-----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, Oh/dsTlgm9hIIEbyPecPubnoMriYpDeKwcWZUZVcSe83ib8+v6VlLariqXDftJJj ijgyTlxAeDHiRkTBm4EelQ== 0001094891-01-500135.txt : 20010516 0001094891-01-500135.hdr.sgml : 20010516 ACCESSION NUMBER: 0001094891-01-500135 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CPI AEROSTRUCTURES INC CENTRAL INDEX KEY: 0000889348 STANDARD INDUSTRIAL CLASSIFICATION: AIRCRAFT PART & AUXILIARY EQUIPMENT, NEC [3728] IRS NUMBER: 112520310 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 001-11398 FILM NUMBER: 1638885 BUSINESS ADDRESS: STREET 1: 200A EXECUTIVE DR CITY: EDGEWOOD STATE: NY ZIP: 11717 BUSINESS PHONE: 5165865200 10QSB 1 cpi_33101-10qsb.txt FORM 10QSB FOR 3/31/01 QUARTER CPI AEROSTRUCTURES, INC. - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period Commission File Number 1-11398 ended March 31, 2001 CPI AEROSTRUCTURES, INC. (Exact Name of Small Business Issuer as Specified in its Character) New York 11-2520310 -------------------------------- ----------------------------------- (State or Other Jurisdiction (IRS Employer Identification Number) of Incorporation or Organization) 200A EXECUTIVE DRIVE, EDGEWOOD, NY 11717 (Address of Principal Executive Offices) Telephone number (631) 586-5200 (Issuer's Telephone Number Including Area Code) 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 such 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 ____ The number of shares of common stock, par value $.001 per share, outstanding was 2,648,509 as of May 11, 2001. CPI AEROSTRUCTURES, INC. INDEX - ------------------------------------------------------------------------------- INDEX Part I Financial Information: Item 1 - Consolidated Financial Statements: Independent Accountants' Review Report 3 Balance Sheets as of March 31, 2001 (Unaudited) and 4 December 31, 2000 Statements of Operations for the Three Months ended March 31, 2001 5 (Unaudited) and 2000 (Unaudited) Statements of Cash Flows for the Three Months ended March 31, 2001 6 (Unaudited) and 2000 (Unaudited) Notes to Financial Statements (Unaudited) 7 Item 2 - Management's Discussion and Analysis of Financial Condition 9 and Results of Operations Part II. Other Item 6 - Exhibits and Reports on Form 8-K 11 Signatures 12 2 CPI AEROSTRUCTURES, INC. - ------------------------------------------------------------------------------- ACCOUNTANTS' REVIEW REPORT To the Board of Directors CPI Aerostructures, Inc. and Subsidiary We have reviewed the accompanying consolidated balance sheet of CPI Aerostructures, Inc. and Subsidiary as of March 31, 2001, and the related consolidated statements of operations and cash flows for the three month period then ended. These financial statements are responsibility of the company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards, generally accepted in the United States of America the objective of which is the expression of an opinion regarding the consolidated financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the accompanying consolidated financial statements for them to be in conformity with generally accepted accounting principles generally accepted in the United States of America. /s/ Goldstein Golub Kessler LLP GOLDSTEIN GOLUB KESSLER LLP New York, New York April 25, 2001 3
CPI AEROSTRUCTURES, INC. CONSOLIDATED BALANCE SHEETS - ---------------------------------------------------------------------------------------------------------------------- March 31, December 31, 2001 2000 (Unaudited) - ---------------------------------------------------------------------------------------------------------------------- ASSETS Current Assets: Cash and cash equivalents $ 192,347 $ 172,184 Accounts receivable 1,218,215 2,107,555 Costs and estimated earnings in excess of billings on uncompleted contracts (Note 2) 5,081,623 4,403,779 Inventory 3,988,149 4,984,682 Deferred income taxes net of valuation allowance of $1,146,000 1,214,000 1,214,000 Prepaid expenses and other current assets 122,421 114,333 - ---------------------------------------------------------------------------------------------------------------------- Total current assets 11,816,755 12,996,533 Property, Plant and Equipment, net 6,008,070 6,142,330 Goodwill 5,937,176 6,066,258 Other Assets 276,240 308,579 - ---------------------------------------------------------------------------------------------------------------------- Total Assets $24,038,241 $25,513,700 ====================================================================================================================== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable $ 2,645,620 $ 2,663,300 Income taxes payable --- 34,000 Accrued expenses 413,552 560,444 Line of credit 1,700,000 1,700,000 Current portion of long term debt 2,728,871 6,043,239 Interest payable 408,554 10,720 - ---------------------------------------------------------------------------------------------------------------------- Total current liabilities 7,896,597 11,011,703 Long term debt 7,188,133 4,460,003 Deferred income taxes 431,000 431,000 Interest payable --- 374,400 - ---------------------------------------------------------------------------------------------------------------------- Total liabilities 15,515,730 16,277,106 - ---------------------------------------------------------------------------------------------------------------------- Commitments Shareholders' Equity: Common stock - $.001 par value; authorized 50,000,000 shares, 2,648,509 issued and outstanding 2,649 2,649 Additional paid - in capital 12,348,086 12,319,674 Accumulated deficit (3,828,224) (3,085,729) - ---------------------------------------------------------------------------------------------------------------------- Shareholders' equity 8,522,511 9,236,594 - ---------------------------------------------------------------------------------------------------------------------- Total Liabilities and Shareholders' Equity $24,038,241 $25,513,700 ====================================================================================================================== See Notes to Consolidated Financial Statements 4
