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 SIX MONTHS ENDED MARCH 31, 1998
BOONTON ELECTRONICS CORPORATION
State: New Jersey Identification No. 22-1543137
File No. 0-2364
Address: 25 Eastmans Road, P.O. Box 465,
Parsippany, New Jersey 07054-0465
Telephone: 973-386-9696
"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 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 [ ]
Shares Outstanding:
MARCH 31, 1998 1,644,301
MARCH 31, 1997 1,636,585
1
<PAGE>
(Unaudited)
BOONTON ELECTRONICS CORPORATION
BALANCE SHEET
<TABLE>
<CAPTION>
Assets March 31, 1998 September 30, 1997
------ -------------- ------------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 72,798 $ 121,620
Trade receivables 911,521 1,051,887
Inventories 1,320,898 1,306,115
Deferred tax benefits 81,058 81,058
Other current assets 327,274 333,325
----------- -----------
Total current assets 2,713,549 2,894,005
----------- -----------
Plant and equipment-net 494,328 534,023
----------- -----------
Other assets:
Deferred tax benefit 988,651 988,651
Security deposits 70,066 71,169
----------- -----------
Total other assets 1,058,717 1,059,820
----------- -----------
Total assets $ 4,266,594 $ 4,487,848
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Note payable $ 65,572 $ 63,379
Related party loans 43,530 93,530
Accounts payable - trade 678,994 800,931
Other current liabilities 271,839 284,528
Unsecured claims payable (Chapter 11
settlement) current 153,372 48,491
----------- -----------
Total current liabilities 1,213,307 1,290,859
Note payable - noncurrent 341,973 375,351
Related party loans - noncurrent 218,970 218,970
Unsecured claims payable (Chapter 11
settlement) - noncurrent -- 153,372
----------- -----------
Total liabilities 1,774,250 2,038,552
----------- -----------
Commitments and contingencies
Stockholders' equity:
Common stock 164,430 163,659
Capital in excess of par 4,637,866 4,613,637
Deficit (2,309,952) (2,328,000)
----------- -----------
Total stockholders' equity 2,492,344 2,449,296
----------- -----------
Total liabilities and stockholders' equity $ 4,266,594 $ 4,487,848
=========== ===========
</TABLE>
The accompanying footnotes are an integral part of these statements.
2
<PAGE>
(Unaudited)
BOONTON ELECTRONICS CORPORATION
STATEMENT OF OPERATIONS
For the Six Months Ended
March 31, 1998 March 31, 1997
-------------- --------------
Net sales $ 3,219,404 $ 3,604,722
Cost of goods sold 1,652,203 1,992,112
----------- -----------
Gross profit 1,567,201 1,612,610
----------- -----------
Operating expenses:
Commissions 334,419 380,211
Research and development 493,722 361,947
Other operating expenses 698,264 775,628
----------- -----------
Total operating expenses 1,526,405 1,517,786
----------- -----------
Income from operations 40,796 94,824
----------- -----------
Interest expense 26,561 19,646
Other expense/(income) (3,813) 18,597
----------- -----------
Total other expenses 22,748 38,243
----------- -----------
Income before provision for
income taxes 18,048 56,581
Provision for income taxes -- --
----------- -----------
Net income 18,048 56,581
Stockholders' equity - beginning 2,449,296 2,217,952
Common stock sold 25,000 200,000
----------- -----------
Stockholders' equity - ending $ 2,492,344 $ 2,474,533
=========== ===========
Weighted average number of shares
outstanding 1,644,301 1,606,255
=========== ===========
Earnings per share: $ 0.01 $ 0.04
=========== ===========
The accompanying footnotes are an integral part of these statements.
