FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED April 30, 1997 COMMISSION FILE NO. 0-4988
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AEROSONIC CORPORATION
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(Exact name of registrant as specified in its charter)
DELAWARE 74-1668471
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1212 No. Hercules Avenue, Clearwater, Florida 34625
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(Address of principal executive offices) (Zip Code)
(813) 461-3000
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(Registrant's telephone number, including Area Code)
Non applicable
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(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether 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
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Indicate the number of shares outstanding of each of the issuers classes of
common stock, as of the latest practicable date.
Common Stock, par value $.40 per share, 3,986,262 number of shares as of April
30, 1997.
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INDEX
AEROSONIC CORPORATION
Page No.
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PART I. FINANCIAL INFORMATION
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Item 1. Consolidated Financial Statements
Consolidated Balance Sheets - 2
April 30, 1997 and January 31, 1997
Consolidated Statements of Operations - 3
Three months ended April 30, 1997 and 1996
Consolidated Statements of Cash Flows - 4
Three months ended April 30, 1997 and 1996
Notes to Consolidated Financial Statements - 5
April 30, 1997
Item 2. Management's Discussion and Analysis of 6
Financial Condition and Results of Operations
SIGNATURES 7
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PART II. OTHER INFORMATION
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ITEM 6. Exhibits and Reports on Form 8-K
Exhibit 11 - Computations of Earnings Per Share 8
<PAGE>
Aerosonic Corporation and Subsidiary
Consolidated Balance Sheets
ASSETS April 30,
1997 January 31,
(unaudited) 1997
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Current assets:
Cash and cash investments $ 1,221,000 $ 1,250,000
Receivables 3,605,000 3,456,000
Income tax receivable 101,000 149,000
Inventories 7,666,000 7,286,000
Prepaid expenses 65,000 66,000
Deferred income tax benefit 429,000 344,000
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Total current assets 13,087,000 12,551,000
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Property, plant and equipment, net 4,504,000 4,491,000
Other assets 167,000 173,000
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$ 17,758,000 $ 17,215,000
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term debt
and notes payable $ 1,697,000 $ 1,805,000
Accounts payable, trade 1,018,000 964,000
Other accrued expenses 1,603,000 1,293,000
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Total current liabilities 4,318,000 4,062,000
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Long-term debt and notes payable, net of
current maturities 1,908,000 1,944,000
Note payable, related party 450,000 500,000
Deferred income taxes 582,000 582,000
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Total liabilities 7,258,000 7,088,000
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Shareholders' equity:
Common stock, $.40 par value; authorized
8,000,000 shares, issued 3,986,262 shares 1,595,000 1,595,000
Additional paid-in-capital 3,451,000 3,410,000
Retained earnings 5,708,000 5,430,000
Less treasury stock; 146,753 shares at
April 30, 1997 and 178,753 shares at
January 31, 1997, at cost (254,000) (308,000)
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Total shareholders' equity 10,500,000 10,127,000
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$ 17,758,000 $ 17,215,000
============ ============
The accompanying notes are an integral part of
these consolidated financial statements.
2
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Aerosonic Corporation and Subsidiary
Consolidated Statements of Operations (Unaudited)
Three Months Ended
April 30,
----------------------------
1997 1996
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Net sales $ 5,327,000 $ 4,661,000
Cost of goods sold 3,465,000 3,294,000
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Gross profit 1,862,000 1,367,000
Selling, general and administrative expenses 1,360,000 1,165,000
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Operating income 502,000 202,000
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Other deductions (income):
Provision for settlement of litigation 0 225,000
Interest expense, net 81,000 67,000
Other, net (4,000) (16,000)
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77,000 276,000
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Income (loss) from continuing operations
before income taxes 425,000 (74,000)
Income tax benefit (expense) 147,000 (25,000)
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Income (loss) from continuing operations 278,000 (49,000)
Discontinued Ordnance operations:
Losses from discontinued operations, net
of income tax benefit of $77,000 0 (150,000)
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Net income (loss) $ 278,000 $ (199,000)
=========== ===========
Earnings (loss) per share:
Continuing operations $ 0.00 $ ( 0.01)
Discontinued operations 0.07 (0.04)
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Net Earnings per share: $ 0.07 $ (0.05)
============ ===========
Weighted average number of common and common
equivalent shares outstanding 3,857,509 3,801,000
============ ===========
The accompanying notes are an integral part of
these consolidated financial statements.
3
<PAGE>
Aerosonic Corporation and Subsidiary
Consolidated Statements of Cash Flows (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
April 30,
--------------------------
1997 1996
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<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 278,000 $ (199,000)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization 125,000 217,000
Change in deferred income taxes (85,000) (101,000)
Net increase in cash due to changes in
current assets and liabilities (116,000) 160,000
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Net cash provided by operating activities 202,000 77,000
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Cash flows from investing activities:
Purchase of property and equipment (138,000) (145,000)
Proceeds from sale of equipment 0 13,000
Net decrease in other assets 6,000 106,000
Proceeds from exercise of stock options 95,000 0
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Net cash used in investing activities (37,000) (26,000)
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Cash flows from financing activities
Repayments on long-term debt and notes payable (144,000) (178,000)
Proceeds from borrowings 0 130,000
Repayments on related party note payable (50,000) 0
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Net cash used by financing activities (194,000) (48,000)
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Net increase (decrease) in cash (29,000) 3,000
Cash, beginning of period 1,250,000 10,000
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Cash, ending of period $ 1,221,000 $ 13,000
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest $ 105,000 $ 77,000
=========== ===========
</TABLE>
Supplemental disclosure of noncash financing activity:
During the quarter ended April 30, 1996, the Company reissued 8,019 shares of
treasury stock to fund a portion of the Company's tax deferred savings plan.
