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Previous: WYOMING OIL & MINERALS INC, NT 10-Q, 1998-06-15 |
Next: FIDELITY COMMONWEALTH TRUST, N-30D, 1998-06-15 |
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, 1998 COMMISSION FILE NO. 0-4988
AEROSONIC CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 74-1668471
- ----------------------------------------- ----------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1212 No. Hercules Avenue, Clearwater, Florida 33765
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(813) 461-3000
- --------------------------------------------------------------------------------
(Registrant's telephone number, including Area Code)
Non applicable
- --------------------------------------------------------------------------------
(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
Indicate the number of shares outstanding of each of the issuer's 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, 1998.
<PAGE>
INDEX
AEROSONIC CORPORATION
Page No.
--------
PART 1. FINANCIAL INFORMATION
- ------ ---------------------
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets - 3
April 30, 1998 and January 31, 1998
Consolidated Statements of Income - 4
Three months ended April 30, 1998 and 1997
Consolidated Statements of Cash Flows - 5
Three months ended April 30, 1998 and 1997
Notes to Consolidated Financial Statements - 6
April 30, 1998
Item 2. Management's Discussion and Analysis of 7
Financial Condition and Results of Operations
PART II. OTHER INFORMATION
- ---------------------------
Item 6. Exhibits and Reports on Form 8-K 8
SIGNATURES 9
- ----------
2
<PAGE>
PART 1. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Aerosonic Corporation and Subsidiary
Consolidated Balance Sheets
<TABLE>
<CAPTION>
April 30,
1998 January 31,
(unaudited) 1998
------------- ---------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash investments $ 1,742,000 $ 2,075,000
Receivables 4,142,000 3,348,000
Inventories 7,764,000 8,057,000
Costs and estimated earnings in excess of billings on uncompleted
contract 48,000 48,000
Prepaid expenses 482,000 36,000
Deferred income tax benefit 506,000 314,000
------------- --------------
Total current assets 14,684,000 13,878,000
Property, plant and equipment, net 4,335,000 4,369,000
Other assets 261,000 68,000
------------- --------------
$ 19,280,000 $ 18,315,000
============= ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt and notes payable $ 949,000 $ 196,000
Accounts payable, trade 349,000 409,000
Compensation and benefits 735,000 619,000
Income taxes payable 0 836,000
Other accrued expenses 705,000 662,000
------------- --------------
Total current liabilities 2,738,000 2,722,000
Long-term debt, less current installments 3,285,000 3,376,000
Note payable, related party 150,000 225,000
Deferred income taxes 582,000 214,000
------------- --------------
Total liabilities 6,755,000 6,537,000
------------- --------------
Shareholders' equity:
Common stock, $.40 par; 8,000,000 shares
authorized; 3,986,262 shares issued 1,595,000 1,595,000
Additional paid-in capital 4,098,000 3,684,000
Retained earnings 6,914,000 6,631,000
Less treasury stock, 76,393 shares at 1/31/98
and 46,593 shares at 4/30/98 (82,000) (132,000)
------------- --------------
Total shareholders' equity 12,525,000 11,778,000
------------- --------------
$ 19,280,000 $ 18,315,000
============= ==============
</TABLE>
Note: The balance sheet at January 31, 1998 has been derived from the
audited financial statements at this date.
See Notes to Consolidated Financial Statements.
