UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
|X| ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 1999
or
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-2892
THE DEWEY ELECTRONICS CORPORATION
(Exact name of registrant as specified in charter)
NEW YORK 13-1803974
(State of Incorporation) (I.R.S. Employer Identification No.)
27 Muller Road, Oakland, New Jersey 07436
(Address of principal executive offices)Zip Code
201-337-4700
(Registrant's telephone number)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common stock, $.01 par value (Title of class)
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 ___.
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form l0-K.
The aggregate market value of the voting and non-voting common equity held
by non-affiliates of the registrant, computed by reference to the price at
which the common stock was sold as of the close of business on August 31,
1999: $1,523,492.
The number of shares outstanding of the registrant's common stock, $.01 par
value was 1,339,531 at August 31, 1999.
Page 1 of 33 Pages
THE DEWEY ELECTRONICS CORPORATION
TABLE OF CONTENTS
Item Page
PART I
1. Business 3
2. Properties 5
3. Legal Proceedings 5
4. Submission of Matters to a Vote of Security Holders 5
PART II
5. Market for Registrant's Common Equity and Related
Stockholder Matters 6
6. Selected Financial Data 7
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
8. Financial Statements and Supplementary Data 15
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 29
PART III
10. Directors and Executive Officers of the Registrant 30
11. Executive Compensation 30
12. Security Ownership of Certain Beneficial Owners and
Management 30
13. Certain Relationships and Related Transactions 30
PART IV
14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K 31
PART I
Item 1. BUSINESS
The Dewey Electronics Corporation (the "Company") was incorporated in the
State of New York in 1955. It is a systems oriented military electronics
development, design and manufacturing organization based in Oakland, New
Jersey. The Company has two industry segments: electronics, and leisure and
recreation.
In the electronics segment, the Company produces sophisticated electronics and
electromechanical systems for the U.S. military. Its Pitometer Log Division
manufactures speed and distance measuring instrumentation, providing parts
for the Department of Defense and other projects performed as a subcontractor.
In the leisure and recreation segment, the Company, through its HEDCO
division, designs, manufactures and markets advanced, sophisticated snowmaking
equipment.
The sales and operating profit of each industry segment and the identifiable
assets attributed to each segment for the last three fiscal years ended
June 30, 1999 are set forth in Note K - Operating Segments of the Notes to
the Financial Statements.
During the last three fiscal years, there have been no material expenditures
for Company-sponsored or customer-sponsored research and development
activities.
Compliance with Federal, State and local environmental provisions has had no
material effect upon capital expenditures, earnings or the competitive
position of the Company. In addition, there are no material capital
expenditures anticipated for environmental control facilities.
As of August 31, 1999, the Company had a work force of 36 employees, of whom
10 were technical or professional personnel. Last year at the same date, the
work force included 26 employees, of whom 9 were technical or professional
personnel. The increase is the result of the resumption of production efforts
in the electronics segment of business. Fluctuations in the work force may
also result from the seasonal nature of the leisure and recreation segment
of business.
ELECTRONICS SEGMENT
This segment of business accounted for 97% of total revenues in fiscal year
1999, 86% of total revenues in fiscal 1998 and 74% of total revenues in
fiscal 1997.
In recent years, most of the Company's electronics segment products had been
manufactured, either as prime contractor or subcontractor, for the U.S. Navy.
With the completion of performance of the Company's contracts under the Navy's
ADCAP torpedo program, most electronics segment revenues in 1999 arise from
performance of work for the U.S. Army under a diesel operated tactical
generator set contract awarded in August 1996.
The Company has continued to pursue both long-term and short-term awards from
various United States Government agencies and related business sectors in its
areas of electronic and mechanical expertise. The Company, however, is
bidding for such contracts in competition with other companies, including
other small firms as well as Fortune 500 companies, in a time of diminished
and less predictable military spending.
Since substantially all of the Company's electronics business is derived
from contracts with various agencies of the United States Government (the
"Government") or subcontracts with prime Government contractors, the loss of
substantial Government business would have a material adverse effect on the
business.
For the most part, working capital requirements for the electronics segment of
business are funded by progress payments provided by the Government.
All of the Company's contracts with the Government are subject to the
standard provision for termination at the convenience of the Government.
Although raw materials are generally available from a number of suppliers,
the Company is at times dependent upon a specific supplier or a limited
number of suppliers of material for a particular contract and has
occasionally experienced some delays in deliveries. Such
delays have not had a material effect on operations; however, the
Company cannot provide any assurances that future delays, if any, will not
have a material adverse effect.
Reference is made to Item 7 - Management's Discussion and Analysis of
Financial Condition and Results of Operations for additional information
regarding this segment.
LEISURE AND RECREATION SEGMENT
The leisure and recreation segment of business accounted for 3% of the
Company's revenues in fiscal year 1999, 14% of the Company's revenues in
fiscal 1998 and 26% of the Company's revenues in fiscal 1997.
Snowmaking equipment is sold to ski areas as original equipment or as
replacements for existing equipment. Such equipment is sold under a sales
contract that provides for a substantial down payment and retention of a
security interest in the equipment until full payment is received.
Most snowmaking equipment is paid for in full at delivery to the customer.
