-----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, CGz7bkUNPRbv3hd7fpHOAULKPGMegZpO13mp0JG4Xw+MR6HhNboKY//MYMJLOwP3 dTJVK63VVMJBNPxL3vJH6g== 0000008065-99-000001.txt : 19990215 0000008065-99-000001.hdr.sgml : 19990215 ACCESSION NUMBER: 0000008065-99-000001 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990212 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ASTROSYSTEMS INC CENTRAL INDEX KEY: 0000008065 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL INSTRUMENTS FOR MEASUREMENT, DISPLAY, AND CONTROL [3823] IRS NUMBER: 135691210 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-03344 FILM NUMBER: 99533119 BUSINESS ADDRESS: STREET 1: 1220 MARKET STREET STREET 2: SUITE 603 CITY: WILMINGTON STATE: DE ZIP: 19801 BUSINESS PHONE: (302) 652- MAIL ADDRESS: STREET 1: 1220 MARKET STREET STREET 2: SUITE 603 CITY: WILMINGTON STATE: DE ZIP: 19801 10QSB 1 U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 1998 __________________________________________________________________________ or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended to Commission File Number: 0-3344 __________________________________________________________________________ ASTROSYSTEMS, INC. __________________________________________________________________________ (Exact name of registrant as specified in its charter) Delaware 13-5691210 ___________________________________________________ ___________________ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1220 Market Street, Suite 603, Wilmington, Delaware 19801 ___________________________________________________ ___________________ (Address of principal executive offices) (Zip Code) (302) 652-3115 __________________________________________________________________________ (Registrant's telephone number, including area code) N/A __________________________________________________________________________ (Former name, former address and former fiscal year, if changed since last report) Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Exchange Act during the past 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 APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Check whether the issuer has filed all documents and reports required to be filed by Sections 12, 13 or 15 (d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes No APPLICABLE ONLY TO CORPORATE ISSUERS: The number of shares outstanding of the issuer's common stock as of January 29, 1999 is 5,930,972. ASTROSYSTEMS, INC. AND SUBSIDIARIES INDEX Page No. ________ Part I - FINANCIAL INFORMATION Item 1. Consolidated Statement of Net Assets in Liquidation 4 December 31, 1998 Consolidated Statements of Changes in Net Assets in Liquidation 5 Six Months Ended December 31, 1998 and 1997 Notes to Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis or Plan of Operation 9 Part II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 12 PART I - FINANCIAL INFORMATION ASTROSYSTEMS, INC. AND SUBSIDIARIES The financial information herein is unaudited. However, in the opinion of management, such information reflects all adjustments (consisting of normal recurring accruals and revisions to estimations) necessary to a fair presentation for the period being reported. On February 2, 1996, the Stockholders of the Company approved a Plan of Complete Liquidation and Dissolution (the "Plan"). Therefore, the financial statements are presented in accordance with the liquidation basis of accounting. Under the liquidation basis of accounting, assets are stated at their estimated net realizable values and liabilities are stated at their anticipated settlement amounts. Certain information and footnote disclosures normally included in financial statements prepared in accordance with the liquidation basis of accounting have been condensed or omitted. Accordingly, these condensed financial statements should be read in conjunction with the Registrant's financial statements included in the Company's Form 10-KSB for the year ended June 30, 1998. ASTROSYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF NET ASSETS IN LIQUIDATION (Amounts in thousands, except per share amounts) (Unaudited) December 31, 1998 ____________ Assets _______ Cash and cash equivalents $14,513 U.S. government securities 978 Investment in AstroPower, Inc. 7,721 Loans to officers 1,186 Other assets 410 _______ 24,808 Liabilities ___________ Deferred income taxes 8,893 Accrued expenses/contingency reserve 1,804 _______ Net assets in liquidation $14,111 ======= Number of common and common equivalent shares outstanding 5,931 ===== Net assets in liquidation per share $2.38 ===== The accompanying notes are an integral part of this statement. Page 4 ASTROSYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS IN LIQUIDATION (In thousands) (Unaudited) Six months Six months ended ended December 31, December 31, 1998 1997 ___________ ___________ Net assets in liquidation - beginning of period $12,006 $5,497 Increase in estimated liquidation values of net assets over liabilities 2,105 2,822 _______ ______ Net assets in liquidation - end of period $14,111 $8,319 ======= ====== The accompanying notes are an integral part of these statements. Page 5 Astrosystems, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Six Month Periods ended December 31, 1998 and 1997 NOTE A - BASIS OF PRESENTATION ______________________________ A Plan of Complete Liquidation and Dissolution (the "Plan") was adopted by the Company's Board of Directors (the "Board") on October 26, 1995 and approved by the holders of a majority of the Company's outstanding shares of common stock on February 2, 1996. The Plan provides for: (1) the payment of or provision for all of the Company's liabilities and obligations, (2) the distribution to the Company's stockholders in kind or of the proceeds from sale or other disposition of