-----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, AMWKU/k12FANUPKZVQ9j/uEsg2pAgU/VRY8CEA7JJwZMe7eq1gRsJMy1xOI6riN7 Nil7oRrpZijfvScXFD3lsA== 0000033533-96-000004.txt : 19960514 0000033533-96-000004.hdr.sgml : 19960514 ACCESSION NUMBER: 0000033533-96-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960513 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: 96561319 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, 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 1,118,646 . 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 - March 31, 1996 1 and June 30, 1995 Statements of Earnings - Nine Months 3 and Three Months Ended March 31, 1996 and 1995 Statements of Cash Flows - Nine Months 4 Ended March 31, 1996 and 1995 Notes to Financial Statements 5 March 31, 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 March 31, 1996 and June 30, 1995 A S S E T S Unaudited 1996 1995 March 31 June 30 CURRENT ASSETS: Cash and cash equivelents $ 146,368 $ 231,675 Short-term investments at cost (market value March 31, 1996, $300,528 and June 30, 1995, $1,497,681) 300,000 1,467,540 Total Cash and Short-term Investments 446,368 1,699,215 Marketable investment securities - current 5,715,769 10,454,464 Trade accounts receivable net of $3000 allowance March 31, 1996 and June 30, 1995 2,959,153 1,925,778 Other receivables 200,377 20,627 NET RECEIVABLES 3,159,530 1,946,405 Inventories: Raw materials and supplies 327,266 400,778 Work-in-process 1,015,000 1,078,169 Costs relating to contracts in process, net of progress payments of $ - 0 - March 31, 1996 and $2,121,800 - June 30,1995 10,425,698 8,769,378 NET INVENTORIES 11,767,964 10,248,325 Income tax refund receivable 160,581 410,467 Prepaid expenses and other current assets 256,135 385,033 TOTAL CURRENT ASSETS 21,506,347 25,143,909 MARKETABLE INVESTMENT SECURITIES 100,000 100,000 PROPERTY, PLANT AND EQUIPMENT AT COST 11,776,259 11,464,636 Less: Accumulated depreciation and amortization (8,261,369) (7,868,827) NET PROPERTY, PLANT AND EQUIPMENT 3,514,890 3,595,809 TOTAL $ 25,121,237 $ 28,839,718 - 1 - (Continued) ESPEY MFG. & ELECTRONICS CORP. Balance Sheets, Continued March 31, 1996 and June 30, 1995 LIABILITIES AND STOCKHOLDERS' EQUITY Unaudited 1996 1995 March 31 June 30 CURRENT LIABILITIES: Accounts Payable $ 618,163 $ 596,823 Accrued expenses: Salaries, wages and commissions 289,891 104,269 Employees' insurance costs 51,946 50,293 ESOP payable 319,715 - Other 14,488 14,588 Payroll and other taxes withheld and accrued 137,322 141,513 Dividends payable - - Deferred income taxes - current 32,593 75,915 TOTAL CURRENT LIABILITIES 1,464,118 983,401 Deferred income taxes 26,070 30,697 TOTAL LIABILITIES 1,490,188 1,014,098 STOCKHOLDERS' EQUITY: Common stock, par value .33-1/3 per share. Authorized 2,250,000 shares; issued 1,514,937 shares March 31, 1996 and June 30, 1995. 504,979 504,979 Capital in excess of par value 10,496,287 10,496,287 Retained earnings 24,179,977 24,678,208 35,181,243 35,679,474 Less: Common stock subscribed ( 5,027,962) ( 5,027,962) Cost of 396,291 shares on March 31, 1996 and 171,489 shares on June 30, 1995 of common stock in treasury ( 6,522,232) ( 2,825,892) TOTAL STOCKHOLDERS' EQUITY 23,631,049 27,825,620 TOTAL $ 25,121,237 $ 28,839,718 See accompanying notes to financial statements - 2 - ESPEY MFG. & ELECTRONICS CORP. STATEMENTS OF EARNINGS Nine and Three Months Ended March 31, 1996 and 1995 Unaudited Unaudited Three Months Nine Months 1996 1995 1996 1995 Net Sales $ 4,352,275 $ 3,496,584 $ 12,787,976 $ 10,472,748 Cost of sales 3,818,718 3,229,122 11,362,828 9,297,301 Gross profit 533,557 267,462 1,425,148 1,175,447 Selling, general and administrative expenses 397,074 320,759 1,251,804 1,122,442 Operating income 136,483 ( 53,297) 173,344 53,005 Other income Interest income and dividends 133,329 202,043 459,539 505,207 Sundry income 667 403 7,942 4,109 133,996 202,446 467,481 509,316 Earnings before income taxes 270,479 149,149 640,825 562,321 Provision for income taxes 101,000 75,000 247,000 280,000 Net earnings $ 169,479 $ 74,149 $ 393,825 $ 282,321 Earnings per share: Net earnings $ .13 $ .06 $ .30 $ .21 Average number of shares outstanding 1,264,912 1,346,044 1,319,375 1,347,855 See accompanying notes to Financical Statements - 3 - ESPEY MFG. & ELECTRONICS CORP. Statements of Cash Flows Nine Months Ended March 31, 1996 and 1995 Unaudited March 31 1996 1995 Cash Flows From Operating Activities: Net earnings $ 393,825 $ 282,321 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 392,542 314,197 Changes in assets and liabilities: Decrease (increase) in receivables, net ( 1,213,125) ( 829,787) Decrease (increase) in inventories, net ( 1,519,639) 691,064 Decrease (increase) in other current assets 128,898 ( 60,730) Decrease (increase) in income tax refund receivable 249,886 60,217 Increase (decrease) in accounts payable 21,340 86,464 Increase (decrease) in accrued salaries, 185,622 171,408 wages and commissions Increase (decrease) in accrued employee 1,653 ( 1,186) insurance costs Increase (decrease) in other accrued expenses ( 100) ( 3,112) Increase (decrease) in payroll & other ( 4,191) ( 11,879) taxes withheld and accrued Increase (decrease) in income tax payable - - Decrease in deferred income taxes ( 47,949) ( 62,288) Increase (decrease) in accrued ESOP contributions 319,715 324,443 Net cash provided by operating