-----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, Dd8bI2cY6T1visQgIjAxid6tsuX3BNWPEtNQE/eRrk2lPA82YrG4TfoEoLPnbRhq HPR9im5NcD9hBOSbSeF8tA== 0000914317-01-000091.txt : 20010214 0000914317-01-000091.hdr.sgml : 20010214 ACCESSION NUMBER: 0000914317-01-000091 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010213 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: SEC FILE NUMBER: 001-04383 FILM NUMBER: 1537804 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 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 December 31, 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 February 13, 2001: 1,029,461. 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 - December 31, 2000 and June 30, 2000 1 Consolidated Statements of Income - Three and Six Months Ended December 31, 2000 and 1999 3 Consolidated Statements of Cash Flows - Six Months Ended December 31, 2000 and 1999 4 Notes to Consolidated Financial Statements 5 Item 2 Management's Discussion and Analysis of 5 Financial Condition and Results of Operations. PART II OTHER INFORMATION 8 SIGNATURES 8 ESPEY MFG. & ELECTRONICS CORP. Consolidated Balance Sheets December 31, 2000 and June 30, 2000 ------------------------------------ A S S E T S
Unaudited 2000 2000 December 31 June 30 ----------- ----------- CURRENT ASSETS: Cash and cash equivalents $ 3,193,433 $ 2,367,191 Investment securities 702,000 650,000 Trade accounts receivable, net 3,178,745 4,105,028 Other receivables 12,501 46,435 Inventories: Raw materials and supplies 905,777 822,814 Work-in-process 3,274,236 3,113,708 Costs relating to contracts in Process, net of advance payments of $181,888 at December 31, 2000 and $537,468 at June 30, 2000 11,491,350 10,889,930 ----------- ----------- Total Inventories 15,671,363 14,826,452 ----------- ----------- Deferred income taxes 281,509 299,709 Prepaid expenses and other current assets 201,206 245,501 ----------- ----------- Total Current Assets 23,240,757 22,540,316 ----------- ----------- Deferred Income Taxes 6,516 6,516 Property, Plant and Equipment, net 3,494,300 3,571,205 ----------- ----------- Total Assets $26,741,573 $26,118,037 =========== ===========
See accompanying notes to the consolidated financial statements (Continued) 1 ESPEY MFG. & ELECTRONICS CORP. Consolidated Balance Sheets, Continued December 31, 2000 and June 30, 2000 ------------------------------------ LIABILITIES AND STOCKHOLDERS' EQUITY Unaudited 2000 2000 December 31 June 30 ------------ ---------- CURRENT LIABILITIES: Accounts Payable $ 337,240 $ 541,636 Accrued expenses: Salaries, wages and commissions 191,444 244,865 Vacation 285,610 280,493 Employees' insurance costs 115,384 65,194 ESOP payable 275,129 -- Dividends payable 51,682 -- Other 13,625 3,372 Payroll and other taxes withheld and accrued 107,883 69,536 Income taxes payable 242,472 124,075 ------------ ---------- TOTAL CURRENT LIABILITIES 1,620,469 1,329,171 STOCKHOLDERS' EQUITY: Common stock, par value .33-1/3 per share. Authorized 10,000,000 shares; issued 1,514,937 shares at December 31, 2000 and June 30, 2000. Outstanding 1,029,461 and 1,033,631 at December 31, 2000 and June 30, 2000, respectively 504,979 504,979 Capital in excess of par value 10,496,287 10,496,287 Accumulated other comprehensive income (loss) (73,421) (107,221) Retained earnings 24,144,761 23,775,433 ------------- ------------ 35,072,606 34,669,478 Less: Common stock subscribed (2,234,649) (2,234,650) Cost of 485,476 and 481,306 shares at December 31, 2000 and June 30, 2000, respectively, of common stock in treasury (7,716,853) (7,645,962) ------------- ------------ TOTAL STOCKHOLDERS' EQUITY 25,121,104 24,788,866 ------------- ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 26,741,573 $ 26,118,037 ============= ============ See accompanying notes to the consolidated financial statements 2 ESPEY MFG. & ELECTRONICS CORP. Consolidated Statements of Income Three and Six Months Ended December 31, 2000 and 1999 ------------------------------------------------------
Unaudited Unaudited Three Months Six Months 2000 1999 2000 1999 ------------------------ ------------------------- Net Sales $ 4,184,993 $ 3,412,424 $ 8,352,228 $ 6,711,404 Cost of sales 3,295,985 2,918,399 6,774,958 5,803,765 ----------- ----------- ----------- ----------- Gross profit 889,008 494,025 1,577,270 907,639 Selling, general and administrative expenses 543,992 533,327 1,004,244 1,025,951 ----------- ----------- ----------- ----------- Operating income (loss) 345,016 (39,302) 573,026 (118,312) ----------- ----------- ----------- ----------- Other income Interest and dividend income 68,556 111,922 133,746 202,587 Sundry income (loss) 8,499 (528) 25,624 52,413 ----------- ----------- ----------- ----------- 77,055 111,394 159,370 255,000 ----------- ----------- ----------- ----------- Income before income taxes 422,071 72,092 732,396 136,688 Provision for income taxes 152,802 25,000 259,708 50,000 ----------- ----------- ----------- ----------- Net Income $ 269,269 $ 47,092 $ 472,688 $ 86,688 =========== =========== =========== =========== Income per share: Basic and dilutive income per share $ .26 $ .04 $ .46 $ .08 ----------- ----------- ----------- ----------- Weighted average common shares outstanding Basic 1,032,996 1,048,631 1,033,314 1,050,754 Diluted 1,035,399 1,048,631 1,035,494 1,050,754 =========== =========== =========== ===========