Typically, in other cases, full payment is made within one year. The
Company has not experienced any losses due to resale of the equipment
following default by customers. The Company services the equipment at the
purchaser's expense after a warranty period that expires at the end of the
snowmaking season in which the sale occurs.
The Company has sold snowmaking equipment to over three hundred different
locations in the United States and abroad. Marketing is performed by the
Company's employees in the domestic market and by distributors and
representatives in foreign markets. In fiscal 1999, all revenues were from
domestic sales.
Orders for snowmaking equipment have normally been received during the first
and fourth quarters of the fiscal year, though this pattern has been changing.
For the most part, shipments are made and revenues recorded during the
second quarter. Production usually takes place in the first and second
quarters, and it is during this period that inventory is generated and
working capital demands are the greatest.
While there may be some temporary delays, problems regarding source and
availability of raw materials have had no material adverse effect on
operations of this segment.
Reference is made to Item 7 - Management's Discussion and Analysis of
Financial Condition and Results of Operations for additional information
regarding this segment.
Item 2. PROPERTIES
The Company's 49,200 square foot facility at 27 Muller Road, Oakland, New
Jersey, located on 90 acres of land owned by the Company, was constructed in
1981. This facility houses executive offices and manufacturing operations
and is used primarily for the electronics segment of business.
Approximately 90% of this facility is being utilized for production
(one shift), staging and storage.
Under the terms of a mortgage note to Sovereign Bank described in Item 7 -
Management's Discussion and Analysis of Financial Condition and Results of
Operations both the land and building are subject to the lien of a mortgage
securing indebtedness in the amount of $2,219,741. The Company also has a
line of credit with the Bank, under which the Company may borrow up to an
additional $500,000 that would be secured by a lien on substantially all of
the Company's' machinery, equipment and other personal property.
Item 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters have been submitted to a vote of security holders during fiscal
year 1999.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The Company's common stock is traded over-the-counter under the symbol "DEWY".
The table below sets forth the high and low market prices of the Company's
common stock for each quarter during the last two fiscal years.
Quarterly Common Stock Price Range
Fiscal Year 1999 Fiscal Year 1998
Quarter High Low High Low
lst $ 0.6563 $ 0.4063 $ 0.8750 $ 0.8125
2nd 0.4063 0.3125 1.0000 0.8125
3rd 0.6250 0.2813 0.8750 0.6875
4th 2.0000 0.6250 0.7188 0.6250
Price information is based on over-the-counter market quotations, which
reflect inter-dealer prices, without retail mark-up, mark-down or commissions,
and may not necessarily represent actual transactions.
There were no dividends declared or paid during the fiscal years 1999 and
1998. The Corporation has no plans to pay dividends in the foreseeable
future.
The number of holders of record of the Company's common stock as of August 31,
1999 was 830.
Item 6. Selected Financial Data
(In thousands of dollars except per share amounts)
Year ended June 30,
1999 1998 1997 1996 1995
Revenues $8,632(2) $2,325 $3,828 $4,595 $6,692
Earnings/(loss)
before income
taxes, and
extraordinary
gain..... $ 935(2) $ (748) $ (155) $ 409 $ 179
Net earnings/
(loss) $ 561(2) $ (447) $ 7(1) $ 244 $ 107
Earnings/(loss)
per share before
extraordinary item
- -basic and
diluted $.42 $ (.33) $ (.06) $.18 $ .08
Net earnings/
(loss) per share
- basic and
diluted $.42 $ (.33) $ .01 $.18 $ .08
Cash dividends
per common
share....... -- -- -- -- --
Total assets $5,776 $4,713 $4,645 $5,372 $5,555
Long-term
obligations.. $2,427 $2,481 $1,843 $2,366 $2,671
Working
capital........ $2,413 $1,444 $1,508 $1,879 $1,770
Stockholders'
equity.... $1,349 $ 788 $1,235 $1,227 $ 983
(1) In fiscal 1997, net earnings were increased by an extraordinary gain of
$100 net of income taxes.
(2) The increases in this selected financial data relate to the Company's
contract with the U.S. Army to supply diesel operated tacital generator sets
over five annual purchasing periods.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the "Selected
Financial Data" and the Company's Financial Statements, including the related
notes thereto, appearing elsewhere in this Annual Report. Certain statements
in this Form 10-K may be deemed "forward-looking statements" within the
meaning of Section 21E of the Securities and Exchange Act of 1934. All
statements, other than statements of historical fact, that address
activities, events or developments that the Company or management intends,
expects, projects, believes or anticipates will or may occur in the future
are forward-looking statements. Such statements are based upon certain
assumptions and assessments made by management of the Company in light of
its experience and its perception of historical trends, current conditions,
expected future developments and other factors it believes to be
appropriate. The forward-looking statements included in this Form 10-K
are also subject to a number of material risks and uncertainties, including
but not limited to economic, governmental, competitive and technological
factors affecting the Company's operations, markets, products, services and
prices. Such forward-looking statements are not guarantees
of future performance and actual results, developments and business
decisions may differ from those envisaged by such forward-looking statements.
