-----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, TcI7coXSIOV4j0x86xGgPk20GhXevvWqTYuEPvWEVxPYcsfHixP5923oDeCIkAeN ordY6U9WSbYFdhUyn3NQ0A== 0000914317-02-000081.txt : 20020414 0000914317-02-000081.hdr.sgml : 20020414 ACCESSION NUMBER: 0000914317-02-000081 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20011231 FILED AS OF DATE: 20020213 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: 02542476 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 form10q-42817_2602.txt 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, 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 February 13, 2002: 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, 2001 and June 30, 2001 1 Consolidated Statements of Income - Three and Six Months Ended December 31, 2001 and 2000 3 Consolidated Statements of Cash Flows - Six Months Ended December 31, 2001 and 2000 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 7 SIGNATURES 7
ESPEY MFG. & ELECTRONICS CORP. Consolidated Balance Sheets December 31, 2001 and June 30, 2001 ----------------------------------- ASSETS Unaudited 2001 2001 December 31 June 30 -------------- -------------- CURRENT ASSETS: Cash and cash equivalents $ 7,561,910 $ 5,200,736 Investment securities 369,600 737,600 Trade accounts receivable, net 3,189,763 2,537,310 Other receivables 3,906 31,179 -------------- -------------- Total Receivables 3,193,669 2,568,489 -------------- -------------- Inventories: Raw materials and supplies 1,078,622 1,036,726 Work-in-process 4,711,769 2,658,436 Costs relating to contracts in process, net of advance payments of $956,220 at December 31, 2001 and $289,000 at June 30, 2001 7,753,143 11,237,515 -------------- -------------- Total Inventories 13,543,534 14,932,677 -------------- -------------- Deferred income taxes 134,409 145,609 Prepaid expenses and other current assets 233,172 151,880 -------------- -------------- Total Current Assets 25,036,294 23,736,991 -------------- -------------- Property, plant and equipment, net 3,482,533 3,491,890 -------------- -------------- Total Assets $28,518,827 $27,228,881 ============== ==============
See accompanying notes to the consolidated financial statements. (Continued) 1
ESPEY MFG. & ELECTRONICS CORP. Consolidated Balance Sheets, Continued December 31, 2001 and June 30, 2001 ------------------------------------ LIABILITIES AND STOCKHOLDERS' EQUITY Unaudited 2001 2001 December 31 June 30 ---------------- ---------------- CURRENT LIABILITIES: Accounts payable $ 1,203,705 $ 334,772 Accrued expenses: Salaries, wages and commissions 118,743 124,081 Vacation 322,098 345,546 Employees' insurance costs 271 61,798 ESOP payable 269,876 -- Dividend payable 154,419 -- Other 21,241 37,711 Payroll and other taxes withheld and accrued 64,313 39,397 Income taxes payable 141,633 61,440 Deferred income taxes 58,752 58,752 --------------- --------------- Total Current Liabilities 2,355,051 1,063,497 --------------- --------------- STOCKHOLDERS' EQUITY: Common stock, par value .33-1/3 per share. Authorized 10,000,000 shares; Issued 1,514,937 shares on December 31, 2001 and June 30, 2001, outstanding 1,029,461 on December 31, 2001 and June 30, 2001 504,979 504,979 Capital in excess of par value 10,496,287 10,496,287 Accumulated other comprehensive loss (29,481) (50,281) Retained earnings 24,584,831 24,607,239 ---------------- --------------- 35,556,616 35,558,224 Less Common stock subscribed (1,675,987) (1,675,987) Cost of 485,476 shares on December 31, 2001 and June 30, 2001 of common stock in treasury (7,716,853) (7,716,853) --------------- --------------- Total Stockholders' Equity 26,163,776 26,165,384 --------------- --------------- Total Liabilities And Stockholders' Equity $28,518,827 $ 27,228,881 =============== ===============
See accompanying notes to the consolidated financial statements. 2