See accompanying notes to the consolidated financial statements 3 ESPEY MFG. & ELECTRONICS CORP. Consolidated Statements of Cash Flows Six Months Ended December 31, 2000 and 1999
Unaudited December 31, 2000 1999 ----------- ----------- Cash Flows From Operating Activities: Net income $ 472,688 $ 86,688 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 345,273 226,510 (Gain)/Loss on disposal of assets (14,721) - Changes in assets and liabilities: Decrease in receivables 960,219 2,501,964 Increase in inventories (844,910) (913,976) Decrease in prepaid expenses and other current assets 44,294 38,835 (Decrease)Increase in accounts payable (204,395) 143,052 Decrease in accrued salaries, wages and commissions (53,421) (134,155) Increase in accrued employee insurance costs 50,191 3,779 Increase(Decrease) in other accrued expenses 10,254 (29,067) Increase in vacation accrual 5,117 5,675 Increase(Decrease) in payroll & other taxes withheld and accrued 38,346 (5,439) Increase(Decrease) in income taxes payable 118,398 (35,390) Increase in ESOP contributions 275,129 274,078 ----------- ----------- Net cash provided by operating activities 1,202,462 2,162,554 ----------- ----------- Cash Flows From Investing Activities: Proceeds from maturity of investment securities -- 2,915,161 Additions to property, plant & equipment (268,397) (361,342) Proceeds on Sale of Assets 14,750 - ----------- ----------- Net cash provided by (used in) investing activities (253,647) 2,553,819 ----------- ----------- Cash Flows From Financing Activities: Dividends paid on common stock (51,682) (104,862) Purchase of treasury stock (70,891) (193,222) ----------- ----------- Net cash used in financing activities (122,573) (298,084) ----------- ----------- Increase in cash and cash equivalents 826,242 4,418,289 Cash and cash equivalents, beginning of period 2,367,191 2,364,335 ----------- ----------- Cash and cash equivalents, end of period $ 3,193,433 $ 6,782,624 ----------- ----------- Income Taxes Paid $ 135,000 $ 80,000 =========== =========== Noncash Financing Activities Dividend payable $ 51,682 $ - =========== ===========
See accompanying notes to the consolidated financial statements 4 ESPEY MFG. & ELECTRONICS CORP. Notes to 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 the 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. Other income consists principally of interest on Certificates of Deposit, Treasury Bills, money market accounts and dividends on equity securities. 3. 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. 4. In fiscal 1989 the Company established an Employee Stock Ownership Plan (ESOP) for eligible non-union employees. The ESOP used the proceeds of 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. As of December 31, 2000 there were 192,367 shares allocated to participants. 5. Total comprehensive income consists of: Three Months Ended Six Months Ended December 31, December 31, 2000 1999 2000 1999 -------- -------- -------- -------- Net income $ 269,269 47,092 472,688 86,688 Accumulated other comprehensive income/(loss) 14,950 (28,165) 33,800 (61,445) -------- -------- --------- -------- Total comprehensive income 284,219 18,927 506,488 25,243 ======== ======== ======== ======== Item 2. Management's Discussion and Analysis of Financial Condition and Results Of Operations Results of Operations Net sales for the six months ended December 31, 2000, (fiscal 2001) were $8,352,228 as compared to $6,711,404 for the same period in 1999, a 24% increase. Net sales for the three months ended December 31, 2000 were $4,184,993 as compared to $3,412,424 for the same period in 1999, a 23% increase. The Company's increase in sales for the three and six month periods ended December 31, 2000, as compared to December 31, 1999, is largely due to an increase in radar transmitter component sales. 