CPI AEROSTRUCTURES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS - ---------------------------------------------------------------------------------------------------------------------- For the Three Months Ended March 31, 2001 2000 (Unaudited) - ---------------------------------------------------------------------------------------------------------------------- Revenue $ 5,614,888 $ 6,947,293 Cost of sales 5,056,768 5,033,787 - ---------------------------------------------------------------------------------------------------------------------- Gross profit 558,120 1,913,506 Selling, general and administrative expenses 1,024,569 1,050,087 - ---------------------------------------------------------------------------------------------------------------------- Income (loss) from operations (466,449) 863,419 - ---------------------------------------------------------------------------------------------------------------------- Other (income) expense: Interest/other (income) expense (4,004) 161,181 Interest expense 280,050 273,115 - ---------------------------------------------------------------------------------------------------------------------- Total other expenses, net 276,046 434,296 - ---------------------------------------------------------------------------------------------------------------------- Income (loss) before provision for income taxes (742,495) 429,123 Provision for income taxes --- 172,000 - ----------------------------------------------------------------------------------------------------------------------- Net income (loss) $ (742,495) $ 257,123 ======================================================================================================================= Earnings (loss) per common share - Basic $ (.28) $ .10 - ----------------------------------------------------------------------------------------------------------------------- Earnings (loss) per common share - Diluted $ (.28) $ .09 - ---------------------------------------------------------------------------------------------------------------------- Shares used in computing earnings (loss) per Common share: Basic 2,648,509 2,648,509 Diluted 2,648,509 2,741,624 ======================================================================================================================= See Notes to Consolidated Financial Statements 5
CPI AEROSTRUCTURES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS - ---------------------------------------------------------------------------------------------------------------------- For the Three Months Ended March 31, 2001 2000 (Unaudited) - ---------------------------------------------------------------------------------------------------------------------- Cash flows from operating activities: Net income (loss) $ (742,495) $ 257,123 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 438,627 379,363 Loss on disposal of fixed assets 8,052 --- Non-cash consulting fees 28,412 28,413 Changes in operating assets and liabilities: (Increase) decrease in accounts receivable 889,340 136,832 (Increase) decrease in prepaid expenses and other current assets (8,088) 32,519 Decrease in other assets 1 79,740 (Increase) decrease in costs and estimated earnings in excess of billings on uncompleted contracts (677,844) 15,170 Decrease (Increase) in inventory 996,533 (316,687) Decrease (Increase) in accounts payable (17,680) 286,143 Decrease in accrued expenses (146,892) (168,707) Decrease (Increase) in income taxes payable (34,000) 167,998 Increase in interest payable 23,434 --- - ---------------------------------------------------------------------------------------------------------------------- Net cash provided (used) in operating activities 757,400 897,907 - ---------------------------------------------------------------------------------------------------------------------- Cash flows from investing activities: Purchase of property and equipment (9,141) (116,425) Proceeds from sale of fixed assets 2,050 --- - ---------------------------------------------------------------------------------------------------------------------- Net cash used in investing activities (7,091) (116,425) - ---------------------------------------------------------------------------------------------------------------------- Cash flows from financing activities: Repayment of long-term debt (730,146) (670,225) - ---------------------------------------------------------------------------------------------------------------------- Net cash used in financing activities (730,146) (670,225) - ---------------------------------------------------------------------------------------------------------------------- Net (Decrease) increase in cash 20,163 111,257 Cash at beginning of period 172,184 295,698 - ---------------------------------------------------------------------------------------------------------------------- Cash at end of period 192,347 $ 406,955 ====================================================================================================================== Supplemental disclosures of cash flow information: Cash paid during the period for: Interest 256,616 $ 273,115 ====================================================================================================================== Income taxes $ 36,050 $ 4,000 ====================================================================================================================== Supplemental schedule of non-cash financing activity: Financing obligation incurred in connection with the acquisition of equipment $ 143,908 $ 370,571 ====================================================================================================================== See Notes to Consolidated Financial Statements 6
