-----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, HX6h2aazabNW0TP/msGFXwHpuk/8t9pPCYrDos/FFlrBg8Lk2FOP3SKp4/mXuPJM OEOarmQAK9NH70+1fb5MZw== 0000914317-01-500098.txt : 20010516 0000914317-01-500098.hdr.sgml : 20010516 ACCESSION NUMBER: 0000914317-01-500098 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010515 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: 1635775 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 form10q38499_5-11.txt 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 March 31, 2001 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 May 15, 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 - March 31, 2001 and June 30, 2000 1 Consolidated Statements of Income - Three and Nine Months Ended March 31, 2001 and 2000 3 Consolidated Statements of Cash Flows - Nine Months Ended March 31, 2001 and 2000 4 Notes to Consolidated Financial Statements 5 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations. 8 PART II OTHER INFORMATION 8 SIGNATURES 8 ESPEY MFG. & ELECTRONICS CORP. Consolidated Balance Sheets March 31, 2001 and June 30, 2000 ------------------------------------ A S S E T S
Unaudited 2001 2000 March 31 June 30 ------------ ----------- CURRENT ASSETS: Cash and cash equivalents $ 4,106,149 $ 2,367,191 Investments securities 743,360 650,000 Trade accounts receivable net of $3,000 allowance at March 31, 2001 and June 30, 2000 3,177,681 4,105,028 Other receivables 1,046 46,435 ----------- ----------- Total Receivables 3,178,727 4,151,463 ----------- ----------- Inventories: Raw materials and supplies 969,737 822,814 Work-in-process 2,679,164 3,113,708 Costs relating to contracts in process, net of advance payments of $289,000 at March 31, 2001 and $537,468 at June 30, 2000 11,570,063 10,889,930 ----------- ----------- Total Inventories 15,218,964 14,826,452 ----------- ----------- Deferred Income Taxes 267,033 299,709 Prepaid expenses and other current assets 198,683 245,501 ----------- ----------- Total Current Assets 23,712,916 22,540,315 ----------- ----------- Deferred Income Taxes 6,516 6,516 Net Property, Plant and Equipment 3,552,062 3,571,205 ----------- ----------- Total Assets $27,271,494 $26,118,037 =========== ===========
See accompanying notes to the consolidated financial statements (Continued) ESPEY MFG. & ELECTRONICS CORP. Consolidated Balance Sheets, Continued March 31,2001 and June 30, 2000 ------------------------------------ LIABILITIES AND STOCKHOLDERS' EQUITY
Unaudited 2001 2000 March 31 June 30 ------------ ----------- CURRENT LIABILITIES: Accounts Payable $ 515,910 $ 541,633 Accrued expenses: Salaries, wages and commissions 160,920 244,865 Employees' insurance costs 136,673 65,194 Vacation 322,624 280,494 ESOP payable 409,541 -- Dividends Payable 51,473 -- Payroll and other taxes withheld and accrued 56,137 51,800 Income taxes payable 290,398 124,074 Other 25,749 21,109 ------------ ------------ Total Current Liabilities 1,969,425 1,329,169 STOCKHOLDERS' EQUITY: Common stock, par value .33-1/3 per share. Authorized 10,000,000 shares; issued 1,514,937 shares on March 31, 2001 and June 30, 2000 Outstanding 1,029,461 and 1,033,631 on March 31, 2001 and June 30, 2000, respectively 504,979 504,979 Accumulated other comprehensive loss (46,537) (107,221) Capital in excess of par value 10,496,287 10,496,287 Retained earnings 24,298,842 23,775,436 ------------ ------------ 35,253,571 34,669,481 Less: Common stock subscribed (2,234,649) (2,234,650) Cost of 485,476 and 481,306 shares on March 31, 2001 and June 30, 2000 respectively of common stock in treasury (7,716,853) (7,645,963) ------------ ------------ TOTAL STOCKHOLDERS' EQUITY 25,302,069 24,788,868 ------------ ------------ Total Liabilities And Stockholders' Equity $ 27,271,494 $ 26,118,037 ============ ============
See accompanying notes to the consolidated financial statements ESPEY MFG. & ELECTRONICS CORP. Consolidated Statements of Income Three and Nine Months Ended March 31, 2001 and 2000 ------------------------------------------------------