3
<PAGE>
(Unaudited)
BOONTON ELECTRONICS CORPORATION
STATEMENT OF OPERATIONS
For the Three Months Ended
March 31, 1998 March 31, 1997
-------------- --------------
Net sales $ 1,562,204 $ 1,793,647
Cost of goods sold 794,628 1,004,817
----------- -----------
Gross profit 767,576 788,830
----------- -----------
Operating expenses:
Commissions 140,024 178,207
Research and development 258,346 171,886
Other operating expenses 346,626 385,804
----------- -----------
Total operating expenses 744,996 735,897
----------- -----------
Income from operations 22,580 52,933
----------- -----------
Interest expense 13,027 10,279
Other expense/(income) 9,714 11,450
----------- -----------
Total other expenses 22,741 21,729
----------- -----------
Income/(loss) before provision for income
taxes (161) 31,204
Provision for income taxes -- --
----------- -----------
Net income/(loss) (161) 31,204
Stockholders' equity - beginning 2,492,505 2,443,329
----------- -----------
Stockholders' equity - ending $ 2,492,344 $ 2,474,533
=========== ===========
Weighted average number of shares
outstanding 1,644,301 1,636,585
=========== ===========
Earnings per share: $ 0.00 $ 0.02
=========== ===========
The accompanying footnotes are an integral part of these statements.
4
<PAGE>
(Unaudited)
BOONTON ELECTRONICS CORPORATION
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
For the Six Months Ended
March 31, 1998 March 31, 1997
-------------- --------------
<S> <C> <C>
Cash provided/(used) by operations:
Net income $ 18,048 $ 56,581
Adjustments to reconcile net income:
Depreciation & amortization 40,260 23,055
Decrease/(increase) in current assets:
Accounts receivable 140,366 (61,433)
Inventories (14,783) (68,749)
Other current assets 6,051 (64,534)
Increase/(decrease) in current liabilities:
Accounts payable (121,937) 118,614
Chapter 11 settlement - current (48,491) (48,491)
Accrued liabilities (12,689) (50,038)
--------- ---------
Net cash provided/(used) by operations 6,825 (94,995)
--------- ---------
Cash flows from investing activities:
Purchase of equipment (565) (323,544)
Other 1,103 (4,368)
--------- ---------
Net cash (used) by investing activities 538 (327,912)
--------- ---------
Cash flows from financing activities:
Increase notes payable -- 317,038
Payments on loans (81,185) (16,723)
Proceeds from sale of stock 25,000 200,000
--------- ---------
Net cash provided/(used) by financing activities (56,185) 500,315
--------- ---------
Increase/(decrease) in cash and cash equivalents (48,822) 77,408
Cash and cash equivalents at beginning of period 121,620 113,041
--------- ---------
Cash and cash equivalents at end of period $ 72,798 $ 190,449
========= =========
</TABLE>
The accompanying footnotes are an integral part of these statements.
5
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(Unaudited)
BOONTON ELECTRONICS CORPORATION
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND
DESCRIPTION OF BUSINESS:
A. The Company is a New Jersey corporation organized in 1947. The
Company designs and produces electronic testing and measuring
instruments including power meters, voltmeters and modulation meters.
Recent models are microprocessor controlled and are often used in
computerized automatic testing systems. The Company's equipment is
marketed throughout the world to commercial and government customers
in the electronics industry.
The Company markets and distributes its products throughout the
United States and abroad through some 15 domestic sales
representatives and 24 foreign distributors. Representatives sell on
a commission basis, while distributors buy products for resale at
discounted ex-factory prices. Its representatives and distributors
also handle the products of other manufacturers, although these are
not generally competitive with the Company's products except that
some items handled by foreign distributors may be somewhat
competitive.
B. Use of estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
C. The company accounts for uncollectible accounts under the direct
write-off method whereas generally accepted accounting principals
require provision for such expenses under the allowance method. The
effect of using this method approximates the allowance method as all
amounts are deemed to be fully collectible.
D. Inventories - stated at the lower of cost or market determined by the
first-in, first-out (FIFO) method.
