SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 9, 1998
ADVANCED ELECTRONIC SUPPORT PRODUCTS, INC.
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(Exact name of registrant as specified in its charter)
FLORIDA 001-12739 59-2327-381
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(State or other (Commission File (I.R.S. Employer
jurisdiction Number) Identification
of incorporation) No.)
1810 N.E. 144TH STREET
NORTH MIAMI, FLORIDA 33181
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(Address of principal executive offices)
Registrant's telephone number, including area code: (305) 944-7710
N/A
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(Former name or former address, if changed since last report)
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Item 5. OTHER EVENTS
On October 9, 1998, Advanced Electronic Support Products, Inc., a Florida
corporation (the "Company") announced that the Company intends to take a
one-time charge approximating $1.7 million on an after-tax basis (approximately
$.75 per share) for the third quarter of 1998 relating to the losses it expects
to suffer as a result of the condition of its Russian distributor and the impact
which such condition is expected to have on the Company's results of operations
for the third quarter of 1998. In addition, the Company also announced that it
has acquired its Ukrainian distributor.
The Company's Russian distributor, which accounted for approximately 15% of
the Company's revenue for both 1997 and for the six months ended June 30, 1998,
has been severely impacted over the last few months by the current economic
situation in Russia. The Russian economic crisis has made it very difficult for
the Company's distributor to continue to sell significant amounts of the
Company's product in Russia. Additionally, the current state of the banking
situation in Russia is making it very difficult for the distributor to make
payments to the Company for products previously ordered. As a result, the
Company believes that it is appropriate at this time to take a one-time charge
relating to this situation, including a write-off of the amounts presently due
to the Company from its Russian distributor. The Company intends to continue
working closely with its Russian distributor and if the Russian economy
recovers, the Company hopes to be in a position to recover some of this charge
during future periods.
Additionally, the Company has acquired its Ukrainian distributor for an
amount equal to the receivables due to the Company from such distributor.
Reference is made to the press release filed as Exhibit 99 hereto. The
information set forth in Exhibit 99 is hereby incorporated by reference herein.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Exhibits
99.1 Press Release issued October 9, 1998
2
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SIGNATURES
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 hereunto duly authorized.
ADVANCED ELECTRONIC SUPPORT
PRODUCTS, INC.
Date: Octobe 19, 1998 By: /s/RANDALL N. PAULFUS
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Randall N. Paulfus,
Chief Financial Officer
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INDEX TO EXHIBITS
EXHIBIT EXHIBIT
NUMBER DESCRIPTION
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99.1 Press release dated October 9 1998.
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
AESP ANNOUNCES ONE-TIME CHARGE RELATING TO RUSSIAN CRISIS
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COMPANY REPORTS ACQUISITION OF UKRAINIAN DISTRIBUTOR
MIAMI, FL - OCTOBER 9, 1998 - ADVANCED ELECTRONIC SUPPORT PRODUCTS, INC.
(NASDAQ: AESP/AESPW) announced today that it intends to take a one-time charge
approximating $1.7 million on an after-tax basis (approximately $.75 per share)
for the third quarter of 1998 relating to the losses it expects to suffer as a
result of the condition of its Russian distributor and the impact which such
condition is expected to have on the Company's results of operations for the
third quarter of 1998. The Company also announced that it has acquired its
Ukrainian distributor.
Slav Stein, the Company's President, commented: "This one-time charge relating
to our Russian activities reflects our belief that it is prudent to be
conservative in times of fiscal crisis. Our Russian distributor, which accounted
for approximately 15% of our revenue for both 1997 and for the six months ended
June 30, 1998, has been severely impacted over the last few months by the
current economic situation in Russia. The Russian economic crisis has made it
very difficult for our distributor to continue to sell significant amounts of
our products in Russia, and even if it were able to continue to sell our
products at previous levels, the current state of the banking situation in
Russia is making it impossible for our distributor to make payments to us for
products previously ordered. As a result, we believe that it is prudent at this
time to take a one-time charge relating to this situation, including a write-off
of the amounts presently due to us from our Russian distributor. Of course, we
intend to continue to work closely with our Russian distributor and if the
Russian economy recovers, we hope to be in a position to recover some of this
charge during future periods."
Mr. Stein continued: "We are also acting at this time to redirect some of our
assets and activities formerly focused on our Russian distributor towards our
other European operations, in an effort to make up for the revenues and gross
profits which we will lose as a result of the problems being experienced by our
Russian distributor. We are also continuing to pursue acquisitions of both U.S.
and foreign companies whose business will add to both our product offerings and
customer base. Finally, we are taking steps to trim our costs in order to
minimize the impact of this situation. However, in the short term, our results
of operations will be negatively impacted by this situation and, in that regard,
we anticipate that we will report a loss for the third quarter of 1998,
exclusive of this one-time charge."
The Company also reported that it has acquired its Ukrainian distributor for an
amount equal to the receivables due to the Company from such distributor. Mr.
Stein commented: "We are pleased to bring our Ukrainian distributor into our
family. Ukraine, while a smaller market than Russia, has not experienced the
substantial economic problems currently being experienced by Russia. While
bringing our Ukrainian distributor into the Company will not add significant
revenues to the Company, it will allow us to better control our activities in
this growing market."
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Advanced Electronic Support Products, Inc. designs, manufactures, markets and
distributes electronic connectivity and networking products to retail and OEM
customers worldwide. The Company offers a broad range of products to its
customers, including computer cables, connectors, installation products, data
sharing devices, and fiber optic cables, as well as a complete selection of
networking products, such as networking interface cards, hubs, transceivers and
repeaters for different networking topologies.
SAFE HARBOR DISCLOSURE UNDER THE 1995 SECURITIES LITIGATION REFORM ACT. This
press release contains forward looking statements which involve risk and
uncertainties. The Company's actual results could differ materially from the
results anticipated herein. For further information, please see the Company's
Annual Report on Form 10-KSB for the 1997 fiscal year.
For further information, please contact:
Slav Stein, President
Roman Briskin, Executive Vice President
Randall Paulfus,Chief Financial Officer
Advanced Electronic Support Products, Inc.
(305) 944-7710
- -or-
Malcolm McGuire
CCRI Corporation
(800) 828-0406