ESPEY MFG. & ELECTRONICS CORP. Consolidated Statements of Income Three and Six Months Ended December 31, 2001 and 2000 ----------------------------------------------------- Unaudited Unaudited Three Months Six Months 2001 2000 2001 2000 -------------------------- ---------------------------- Net Sales $ 5,199,517 $ 4,184,993 $ 9,785,032 $ 8,352,228 Cost of sales 4,605,948 3,295,985 8,583,878 6,774,958 ------------ ------------ ------------ ------------ Gross profit 593,569 889,008 1,201,154 1,577,270 Selling, general and administrative expenses 527,101 543,992 921,134 1,004,244 ------------ ------------ ------------ ------------ Operating income 66,468 345,016 280,020 573,026 ------------ ------------ ------------ ------------ Other income Interest and dividend income 48,726 68,556 115,205 133,746 Sundry income 1,940 8,499 12,895 25,624 ------------ ------------ ------------ ------------ 50,666 77,055 128,100 159,370 ------------ ------------ ------------ ------------ Income before income taxes 117,134 422,071 408,120 732,396 Provision for income taxes 35,135 152,802 122,431 259,708 ------------ ------------ ------------ ------------ Net Income $ 81,999 $ 269,269 $ 285,689 $ 472,688 ============ ============ ============ ============ Income per share: Basic and dilutive income per share $ .08 $ .26 $ .28 $ .46 ------------ ------------ ------------ ------------ Weighted average common shares outstanding Basic 1,029,461 1,032,996 1,029,461 1,033,314 Diluted 1,034,640 1,035,399 1,033,658 1,035,494 =========== ============ ============ ============
See accompanying notes to the consolidated financial statements 3
ESPEY MFG. & ELECTRONICS CORP. Consolidated Statements of Cash Flows Six Months Ended December 31, 2001 and 2000 Unaudited December 31, 2001 2000 ----------- ----------- Cash Flows From Operating Activities: Net income $ 285,689 $ 472,688 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 247,505 345,273 (Gain)/Loss on disposal of assets 250 (14,721) Deferred income tax benefit 872 -- Changes in assets and liabilities: Decrease (Increase) in receivables (625,180) 960,219 Decrease (Increase) in inventories 1,389,143 (844,910) Decrease (Increase) in prepaid expenses and other current assets (81,292) 44,294 Increase (Decrease) in accounts payable 868,933 (204,395) Decrease in accrued salaries, wages and commissions (5,338) (53,421) Increase (Decrease) in accrued employee insurance costs (61,527) 50,191 Increase (Decrease) in other accrued expenses (16,470) 10,254 Increase (Decrease) in vacation accrual (23,448) 5,117 Increase in payroll & other taxes withheld and accrued 24,916 38,346 Increase in income taxes payable 80,193 118,398 Increase in ESOP payable 269,876 275,129 ----------- ----------- Net cash provided by operating activities 2,354,122 1,202,462 ----------- ----------- Cash Flows From Investing Activities: Proceeds from maturity of investment securities 399,128 -- Additions to property, plant & equipment (238,448) (268,397) Proceeds on Sale of Assets 50 14,750 ----------- ----------- Net cash provided by (used in) investing activities 160,730 (253,647) ----------- ----------- Cash Flows From Financing Activities: Dividends paid on common stock (153,678) (51,682) Purchase of treasury stock -- (70,891) ----------- ----------- Net cash used in financing activities (153,678) (122,573) ----------- ----------- Increase in cash and cash equivalents 2,361,174 826,242 Cash and cash equivalents, beginning of period 5,200,736 2,367,191 ----------- ----------- Cash and cash equivalents, end of period $ 7,561,910 $ 3,193,433 =========== =========== Income Taxes Paid $ 42,238 $ 135,000 =========== =========== Noncash Financing Activities Dividend payable $ 154,419 $ 51,682 =========== ===========
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 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 generally accepted in the United States 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 2001 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. Basic earnings per share excludes dilution and is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue Common Stock were exercised or converted into Common Stock or resulted in the issuance of Common Stock that then shared in the Income of the Company. 5. In fiscal 1989 the Company established an Employee Stock Ownership a 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, 2001 there were 199,876 shares allocated to participants. 6. Total comprehensive income consists of:
Three Months Ended Six Months Ended December 31, December 31, 2001 2000 2001 2000 -------- -------- -------- -------- Net income $ 81,999 $269,269 $285,689 $472,688 Other comprehensive income 9,880 14,950 20,800 33,800 -------- -------- -------- -------- Total comprehensive income $ 91,879 $284,219 $306,489 $506,488 ======== ======== ======== ========