E. Plant and equipment - Depreciation and amortization are calculated by
the straight-line method for financial reporting purposes at rates
based on the following estimated useful lives:
Building and improvement 39
Machinery and equipment 5-10
Office furniture and fixtures 5-10
Transportation equipment 3
6
<PAGE>
(Unaudited)
BOONTON ELECTRONICS CORPORATION
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
The accelerated cost recovery system and modified accelerated cost
recovery system is used for income tax purposes. Cost of major
renewals and betterments that extend the life of the property and
equipment are capitalized. Expenditures for maintenance and repairs
are charged to expenses as incurred.
F. Financial risk - The Company regularly maintains bank account
balances in excess of FDIC insurable limit.
G. Income Taxes - The Company adopted the provisions of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes"
which requires a company to recognize deferred tax liabilities and
assets for the expected future tax consequences of events that have
been recognized in a Company's financial statements or tax returns.
Under this method, deferred tax liabilities and assets are determined
based on the differences between the financial statement carrying
amounts and tax basis of assets and liabilities using expected tax
rates in effect in the years in which the differences are expected to
reverse. The Company recognized the benefit of net operating loss
carryforwards applying the valuation allowance, which requires that
the tax benefit be limited, based on the weight of available evidence
and the probability that some portion of the deferred tax asset will
not be realized.
H. Financial Instruments - The Company's financial instruments include
cash, cash equivalents, trade receivables and payables, long-term
debt and loans from related parties for which carrying amounts
approximate fair value. It is not practicable to estimate the fair
value of related party loans and long-term debt.
I. Stock-Based Compensation - The Company has elected to follow Account
Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees (APB25) and related interpretations in accounting for its
employee stock options. Under APB25, because the exercise price of
employee stock options equals the market price of the underlying
stock on the date of grant, no compensation expense is recorded.
Effective October 1, 1997, the Company has adopted the disclosure
only provisions of Statement of Financial Accounting Standards No.
123, Accounting for Stock-Based Compensation (Statement 123).
7
<PAGE>
(Unaudited)
BOONTON ELECTRONICS CORPORATION
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
NOTE 2 - PROCEEDINGS UNDER CHAPTER:
The Company operated under Chapter 11 proceedings for the period
September 7, 1993 through November 15, 1994 when, on the later date, the order
confirming the Plan of Reorganization was entered by the United States
Bankruptcy Court, District of New Jersey subject to the court closing the case
180 days after said entry (Local Rule 25(a)) cause for extension of time in
closing case (Local Rule 25(b)) and filing of application for allowance of fees
and allowance within 90 days after entry of final order confirming plan (Local
Rule 25(c)).
In accordance with S.A.S. Sections 560.03, the Company has adjusted
downward all liability accounts that were affected by the confirmed Plan of
Reorganization entered on November 15, 1994. Therefore, the financial statements
reflect the maximum liabilities to creditors under the Chapter 11 proceedings
and the Plan of Reorganization. The settlement of unsecured claims under the
confirmed Plan of Reorganization totaling 35% of allowed claims for accounts
payable and accrued expenses provided for the following payments to be made
subsequent to November 15, 1994:
%
10 From after tax proceeds from termination of the company's pension plan
5 One year after initial payout
5 Two years after initial payout
15 Three years after initial payout
Pre-petition liabilities in accordance with the November 15, 1994
confirmed plan of reorganization were compromised of the following:
Accounts payable $ 702,233
Accrued expenses:
Commissions payable 126,370
Vacation pay 96,250
Severance pay 25,108