CPI AEROSTRUCTURES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - ---------------------------------------------------------------------------- 1. INTERIM The financial statements as of March 31, 2001 and for the FINANCIAL three months ended March 31, 2001 and 2000 are unaudited, STATEMENTS however, in the opinion of the management of the Company, these financial statements reflect all adjustments (consisting solely of normal recurring adjustments) necessary to present fairly the financial position of the Company and the results of operations for such interim periods are not necessarily indicative of the results to be obtained for a full year. 2. COSTS AND Costs and estimated earnings in excess of billings on EXTIMATED uncompleted contracts consist of: EARNINGS IN EXCESS OF BILLINGS ON UNCOMPLETED CONTRACTS
March 31, 2001 ---------------------------------------------------------------------------------------- U.S. Government Commercial Total ---------------------------------------------------------------------------------------- Costs incurred on uncompleted contracts $3,798,065 $12,084,257 $15,882,322 Estimated earnings 1,206,632 6,484,958 7,691,590 ---------------------------------------------------------------------------------------- 5,004,697 18,569,215 23,573,912 Less billings to date 2,855,308 15,636,981 18,492,289 ---------------------------------------------------------------------------------------- Costs and estimated earnings in excess of billings on uncompleted contracts $2,149,389 $2,932,234 $5,081,623 ======================================================================================== December 31, 2000 ---------------------------------------------------------------------------------------- U.S. Government Commercial Total ---------------------------------------------------------------------------------------- Costs incurred on uncompleted contracts $2,920,896 $11,718,432 $14,639,328 Estimated earnings 909,009 6,227,850 7,136,859 ---------------------------------------------------------------------------------------- 3,829,905 17,946,282 21,776,187 Less billings to date 2,156,866 15,215,542 17,372,408 ---------------------------------------------------------------------------------------- Costs and estimated earnings in excess of billings on uncompleted contracts $1,673,039 $ 2,730,740 $ 4,403,779 ======================================================================================== 7
CPI AEROSTRUCTURES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - ---------------------------------------------------------------------------- 3. EARNINGS PER Basic earnings per common share is computed using the COMMON SHARE: weighted average number of shares outstanding. Diluted earnings per common share is computed using the weighted-average number of shares outstanding adjusted for the incremental shares attributed to outstanding options and warrants to purchase common stock. Potential common shares have not been included in the computation of diluted EPS for the first three months of 2001 since the effect would be antidilutive. Incremental shares of 93,115 were used in the calculation of diluted earnings per common share in the first three months of 2000. The convertible securities attributable to a note payable have been excluded from the fully diluted computation as their effect would be antidilutive. 4. INVENTORY: Inventory consists of the following: Raw Materials $1,476,516 Work-in-Progress 1,512,784 Finished Goods 998,849 ----------------------------------------------------------- $ 3,988,149 5. SEGMENT The Company's operations are classified into two business INFORMATION: segments: Production of complex aerospace structural sub-assembles ("Aerospace") and computer numerical control machining of metal products ("Machining"). Summarized financial information by business segment for 2001 and 2000 are as follows:
For the three months ended March 31, 2001 2000 ---------------------------------------------------------------------- Net sales: Aerospace $2,995,611 $ 1,750,065 Machining 2,619,277 5,197,228 ---------------------------------------------------------------------- $5,614,888 $ 6,947,293 ======================================================================= For the three months ended March 31, 2001 2000 ---------------------------------------------------------------------- Operating income (loss): Aerospace $ 444,343 $ 236,601 Machining (910,792) 626,818 ---------------------------------------------------------------------- $ (466,449) $ 863,419 ====================================================================== March 31, December 31, 2001 2000 ---------------------------------------------------------------------- Total assets: Aerospace $ 7,454,390 $ 6,838,934 Machining 16,583,851 18,674,766 ---------------------------------------------------------------------- $ 24,038,241 $ 25,513,700 ====================================================================== 8