The sales and operating profit of each industry segment and the identifiable
assets attributed to each segment for the last three fiscal years ended
June 30, 1999, 1998, and 1997 are set forth in Note K - Operating Segments
of the Notes to the Financial Statements.
Results of Operations
The Company's fiscal year ends on June 30. Accordingly, all references to
years in this Management's Discussion refer to the fiscal year ended
June 30 of the indicated year. Also, when referred to herein, operating
profit means net sales less operating expenses, without deductions for
general corporate expenses, interest and income taxes.
Revenues
Revenues for fiscal year 1999 were 271% higher than those for fiscal year
1998 and 125% higher than revenues for 1997. The increase in revenues is a
result of large-scale production efforts under the Company's contract with
the U.S. Army for diesel operated tactical generator sets.
Electronic Products
Electronic product revenues increased by 319% compared to last year and
increased by 194% compared to 1997 revenues. Revenues from the electronic
product segment accounted for 97% of total revenues in 1999, and 86% of total
revenues in 1998.
The Company's contract with the U.S. Army to supply diesel operated tactical
generator sets includes five annual purchasing periods with price escalations
for each year. The Department of Defense has issued a fuel policy requiring
that in the future all mobile electric power sets (includes tactical
generators) will require only diesel fuels and that those using gasoline
fuels will be eliminated. There are currently two annual purchasing
periods remaining in the contract and the Company anticipates that the
government will continue to place orders for diesel operated tactical
generator sets. However, no assurances can be made that they will do so.
Orders not yet received are not reflected in the fiscal year end backlog
figures provided below.
The delivery of diesel operated tactical generator sets had been scheduled
to begin in March 1998. However, because of engineering changes initiated
by the Company and approved by the U.S. Army, deliveries were rescheduled
to begin in November 1998. As a result of this delay in delivery,
production efforts were also delayed causing lower revenue recognition
during fiscal year 1998. This contract accounted for 94%
of the electronic segment revenues in 1999 and 40% in 1998.
Subsequent to June 30, 1998 the Company has received approximately $8 million
in additional orders for diesel operated tactical generator sets. This
brings the total amount of orders received for the diesel operated tactical
generator sets program to approximately $14 million. The Company anticipates
that the U.S. Army will continue to place additional orders; however, the
Army is not obligated to do so and no assurances can be given to the
quantity or scheduling of additional generator set orders. Though
the Company's contract with the Army contemplated annual orders in
roughly equal amounts, actual order placements have varied in timing and
size.
The remaining 6% of electronic product revenues resulted from various
orders, more limited in scope and duration, that were generally for
replacement parts for previously supplied Department of Defense equipment
and other projects performed as a subcontractor. A large part of such other
revenues continue to be attributable to the Company's Pitometer Log
Division, which manufactures speed and distance measuring instrumentation
for the U.S. Navy. These orders provided 49% of electronic product
revenues in 1998.
The Company's contracts under the U.S. Navy's MK48 ADCAP torpedo program
accounted for 11% of fiscal year 1998 electronic segment revenues and
completion of these contracts are in process.
In fiscal year 1997, the diesel operated tactical generator set program
provided 49% of electronic product revenues and production efforts under the
Navy's ADCAP torpedo program provided 19%. Various orders provided 32%
of such revenues.
The aggregate value of the Company's backlog of electronic products not
previously recorded as revenues was approximately $4 million on June 30, 1999.
Almost all of the current backlog is attributable to the U.S. Army contract
for diesel operated tactical generator sets. It is estimated that the
present backlog will be shipped during the next 12 months and recognized
as fiscal year 2000 revenues.
Leisure and Recreation
In the leisure and recreation segment, revenues for fiscal years 1999, 1998
and 1997 amounted to approximately $277,000, $329,000 and $987,000,
respectively. There were no export sales of snowmaking machinery in 1999 or
1998. In 1997 export sales of snowmaking machinery amounted to $92,000.
The Company's marketing efforts are being focused to increase its market share
by utilizing different strategies dependent upon regional locations.
Competition in foreign markets remains to be stronger than in the domestic
market.
As of June 30, 1999, there was a backlog of orders for snowmaking machinery in
the amount of $201,500 for delivery during the second fiscal quarter. As of
June 30, 1998, there was no backlog of orders; however, orders amounting to
$150,000 were received during the first quarter of fiscal year 1999. There
was no backlog of orders for snowmaking equipment as of June 30, 1997.
Gross Profit
Gross Profit was 23% in 1999, 12% in 1998 and 26% in 1997.
In the electronics segment, for fiscal year 1999, gross profit was 24% as a
result of increased production relating to the diesel operated tactical
generator set project. Fiscal year 1998 gross profit was 10% as a result
of delayed production explained above. Fiscal year 1997 was favorably
affected by approximately $343,000 following contract review of operations
in prior years, which resulted in gross profit of 29%.
Selling, General and Administrative Expenses
In 1999, selling, general and administration expenses amounted to $841,107
(10% of revenues). In 1998, they amounted to $827,776 (36% of revenues) and
$938,366 (25% of revenues) in 1997.
Interest Expense
Interest expense for the last three fiscal years amounted to $216,017 in 1999,
$212,738 in 1998 and $218,682 in 1997.