all of the Company's assets, (3) the transfer of any remaining assets to a liquidating trust by February 2, 2000, if applicable, and (4) the dissolution of the Company. The Company has adopted the liquidation basis of accounting for all periods subsequent to February 2, 1996. Under the liquidation basis of accounting, assets are stated at their estimated net realizable values and liabilities are stated at their anticipated settlement amounts. Therefore, historical financial information is not comparable to the liquidation period financial information. The Company has set aside, as Accrued expenses/contingency reserve, an amount believed to be adequate for payment of all expenses and other known liabilities, as well as likely and quantifiable contingent obligations, including potential tax obligations. A portion of the Accrued expenses/contingency reserve is a reserve for other contingencies, aggregating $1,350,000 at December 31, 1998, which could be made available for distribution to stockholders if and when the Company determines it is no longer required. In the event that the reserve for other contingencies is not adequate for payment of the Company's expenses and liabilities, each stockholder could be held liable for pro rata payments to creditors in an amount not to exceed the stockholder's prior distributions from the Company. The valuation of assets and liabilities necessarily requires many estimates and assumptions and there are substantial uncertainties in carrying out the provisions of the Plan. The actual value of any liquidating distributions will depend upon a variety of factors including, among others, the actual market prices of any securities distributed in kind, the proceeds from the sale of any of the Company's assets and the actual timing of distributions. The valuations presented in the accompanying statement of net assets in liquidation represent forecasts, based on present facts and circumstances, of the estimated realizable values of assets, net of liabilities and estimated costs associated with carrying out the provisions of the Plan. The actual values and costs could be higher or lower than the amounts recorded. On June 30, 1997, the Company declared an initial liquidating distribution of $5.00 per share in cash to stockholders of record as of August 15, 1997. The distribution was paid on September 8, 1997. The Board of Directors is currently unable to predict the precise amount or timing of any future distributions pursuant to the Plan. The actual amount and timing of, and record date for, all distributions will be determined by the Board of Directors, in its sole discretion, and will depend in part upon the Board's determination as to whether particular assets are to be distributed in kind or otherwise disposed of and the amounts deemed necessary by the Board to pay or provide for all the Company's liabilities and obligations. Page 6 Astrosystems, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Six Month Periods ended December 31, 1998 and 1997 NOTE B - CHANGES IN NET ASSETS IN LIQUIDATION ______________________________________________ The changes in the estimated liquidation values of net assets over liabilities are as follows: December 31, December 31, 1998 1997 (in thousands) (in thousands) ____________ ____________ Proceeds from exercise of stock options - $2,070 Gain on sale of AstroPower, Inc. stock $ 753 - Change in valuation of AstroPower, Inc. stock 2,623 - Change in final inventory valuation for sale of assets (353) - Adjustment to accounts payable - 946 Additional interest earned and estimated on cash and cash equivalents 437 425 Change in estimated tax benefits (1,114) (322) Change in the estimate of shut-down costs (242) (356) Other adjustments 1 59 ______ ______ Increase in estimated liquidation values of net assets over liabilities $2,105 $2,822 ====== ====== NOTE C - ACCRUED EXPENSE/CONTINGENCY RESERVE ____________________________________________ Accrued expenses at December 31, 1998 include estimated costs to be incurred in carrying out the Plan. The actual costs could vary significantly from the related provisions due to uncertainty related to the length of time required to complete the Plan and complexities and contingencies which may arise. Existing liabilities at December 31, 1998 consist of (amounts in thousands): Accounts payable, accrued expenses and miscellaneous $ 105 Minimum payments on nonrecourse obligation 25 Shutdown costs and estimated operating costs (including compensation) to administer the Plan through dissolution 952 Estimated interest income (440) Estimated tax benefit of losses through dissolution (188) Reserve for other contingencies 1,350 ______ $1,804 ====== Page 7 Astrosystems, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Six Month Periods ended December 31, 1998 and 1997 NOTE C (continued) ______ Accounts payable, accrued expenses and miscellaneous consist of accrued professional fees and other accrued liabilities. The Company has set aside, as reserve for other contingencies, an amount believed to be adequate for payment of likely and quantifiable contingent obligations, including potential tax obligations. Any portion of the reserve for other contingencies which the Company determines is no longer required will be made available for distribution to its stockholders. In the event that the reserve for other contingencies account is not adequate for payment of the Company's expenses and liabilities, each stockholder could be held liable for pro rata payments to creditors in an amount not to exceed the stockholder's prior distributions from the Company. NOTE D - SALE OF OPERATING ASSETS _________________________________ As of February 7, 1996, all of the Company's operating assets were sold to two purchasers. The purchase prices were made subject to adjustment