activities ( 1,046,460) 1,011,202 Cash Flows From Investing Activities: Additions to property, plant & equipment ( 311,623) ( 962,857) Proceeds from sale of marketable investment securities 11,445,421 - Purchases of marketable investment securities ( 6,706,726) - Net cash used in investing activities 4,427,072 ( 962,857) Cash Flows From Financing Activities: Dividends on common stock ( 937,119) ( 809,042) Purchase of treasury stock ( 3,696,340) ( 93,585) Net cash used in financing activities ( 4,633,459) ( 902,627) Increase (decrease) in cash and short-term investments ( 1,252,847) ( 854,282) Cash and short-term investments, beginning of period 1,699,215 13,469,584 Cash and short-term investments, end of period $ 446,368 $ 12,615,302 Income Taxes Paid $ - $ 232,000 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 March 31, 1996, and the results of operations for each of the nine months ended March 31, 1996 and 1995 and cash flows for the nine months ended March 31, 1996 and 1995. 2. The earnings per share computations for March 31, 1996 were based on 1,319,375 shares and on 1,347,855 shares for March 31, 1995. 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, 1996 there were 118,986 shares allocated to participants. - 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, 1996 were $12,787,976 as compared to $10,472,748 for the same period in 1995, an increase of approximately 22%. 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, 1996 were $393,825 or $.30 per share compared to $282,321 or $.21 per share for the corresponding period ended March 31, 1995. Net earnings per share reflects an increase of approximately 43% over the prior year's nine month period. Net earnings per share of $.13 for the quarter ended March 31, 1996 indicates an increase of 30% over the net earnings of $.10 per share for the prior quarter ended December 31, 1995, and an increase of more than 100% over the net earnings per share of $.06 for the quarter ended March 31, 1995. Most of the contracts shipped during the current nine month period reflected about the same gross profit margin as those shipped in the comparable nine month period of last year. Cost of sales for both nine month periods was 89%. The increase in gross earnings was due primarily to the increase in Sales. We feel that this is a continuation of a positive trend, and will continue to strive to increase sales and profitability 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 11% during the current six month period. The major factor accounting for this was an increase in selling salaries. Investment Income declined by approximately 9% for the current nine month period, due to both a decrease in our investment base and overall declining interest rates. 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. - 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 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 $311,623. On February 9, 1996 the Board of Directors authorized additional funds for the continuing purchase of shares of the company's common stock in either the open market or in private transactions. As of that date the total authorization stood at $5,000,000. On March 7, 1996 the company purchased, for an aggregate amount of $3,620,100, the entire holdings of Espey common stock amounting to 219,400 shares, from both the Entwistle Co. and Global Securities. On March 11, 1996 a Form 8K was filed with the Securities and Exchange Commission disclosing this transaction. During the nine month period ended March 31, 1996, the Company repurchased 224,802 shares of its common stock. Under existing authorizations, as of March 31, 1996, funds in the amount of $1,379,900 were available for the continuing repurchase of the Company's shares. The backlog as of March 31, 1996 was $18,666,969. The backlog as of March 31, 1995 was $16,884,994. 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 At the rescheduled 1995 Annual Meeting of Shareholders held on March 28, 1996, three shareholder proposals, none of which received a majority of the votes cast, were included in the proxy statement as follows: Proposal 1 A recommendation to the Board of Directors that the 1989 Shareholder Rights Plan be redeemed. Proposal 2 A recommendation to the Board of Directors to declassify the Board so that all directors are elected each year. Proposal 3 A recommendation that the Board of Directors initiate steps to achieve a sale, merger or other restructuring of the Company. The result of the voting was as follows: Proposal 1 Proposal 2 Proposal 3 For 178,966 169,006 132,911 Against 821,641 825,546 865,924 Abstain 2,360 8,415 4,133 Broker non-votes 300,384 300,384 300,384 Item 5. Other Information None during the quarter. Item 6. Exhibits and Reports on Form 8-K On March 11, 1996, a Form 8-K was filed reflecting the repurchase of 219,400 shares of the Company's common stock. - 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 May 1996 Date - 10 - EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 3RD QUARTER 10-Q FILING AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 9-MOS JUN-30-1996 MAR-31-1996 446,368 5,715,769 3,159,530 0 11,767,964 21,506,347 11,776,259 8,261,369 25,121,237 1,464,118 0 0 0 504,979 0 25,121,237 12,787,976 12,787,976 11,362,828 11,362,828 1,251,804 0 0 640,825 247,000 393,825 0 0 0 393,825 .30 0 -----END PRIVACY-ENHANCED MESSAGE-----