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, 2001, (fiscal 2002) were $9,785,032 as compared to $8,352,228 for the same period in 2000, a 17% increase. Net sales for the three months ended December 31, 2001 were $5,199,517 as compared to $4,184,993 for the same period in 2000, a 24% increase. The Company's increase in sales for the three and six month periods ended December 31, 2001, as compared to December 31, 2000, is due to an increase in antenna, radar transmitter, and transmitter component shipments. During the first six months of fiscal 2002 gross profits as a percentage of sales decreased approximately 6.6% as compared with the first six months of fiscal 2001. For the three months ended December 31, 2001 gross profit as a percentage of sales decreased 33% as compared to the same period in 2000. Net income for the six months ended December 31, 2001 was $285,689 or $.28 per share compared to $472,688 or $.46 per share for the corresponding period ended December 31, 2000. For the three months ended December 31, 2001 net income was $81,999 or $.08 per share compared to $285,689 or $.28 per share for the same period in 2000. The decrease in gross profit and net income for the three and six-month periods ended December 31, 2001, was a result of the Company investing engineering resources in several new customer specific programs and products. These engineering and prototype developmental expenditures, which have a negative impact on current operations, in management's 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, 2001 was 190 people compared to December 31, 2000 when 222 people were employed. 5 The backlog at December 31, 2001 was approximately $25.9 million as compared to $25.8 at December 31, 2000. New orders for the six-month period ended December 31, 2001 were approximately $8.2 million. Selling, general and administrative expenses were $921,134 for the six months ended December 31, 2001, a decrease of $83,110 as compared to the six months ended December 31, 2000. The decrease is primarily due to a decrease in employees, selling expenses and professional fees. Other income for the three and six months ended December 31, 2001 decreased as compared to the three and six months ended December 31, 2000 due to lower interest income for both periods. The Company does not believe there is any significant risk associated with its investment policy, since a majority of the investments are represented by preferred equity securities and a money market account. Liquidity and Capital Resources As of December 31, 2001, the Company had working capital of $22.7 million compared to $21.6 million at December 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: Six Months Ended December 31, 2001 2000 ------------- ------------- Net cash provided by operating activities $ 2,354,122 $ 1,202,462 Net cash provided by (used in) investing activities 160,730 (253,647) Net cash (used in) financing activities (153,678) (122,573)
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, changes in inventory, level of sales and payment of accounts payable. The increase in net cash provided by (used in) investing activities is due to the sale of an investment security in 2001. The increase in net cash used in financing activities is due to an increase in dividends paid on common stock. 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 2002 capital expenditures were approximately $238,000. 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 the ESOP. During the six months ended December 31, 2001 the Company did not repurchase shares of its common stock. Under existing Board authorizations, as of December 31, 2001, $854,860 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. 6 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 7, 2001. 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 two nominees listed in the proxy statement were elected. c) The following matters were voted upon at the annual meeting: The election of two Class B directors. The votes were cast as follows: Nominee: Shares Voted For: ------------- ----------------------- William Greene 873,097 Symour Saslow 897,860 Ratification of PricewaterhouseCoopers LLP, as independent auditors for the Corporation for the fiscal year ending June 30, 2002. The votes were cast as follows: Shares IN FAVOR 999,230 Shares AGAINST 2,600 ABSTENTIONS 900 ------------------------------------------------------------ Item-5. Other Information None Item 6. Exhibits and Reports on Form 8-K Report on Form 8-K Form 8-K filed November 9, 2001 announcing the death of a director. 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 2001 - ---------------- Date -----END PRIVACY-ENHANCED MESSAGE-----