Other 78,282
------------
Total September 30, 1994 1,028,243
Court authorized payments/adjustments (75,073)
------------
Balance subject to settlement 953,170
Amount discharged and/or paid to date (799,798)
------------
Chapter 11 settlement total March 31, 1998 $ 153,372
============
8
<PAGE>
(Unaudited)
BOONTON ELECTRONICS CORPORATION
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
NOTE 3 - INVENTORIES
<TABLE>
<CAPTION>
MARCH 31, SEPTEMBER 30,
--------- -------------
1998 1997
---- ----
<S> <C> <C>
Raw material $ 830,608 $ 639,045
Work in process 412,022 577,337
Finished Goods 78,268 89,733
---------- ----------
Total inventories $1,320,898 $1,306,115
========== ==========
</TABLE>
NOTE 4 - PLANT AND EQUIPMENT:
<TABLE>
<CAPTION>
MARCH 31, SEPTEMBER 30,
--------- -------------
1998 1997
---- ----
<S> <C> <C>
Building and improvements $ 62,329 $ 62,329
Machinery and equipment 1,657,819 1,657,819
Office furniture and fixtures 583,083 582,518
Transportation equipment 13,188 13,188
---------- ----------
Total 2,316,419 2,315,854
Less Accumulated depreciation 1,822,091 1,781,831
---------- ----------
Net depreciated cost $ 494,328 $ 534,023
========== ==========
</TABLE>
NOTE 5 - NOTES PAYABLE
<TABLE>
<CAPTION>
MARCH 31, SEPTEMBER 30,
--------- -------------
1998 1997
---- ----
<S> <C> <C>
A. Board of Directors:
Notes, subordinated to NJEDA
loan, dated February 6, 1995,
payable in monthly installments of
$5,449 including interest at 9% per
annum through September 30, 2001: $ 262,500 $ 262,500
Less current portion 43,530 43,530
---------- ----------
Noncurrent portion $ 218,970 $ 218,970
========== ==========
</TABLE>
Interest expense for the fiscal years ended September 30, 1997 and 1996 amounted
to $24,757 and $24,019, respectively. No principal payments were made due to
these notes being subordinated to the NJEDA loan.
9
<PAGE>
(Unaudited)
BOONTON ELECTRONICS CORPORATION
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
<TABLE>
<CAPTION>
MARCH 31, SEPTEMBER 30,
--------- -------------
1998 1997
---- ----
<S> <C> <C>
B. New Jersey Economic Development
Authority:
Notes, dated July 31, 1996, payable in
monthly installments of $7,620
including interest at 6.75% per
annum through June 30, 2003: $ 407,545 $ 438,730
Less current portion 65,572 63,379
----------- -----------
Noncurrent portion $ 341,973 $ 375,351
=========== ===========
</TABLE>
Interest expense for the fiscal years ended September 30, 1997 and 1996 amounted
to $23,066 and $1,042, respectively. Future principal payments under the terms
of the agreement are as follows:
FISCAL YEAR AMOUNT
----------- --------
1998 $ 63,379
1999 67,855
2000 72,647
2001 77,778
2002 83,271
2003 73,800
--------
TOTAL: $438,730
========
NOTE 6 - CONCENTRATION OF CREDIT RISK:
The Company maintains cash and cash equivalents at three financial
institutions that are insured by the Federal Deposit Insurance Corporation
(FDIC) and/or Securities Investor Protection Corporation (SIPC). The Company at
times during the year had amounts in these institutions that exceeded insurable
limits of $100,000 FDIC and $500,000 SIPC. In the normal course of business the
Company extends unsecured credit to customers in the United States and Asia.
10
<PAGE>
(Unaudited)
BOONTON ELECTRONICS CORPORATION
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
NOTE 7 - COMMITMENTS AND CONTINGENCIES:
Commitments:
A. Retirement Plans:
Effective July 1, 1989, the Company adopted a defined contribution
plan for all eligible employees. In accordance with Internal
Revenue Code Section 401(k), the plan provides for elective
deferral of up to 15% of total compensation. The plan further
provided for a Company matching contribution of 25% of the elective
deferral amount of each participant that did not exceed 6% of total
compensation. Effective January 1, 1994, the matching Company
contribution was suspended due to the company's financial condition
and pending reorganization. Effective October 1, 1995, the Company
reinstated a matching contribution at 50% of the elective deferral
amount for each participant that does not exceed 6% of total
compensation. The amounts charged to operations were $37,581 and
$46,151 for the years ended September 30, 1997 and 1996,
respectively.