Under a borrowing arrangement with Sovereign Bank, effective September 18,
1997 the interest rate for the Company's mortgage note is 8.25%. The
Company also has a line of credit facility under the Sovereign Bank
borrowing arrangement which carries an interest rate of .75% over the
prime rate for its outstanding borrowings. The prime rate as of June 30,
1999 was 8.00%. Interest payments made to Sovereign Bank
constitute essentially all of the Company's interest expense.
Other Income-Net
For fiscal year 1999, other income is the sum of miscellaneous scrap sales
of $4,615 and interest income of $870.
Other income for fiscal year 1998 was the sum of miscellaneous scrap sales
of $14,045 and interest income of $6,827.
Fiscal year 1997 other income was the net effect of interest income of
$11,159 which was partially offset by a net amount of $3,414 which
represents scrap sales and miscellaneous expenses.
Income Taxes
Deferred income taxes reflect the net tax effects of (a) temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes, and (b) operating loss
carryforwards.
The tax (provision)benefit for the fiscal years ended June 30, 1999, 1998, and
1997 were at an effective rate of 40%.
Extraordinary Gain
During the fourth quarter of the fiscal year ended June 30, 1997, the Company
prepaid its indebtedness to its then lender upon negotiating financing
arrangements with a new long-term lender. As a result of the refinancing
certain financing fees in the amount of $166,832 previously recorded as
Other Expense would not be due and such amount, less applicable income
taxes of $67,150, was treated as an extraordinary gain of $99,682.
Inflation
Historically, inflation and price changes have not had a material effect on
operations.
Liquidity and Capital Resources
The Company's working capital was $2,412,569 at June 30, 1999 and $1,443,538
at June 30, 1998.
The ratio of current assets to current liabilities was 2.21 to 1 at June 30,
1999 and 2.00 to 1 at June 30, 1998.
In fiscal year 1999, operating activities provided $162,544 in net cash,
expenditures for property, plant and equipment were $58,341 and financing
activities provided $50,207. As a result, cash and cash equivalents increased
by $154,410.
In fiscal year 1998, operating activities used $613,007 in net cash ,
expenditures for property, plant and equipment were $17,490 and financing
activities provided $446,888. As a result, cash and cash equivalents
decreased by $183,609.
In fiscal year 1997, operating activities provided net cash of $752,620.
Expenditures for plant and equipment were $15,903 and long term debt was
reduced by $507,061. These activities resulted in a net increase in cash and
cash equivalents of $229,656.
The Company continues to meet its short term liquidity needs arising out
of electronic product operations through a combination of progress payments
on government contracts (based on costs incurred) and billings at the time of
delivery of products.
On a long-term basis, the Company's liquidity may depend upon its ability to
maintain adequate borrowing arrangements with lenders. On September 18,
1997, the Company entered into borrowing arrangements with Sovereign Bank
(the "Bank") under which:
- - The Company borrowed $2,300,000 at an interest rate of 8.25% per annum,
payable in monthly installments of approximately $20,000 with a final
maturity in year 2002, evidenced by delivery of a Mortgage Note Payable
to the Bank (the "Mortgage Note").
- - The Bank agreed to provide up to an additional $500,000 under a line-of-
credit agreement, to be evidenced by promissory notes bearing interest
at a rate of .75% over the prime rate that will become due and payable
on October 31, of each year. The prime rate as of June 30, 1999 was
8.00%. At the Bank's discretion, this line of credit may be renewed.
As of June 30, 1999 the Company had outstanding $200,000 of this line of
credit.
The Mortgage Note is secured by a first mortgage on all of the Company's land
and its building. Borrowings under the line-of-credit arrangement are secured
by a first lien on all of the Company's machinery, equipment and other
personal property.
Approximately $1,900,000 of the proceeds from the issuance of the Mortgage
Note was applied to the prepayment in full of the outstanding balances due
from the Company to Fleet Bank under its secured term loan agreement with
the Company and to New Jersey Economic Development Authority under a mortgage
note. The interest rate on the prepaid indebtedness was 9% per annum. The
prepaid indebtedness was secured by liens on virtually all of the Company's
real and personal property. Under the former term loan agreement, the
Company was subject to numerous affirmative and negative covenants
containing working capital, net worth and other financial tests. The new
borrowing arrangements with the Bank contain no such financial test covenants.
The Company had no material commitments for capital expenditures as of the
end of the 1999 fiscal year.
The Company owns approximately 90 acres of land and the building it occupies
in Bergen County, New Jersey, which are carried on its books at a net value of
approximately $700,000. This property is adjacent to a full interchange of
Interstate Route 287. Management continues to investigate possible uses of
this property which would be favorable to the Company's stockholders' equity.
Current Business Environment
The two segments in which the Company operates are marked by intense
competition - including competition from firms with greater financial
resources - and by unpredictability of customer requirements. Defense
contract suppliers are dependent on legislative and administrative allocations
of funds. Ski area operations continually face weather conditions and other
uncertainties that impact their capital expenditure programs.
Most of the Company's revenues are derived from its electronic product
segment. This segment of operations is comprised of business with the U.S.
