-----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, AcltFdc9cKaadGwFlRTjKEr/WYVJlNycW24z6PVKAU/QzAWc5P3NXYsrHbOufMvx 0Kt2CpFifXb9Lxq+MuZ/yg== 0000033533-96-000001.txt : 19960216 0000033533-96-000001.hdr.sgml : 19960216 ACCESSION NUMBER: 0000033533-96-000001 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960213 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: 96517256 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 2ND 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 December 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 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 1,338,046. 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 - December 31, 1995 1 and June 30, 1995 Statements of Earnings - Six Months 3 Ended December 31, 1995 and 1994 Statements of Cash Flows - Six Months 4 and Three Months Ended December 31, 1995 and 1994 Notes to Financial Statements 5 December 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 December 31, 1995 and June 30, 1995 A S S E T S Unaudited 1995 1995 December 31 June 30 CURRENT ASSETS: Cash and cash equivelents $ 846,609 $ 231,675 Short-term investments at cost (market value December 31, 1995, $300,235 and June 30, 1995, $1,497,681) 300,000 1,467,540 Total Cash and Short-term Investments 1,146,609 1,699,215 Marketable investment securities - current 9,469,817 10,454,464 Trade accounts receivable net of $3000 allowance December 31, 1995 and June 30, 1995 2,386,905 1,925,778 Other receivables 302,313 20,627 NET RECEIVABLES 2,689,218 1,946,405 Inventories: Raw materials and supplies 309,562 400,778 Work-in-process 1,148,000 1,078,169 Costs relating to contracts in process, net of progress payments of $773,800 - December 31, 1995 and $2,121,800 - June 30,1995 9,689,451 8,769,378 NET INVENTORIES 11,147,013 10,248,325 Income tax refund receivable 277,564 410,467 Prepaid expenses and other current assets 340,356 385,033 TOTAL CURRENT ASSETS 25,070,577 25,143,909 MARKETABLE INVESTMENT SECURITIES 100,000 100,000 PROPERTY, PLANT AND EQUIPMENT AT COST 11,568,602 11,464,636 Less: Accumulated depreciation and amortization (8,080,521) (7,868,827) NET PROPERTY, PLANT AND EQUIPMENT 3,488,081 3,595,809 TOTAL $ 28,658,658 $ 28,839,718 - 1 - (Continued) ESPEY MFG. & ELECTRONICS CORP. Balance Sheets, Continued December 31, 1995 and June 30, 1995 LIABILITIES AND STOCKHOLDERS' EQUITY Unaudited 1995 1995 December 31 June 30 CURRENT LIABILITIES: Accounts Payable $ 756,386 $ 596,823 Accrued expenses: Salaries, wages and commissions 314,142 104,269 Employees' insurance costs 46,229 50,293 ESOP payable 213,143 - Other 15,693 14,588 Payroll and other taxes withheld and accrued 156,750 141,513 Dividends payable - - Deferred income taxes - current 40,645 75,915 TOTAL CURRENT LIABILITIES 1,542,988 983,401 Deferred income taxes 34,000 30,697 TOTAL LIABILITIES 1,576,988 1,014,098 STOCKHOLDERS' EQUITY: Common stock, par value .33-1/3 per share. Authorized 2,250,000 shares; issued 1,514,937 shares December 31, 1995 and June 30, 1995. 504,979 504,979 Capital in excess of par value 10,496,287 10,496,287 Retained earnings 24,010,498 24,678,208 35,011,764 35,679,474 Less: Common stock subscribed ( 5,027,962) ( 5,027,962) Cost of 176,891 shares on December 31, 1995 and 171,489 shares on June 30, 1995 of common stock in treasury ( 2,902,132) ( 2,825,892) TOTAL STOCKHOLDERS' EQUITY 27,081,670 27,825,620 TOTAL $ 28,658,658 $ 28,839,718 See accompanying notes to financial statements - 2 - ESPEY MFG. & ELECTRONICS CORP. STATEMENTS OF EARNINGS Six and Three Months Ended December 31, 1995 and 1994 Unaudited Unaudited Three Months Six Months 1995 1994 1995 1994 Net Sales $ 4,434,896 $ 2,814,595 $ 8,435,701 $ 6,976,164 Cost of sales 3,947,980 2,520,964 7,544,110 6,068,179 Gross profit 486,916 293,631 891,591 907,985 Selling, general and administrative expenses 443,195 386,019 854,730 801,683 Operating income (loss) 43,721 ( 92,388) 36,861 106,302 Other income Interest income and dividends 166,748 156,725 326,210 303,164 Sundry income 437 1,070 7,275 3,706 167,185 157,795 333,485 306,870 Earnings before income taxes 210,906 65,407 370,346 413,172 Provision for income taxes 85,000 32,000 146,000 205,000 Net earnings $ 125,906 $ 33,407 $ 224,346 $ 208,172 Earnings per share: Net earnings $ .10 $ .02 $ .17 $ .15 Average number of shares outstanding 1,338,552 1,347,572 1,339,951 1,348,488 See accompanying notes to Financical Statements - 3 - ESPEY MFG. & ELECTRONICS CORP. Statements of Cash Flows Six Months Ended December 31, 1995 and 1994 Unaudited December 31 1995 1994 Cash Flows From Operating Activities: Net earnings $ 224,346 $ 208,172 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 211,694 207,039 Changes in assets and liabilities: Decrease (increase) in receivables, net ( 742,813) ( 850,849) Decrease (increase) in inventories, net ( 898,688) 168,445 Decrease (increase) in other current assets 44,677 ( 134,037) Decrease (increase) in income tax