Unaudited Unaudited Three Months Nine Months 2001 2000 2001 2000 ------------------------------ ------------------------------- Net Sales $ 4,615,138 $ 3,289,816 $ 12,967,365 $ 10,001,220 Cost of sales 3,920,377 2,519,259 10,695,335 8,322,049 ----------- ----------- ----------- ----------- Gross profit 694,761 770,557 2,272,030 1,679,171 Selling, General and Administrative Expenses 456,964 466,613 1,461,207 1,493,539 ----------- ----------- ----------- ----------- Operating income 237,797 303,944 810,823 185,632 ----------- ----------- ----------- ----------- Other income Interest and Dividend Income 59,716 95,717 193,462 298,304 Other income 5,575 6,983 31,199 59,396 ----------- ----------- ----------- ----------- 65,291 102,700 224,661 357,700 ----------- ----------- ----------- ----------- Income before income taxes 303,088 406,644 1,035,484 543,332 Provision for income taxes 97,534 143,000 357,242 193,000 ----------- ----------- ----------- ----------- Net Income $ 205,554 $ 263,644 $ 678,242 $ 350,332 =========== =========== =========== =========== Income per share: Basic and diluted income per share $ .20 $ .25 $ .66 $ .33 ----------- ----------- ----------- ----------- Weighted average number of shares outstanding Basic 1,029,461 1,045,005 1,032,048 1,048,854 Diluted 1,032,445 1,045,005 1,034,469 1,048,854 =========== =========== =========== ===========
See accompanying notes to the consolidated financial statements ESPEY MFG. & ELECTRONICS CORP. Consolidated Statements of Cash Flows Nine Months Ended March 31, 2001 and 2000
Unaudited March 31, 2001 2000 ----------- ----------- Cash Flows From Operating Activities: Net income $ 678,242 $ 350,332 Adjustments to reconcile net income to net cash provided by (used in)operating activities: Depreciation 469,121 345,846 (Gain)/loss on disposal of assets (14,721) -- Changes in assets and liabilities: Decrease in receivables 972,737 1,962,020 Increase in inventories (392,511) (3,193,152) Decrease in prepaid expenses and other current assets 46,818 35,551 (Decrease) Increase in accounts payable (25,725) 588,357 (Decrease) in accrued salaries, wages and commissions (83,945) (215,803) Increase in accrued employee insurance costs 71,479 11,941 (Decrease) Increase in other accrued expenses 4,640 (20,512) Increase in vacation accrual 42,131 40,409 (Decrease) Increase in payroll & other taxes withheld and accrued 4,337 (76,143) Increase in income taxes payable 166,324 101,610 Increase in ESOP contributions 409,541 403,238 ----------- ----------- Net cash provided by operating activities 2,348,468 333,694 ----------- ----------- Cash Flows From Investing Activities: Proceeds from maturity of investment securities -- 2,915,161 Additions to property, plant & equipment (450,007) (679,008) Proceeds on sale of assets 14,750 -- ----------- ----------- Net cash (used in) provided by investing activities (435,257) 2,236,153 ----------- ----------- Cash Flows From Financing Activities: Dividends on common stock (103,362) (157,045) Purchase of treasury stock (70,891) (329,222) ----------- ----------- Net cash used in financing activities (174,253) (486,267) ----------- ----------- Increase in cash and cash equivalents 1,738,958 2,083,580 Cash and cash equivalents, beginning of period 2,267,191 2,364,335 ----------- ----------- Cash and cash equivalents, end of period $ 4,106,149 $ 4,447,915 ----------- ----------- Income Taxes Paid $ 175,000 $ 91,500 =========== =========== Noncash Financing Activities Dividends Payable $ 51,473 $ -- =========== ===========
See accompanying notes to the consolidated financial statements 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 for 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 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 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. As of March 31, 2001 there were 187,884 shares allocated to participants. 5. Total comprehensive income consists of:
Three Months Ended Nine Months Ended March 31, March 31, 2001 2000 2001 2000 -------- -------- ------ ------ Net income $205,554 263,644 678,242 350,332 Accumulated other comprehensive income: Unrealized gain (loss) on available for sale securities 26,884 (9,600) 60,684 (71,045) -------- -------- --------- -------- Total comprehensive income $232,438 254,044 738,926 279,287 ======== ======== ========= ========
6. New Accounting Standards In June 1998, the Financial Accounting Standards Board issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," (SFAS 133), SFAS 133 establishes a new model for accounting for derivatives and hedging activities. This statement is effective for all Fiscal quarters of all fiscal years after June 15, 2000. The Company has adopted the provisions of this standard which did not have an impact on the Company's financial statements. In December 1999, the SEC issued Staff Bulletin No. 101 (SAB 101), "Revenue Recognition in Financial Statements." SAB 101 summarizes certain of the SEC's views in applying generally accepted accounting principles to revenue recognition in the financial statements. The Company is required to adopt SAB 101 in the quarter ended June 30, 2001. Management does not expect the adoption of SAB 101 to have a material effect on the Company's financial condition or results of operations. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Net sales for the nine months ended March 31, 2001 were $12,967,365 as compared to $10,001,220 for the same period in 2000. Net sales for the three months ended March 31, 2001 were $4,615,138 as compared to $3,289,816 for the same period in 2000. The Company's increase in sales for the three and nine month periods ended March 31, 2001 as compared to March 31, 2000 is largely due to increased radar transmitter component sales. Successful marketing efforts with new and existing customers have lead the Company to recognize higher net sales as backlog orders are completed and shipped. Net income for the nine months ended March 31, 2001 was $678,242 or $.66 per share compared to $350,332 or $.33 per share for the corresponding period ended March 31, 2000. The primary reason for the change in gross profit and net income for the three and nine month periods ended March 31, 2001 was increased sales offset by changes in contract mix and energy costs. The current contracts the Company has for radar transmitter components have improved gross profit. The Company is also 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. In addition, energy costs have had a significant impact on gross profit and net income. The gas and electric expense for the nine months ended March 31, 2001 was approximately $94,000 higher than the expense for the prior year nine month period ended March 31, 2000. These higher expenses have continued into April of 2001 as Management continues to monitor the gas and electric market looking for opportunities to lock-in energy prices at the lowest possible price. Management has also implemented energy saving policies to reduce consumption at its production facility. 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 March 31, 2001 stands at 202 people. The backlog at March 31, 2001 was approximately $25,355,000, a decrease of approximately $6 million from the prior year. Management continues to market the engineering capabilities and products of the Company. New orders for the quarter totaled approximately $4.2 million. Selling, general and administrative expenses were $1,461,207 for the nine months ended March 31, 2001, a decrease of $32,332, or 2.2%, as compared to the nine months ended March 31, 2000. The decrease is primarily due to decreased selling expenses. Other income for the three and nine months ended March 31, 2001 decreased as compared to the three and nine months ended March 31, 2000 due to lower interest income for both periods associated with lower investment balances. The Company does not believe there is significant risk associated with its investment policy, since a majority of the investments are United States Government Treasury Securities, preferred equity securities, and a money market account. Liquidity and Capital Resources As of March 31, 2001, the Company had working capital of $21.7 million compared to $20.3 million at March 31, 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:
Nine Months Ended March 31, --------------------------------- 2001 2000 ----------- ------------ Net cash provided by operating activities $ 2,348,468 333,694 Net cash (used in) provided by investing activities (435,257) 2,236,153 Net cash used in financing activities (174,253) (486,267)
Net cash provided by operating activities fluctuates between periods primarily as a result of differences in net income, the timing of the collection of 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 in the prior year. 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 nine months of fiscal 2001 capital expenditures were approximately $450,000. 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 expense relating to ESOP. During the nine months ended March 31, 2001 and March 31, 2000 the Company repurchased 4,170, and 25,027 shares respectively, of its common stock from the Company's ESOP and through other public transactions. As of March 31, 2001, under existing Board authorization, $854,859 could be utilized to repurchase shares of company 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. ESPEY MFG. & ELECTRONICS CORP. PART II: Other Information and Signatures Item 4. Submission of Matters to a Vote of Security Holders None Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K None 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 May 15, 2001 - --------------- Date -----END PRIVACY-ENHANCED MESSAGE-----