based upon a final valuation of the transferred inventory and equipment. Pursuant to one of the purchase agreements, $1,000,000 of the purchase price of $3,706,700 was placed in escrow to provide for indemnification claims asserted against the Company. At December 31, 1998, the amount in escrow was approximately $512,000. As of December 31, 1998, the Company recorded a receivable aggregating approximately $594,000 based upon the Company's valuation of inventory sold. The value of certain inventory items was disputed by the purchaser. A final valuation has reduced this receivable to $236,000. NOTE E - ASTROPOWER, INC. STOCK _______________________________ In December 1998, the Company sold 250,000 shares of AstroPower, Inc. stock at $8.41 per share. The amount included in Net Assets in Liquidation as of December 31, 1998 assumes an estimated fair market value of approximately $8.18 per share as at December 31, 1998 for the Company's remaining 943,750 shares unregistered common stock in AstroPower, Inc. On February 12, 1998, AstroPower, Inc. successfully completed an initial public issue and the stock is currently listed on the NASDAQ National Market (symbol APWR). The Company's agreement with the underwriter not to sell or otherwise transfer this stock expired on August 12, 1998. As of December 31, 1998, the Company determined that the fair value of its investment in AstroPower, Inc. is approximately $7,721,000 (approximately $8.18 per share). The Company retained an outside independent appraiser to assist management in adjusting AstroPower, Inc.'s quoted market value ($9.63 at December 31, 1998) to fair value with due notice being given to marketability as well as other factors. As the Company has a zero basis in this stock, any sale or transfer results in a corporate tax based on the value of the stock at that time. Provision for such taxes has been made in Deferred Income Taxes. Page 8 MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION Forward-Looking Statements __________________________ Certain information contained herein includes "forward-looking statements" within the meaning of the Private Securities Reform Act of 1995 and is subject to the safe harbor created by that act. The Company cautions readers that certain important factors may affect the Company's actual net assets in liquidation and could cause such net assets to differ materially from any forward-looking statements which may be deemed to have been made in this report. For this purpose, any statements contained in this report that are not statements of historical fact, including, without limitation, statements as to the contingency reserve established by the Company, may be deemed to be forward-looking statements. Without limiting the generality of the foregoing, words such as "may," "will," "expect," "believe," anticipate," "intend," "could," "estimate," or "continue" or the negative variations thereof or comparable terminology are intended to identify forward-looking statements. Factors which may affect the Company's net assets include, but are not limited to, the following: final sale and/or distribution of AstroPower, Inc. stock, final corporate income tax liabilities, changes in actual costs to execute the Plan of Complete Liquidation and Dissolution, and possible claims against the Company's assets upon final dissolution. Liquidity, Capital Resources and Impact of Inflation ____________________________________________________ The Board of Directors adopted, and the stockholders approved on February 2, 1996, a Plan of Complete Liquidation and Dissolution (the "Plan") of the Company. See "Plan of Complete Liquidation and Dissolution" below. The Company announced on March 26, 1996 a Board of Directors authorization for the repurchase of up to 500,000 shares of Common Stock to be made from time to time through open market and privately negotiated transactions (in addition to the 500,000 shares previously authorized on October 23, 1992). To date, 676,404 shares have been repurchased. On June 30, 1997, the Company declared an initial liquidating distribution of $5.00 per share in cash to stockholders of record as of August 15, 1997. The distribution was paid on September 8, 1997. Although the Company has not established a firm timetable for additional liquidating distributions to stockholders, the Company will, subject to exigencies inherent in winding up the Company's business, make such distributions consistent with maximizing stockholder value. The actual amount and timing Page 9 of, and record date for, all additional distributions will be determined by the Board of Directors, in its sole discretion, and will depend in part upon the Board's determination as to whether particular assets are to be distributed in kind or otherwise disposed of, and the amounts deemed necessary by the Board to pay or provide for all the Company's liabilities and obligations. Statement of Net Assets in Liquidation ______________________________________ Pursuant to the Plan, the Company consummated the sales of the assets of its three operating units (Military Division, Behlman Electronics subsidiary and Industrial Automation Division) as of February 7, 1996. The exact amount of the proceeds to the Company of such sales was made dependent upon a final fixed asset and inventory valuation. The value of certain inventory items was disputed along with a number of other items such as warranty costs. Certain of these disputes are subject to ongoing arbitration; however, the Company does not believe that the final result will have a material effect on the value of the net assets in liquidation. In connection with the sale of the Military and Behlman operations, approximately $512,000 of the purchase price currently is being held in escrow to provide for certain indemnification claims that