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 NINE MONTHS ENDED JUNE 30, 1998
-------------
Commission File No. 0-2364
------------------------------------------------------------
BOONTON ELECTRONICS CORPORATION
- --------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its Charter)
New Jersey 22-1543137
--------------------------------- ----------------------------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
25 Eastmans Road, P. O. Box 465, Parsippany, New Jersey 07054-0465
- --------------------------------------------------------------------------------
(Address of principal or executive office) (Zip Code)
973-386-9696
- --------------------------------------------------------------------------------
(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 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:
June 30, 1998 1,644,301
June 30, 1997 1,636,585
1
<PAGE>
(Unaudited)
BOONTON ELECTRONICS CORPORATION
BALANCE SHEET
<TABLE>
<CAPTION>
ASSETS June 30, 1998 September 30, 1997
------ ------------- ------------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 119,609 $ 121,620
Trade receivables 835,147 1,051,887
Inventories 1,333,012 1,306,115
Deferred tax benefits 81,058 81,058
Other current assets 238,830 333,325
----------- -----------
Total current assets 2,607,656 2,894,005
----------- -----------
Plant and equipment-net 474,198 534,023
----------- -----------
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 $ 4,140,571 $ 4,487,848
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Note payable $ 66,698 $ 63,379
Related party loans 43,530 93,530
Accounts payable - trade 451,109 800,931
Other current liabilities 415,952 284,528
Unsecured claims payable (Chapter 11
settlement) current 153,372 48,491
----------- -----------
Total current liabilities 1,130,661 1,290,859
Note payable - noncurrent 330,238 375,351
Related party loans - noncurrent 218,970 218,970
Unsecured claims payable (Chapter 11
settlement) - noncurrent -- 153,372
----------- -----------
Total liabilities 1,679,869 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 (2,341,594) (2,328,000)
----------- -----------
Total stockholders' equity 2,460,702 2,449,296
----------- -----------
Total liabilities and stockholders' equity $ 4,140,571 $ 4,487,848
=========== ===========
The accompanying footnotes are an integral part of these statements.
</TABLE>
2
<PAGE>
(Unaudited)
BOONTON ELECTRONICS CORPORATION
STATEMENT OF OPERATIONS
For the Nine Months Ended
June 30, 1998 June 30, 1997
------------- -------------
Net sales $ 4,642,057 $ 5,403,070
Cost of goods sold 2,332,550 3,046,285
----------- -----------
Gross profit 2,309,507 2,356,785
----------- -----------
Operating expenses:
Commissions 456,585 526,436
Research and development 748,102 538,137
Other operating expenses 1,070,322 1,189,298
----------- -----------
Total operating expenses 2,275,009 2,253,871
----------- -----------
Income from operations 34,498 102,914
----------- -----------
Interest expense 37,163 34,329
Other expense 10,929 27,186
----------- -----------
Total other expenses 48,092 61,515
----------- -----------
Income/(loss) before provision for
income taxes (13,594) 41,399
Provision for income taxes -- --
----------- -----------
Net income/(loss) (13,594) 41,399
Stockholders' equity - beginning 2,449,296 2,217,952
Common stock sold 25,000 200,000
----------- -----------
Stockholders' equity - ending $ 2,460,702 $ 2,459,351
=========== ===========
Weighted average number of shares
Outstanding 1,644,301 1,616,365
=========== ===========
Earnings/(loss) per share: $ (0.01) $ 0.03
=========== ===========
The accompanying footnotes are an integral part of these statements.
3
<PAGE>
(Unaudited)
BOONTON ELECTRONICS CORPORATION
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Three Months Ended
June 30, 1998 June 30, 1997
------------- -------------
<S> <C> <C>
Net sales $ 1,422,653 $ 1,798,348
Cost of goods sold 680,347 1,054,173
----------- -----------
Gross profit 742,306 744,175
----------- -----------
Operating expenses:
Commissions 122,166 146,225
Research and development 254,380 176,190
Other operating expenses 372,058 413,670
----------- -----------
Total operating expenses 748,604 736,085
----------- -----------
Income/(loss) from operations (6,298) 8,090
----------- -----------
Interest expense 10,602 14,683
Other expense 14,742 8,589
----------- -----------
Total other expenses 25,344 23,272
----------- -----------
Income/(loss) before provision for income
taxes (31,642) (15,182)
Provision for income taxes -- --
----------- -----------
Net income/(loss) (31,642) (15,182)
Stockholders' equity - beginning 2,492,344 2,474,533
----------- -----------
Stockholders' equity - ending $ 2,460,702 $ 2,459,351
=========== ===========
Weighted average number of shares
Outstanding 1,644,301 1,636,585
=========== ===========
Earnings/(loss) per share: $ (0.02) $ (0.01)
=========== ===========
</TABLE>
The accompanying footnotes are an integral part of these statements.
