-----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, JIugXkpe/KPxKXfjGglrRy/00RvOxcSh+WybwUxKf+RHsbIBXzX9pz2Lg9Op/jeC l5TjwzFHCtPGsaanj1gNyw== /in/edgar/work/0000914317-00-000723/0000914317-00-000723.txt : 20001107 0000914317-00-000723.hdr.sgml : 20001107 ACCESSION NUMBER: 0000914317-00-000723 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001106 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ESPEY MANUFACTURING & ELECTRONICS CORP CENTRAL INDEX KEY: 0000033533 STANDARD INDUSTRIAL CLASSIFICATION: [3679 ] IRS NUMBER: 141387171 STATE OF INCORPORATION: NY FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-04383 FILM NUMBER: 753427 BUSINESS ADDRESS: STREET 1: 233 BALLSTON AVE STREET 2: CONGRESS & BALLSTON AVENUES CITY: SARATOGA SPRINGS STATE: NY ZIP: 12866 BUSINESS PHONE: 5185844100 MAIL ADDRESS: STREET 1: 233 BALLSTON AVE CITY: SARATOGA SPRINGS STATE: NY ZIP: 12866 10-Q 1 0001.txt FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended September 30, 2000 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 Identification No.) 233 Ballston Avenue, Saratoga Springs, New York 12866 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code 518-584-4100 --------------------------- Number of shares outstanding of issuer's class of common stock $.33-1/3 par value as of November 6, 2000: 1,033,631. 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 Statements: Consolidated Balance Sheets - September 30, 2000 and June 30, 2000 1 Consolidated Statements of Income - Three Months Ended September 30, 2000 and 1999 3 Consolidated Statements of Cash Flows - Three Months Ended September 30, 2000 and 1999 4 Notes to Consolidated Financial Statements 5 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. Consolidated Balance Sheets September 30, 2000 and June 30, 2000 ------------------------------------ A S S E T S
Unaudited 2000 2000 September 30 June 30 ----------- ----------- CURRENT ASSETS: Cash and cash equivalents $ 2,971,887 $ 2,367,191 Investments securities 679,000 650,000 ----------- ----------- Net cash and cash equivalents and investment securities 3,650,887 3,017,191 ----------- ----------- Trade accounts receivable, net 3,224,423 4,105,028 Other receivables 10,263 46,435 ----------- ----------- Net Receivables 3,234,686 4,151,463 ----------- ----------- Inventories: Raw materials and supplies 823,264 822,814 Work-in-process 3,363,149 3,113,708 Costs relating to contracts in process, net of progress payments of $363,776 at September 30 and $537,468 at June 30, 2000 11,121,352 10,889,930 ----------- ----------- Net Inventories 15,307,765 14,826,452 ----------- ----------- Deferred income taxes 289,559 299,709 Prepaid expenses and other current assets 159,201 245,501 ----------- ----------- Total Current Assets 22,642,098 22,540,316 ----------- ----------- Deferred Income Taxes 6,516 6,516 ----------- ----------- Property, plant and equipment, net 3,549,313 3,571,205 ----------- ----------- Total Assets $26,197,927 $26,118,037 =========== ===========
See accompanying notes to the consolidated financial statements (Continued) - 1 - ESPEY MFG. & ELECTRONICS CORP. Consolidated Balance Sheets, Continued September 30, 2000 and June 30, 2000 ------------------------------------ LIABILITIES AND STOCKHOLDERS' EQUITY
Unaudited 2000 2000 September 30 June 30 ------------ ----------- CURRENT LIABILITIES: Accounts Payable $ 407,526 $ 541,636 Accrued expenses: Salaries, wages and commissions 195,296 244,865 Employees' insurance costs 57,318 65,194 Vacation 223,991 280,493 ESOP payable 138,615 - Other 4,057 3,372 Payroll and other taxes withheld and accrued 57,000 69,536 Income taxes payable 154,670 124,075 ------------ ----------- TOTAL CURRENT LIABILITIES 1,238,473 1,329,171 STOCKHOLDERS' EQUITY: Common stock, par value .33-1/3 per share. Authorized 10,000,000 shares; issued 1,514,937 shares September 30, 2000 and June 30, 2000. Outstanding 1,033,631 on September 30, 2000 and June 30, 2000 504,979 504,979 Accumulated other comprehensive income(loss) (88,371) (107,221) Capital in excess of par value 10,496,287 10,496,287 Retained earnings 23,927,171 23,775,433 ------------ ----------- 34,840,066 34,669,478 Less: Common stock subscribed (2,234,650) (2,234,650) Cost of 481,306 shares on September 30, 2000 and June 30, 2000 of common stock in treasury (7,645,962) (7,645,962) ------------ ------------ TOTAL STOCKHOLDERS' EQUITY 24,959,454 24,788,866 ------------ ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 26,197,927 $ 26,118,037 ============ ============
See accompanying notes to the consolidated financial statements - 2 - ESPEY MFG. & ELECTRONICS CORP. Consolidated Statements of Income Three Months Ended September 30, 2000 and 1999 ----------------------------------------------
Unaudited Three Months September 2000 September 1999 -------------- -------------- Net Sales $ 4,167,234 $ 3,298,980 Cost of sales 3,478,973 2,884,391 ----------- ----------- GROSS PROFIT 688,261 414,589 Selling, general and administrative expenses 460,251 493,600 ----------- ----------- OPERATING INCOME (LOSS) 228,010 (79,011) ----------- ----------- Other Income: Interest and dividend income 65,190 90,666 Other 17,126 52,941 ----------- ----------- TOTAL OTHER INCOME 82,316 143,607 ----------- ----------- Income before income taxes 310,326 64,596 Provision for income taxes 106,906 25,000 ----------- ----------- NET INCOME $ 203,420 $ 39,596 ----------- ----------- Income per Share: Basic and diluted income per share $ .20 $ .04 ===== ===== Weighted average number of shares outstanding Basic 1,033,631 1,052,884 ========= ========= Diluted 1,035,966 1,052,884 ========= =========
See accompanying notes to the consolidated financial statements - 3 - ESPEY MFG. & ELECTRONICS CORP. Consolidated Statements of Cash Flows Three Months Ended September 30, 2000 and 1999