B. Employee Stock Options Plans:
On February 26, 1987, the Stockholders approved the 1987 Incentive
Stock Option Plan, the 1987 Employee Stock Purchase Plan and the
1987 Stock Option Program for Non-Employee Directors. Subject to
the provisions of these plans, an aggregate of 150,000 shares of
the Company's stock was made available for option purchases;
namely, 75,000 shares, 37, 500 shares and 37,500 shares,
respectively. The plans ended effective December 1996 and no
further grants may be made for options.
11
<PAGE>
(Unaudited)
BOONTON ELECTRONICS CORPORATION
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
OPTION
------
PRICE PER SHARE NUMBER OF SHARES
--------------- ----------------
Shares under option at
September 30, 1994 3.00 50,000
Granted $1.0625 130,000
Exercised $1.0625 (30,000)
Expired $1.0625 (18,750)
Expired/surrender $ 3.00 (50,000)
-------
Shares under option at
September 30, 1995 $1.0625 81,250
Exercised $1.0625 (34,500)
Expired $1.0625 (250)
-------
Shares under option at
September 30, 1996 $1.0625 46,500
Expired $1.0625 (20,000)
-------
Shares under option at
September 30, 1997 $1.0625 26,500
=======
Lease Commitments:
Subsequent to the sale of the Company's facility in Randolph,
New Jersey on September 28, 1994, the company entered into a
seven-year lease for its present office and manufacturing
facility in Hanover Township, New Jersey with a five-year
renewal option. Rent charged to operations for the fiscal year
ended September 30, 1997 was $227,400. Annual rent for the
initial seven-year term is $227,400 for the first four years
and $300,000 for years five through seven. Future minimum
lease payments required under the operating lease are as
follows:
FISCAL YEAR AMOUNT
----------- ------
1998 $227,400
1999 300,000
2000 300,000
2001 300,000
The Company leases office equipment under a five-year
operating lease with an option to upgrade after three years
that it intends to exercise. The annual lease payment for the
term of the lease is $17,617. Future lease payments required
under the operating lease are as follows:
12
<PAGE>
(Unaudited)
BOONTON ELECTRONICS CORPORATION
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
FISCAL YEAR AMOUNT
----------- ------
1998 $ 17,617
1999 17,617
2000 17,617
2001 1,468
Contingencies:
A. Environmental Contingencies:
Following an investigation by the New Jersey Department of
Environmental Protection (NJDEP) of the Company's waste
disposal practices at a certain site that it formerly leased,
the Company put a ground water management plan into effect as
approved by the Department. Costs associated with this site
are charged directly to income as incurred. The owner of this
site has notified the Company that if the NJDEP investigation
proves to have interfered with a sale of the property, the
owner may seek to hold the Company liable for any loss it
suffers as a result. However, corporate counsel has informed
management that, in their opinion, the lessor would not
prevail in any lawsuit filed due to the imposition by law of
the statute of limitations. Costs charged to operations in
connection with the water management plan amounted to $43,173
and $51,879 for the years ended September 30, 1997 and 1996,
respectively. The Company estimates the expenditures in this
regard for the fiscal year ending September 30, 1998 will
amount to approximately $52,000. The Company will continue to
be liable under the plan in all future years until such time
as the NJDEP releases it from all obligations applicable
thereto.
B. Contingent Subscription and Option Agreement:
On June 30, 1997, the Board of Directors of Boonton
Electronics Corporation (BEC) agreed to enter into a
Subscription and Option Agreement with G.E.M. USA, Inc. (GEM),
a wholly-owned subsidiary of General Electronique Mesure,
S.A., whereby GEM shall have the option to buy 435,984 shares
of the common stock of BEC at an option price of $3.24 per
share. The term of the option agreement shall be for a period
of two years. On October 1, 1997, GEM paid BEC $25,000 for
this option and simultaneously purchased 7,716 shares of BEC's
common stock from the corporation for $25,000.