the buyer may assert against the Company under the sale agreement. The Company owns 943,750 unregistered shares of AstroPower, Inc. common stock. On February 12, 1998, AstroPower, Inc. successfully completed an initial public issue and its stock is currently listed on the NASDAQ National Market (symbol APWR). The Company's agreement with the underwriter not to sell or otherwise transfer this stock expired on August 12, 1998. The current estimated fair value of approximately $7,721,000 for the Company's remaining unregistered stock (after a sale in December 1998 of 250,000 shares) was established by an outside appraiser with due notice being given to marketability as well as other factors. As the Company has a zero basis in this stock, any sale or transfer results in a corporate tax based on the value of the stock at that time. Provision for such taxes has been made in Deferred Income Taxes. The Company has set aside, as Accrued expenses/contingency reserve, an amount believed to be adequate for payment of all expenses and other known liabilities as well as likely and quantifiable contingent obligations, including potential tax obligations. Any portion of the contingency reserve which the Company determines is no longer required will be made available for distribution to its stockholders. In the event that the Accrued expenses/contingency reserve account is not adequate for payment of the Company's expenses and liabilities, each stockholder could be held liable for pro rata payments to creditors in an amount not to exceed the stockholder's prior distributions from the Company. The Company has therefore adopted a conservative policy in retaining sufficient assets to insure against any unforeseen and non-quantifiable contingencies. Page 10 Statement of Changes in Net Assets in Liquidation _________________________________________________ From July 1, 1998 to December 31, 1998 there was an increase in net assets in liquidation of $2,105,000. This increase was primarily due to a gain on the sale of 250,000 shares of AstroPower, Inc. stock and an increase in the estimated value of the Company's remaining investment in AstroPower, Inc. as a result of an increase in the quoted market price of AstroPower, Inc. stock. Plan of Complete Liquidation and Dissolution ____________________________________________ On February 2, 1996, the stockholders of the Company approved a Plan of Complete Liquidation and Dissolution for the Company. Pursuant to the Plan, the Company has sold its three operating units and intends to sell such of its remaining assets as are not to be distributed in kind to its stockholders. The Company intends to provide for payment of all expenses, liabilities and obligations of the Company and liquidate via distributions to stockholders. On June 30, 1997, the Company declared an initial liquidating distribution of $5.00 per share in cash to stockholders of record as of August 15, 1997. The distribution was paid on September 8, 1997. The Board is currently unable to predict the precise amount of any additional distributions pursuant to the Plan. The actual amount and timing of, and record date for, all such distributions will be determined by the Board of Directors, in its sole discretion, and will depend in part upon the Board's determination as to whether particular assets are to be distributed in kind or otherwise disposed of, and the amounts deemed necessary by the Board to pay or provide for all the Company's liabilities and obligations. Year 2000 Issue _______________ The Year 2000 issue is the result of computer programs using a two- digit format as opposed to four digits to indicate the year. Such computer systems will be unable to interpret dates beyond 1999 which could cause a system failure or other computer errors leading to disruptions in operations. The Year 2000 issue will not have a material effect on the Company's financial position. Page 11 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. _________________________________ (a) Exhibits. _________ 2. Plan of Complete Liquidation and Dissolution - incorporated by reference to Exhibit A to Proxy Statement of the Company dated January 12, 1996 with respect to Annual Meeting of Stockholders held February 2, 1996 (File No. 0-3344). 3 (a) Certificate of Incorporation - incorporated by reference to Exhibit 3(a) to the Company's Annual Report on Form 10-KSB for the fiscal year ended June 30, 1993 (File No. 0-3344). (b) By-Laws - incorporated by reference to Exhibit 3(b) to the Company's Annual Report on Form 10-KSB for the fiscal year ended June 30, 1993 (File No. 0-3344). 10. Asset Purchase Agreement dated as of January 11, 1996 by and among Astrosystems, Inc., Behlman Electronics, Inc., Orbit International Corp. and Cabot Court, Inc. - incorporated by reference to Exhibit B to Proxy Statement of the Company dated January 12, 1996 with respect to Annual Meeting of Stockholders held February 2, 1996 (File No. 0-3344). 27. Financial Data Schedule (b) Reports on Form 8-K. ____________________ None. No other reportable items Page 12 SIGNATURES __________ In accordance with the requirements of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ASTROSYSTEMS, INC. February 12, 1999 BY: /S/ ___________________________ ____________________________________ Date Gilbert H. Steinberg, Vice President February 12, 1999 /S/ ___________________________ ____________________________________ Date Gilbert H. Steinberg, Treasurer and Chief Financial Officer EX-27 2
5 0000008065 ASTROSYSTEMS, INC. 6-MOS 6-MOS JUN-30-1999 JUN-30-1998 OCT-01-1998 OCT-01-1997 DEC-31-1998 DEC-31-1997 14,513 12,317 978 2,979 0 0 0 0 0 0 24,808 17,546 0 0 0 0 24,808 17,546 1,804 4,186 0 0 0 0 0 0 5,931 5,828 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
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