Department of Defense of the Federal Government or with other Government
contractors. The balance of revenues is primarily for replacement parts,
which is driven by requirements of the U.S. Navy and continues to remain
at relatively stable levels. Long-term contracts with the U.S. Department
of Defense have provided most of electronic segment revenues.
The Company has been directing its strategy to bid on projects which are more
likely to be funded by the Government and more resistant to budget cuts.
In fiscal 1997 the Company entered into a contract with the U.S. Army to
manufacture diesel operated tactical generator sets. The contract with the
U.S. Army consists of a five year program with the Army placing orders
each year, based on a predetermined estimated quantity. The Department of
Defense has issued a fuel policy requiring that in the future all mobile
electric power sets (includes tactical generators) will require only
diesel fuels and that those using gasoline fuels will be eliminated.
It is expected that the diesel operated tactical generator program
will continue to be considered necessary to national defense and provide
a steady workflow, but no assurance can be given that this program will be
continued. The Company continues to explore areas of business which will
provide continued stability and growth.
Electronic product revenues are determined by the percentage of completion
method of accounting. The use of estimates to complete projects is required
under this accounting method. These estimates are reviewed by management
on an ongoing basis and are adjusted when necessary in the opinion of
management. No significant adjustments are anticipated to be made to
current estimates, but changes in contract requirements and the efforts
needed to meet such changes are normal events in the defense electronics
industry.
Leisure and Recreation Products
The Company has experienced the impact of competitive pressures and a
reallocation of funds by the ski resorts. The Company has increased its
marketing efforts to gain more exposure within the industry. Cost reduction
efforts have had a positive impact on operating results and the Company is
seeking to maximize the benefits of more economic operating costs along
with a more intense marketing campaign.
Properties
The Company has for some time been exploring alternative methods of
increasing its shareholders' equity by realizing the value of its 90 acres
of land and building situated thereon, such as the sale of some or all of the
property, a sale/lease-back arrangement or long-term financing.
Year 2000
The Year 2000 issue (the "Y2K") is the result of certain computerized systems
use of a two rather than four digit year (e.g., 95 vs,. 1995). As a result
of the ambiguous century in such systems, the introduction of twenty-first
century dates (i.e., January 1, 2000) may cause systems to function
abnormally or not at all. The Company has been preparing for the impact of
the Y2K problem on its business by testing its own computer systems and by
analyzing the possible impact of computer system failures of its
significant vendors.
As a prime contractor for the U.S. Government, the Company is required to
maintain precise records for job costing as well as provide timely and
accurate information. It is subject to periodic audits by government agencies
of its systems and controls. The Company has never had any difficulty in
meeting government requirements. However, Y2K problems could be detrimental
to the Company or any other company in this type of business.
The Company has reviewed its internal computer systems for Y2K compliance
by identifying and testing all of its internal systems. All critical
programs and systems have been analyzed and tested. The operational tests
were successful and included the actual processing applications under
Y2K conditions.
In November 1996, the Company hired an outside service to upgrade hardware
and make modifications to its main software. The cost of these services was
$5,085. Further expenditures of this sort are not anticipated.
Based on information obtained to date in the course of surveys of key
suppliers, the Company does not foresee any significant impact arising from
third party computer system failures. However, the Company is not able to
identify all Y2K issues that may exist at supplier levels and has not received
sufficient information from all major third parties to confirm their Year 2000
preparedness. The Company's key vendor is a foreign manufacturer that
provides engines for the U.S. Army diesel operated tactical generator set
project and is the Company's sole source of supply of this particular
component. Such information as it has been received to date through the
supplier's U.S. distributor does not indicate that there will be a Y2K
problem which could result in delay of the Company's performance.
In this instance and in the case of other important suppliers, the Company has
been investigating other sources as well as the use of other products and
intends to continue contingency planning to eliminate any material financial
impact on the Company.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Financial Statements
Page
Independent Auditors' Report 16
Financial Statements:
Balance Sheets, June 30, 1999 and 1998 17
Statements of Income (Loss), Years Ended June 30, 1999,
1998, and 1997 18
Statements of Stockholders' Equity, Years Ended June
30, 1999, 1998, and 1997 18
Statements of Cash Flows, Years Ended June 30, 1999,
1998, and 1997 19
Notes to the Financial Statements 20
All other schedules are omitted because they are not applicable or the
required information is shown in the Financial Statements or the Notes
thereto.
Independent Auditors' Report
Board of Directors of
The Dewey Electronics Corporation
Oakland, New Jersey
We have audited the accompanying balance sheets of The Dewey Electronics
Corporation as of June 30, 1999 and 1998, and the related statements of
income (loss), stockholders' equity and cash flows for each of the three
years ended June 30, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of The Dewey Electronics Corporation as of
June 30, 1999 and 1998 and the results of its operations and its cash flows
for each of the three years in the period ended June 30, 1999 in conformity
with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
September 10, 1999
Parsippany, New Jersey
Balance Sheets
June 30,
1999 1998
ASSETS:
CURRENT ASSETS:
Cash $ 288,859 $134,449
Accounts receivable (includes U.S.