3
<PAGE>
Aerosonic Corporation and Subsidiary
Consolidated Statements of Income (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
April 30
----------------------------------
1998 1997
------------- ------------
<S> <C> <C>
Net sales $ 5,328,000 $ 5,327,000
Cost of goods sold 3,295,000 3,465,000
------------ -------------
Gross Profit 2,033,000 1,862,000
Selling, general and administrative
expenses 1,562,000 1,360,000
------------ -------------
Operating Income 471,000 502,000
------------ -------------
Other (income) deductions:
Interest expense, net 53,000 81,000
Other, net (24,000) (4,000)
------------ -------------
29,000 77,000
------------ -------------
Income before income taxes 442,000 425,000
Income tax expense 159,000 147,000
------------ -------------
Net Income $ 283,000 $ 278,000
============ =============
Basic and diluted earnings per share: $ 0.07 $ 0.07
============ =============
Basic weighted average shares
outstanding 3,938,000 3,858,000
============ =============
Diluted weighted average shares
outstanding
3,939,000 3,858,000
============ =============
</TABLE>
See Notes to Consolidated Financial Statements
4
<PAGE>
Aerosonic Corporation and Subsidiary
Consolidated Statements of Cash Flows (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
April 30
------------------------------
1998 1997
<S> <C> <C>
Cash flows from operating activities:
Net income $ 283,000 $ 278,000
Adjustment to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization 151,000 125,000
Stock Compensation 157,000 0
Change in deferred income taxes 176,000 (85,000)
Changes in current assets & liabilities (1,397,000) (116,000)
------------ ------------
Net cash provided by (used in) operating activities (630,000) 202,000
------------ ------------
Cash flows from investing activities:
Purchase of property, plant and equipment (100,000) (138,000)
Changes in other assets (193,000) 6,000
Exercise of stock options 3,000 95,000
------------ ------------
Net cash (used in) investing activities (290,000) (37,000)
------------ ------------
Cash flows from financing activities:
Proceeds from/(repayment on) long-term debt
and notes payable 662,000 (144,000)
Repayment of related party notes payable (75,000) (50,000)
------------ ------------
Net cash provided by (used in) financing activities 587,000 (194,000)
------------ ------------
Net (decrease) in cash and cash investments (333,000) (29,000)
Cash and cash investments, beginning of period 2,075,000 1,250,000
------------ ------------
Cash and cash investments, end of period $ 1,742,000 $ 1,221,000
============ ============
Supplemental disclosure of cash flow information:
Cash paid for:
Interest $ 73,000 $ 105,000
============ ============
Income taxes $ 935,000 $ 0
============ ============
</TABLE>
See Notes to Consolidated Financial Statements
5
<PAGE>
AEROSONIC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
April 30, 1998
NOTE A - BASIS OF PRESENTATION
- ------------------------------
The accompanying unaudited condensed financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
reporting 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, 1998 are
not necessarily indicative of the results that may be expected for the year
ended January 31, 1999. 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, 1998.
NOTE B - ENVIRONMENTAL MATTERS
- ------------------------------
As reported in the annual report on form 10-K for the fiscal year ended January
31, 1998, in accordance with a consent agreement signed by the Company in 1993,
the Company's environmental consultant has developed an interim remedial action
plan to contain and remediate certain contamination on and underlying the
Company's property. This plan was submitted to the Florida Department of
Environmental Protection (FDEP) in 1997 and is currently under review and
discussion. During 1997, the Company recorded a provision of approximately
$175,000 related to the estimated costs to be incurred under this plan. As of
April 30, 1998, the company has a remaining liability of approximately $109,000
recorded in Other accrued expenses to cover future environmental expenditures
related to the remediation of this site. Before approval of the plan, the FDEP
may require further assessment and testing. Company management believes that any
additional liability in excess of amounts accrued at April 30, 1998 will not
have a material affect on the financial condition of the company.
NOTE C - WEIGHTED AVERAGE COMMON SHARES AND COMMON EQUIVALENTS OUTSTANDING
- ---------------------------------------------------------------------------
COMPUTATIONS OF EARNINGS PER SHARE
- ----------------------------------
For the three months ended
April 30, April 30,
1998 1997
---- ----
Basic weighted average common shares outstanding 3,938,000 3,858,000
Weighted average common stock equivalents 1,000 0
----------- -------------
Shares used in diluted earnings per share
calculation 3,939,000 3,858,000
=========== =============
6
<PAGE>
PART 1. FINANCIAL INFORMATION
- ------------------------------
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT
OF OPERATIONS
Company wide net sales for the three months ended April 30, 1998 were $5,328,000
as compared to $5,327,000 for the same period in the preceding year. Net sales
for the Clearwater and Kansas Instrument Divisions for the quarter ended April
30, 1998 totaled $3,091,000, which represents a $18,000 decrease from the same
period in the prior year. The Avionics Specialties Division sales for the
quarter ended April 30, 1998 were $2,237,000, a $19,000 increase over the same
period in the prior fiscal year.