13
<PAGE>
(Unaudited)
BOONTON ELECTRONICS CORPORATION
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
Also on October 1, 1997, BEC entered into a Shared Facilities
Agreement with B&K Precision, Inc. (B&K), a wholly owned
subsidiary of GEM, as additional consideration for the above
noted option. B&K shall pay BEC a monthly management fee of
$15,000 and shall also pay rent at the same price per square
foot as BEC for the area sublet to B&K.
C. Income Tax Contingencies:
The Company's income tax returns for the fiscal years ended
September 30, 1995, 1996 and 1997 are subject to review.
NOTE 8 - COMMON AND TREASURY STOCK:
<TABLE>
<CAPTION>
MARCH 31, SEPTEMBER 30
1998 1996
---- ----
<S> <C> <C>
Common Stock:
$.10 par value, authorized 5,000,000
shares, issued and outstanding 1,644,301
shares and 1,636,585 shares, respectively. $164,430 $163,659
======== ========
</TABLE>
NOTE 9 - INCOME TAXES:
The components of the deferred tax asset are:
MARCH 31, SEPTEMBER 30,
--------- -------------
1998 1997
---- ----
Deferred tax asset $2,867,591 $2,867,591
Less: Valuation allowance (1,797,882) (1,797,882)
---------- ----------
Net deferred tax asset $1,069,709 $1,069,709
========== ==========
Financial Accounting Standards Board Statement No. 109, "Accounting for
Income Taxes", requires that the Company record a valuation allowance when it is
"more likely than not that some portion or all of the deferred tax assets will
not be realized". It further states that "forming a conclusion that a valuation
allowance is not needed is difficult when there is negative evidence such as
cumulative losses in recent years".
The ultimate realization of this deferred income tax asset depends on
the ability to generate sufficient taxable income in the future. The Company is
undergoing substantial restructuring changes and has made strategic realignments
of its operations in association with its Plan or Reorganization that management
believes will result in future profitability.
14
<PAGE>
(Unaudited)
BOONTON ELECTRONICS CORPORATION
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
While it is management's belief that these measures will allow the total
deferred income tax asset to be realized by future operating results, the losses
in recent years and a desire to be conservative make it appropriate to record a
valuation allowance.
Accordingly, the Company has provided a valuation allowance (based on
estimated future taxable income) for the portion of the total deferred income
tax asset that will not be realized as related to the operating loss
carryforward.
Income tax laws allow for the utilization of loss carryforwards over
periods not to exceed 15 and 7 years for Federal and State purposes,
respectively. If the Company is not able to generate sufficient taxable income
in the future through operating results, increases in the valuation allowance
will be required through a charge to expense (reducing stockholder's equity). In
the event the Company reports sufficient profitability to use all of the
deferred income tax assets, the valuation allowance will be eliminated through a
credit to expense (increasing stockholder's equity).
The following is a reconciliation of income taxes at the federal
statutory rate.
MARCH 31, MARCH 31,
--------- ---------
1998 1997
---- ----
Computed income taxes at statutory rate $ 6,136 $ 19,238
Recognition of net operating loss (6,136) (19,238)
-------- ---------
Expense/(benefit) $ -- $ --
======== =========
The Company has net operating loss carry forwards for federal and state
purposes approximating $6,266,666 and $8,188,055 that will not begin to expire
until the year 2011 and 2003 respectively. These loss carryforwards can be
utilized to reduce future taxable income dollar for dollar.
In May 1997, the Company dissolved Boonton International Sales
Corporation (BIS) (former wholly-owned subsidiary) and received a Certificate of
Dissolution from the state of New Jersey. BIS, as an Interest Charge Domestic
International Sales Corporation (IC-DISC), had $1,456,000 of deferred income.
The deferred income became taxable to the Company upon the dissolution of BIS
and therefore reduced the deferred tax asset and related valuation allowance
accordingly.
15
<PAGE>
(Unaudited)
BOONTON ELECTRONICS CORPORATION
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
NOTE 10 - SEGMENT INFORMATION:
The Company is engaged in the manufacture and sale of electronic test
and measurement equipment and management considers its business as a single
segment for reporting purposes.