Government receivables of
approximately$1,183,000 in 1999
and $304,500 in 1998) less
allowance for doubtful accounts
of $28,571 in 1999 and 1998 1,211,841 449,534
Inventories 1,064,996 1,050,027
Contract costs and related estimated
profits in excess of billings 1,819,008 1,193,520
Prepaid expenses and other current
Assets 28,375 60,556
TOTAL CURRENT ASSETS 4,413,079 2,888,086
PROPERTY, PLANT AND EQUIPMENT:
Land and improvements 519,186 513,161
Building and improvements 1,799,383 1,799,383
Machinery and equipment 2,370,215 2,330,301
Furniture and fixtures 147,512 147,512
4,836,296 4,790,357
Less accumulated depreciation and
Amortization 3,956,251 3,826,425
880,045 963,932
DEFERRED TAX ASSET 348,308 722,308
OTHER NON-CURRENT 134,694 138,876
TOTAL ASSETS $5,776,126 $4,713,202
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Note payable - bank $ 200,000 $ 100,000
Accounts payable 607,591 181,525
Accrued expenses and other liabilities 284,533 251,988
Pension costs accrued 152,722 159,639
Billings in excess of contract costs
and related estimated profits 701,608 701,608
Current portion of long-term debt 54,056 49,788
TOTAL CURRENT LIABILITIES 2,000,510 1,444,548
LONG-TERM DEBT 2,165,685 2,219,746
OTHER LONG-TERM LIABILITIES 61,172 61,172
DUE TO RELATED PARTY 200,000 200,000
STOCKHOLDERS' EQUITY:
Preferred stock, par value $1.00;
authorized 250,000 shares, issued
and outstanding, none -- --
Common stock, par value $.01;
authorized 3,000,000 shares;
issued and outstanding 1,693,397
in 1999 and 1998. 16,934 16,934
Paid-in capital 2,835,307 2,835,307
Accumulated deficit (983,385) (1,544,408)
1,868,856 1,307,833
Less: Treasury stock, 353,866
shares in 1999 and 1998, at cost 520,097 520,097
1,348,759 787,736
TOTAL LIABILITY AND STOCKHOLDERS'
EQUITY $5,776,126 $4,713,202
See notes to the financial statements
Statements of Income (Loss)
Years ended June 30,
1999 1998 1997
Revenues $8,632,261 $2,324,597 $3,828,417
Cost of revenues 6,645,599 2,052,787 2,833,849
Gross profit 1,986,662 271,810 994,568
Selling, general and
administrative expenses 841,107 827,776 938,366
Operating profit/(loss) 1,145,555 (555,966) 56,202
Interest expense (216,017) (212,738) (218,682)
Other income - Net 5,485 20,872 7,745
Earnings/(Loss) before income
taxes and extraordinary gain 935,023 (747,832) (154,735)
Income tax (provision)/
Benefit (374,000) 301,028 62,281
Earnings/(Loss) before
extraordinary gain 561,023 (446,804) (92,454)
Extraordinary gain (Net of
income taxes of $67,150) -- -- 99,682
NET EARNINGS/(LOSS) $561,023 $(446,804) $ 7,228
NET EARNINGS/(LOSS) PER COMMON
SHARE - BASIC AND DILUTED
Earnings (Loss) before
extraordinary item $ .42 $ (.33) $ (0.06)
Extraordinary gain -- -- 0.07
NET EARNINGS/(LOSS) PER COMMON SHARE
- BASIC AND DILUTED $ .42 $ (.33) $ 0.01
Statements of Stockholders' Equity
Treasury stock
Common Stock at cost
Paid-in Accumulated
Shares Amount capital Deficit Shares Amount
Balance,
June 30,
1996 1,693,397 $16,934 $2,835,307 $(1,104,832) 353,866 $520,097
Net
Earnings -- -- -- 7,228 -- --
Balance,
June 30,
1997 1,693,397 16,934 2,835,307 (1,097,604) 353,866 520,097
Net Loss -- -- -- (446,804) -- --
Balance,
June 30,
1998 1,693,397 16,934 2,835,307 (1,544,408) 353,866 520,097
Net
Earnings -- -- -- 561,023 -- --
Balance,
June 30,
1999 1,693,397 $16,934 $2,835,307 $(983,385) 353,866 $520,097
See notes to the financial statements
Statements of Cash Flows
Years ended June 30,
1999 1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $561,023 $(446,804) $7,228
Adjustments to reconcile net
income (loss) to net cash
provided by (used in)
operating activities:
Depreciation 142,228 138,818 133,302
Amortization 4,182 7,432 2,210
Deferred taxes 374,000 (301,028) 4,869
Deferred financing costs -- -- 8,072
(Increase)/Decrease in accounts
receivable (762,307) (92,056) 643,197
Increase in allowance for
doubtful accounts -- 20,000 --
(Increase)/Decrease in
Inventories (14,969) 7,311 358,825
(Increase)/Decrease in contract
costs and related estimated
profits in excess of
applicable billing (625,488) 77,587 (159,140)
Decrease/(Increase) in prepaid
expenses and other current
assets 32,181 (8,524) (32,127)
(Increase)/Decrease in other
noncurrent assets -- (83,642) 25,000
Increase/(Decrease) in accounts
Payable 426,066 65,443 (254,725)
Increase/(Decrease) in accrued
expenses and other liabilities 32,545 (39,623) 8,707
(Decrease)/Increase in pension
costs accrued (6,917) 43,606 25,536
(Decrease)/Increase other long
term liabilities -- (1,527) (18,334)
Total adjustments (398,479) (166,203) 745,392
Net cash provided by/(used in)
operating activities 162,544 (613,007) 752,620
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for property,
plant and equipment (58,341) (17,490) (15,903)
Net cash used in investing
Activities (58,341) (17,490) (15,903)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of long-term
Borrowings (49,793) (1,953,112) (507,061)
Payment of Line of Credit (100,000) -- --
Proceeds from long-term
Borrowings -- 2,300,000 --
Proceeds from Line of Credit 200,000 100,000 --
Net cash provided by/(used in)
financing activities 50,207 446,888 (507,061)
NET INCREASE/(DECREASE) IN CASH 154,410 (183,609) 229,656
CASH - BEGINNING OF YEAR 134,449 318,058 88,402
CASH - END OF YEAR $ 288,859 $134,449 $ 318,058
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid $212,682 $200,587 $233,458
Interest received $846 $6,827 $11,159
See notes to the financial statements.