CPI AEROSTRUCTURES, INC. Management's Discussion and Analysis of Financial Condition and Results of Operations - ------------------------------------------------------------------------------- Forward Looking Statements The statements discussed in this Report include forward looking statements that involve risks and uncertainties, including the timely delivery and acceptance of the Company's products and the other risks detailed from time to time in the Company's reports filed with the Securities and Exchange Commission. Material Changes in Results of Operations The Company's revenue for the three months ended March 31, 2001 was $5,614,888 compared to $6,947,293 for the same period last year, representing a decrease of $1,332,405 or 19%. This decrease is largely attributable to the decrease in the demand for board handlers produced by Kolar. Gross profit decreased by $1,355,386 or 71%, from the three months ended March 31, 2000 to the three months ended March 31, 2001. Gross profit as a percentage of revenue for the three months ended March 31, 2001 was 10% compared to 28% for the same period last year. These percentages reflect the lower margins at Kolar resulting from the weakness in revenue from its major customers and excess capacity. Selling, general, and administrative expenses decreased by $25,518, or 2%, from the three months ended March 31, 2000 to the three months ended March 31, 2001. Interest expense increased by $6,935 for the three months ended March 31, 2001, compared to the same period last year. Other income increased by $165,185 over last year's other expense. This is due to the fact that the Company recorded a write-off of acquisition charges for unconsummated transactions in 2000. The resulting net loss for the three months ended March 31, 2001, was $742,495 compared to net income of $257,123 for the same period last year. Basic loss per share was $.28 on 2,648,509 average shares outstanding, compared to earnings of $.10 per share on 2,648,509 average shares outstanding for fiscal 2000. Diluted loss per share was $.28 on $2,648,509 weighted average shares outstanding compared to $.09 per share in 2000 on 2,741,624 weighted average shares outstanding. Material Changes in Financial Condition At March 31, 2001 and December 31, 2000, the Company had working capital of $3,920,158 and $1,984,830 respectively, an increase of $1,935,328. This increase is primarily attributable to the classification of approximately $1,819,000 of long-term debt as current as of December 31, 2000. A large portion of the Company's cash has been used for costs incurred on commercial and the numerous government contracts that are in process and which do not allow progress payments. These costs are components of "Costs and estimated earnings in excess of billings on uncompleted contracts" and represent the aggregate costs and related earnings for uncompleted contracts for which the customer has not yet been billed. These costs and earnings are recovered upon shipment of products and presentation of billings in accordance with contract terms. The Company's continued requirement to incur significant costs, in advance of receipt of associated cash for commercial and government aircraft contracts, has caused an increase in the gap between aggregate costs and earnings and the related billings to date. In April 2001, the Company re-structured its term loan agreement with the Chase and Mellon banks. Under the new arrangement, the principal payments for March, April and May of 2001 were deferred, and will be amortized through June 30, 2002. Monthly loan payments will commence in June 2001 at $100,000 per month, and continue at that rate through August 2001. The payments will increase to $200,000 for the succeeding two months, then return to $317,000 per month beginning in November 2001, and continue until the term loan is paid off on June 30, 2002. Additionally, Daniel Liguori, the seller of Kolar, has deferred the Company's payment of interest to him until July 1, 2002. This deferred interest will accrue and become payable upon maturity of his note. Interest payments will begin again in July, 2002. 9 CPI AEROSTRUCTURES, INC. Management's Discussion and Analysis of Financial Condition and Results of Operations - ------------------------------------------------------------------------------- Net cash provided by operating activities for the three months ended March 31, 2001 was $757,400. This increase in cash was primarily the result of a net loss of $742,495, depreciation and amortization of $438,627, a decrease in accounts receivable of $889,340, a decrease in inventory of $996,533 offset by an increase in costs and estimated earnings in excess of billings on uncompleted contracts of $677,844, an increase in prepaid expenses and other current assets of $8,088, a decrease in accounts payable of $17,680, a decrease in income tax payable of $34,000 and a decrease in accrued expenses of $146,892. 10 ITEM 6. Exhibits and Reports on Form 8-K a) No Exhibits b) No reports on Form 8-K were filed with the Securities and Exchange Commission during the three months ended March 31, 2001. 11 SIGNATURE Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CPI AEROSTRUCTURES, INC. Dated: May 14, 2001 By: /S/ Arthur August --------------------------------- Arthur August President (Principal Executive Officer) Dated: May 14, 2001 By: /S/ Edward J. Fred --------------------------------- Edward J. Fred Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----