4
<PAGE>
(Unaudited)
BOONTON ELECTRONICS CORPORATION
STATEMENT OF CASH FLOWS
For the Nine Months Ended
June 30, 1998 June 30, 1997
------------- -------------
Cash provided/(used) by operations:
Net income/(loss) $ (13,594) $ 41,399
Adjustments to reconcile net income:
Depreciation & amortization 60,391 32,013
Decrease/(increase) in current assets:
Accounts receivable 216,740 (69,151)
Inventories (26,897) (75,361)
Other current assets 94,495 (50,745)
Increase/(decrease) in current liabilities:
Accounts payable (349,822) 113,092
Chapter 11 settlement - current (48,491) (48,133)
Accrued liabilities 131,424 (51,119)
--------- ---------
Net cash provided/(used) by operations 64,246 (108,005)
--------- ---------
Cash flows from investing activities:
Purchase of equipment (565) (342,451)
Other 1,103 (6,276)
--------- ---------
Net cash provided/(used) by investing activities 538 (348,727)
--------- ---------
Cash flows from financing activities:
Increase notes payable -- 317,038
Payments on loans (91,795) (29,115)
Proceeds from sale of stock 25,000 200,000
--------- ---------
Net cash provided/(used) by financing activities (66,795) 487,923
--------- ---------
Increase/(decrease) in cash and cash equivalents (2,011) 31,191
Cash and cash equivalents at beginning of period 121,620 113,041
--------- ---------
Cash and cash equivalents at end of period $ 119,609 $ 144,232
========= =========
The accompanying footnotes are an integral part of these statements.
5
<PAGE>
(Unaudited)
BOONTON ELECTRONICS CORPORATION
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 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
(Unaudited)
6
<PAGE>
(Unaudited)
BOONTON ELECTRONICS CORPORATION
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 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
JUNE 30, 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 June 30, 1998 $ 153,372
============
8
<PAGE>
(Unaudited)
BOONTON ELECTRONICS CORPORATION
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998
NOTE 3 - INVENTORIES
June 30, September 30,
1998 1997
---------- -------------
Raw material $ 753,792 $ 639,045
Work in process 441,577 577,337
Finished goods 137,643 89,733
---------- ----------
Total inventories $1,333,012 $1,306,115
========== ==========
NOTE 4 - PLANT AND EQUIPMENT:
June 30, September 30,
1998 1997
---------- -------------
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 1,842,221 1,781,831
---------- ----------
Net depreciated cost $ 474,198 $ 534,023
========== ==========
NOTE 5 - NOTES PAYABLE
June 30, September 30,
1998 1997
---------- -------------
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
========== ==========
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
JUNE 30, 1998
June 30, September 30,
1998 1997
---------- -------------
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: $ 396,936 $ 438,730
Less current portion 66,698 63,379
---------- ----------
Noncurrent portion $ 330,238 $ 375,351
========== ==========
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
JUNE 30, 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
JUNE 30, 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
JUNE 30, 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
JUNE 30, 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>
June 30, 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:
<TABLE>
<CAPTION>
June 30, September 30,
1998 1997
-------- -------------
<S> <C> <C>
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
=========== ===========
</TABLE>
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
JUNE 30, 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.
June 30, June 30,
1998 1997
-------- --------
Computed income taxes at statutory rate $ (4,622) $ 14,016
Recognition of net operating loss 4,622 (14,076)
-------- --------
Expense/(benefit) $ -- $ --
======== ========
The Company has net operating loss carryforwards 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
JUNE 30, 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:
Nine Months Ended % of
June 30, Amount Total Sales
-------- ------ -----------
1998 $ 1,961,972 42%
1997 $ 1,599,665 30%
B. Customers sales to domestic government agencies were as follows:
Nine Months Ended % of
June 30, Amount Total Sales
-------- ------ -----------
1998 $ 167,422 4%
1997 $ 1,285,374 24%
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
1,616,365 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 DISCUSSION AND ANALYSIS OF FINANCIAL STATEMENTS
NINE MONTHS ENDED JUNE 30, 1998
Sales for the nine months ended June 30, 1998 were $761,013 below the
prior year due to delays for expected orders that were booked in late June 1998.
Cost of goods sold was $713,735 below the prior year due to the lower volume in
sales. The gross profit, as percentage of sales improved to 49.8% versus the
prior year's 43.6%. The increase in the gross margin percentage was due to
increased sales that carry a higher gross margin. Research and development
expense was higher than the prior year by $209,965 due to increased efforts in
new product development. The other operating expense categories were $188,827
below the prior year. Income from operations was $68,416 below the prior year
due to the decreased sales volume coupled with the increase in development
expense. There was a net loss of $13,594 versus a prior year's net income of
$41,399.
The June 30, 1998 production inventory balance was $30,754 below the
September 30, 1997 balance. The demonstrator inventory balance increased by
$57,651 over the September balance for demonstrator additions for new products.
Accounts receivable was down $216,740 from September's balance. The current
ratio at June 30, 1998 was 2.30 versus September's 2.24.
The company's backlog at June 30, 1998 was $1,675,806, which was
$500,000 above the backlog balance as of September 30, 1997. Bookings for the
quarter and month ended June 30, 1998 were $2,029,976 and $1,213,032,
respectively. It was the best bookings quarter since the fourth quarter in
fiscal 1992 and it was the best bookings month since May 1990.
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: July 27, 1998
By: /s/ JOHN E. TITTERTON
-------------------------------------
John E. Titterton, Vice President
Finance, Secretary/Treasurer
Date: July 27, 1998
18
<PAGE>
BOONTON ELECTRONICS CORPORATION
INDEX TO EXHIBIT FILED
IN THE QUARTERLY REPORT ON FORM 10-QSB
FOR THE NINE MONTHS ENDED JUNE 30, 1998
Exhibit No. Page
- ----------- ----
27 Financial Data Sheet 20
19
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(Page 20)
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<NAME> Boonton Electronics
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