5 During the first six months of fiscal 2001 gross profits as a percentage of sales increased approximately 5.4% as compared with the first six months of fiscal 2000. Net income for the six months ended December 31, 2000 was $472,688 or $.46 per share compared to $86,688 or $.08 per share for the corresponding period ended December 31, 1999. The primary reason for the increase in gross profit and net income for the three and six month period ended December 31, 2000, was contract mix. The current contracts the Company has for radar transmitter components have improved gross profit. The Company is presently investing in several new programs and products. These expenditures, which have a negative impact on current operations, in managements estimate, should improve the operating results of the Company when future production orders are received. Management continues to evaluate the Company's workforce to ensure that production and overall execution of the backlog orders and additional anticipated orders are successfully performed. Employment at December 31, 2000 has leveled off at 222 people compared to December 31, 1999 when 225 people were employed. The Company continues to diversify its customer base and product line. The backlog at December 31, 2000 was approximately $25.8 million as compared to $28.6 at December 31, 1999. New orders for the six-month period ending December 31, 2000 were approximately $2.7 million. Selling, general and administrative expenses were $1,004,243 for the six months ended December 31, 2000, a decrease of $21,709 as compared to the six months ended December 31, 1999. The decrease is primarily due to a decrease in selling expenses. Other income for the three and six months ended December 31, 2000 decreased as compared to the three and six months ended December 31, 1999 due to lower interest income for both periods associated with lower investment balances. The Company does not believe there is any significant risk associated with its investment policy, since a majority of the investments are represented by United States Government Treasury Securities, preferred equity securities, and a money market account. Liquidity and Capital Resources As of December 31, 2000, the Company had working capital of $21.6 million compared to $20.4 million at December 31, 1999. 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:
Six Months Ended December 31, ----------------------------- 2000 1999 -------- -------- Net cash provided by operating activities $ 1,202,462 2,162,554 Net cash provided by (used in) investing activities (253,647) 2,553,819 Net cash (used in) financing activities (122,573) (298,084)
Net cash provided by (used in) operating activities fluctuates between periods primarily as a result of differences in net income, the timing of the collection of accounts receivable, changes in inventory, level of sales and payment of 6 accounts payable. The decrease in net cash provided by (used in) investing activities is due to the maturity of investment securities in 1999 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 the cash generated from operations and when necessary, from cash and cash equivalents, will be sufficient to meet its long-term funding requirements. Management, if necessary, has at its disposal a $3,000,000 line of credit to help fund further growth. For the first half of fiscal 2000 capital expenditures were approximately $268,000. 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. During the six months ended December 31, 2000 the Company repurchased 4,170 shares of its common stock from the Company's ESOP. Under existing Board authorizations, as of December 31, 2000, $854,859 could be utilized to repurchase the Company's common stock. 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. 7 ESPEY MFG. & ELECTRONICS CORP. PART II: Other Information and Signatures Item 4. Submission of Matters to a Vote of Security Holders a) The Company's Annual Meeting of Shareholders (the "Annual Meeting") was held on December 8, 2000. b) Proxies for the Annual Meeting were solicited pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended. There were no solicitations in opposition to management's nominees listed in the proxy statement. All three nominees listed in the proxy statement were elected. c) The following matters were voted upon at the annual meeting: The election of three Class A directors. The votes were cast as follows: Nominee: Shares Voted For: -------- ----------------- Howard Pinsley 951,089 Alvin O. Sabo 951,358 Carl Helmetag 951,558 Ratification of PricewaterhouseCoopers LLP, as independent auditors for the Corporation for the fiscal year ending June 30, 2001. The votes were cast as follows: Shares IN FAVOR 951,358 Shares AGAINST 2,632 ABSTENTIONS 500 Item-5. Other Information None Item 6. Exhibits and Reports on Form 8-K None 8 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 -------------------------------- Howard Pinsley, President and Chief Executive Officer /s/ David O'Neil -------------------------------- David O'Neil, Treasurer and Principal Financial Officer 13 February 2000 ---------------- Date -----END PRIVACY-ENHANCED MESSAGE-----