Notes to the Financial Statements
Years ended June 30, 1999, 1998, and 1997
A. Summary of Significant Accounting Policies
1. Government Contract Accounting - (Electronics)
Revenues and estimated earnings under defense contracts are recorded
using the percentage-of-completion method of accounting, measured as
the percentage of costs incurred to estimated total costs for each contract.
Provisions for estimated losses on uncompleted contracts are made in the
period in which such losses are determined. Changes in job performance,
job conditions, and estimated profitability may result in revisions to costs
and income and are recognized in the period in which the revisions are
determined. An amount equal to contract costs and estimated profit
(limited to estimated net realizable value) attributable to claims is included
in revenue when realization is probable and the amount can be reasonably
estimated.
Since substantially all of the Company's electronics business comes from
contracts with various agencies of the United States Government or
subcontracts with prime Government contractors, the loss of Government
business would have a material adverse effect on this segment of business.
2. Leisure and Recreation
Revenues and earnings are recorded when deliveries are made.
3. Cash Equivalents
The Company considers all highly liquid debt instruments with a maturity of
three months or less at the date of purchase to be cash equivalents.
4. Fair Value of Financial Instruments
The fair values of the Company's long-term debt and line of credit borrowings
are estimated based upon interest rates currently available for borrowings
with similar terms and maturities and approximate the carrying values.
Due to the short term nature of cash, accounts receivable, accounts payable,
accrued expenses and other current liabilities, their carrying value is a
reasonable estimate of fair value.
5. Inventories
Inventories are valued at the lower of cost or market. Components of cost
include materials, direct labor and factory overhead.
6. Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles required 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
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
7. Property, Plant, and Equipment
Property, plant, and equipment are stated at cost. Allowance for depreciation
and amortization is provided on a straight-line basis over estimated useful
lives of three to ten years for machinery and equipment, ten years for
furniture and fixtures, and twenty years for building and improvements.
Whenever events indicate that the carrying values of Long-lived assets may not
be recoverable, the Company evaluates the carrying values of such assets using
future undiscounted cash flows. Management believes that, as of June 30,
1999, the carrying values of such assets are appropriate.
8. Reclassifications
Certain reclassifications have been made in prior years' financial
statements and notes to conform with the 1999 presentation.
B. Inventories
Inventories consist of:
June 30,
1999 1998
Finished goods $ 392,652 $ 458,104
Work in progress 146,075 159,757
Raw materials 526,269 432,166
$1,064,996 $1,050,027
C. Costs and Estimated Earnings on Uncompleted Contracts
June 30,
1999 1998
Costs incurred on contracts
in progress $47,961,443 $42,377,828
Estimated contract profit 7,686,643 5,908,842
55,648,086 48,286,670
Less: billings to date 54,530,686 47,794,758
$1,117,400 $491,912
Included in the accompanying balance sheets under the following captions:
June 30,
1999 1998
Contract costs and related
estimated profits in excess
of applicable billings $1,819,008 $1,193,520
Billings in excess of
contract costs and related
estimated profits (701,608) (701,608)
$1,117,400 $491,912
D. Stock Option Plan
The Company's stock option plan, which expired in June 1998, authorized the
granting of options to various executives and key employees to purchase shares
of common stock. Such options were granted at fair market value of the stock
on the date of grant and were exercisable over a five-year period.
On December 2, 1998, the Employee Stock Option Committee adopted a new
Stock Option Plan of 1998 subject to the approval of the Corporations
stockholders at the meeting of stockholders in 1999. At that time, the
Employee Stock Option Committee had granted incentive stock options to
various executives and key employees to purchase shares of common stock.
Such options were granted at fair market value of the stock on the date of
grant and are exercisable over a ten year period beginning December 2, 1999
to December 1, 2009.