A. The Company's export sales were as follows:
SIX MONTHS ENDED % OF
MARCH 31, AMOUNT TOTAL SALES
--------- ------ -----------
1998 $ 1,513,156 47%
1997 $ 1,220,232 34%
B. Customers sales to domestic government agencies were as follows:
SIX MONTHS ENDED % OF
MARCH 31, AMOUNT TOTAL SALES
--------- ------ -----------
1998 $ 69,137 2%
1997 $ 748,230 21%
NOTE 11 - EARNINGS PER SHARE:
Earnings per share have been computed by dividing net earnings by the
weighted average number of common shares outstanding of 1,644,301 for 1998 and
1,606,255 for 1997. Options to purchase a total of 428,268 shares of common
stock at $3.24 per share were not included because the exercise price exceeded
the average market price, which would result in antidilution. Incentive stock
options to purchase 26,500 shares in 1998 and 26,500 shares in 1997 were not
included because they were insignificant.
16
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF INCOME STATEMENTS
SIX MONTHS ENDED MARCH 31, 1998
Sales for the six months ended March 31, 1998 were $385,318 below the
prior year. The decrease in sales was primarily due to a decrease in military
contract sales of $679,093 coupled with an offsetting increase in export
revenues of $292,924. Gross profit decreased by $45,409 below the prior year but
increased as a percentage of sales to 48.7% from 44.7%. The increase in gross
margin was primarily due to the decrease in military contract sales that carry a
lower margin. Commission expense decreased by $45,792 due to the decrease in
sales volume. Research and development expense increased by $131,775 above the
prior year as the company continues to concentrate on developing new products.
Other operating expenses decreased by $77,364 below the prior year. Net income
was $18,048 versus a prior year's $56,581 and earnings per share were $0.01
versus $0.04.
The March 31, 1998 inventory balance was $71,371 below the December 31,
1997 balance and was $14,783 above the September 30, 1997 balance. Trade
receivables decreased by $140,366 due primarily to the decreased sales volume.
The current ratio of 2.24 at March 31, 1998 was the same as it was at September
30, 1997.
17
<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.
BOONTON ELECTRONICS CORPORATION
By: /s/ YVES GUYOMAR
-------------------------------------
Yves Guyomar, President and Chief
Executive Officer
Date: May 14, 1998
By: /s/ JOHN E. TITTERTON
-------------------------------------
John E. Titterton, Vice President
Finance, Secretary/Treasurer
Date: May 14, 1998
May 14, 1998
18
<PAGE>
BOONTON ELECTRONICS CORPORATION
INDEX TO EXHIBIT FILED
IN THE QUARTERLY REPORT ON FORM 10-QSB
FOR THE SIX MONTHS ENDED MARCH 31, 1998
EXHIBIT NO. PAGE
- ----------- ----
27 Financial Data Sheet 20
19
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Page 20)
</LEGEND>
<CIK> 0000013191
<NAME> Boonton Electronics
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1998
<CASH> 72,798
<SECURITIES> 0
<RECEIVABLES> 911,521
<ALLOWANCES> 0
<INVENTORY> 1,320,898
<CURRENT-ASSETS> 2,713,549
<PP&E> 2,316,419
<DEPRECIATION> 1,822,091
<TOTAL-ASSETS> 4,266,594
<CURRENT-LIABILITIES> 1,213,307
<BONDS> 0
0
0
<COMMON> 164,430
<OTHER-SE> 2,327,914
<TOTAL-LIABILITY-AND-EQUITY> 4,266,594
<SALES> 3,219,404
<TOTAL-REVENUES> 3,219,404
<CGS> 1,652,203
<TOTAL-COSTS> 1,526,405
<OTHER-EXPENSES> (3,813)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 26,561
<INCOME-PRETAX> 18,048
<INCOME-TAX> 0
<INCOME-CONTINUING> 18,048
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,048
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