Gross profit as a percentage of net sales improved to 38% in the three months
ended April 30, 1998 as compared to 35% for the respective period in the prior
fiscal year. The improvement is largely attributed to Company Management's
continued focus of its sales efforts toward its most highly profitable product
lines. Company Management continues its strategy of pursuing long term
agreements with its major customers and continues to focus on the worldwide
market to enhance revenues and profitability, while de-emphasizing, and in some
areas, discontinuing sales of lower margin products.
Selling, General and Administrative expenses increased in the three months ended
April 30, 1998 due primarily to increased research and development expenditures
related to specific programs targeted to begin production in the third quarter
of FY'99. Employee stock bonuses accounted for a large portion of the balance of
the increase from the prior year.
Interest expense totaled $53,000 for the three months ended April 30, 1998
versus $81,000 during the same period in the preceding year. The decrease is due
primarily to the reduction in borrowings, and a renegotiation of interest rates
on its existing credit facilities.
For the first quarter ended April 30, 1998 the Company recorded net income of
$283,000, or $.07 per share. Earnings for the first quarter reflect an increase
from the same period in the prior year of $5,000.
Working capital increased to $11,946,000 during the three months ended April 30,
1998 versus $11,156,000 at January 31, 1998, and the Company's current ratio
approximated 5.4:1, which is an increase from the current ratio from last
reporting period of 5.1:1.
Significant sources of cash during the first three months consisted of funds
generated from operations and short term borrowings. Significant uses of cash
included a $935,000 payment of federal and state income tax liabilities, which
included all of FY'98 and the first quarter of FY'99. Net changes in current
assets and liabilities, the purchase of property and equipment and repayment of
long term debt and notes payable, related comprised the majority of other uses
of cash. Company management anticipates that cash flow from operations, existing
cash balances and the availability under the line of credit will be sufficient
to fund future growth.
The Company's management has evaluated the Year 2000 impact on the Company's
internal financial and operational systems. The Company has undertaken remedial
measures based upon this evaluation. The Company anticipates that any changes,
if necessary, to its information systems to make them Year 2000 compliant will
be completed by January 31, 1999. The company does not expect that the Year 2000
will cause operational problems or result in the company incurring costs
material to the company's financial condition or results of operations.
7
<PAGE>
PART II. OTHER INFORMATION
AEROSONIC CORPORATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-K
The Company did not file any report on Form 8-K during
the three months ended April 30, 1998.
8
<PAGE>
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
-------------------------------------
(Registrant)
Date: June 15, 1998
---------------- /s/ J. Mervyn Nabors
-------------------------------------
J. Mervyn Nabors,
President and Chief Executive Officer
9
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Jan-31-1998
<PERIOD-START> Feb-01-1998
<PERIOD-END> Apr-30-1998
<CASH> 1,742,000
<SECURITIES> 0
<RECEIVABLES> 4,186,000
<ALLOWANCES> 44,000
<INVENTORY> 7,764,000
<CURRENT-ASSETS> 14,684,000
<PP&E> 8,294,000
<DEPRECIATION> 3,958,000
<TOTAL-ASSETS> 19,280,000
<CURRENT-LIABILITIES> 2,738,000
<BONDS> 0
0
0
<COMMON> 1,595,000
<OTHER-SE> 10,930,000
<TOTAL-LIABILITY-AND-EQUITY> 19,280,000
<SALES> 5,328,000
<TOTAL-REVENUES> 5,328,000
<CGS> 3,295,000
<TOTAL-COSTS> 3,295,000
<OTHER-EXPENSES> 1,538,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 53,000
<INCOME-PRETAX> 442,000
<INCOME-TAX> 159,000
<INCOME-CONTINUING> 283,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
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