Unaudited September 30 2000 1999 ----------- ----------- Cash Flows From Operating Activities: Net income $ 203,420 $ 39,596 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 181,094 111,751 Gain on disposal of fixed assets (14,721) - Changes in assets and liabilities: Decrease in receivables 916,777 1,181,939 Increase in inventories (481,313) (617,286) Decrease in prepaid expenses and other current assets 86,300 147,738 (Decrease) increase in accounts payable (134,110) 555,001 Decrease in accrued salaries, wages and commissions (49,569) (118,242) Decrease in accrued employee insurance costs (7,876) (1,391) (Decrease) increase in other accrued expenses 685 (28,235) Decrease in vacation accrual (56,502) (21,450) Increase in ESOP payable 138,615 138,352 Decrease in payroll & other taxes withheld and accrued (12,536) (22,418) Decrease in deferred income taxes - - Increase in income taxes payable 30,595 19,608 ----------- ----------- Net cash provided by operating activities 800,859 1,384,963 ----------- ----------- Cash Flows From Investing Activities: Proceeds from sale of fixed assets 14,750 - Proceeds from maturity of investment securities - 2,915,161 Additions to property, plant & equipment (159,231) (260,559) ----------- ----------- Net cash (used in) provided by investing activities (144,481) 2,654,602 ----------- ----------- Cash Flows From Financing Activities: Dividends on common stock (51,682) (52,432) Purchase of treasury stock - (193,223) ----------- ----------- Net cash used in financing activities (51,682) (245,655) ----------- ----------- Increase in cash and cash equivalents 604,696 3,793,910 Cash and cash equivalents, beginning of period 2,367,191 2,364,335 ----------- ----------- Cash and cash equivalents, end of period $ 2,971,887 $ 6,158,245 ----------- ----------- Income Taxes Paid $ - $ - =========== ===========
See accompanying notes to the consolidated financial statements - 4 - ESPEY MFG. & ELECTRONICS CORP. Notes to Consolidated Financial Statements ------------------------------------------ 1. In the opinion of management the accompanying unaudited consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary for a fair presentation of results for such periods. The results for any interim period are not necessarily indicative of the results to be expected for the full fiscal year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. These financial statements should be read in conjunction with the Company's most recent audited financial statements included in its 2000 Form 10-K. 2. The basic earnings per share (EPS) is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted EPS is computed giving effect to all dilutive potential common shares that were outstanding during the period. Dilutive potential common shares consist of the incremental common shares issuable upon the exercise of stock options for all periods using the treasury stock method. 3. Other income consists principally of government grants related to increased employment, interest on Certificates of Deposit, Treasury Bills, money market accounts and dividends on equity securities. 4. 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. 5. 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. 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, 2000 there were 197,136 shares allocated to participants. 6. Total comprehensive income consists of: Three Months Ended September 30, 2000 1999 -------- -------- Net income $ 203,420 39,596 Accumulated other comprehensive income: Unrealized gain (loss) on investment securities 18,850 (33,280) -------- -------- Total comprehensive income 222,270 6,316 ======== ======== - 5 - 7. Stock Options On October 29, 1999, the Board of Directors approved, subject to shareholder approval, the 2000 Stock Option Plan (the Plan). Under the Plan and related incentive stock option agreements, options will be granted to purchase shares of common stock of the Company with an exercise price not less than the fair value of a share of such common stock at the date of the grant and vest over a period not to exceed ten years as will be determined by the Option Committee which will administer the Plan. Non-Qualified stock options will be issued in accordance with the Plan. Shareholders approved the Plan at the Annual Meeting on January 4, 2000. The Company applies Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," in accounting for the Plan. To determine the necessary pro forma disclosure information the Company utilizes Statement of Financial Accounting Standards No. 123 "Accounting for Stock-Based Compensation". On March 1, 2000, 11,500 stock options were granted under the Plan. All options were granted at fair market value. - 6 - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - -------------------------------------------------------------------------------- Results of Operations - --------------------- Net sales for the three months ended September 30, 2000 were $4,167,234 as compared to $3,298,980 for the same period in 1999. The $868,254 increase in net sales for the three-month period is mainly due to increased sales of power supplies and radar transmitters. Due to successful marketing efforts with new and existing customers the Company should continue to see increased net sales levels as backlog orders are completed and shipped. During the first quarter of fiscal 2001 gross profits as a percentage of sales increased approximately 4% as compared with the first quarter of fiscal 2000. Net income for the three months ended September 30, 2000 was $203,419 or $.20 per share compared to $39,596 or $.04 per share for the corresponding period ended September 30, 1999. The increase in gross profit and net income was primarily