The accompanying notes are an integral part of
these consolidated financial statements.
4
<PAGE>
AEROSONIC CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
APRIL 30, 1997
NOTE A - BASIS OF PRESENTATION
- ------------------------------
The accompanying unaudited consolidated condensed financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three-month period ended April 30, 1997
are not necessarily indicative of the results that may be expected for the year
ended January 31, 1998. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's annual
report on Form 10-K for the year ended January 31, 1997.
NOTE B - DISCONTINUED OPERATIONS
- --------------------------------
On July 10, 1996, the Company finalized the sale of the assets of the Ordnance
Division for $1,700,000 in cash, the proceeds of which were partially used to
pay down long-term debt, with the balance being invested in marketable
securities.
Net sales of the Ordnance Division for the three months ended April 30, 1996
were $328,000.
Certain prior year amounts have been reclassified to conform with current year
presentation of discontinued operations.
NOTE C - FINALIZATION OF THE SENSONICS SETTLEMENT
- -------------------------------------------------
During the first quarter ended April 30, 1996, the Company finalized the
settlement of the lawsuit with Sensonics, Inc. and recorded a $225,000 charge
against related earnings. The details of the lawsuit and related settlement are
reflected in the 10-K report, dated January 31, 1997.
5
<PAGE>
AEROSONIC CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF
OPERATIONS
Companywide net sales for the three months ended April 30, 1997 were $5,327,000
as compared to $4,989,000 for the same period in the preceding year. This
represents a $338,000 or 7% increase during the second quarter of Fiscal 1997.
Net sales for the Clearwater and Kansas Instrument Divisions during the first
quarter of Fiscal 1998 totaled $3,109,000, which represents a $949,000 or 44%
increase from the same period in the prior year. Net sales for the Avionics
Specialties Division for the quarter ended April 30, 1997 were $2,218,000, an
11% decrease over the same period in the prior year. Discontinued Ordnance
division sales totaled $328,000 during the three months ended April 30, 1996.
Gross profit as a percentage of net sales approximated 35% during the first
quarter of Fiscal 1998 as compared to 29% during the respective period in the
preceding year. The improvement is largely attributed to increased management
focus on the instrument product line, the Company's core business line. Company
management is reengineering and streamlining the instrument manufacturing, cost
accounting and sales management processes as well as addressing significant
price increases on certain instrument lines. In addition, management continues
to focus on increased sales volume through both long-term contracts with certain
customers and the generation of new business both internationally and
domestically.
Interest expense totaled $81,000 for the three months ended April 30, 1997 as
compared to $67,000 for the same period in the preceding year. The increase is
primarily due to heavier borrowings under the Company's line of credit
agreement.
The Company recorded net income for the first quarter of Fiscal 1998 of
$278,000, or $.07 per share. This compares to a net loss of $199,000 or (.05)
per share for the respective period in the prior year.
Working capital increased by $280,000 during the first quarter of Fiscal 1998
and the Company's current ratio approximated 3:1, consistent with the last
reporting period. Significant sources of cash during the first quarter consisted
of funds generated from operations. Net cash provided by operations approximated
$202,000 for the first quarter of Fiscal 1998 as compared to $77,000 for the
same period in the preceding year. In addition, stock options granted under the
Company's Incentive Stock Option Plan were exercised during the first quarter of
Fiscal 1998 generating cash of approximately $95,000. Significant uses of cash
included a net decrease in other current assets and liabilities, the purchase of
property and equipment and repayment of long-term debt and notes payable,
related.
6
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AEROSONIC CORPORATION
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 11: Computation of Earnings Per Share
Exhibit 27: Financial Data Schedule (Electronic filing only)
(b) The Company did not file any report on Form 8-K during the
three months ended April 30, 1997.
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 thereunto duly authorized.
AEROSONIC CORPORATION
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(Registrant)
Date: June 13, 1997 /s/ J. Mervyn Nabors
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J. Mervyn Nabors, President
and Chief Executive Officer
7
Exhibit 11: Computation of Earnings per Share
Exhibit 11
Weighted Average Common Shares and Common Equivalents Outstanding
Computation of Earnings Per Share
For the three months ended
April 30, April 30,
1997 1996
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Primary Earnings Per Share:
Net Income $ 278,000 $ (199,000)
=========== ===========
Weighted Average Common Shares Outstanding 3,858,000 3,801,000
=========== ===========
Primary Earnings Loss Per Share $ 0.07 $ (0.05)
=========== ============
There are no other common stock equivalents; therefore, primary and fully
diluted earnings per share are equal.
8
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF AEROSONIC CORPORATION FOR THE THREE MONTHS ENDED APRIL
30, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-START> FEB-01-1997
<PERIOD-END> APR-30-1996
<CASH> 1,221
<SECURITIES> 0
<RECEIVABLES> 3,787
<ALLOWANCES> 81
<INVENTORY> 7,666
<CURRENT-ASSETS> 13,087
<PP&E> 7,906
<DEPRECIATION> 3,402
<TOTAL-ASSETS> 17,758
<CURRENT-LIABILITIES> 4,318
<BONDS> 0
0
0
<COMMON> 1,595
<OTHER-SE> 8,905
<TOTAL-LIABILITY-AND-EQUITY> 17,758
<SALES> 5,327
<TOTAL-REVENUES> 5,327
<CGS> 3,465
<TOTAL-COSTS> 3,465
<OTHER-EXPENSES> 1,360
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 81
<INCOME-PRETAX> 425
<INCOME-TAX> 147
<INCOME-CONTINUING> 278
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 278
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