refund receivable 132,903 88,999 Increase (decrease) in accounts payable 159,563 522,876 Increase (decrease) in accrued salaries, 209,873 176,645 wages and commissions Increase (decrease) in accrued employee ( 4,064) ( 15,635) insurance costs Increase (decrease) in other accrued expenses 1,105 ( 4,508) Increase (decrease) in payroll & other 15,237 ( 20,464) taxes withheld and accrued Increase (decrease) in income tax payable - - Decrease in deferred income taxes ( 31,967) ( 41,527) Increase (decrease) in accrued ESOP contributions 213,143 216,295 Net cash provided by (used in) operating activities ( 419,928) 571,521 Cash Flows From Investing Activities: Additions to property, plant & equipment ( 103,966) ( 706,340) Proceeds from sale of marketable investment securities 4,796,099 - Purchases of marketable investment securities ( 3,811,452) - Net cash provided by (used in) investing activities 880,681 ( 706,340) Cash Flows From Financing Activities: Dividends on common stock ( 937,119) ( 809,042) Purchase of treasury stock ( 76,240) ( 54,094) Net cash used in financing activities ( 1,013,359) ( 863,136) Increase (decrease) in cash and short-term investments ( 552,606) ( 997,955) Cash and short-term investments, beginning of period 1,699,215 13,469,584 Cash and short-term investments, end of period $ 1,146,609 $ 12,471,629 Income Taxes Paid $ - $ 116,000 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 Decmember 31, 1995, and the results of operations for each of the three and six month periods ended December 31, 1995 and 1994 and cash flows for the six month periods ended December 31, 1995 and 1994. 2. The earnings per share computations for December 31, 1995 were based on 1,339,951 shares and on 1,348,488 shares for December 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 December 31, 1995 there were 118,986 shares allocated to participants. 8. The Company adopted the provisions of Statement of Financial Accounting Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt and Equity Securities," at July 1, 1994. Upon adoption of SFAS No. 115, at July 1, 1994, all amounts included in short-term investments matured within three months of the adoption date. Therefore no amounts were transferred to marketable investment securities upon adoption and there was no cumulative effect from this change. - 6 - ESPEY MFG. & ELECTRONICS CORP. Management's Discussion and Analysis of Financial Condition and Results of Operations Sales for the six months ended December 31, 1995 were $8,435,701 as compared to $6,976,164 for the same period in 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 six month period were $224,346 or $.17 per share compared to $208,172 or $.15 per share for the corresponding period of last year. Most of the contracts shipped during the current six month period reflected about the same gross profit margin as those shipped in the comparable six month period last year. Cost of sales for both six month periods was 90%, which is consistent with the Cost of Sales for the first quarter of this year. We feel that this is a positive trend, and will continue to strive to increase profitibility primarily through the introduction of products and services of a more proprietary nature in both the military and industrial marketplace. The President's message contained in the 1995 Annual Report addressed some of our specific areas of concentration. Selling and G & A expenses increased by about 6% during the current six month period. The major factor accounting for this was an increase in selling salaries. Although our investment base was somewhat lower during the current period, Investment Income rose slightly. 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 of a major utility. 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, when possible, funds all of its operations 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 six month period capital expenditures were approximately $103,966. During the six month period ended December 31, 1995, the Company repurchased 5402 shares of its common stock. - 7 - Under existing authorizations, as of December 31, 1995, funds in the amount of $1,007,077 were available for the continuing repurchase of the Company's shares. The backlog as of December 31, 1994 was $16,666,187. The backlog as of December 31, 1995 was $18,596,016. A dividend in the amount of $.70 per share was declared payable November 21, 1995 to shareholders of record on October 27, 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 13 February 1996 Date - 10 - EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 2ND QUARTER 10-Q FILING AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 6-MOS JUN-30-1996 DEC-31-1995 846,609 9,469,817 2,689,218 0 11,147,013 25,070,577 3,488,081 8,080,521 28,658,658 1,576,988 0 0 0 504,979 0 28,658,658 8,435,701 8,435,701 7,544,110 7,544,110 854,730 0 0 370,346 146,000 224,346 0 0 0 224,346 .17 0 -----END PRIVACY-ENHANCED MESSAGE-----