due to higher sales volume and changes in contract/product mix. Management continues to evaluate the Company's workforce to insure that production and overall execution of backlog orders and additional anticipated orders are successfully performed. Present employment is approximately 240 people. Selling, general and administrative expenses were $460,251 for the three months ended September 30, 2000, a decrease of $33,349, or 6.8%, as compared to the three months ended September 30, 1999. This decrease was primarily due to a decrease in selling expenses. Total other income for the three months ended September 30, 2000 decreased $61,292, compared to the three months ended September 30, 1999. This decrease is due to lower interest income and lower funds received related to government grants for increased employment. The Company does not believe that there is any risk associated with its investment policy, since the majority of its investments are represented by United States Government Treasury Securities, preferred equity securities and a money market account. The Company continues to diversify its customer base and product offerings. The backlog at September 30, 2000 was approximately $27,339,000, as compared to approximately $27,871,000 at September 30, 1999. Liquidity and Capital Resources - ------------------------------- As of September 30, 2000, the Company had working capital of $21.4 million compared to $21.2 million at June 30, 2000. The Company meets its short-term financing needs through cash from operations and when necessary, from its existing cash and short term investments. The table below presents the summary of cash flow for the periods indicated:
Three Months Ended September 30, 2000 1999 ---- ---- Net cash provided by operating activities $ 800,859 $1,384,963 Net cash (used in) provided by investing activities $ (144,481) $2,654,602 Net cash used in financing activities $ 51,682 $ 245,655
Net cash provided by operating activities fluctuates between periods primarily as a result of differences in net income, the timing of the collection of - 7 - accounts receivable, purchase of inventory, level of sales and payment of accounts payable. The decrease in net cash provided by (used in) investing activities is due to the maturity of investment securities with no offsetting purchase of new investments. The decrease in net cash used in financing activities is due to decreased treasury stock purchases. The Company currently believes that its current cash and cash equivalent balances and the cash generated from operations will be sufficient to meet its long-term funding requirements. Management has in place a $3,000,000 line of credit to help fund further growth. For the first quarter of fiscal 2000 capital expenditures were approximately $160,000. Since the debt of the Company's ESOP is not to an outside party the Company has eliminated from the Consolidated Statements of Income the offsetting items of interest income and interest expenses relating to ESOP. The Company has also eliminated the offsetting accruals from the Consolidated Balance Sheets. During the three months ended September 30, 2000, the Company did not repurchase any of its common stock. During the three months ended September 30, 1999, the Company repurchased 15,027 shares of its common stock from the Company's ESOP and other public transactions. Under existing Board authorizations, as of September 30, 2000, $925,750 could be utilized to repurchase the Company's common stock. Year 2000 Issues The Company's information technology systems successfully completed the transition into the year 2000. The beginning of the new year resulted in no adverse or negative impact on operations. The Company believes that the risk associated with the year 2000 problem has been identified and eliminated. The Company will continue to evaluate the 2000 readiness of its business systems and significant vendors to ensure a complete transition through the year 2000. The estimated total cost of the year 2000 assessment and remediation plan has been less than $25,000. CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 It should be noted that in this Management's Discussion and Analysis of Financial Condition and Results of Operations are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The terms "believe," "anticipate," "intend," "goal," "expect," and similar expressions may identify forward-looking statements. These forward-looking statements represent the Company's current expectations or beliefs concerning future events. The matters covered by these statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those set forth in the forward-looking statements, including the Company's dependence on timely development, introduction and customer acceptance of new products, the impact of competition and price erosion, as well as supply and manufacturing constraints and other risks and uncertainties. The foregoing list should not be construed as exhaustive, and the Company disclaims any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. - 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 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. /s/ Howard Pinsley,President ------------------------------- Howard Pinsley, President and Chief Executive Officer /s/ David O'Neil, Treasurer -------------------------------- David O'Neil, Treasurer and Principal Financial Officer 15 November 2000 ---------------- Date - 10 - EX-27 2 0002.txt FINANCIAL DATA SCHEDULE
5 3-MOS JUN-30-2001 SEP-30-2000 2,971,887 679,000 3,234,686 0 15,307,765 22,642,098 3,549,313 0 26,197,927 1,238,473 0 0 0 504,979 0 26,197,927 4,167,234 4,167,234 3,478,973 3,478,973 460,251 0 0 310,326 106,906 203,420 0 0 203,420 0 .20 .20
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