shares for March 31, 1994. These represent the average number of shares outstanding for each respective period. 3. Revenues and other income include interest on Certificates of Deposit and Treasury Bills in addition to dividends on preferred stocks. 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. 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. - 5 - 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 March 31, 1995 there were 103,375 shares allocated to participants. 8. The Company adopted the provisions of Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes", as of July 1, 1993 on a prospective basis. The cumulative effect of the change in accounting for income taxes as of July 1, 1993 was $201,653 and is separately identified in the statements of earnings for the nine month period ended March 31, 1994. Prior years' financial statements were not restated to apply the provisions of SFAS No. 109. - 6 - ESPEY MFG. & ELECTRONICS CORP. Management's Discussion and Analysis of Financial Condition and Results of Operations Sales for the nine months ended March 31, 1995 were $10,472,748 as compared to $10,861,269 for same period in fiscal 1994. 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 nine month period ended March 31, 1995 were $282,321 or $.21 per share compared to $1,126,392 or $.84 per share for the nine month period ended March 31, 1994. The March 31, 1994 earnings included a cumulative adjustment for the adoption of SFAS 109 which increased net earnings by $201,653, or $.15 per share. This adjustment has been more fully explained in prior financial statements. Manufacturing expenses increased marginally over the corresponding nine month period of last year. Both general & administration and selling expenses decreased slightly. As anticipated the current quarter reflected an increase in earnings over the prior quarter, due mainly to certain cost containment measures taken by the Company. Earnings for the current nine month period, however, are less than for the corresponding nine months of last year. This has been brought about mainly thru the restructuring of our pricing policies due to the increasingly competitive nature of doing business in the military electronics field. In line with this the Company is endeavoring to penetrate the industrial marketplace, not only with our basic expertise in the design, development, and production of specialized power supplies and iron core components, but with the offering of attendant services such as electro-plating and environmental testing. We are currently experiencing marginal success with our power supplies and iron core components, however the future looks extremely promising. A new Division has been set up with the name of Saratoga Electro-Finishing. A capital expenditure of approximately $700,000 has been made for the expansion and modernization of our electro-plating facility. This facility, by employing the most modern and environmentally approved features, will enable us to offer sophisticated services to both industrial and military customers. Our demographic studies have indicated that there is no similar facility in either our immediate or neighboring geographic areas. The facility is currently operating on a limited basis. We are undertaking a marketing effort to insure that we will maximize its potential as it becomes fully operational. Although our investment base was somewhat lower in the current period, an increase in short-term rates resulted in an increase of about $200,000 in our investment income for the nine month period ended March 31, 1995 as compared to the nine month period ended March 31, 1994. The Company does not feel that there is any risk associated with its investment policy, since approximately 90% of our investments are represented by U.S. Government T-Bills, with the balance represented by Certificates of Deposit and one preferred stock issue in a major utility. - 7 - 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. The Company funds all of its operations, when possible, including Financing Activities and Investing Activities with cash flows resulting from Operating Activities. It is felt that in the future, funds from Operating Activities will continue to be adequate to meet these needs. For the current nine month period capital expenditures were approximately $962,000. During the nine month period ended March 31, 1995 the Company repurchased 7,260 shares of its common stock. On March 24,1995 the Board of Directors authorized an additional one million dollars for the continuing repurchase of the Company's shares making the total available as of March 31, 1995 $1,083,317. The backlog as of March 31, 1994 was $21,142,465. The backlog as of March 31, 1995 was $16,884,994. A dividend in the amount of $.60 per share was paid November 21, 1994 to shareholders of record on October 28, 1994. On October 20, 1994, Albert K. Braim, a director since 1968, died. The Company and all of its Directors and Employees wish to express their condolences to Mr. Sol Pinsley, longtime President and CEO, who lost his wife on March 21, 1995. - 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 None during the quarter. Item 6. Exhibits and Reports on Form 8-K None during the quarter. - 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. Sol Pinsley, President Herbert Potoker, Treasurer and Chief Financial Officer 10 May 1995 Date - 10 - -----END PRIVACY-ENHANCED MESSAGE-----