The changes in the number of shares under option are as follows:
Number Exercise
of Shares Price
Balance, June 30, 1997 15,000 $.9375
Expired 15,000 $.9375
Balance at June 30, 1998 0
Granted during 1999 27,500 $.5781
Exercised --
Balance, June 30, 1999 27,500 $.5781
The Company applies Accounting Principles Board (APB) Opinion 25 and
related interpretations in accounting for the Plan. Accordingly, no
compensation cost had been recognized for the Plan. Had compensation cost
for the Plan been determined consistent with Statement of Financial
Accounting Standards No. 123 "Accounting for Stock-Based Compensation"
(SFAS 123), it would not have any impact on the financial statements
for 1999, 1998 and 1997, respectively.
E. Long-Term Debt
Long-term debt at June 30, consists of:
1999 1998
8.25% Mortgage Note payable
to Sovereign Bank due in
monthly installments of
approximately $20,000 with
a final maturity in year 2002. $2,219,741 $2,269,534
Less current portion: 54,056 49,788
$2,165,685 $2,219,746
On September 18, 1997, the Company entered into an agreement with Sovereign
Bank, under which Sovereign Bank loaned the Company $2,300,000 against
delivery of a mortgage note payable at the rate of 8.25%. The proceeds of the
loan were used to replace all outstanding indebtedness to Fleet Bank and the
New Jersey Economic Development Authority and for working capital.
The Mortgage Note is secured by a first mortgage on all of the Company's land
and its building. Borrowings under the line-of-credit arrangement are secured
by a first lien on all of the Company's machinery, equipment and other
personal property. This borrowing arrangement with the bank contains no
financial ratio or other debt covenants.
Aggregate annual principal payments applicable to long-term debt for the years
subsequent to June 30, 1999, based on the mortgage loan agreement in place at
June 30, 1999 are:
2000 $54,056
2001 58,687
2002 63,716
2003 2,043,282
$2,219,741
Management has evaluated its indebtedness and has determined based on
interest rates and related terms that the fair value of such debt approximates
it carrying value.
The Bank also agreed to provide a $500,000 line-of-credit facility to be
evidenced by promissory notes bearing interest at a rate of .75% plus the
prime rate. The prime rate at June 30, 1999 was 8.00%. The outstanding
borrowings against the line-of-credit facility at June 30, 1999 was $200,000.
Any outstanding borrowings under the line of credit will become due and
payable on October 31 of each year. This line of credit may be renewed on
an annual basis.
F. Taxes on Income
Deferred income taxes reflect the net tax effects of (a) temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes, and b) operating
loss and tax credit carryforwards.
Federal income tax net operating loss carryforwards mainly arise from
temporary differences between financial and taxable income. The Company's
net operating loss ("NOL") carryforwards for tax purposes were $1,010,000
at June 30, 1999 and are scheduled to expire in the year 2008.
The Company believes that it is more likely than not that the NOL
carryforwards will be utilized prior to their expiration. This belief is
based upon the expectation that the Company will remain profitable. In
addition, the Company's real property, or a portion thereof, will generate
income prior to the expiration of the loss carryforwards in an amount at
least sufficient to realize the deferred tax benefit.
The provision for income taxes is summarized as follows:
Years Ended June 30,
1999 1998 1997
Deferred
Federal $ 285,416 $ (230,171) $ 3,723
State 88,584 (70,857) 1,146
$ 374,000 $ (301,028) $ 4,869
The provision (benefit) for income taxes allocated between continuing
operations and extraordinary items as summarized below:
Years Ended June 30,
1999 1998 1997
Continuing operations $ 374,000 $ (301,028) $ (62,281)
Extraordinary items -- -- 67,150
Total $ 374,000 $ (301,028) $ 4,869
Deferred tax assets and liabilities as of June 30, 1999 and June 30, 1998
consisted of the following:
Deferred tax assets: 1999 1998
Net operating loss
Carryforward $ 462,967 $ 855,522
Vacation accrual 28,890 26,802
$ 491,857 $ 882,324
Deferred tax liabilities:
Depreciation $ 114,659 $ 133,214
Deferred contract income 67,860 67,860
$ 182,519 $ 201,074
G. Pension Plan
The Company has a non-contributory defined benefit retirement plan covering
all its employees. The plan is qualified under the Internal Revenue Code.
The method of determining the accrued benefit of an employee is the amount
equal to .8% of an employee's average monthly salary times the number of
years employed by the Company, to a maximum of 35 years. The Company's
policy is to contribute the amounts allowable under Internal Revenue Service
regulations. The plan assets are invested primarily in a fixed income
investment account.
Net pension expense consists of the following:
Years ended June 30,
1999 1998 1997
Service cost $ 15,268 $ 19,281 $ 24,089
Interest cost on
projected benefit
obligations 46,630 46,438 48,588
Actual return on assets (23,775) (22,722) (28,783)
Net amortization and deferrals 16,898 17,366 17,676
Net pension expense $ 55,021 $ 60,363 $ 61,570
In both 1999 and 1998, the Company recorded its minimum pension
liability as an other long term liability and a corresponding intangible
asset included in other non-current assets. The funded status of the plan
and the amount recognized on the balance sheet are as follows:
June 30,
1999 1998
Actuarial present value of
benefit obligations:
Accumulated benefit obligation $ 599,343 $ 625,731
Projected benefit obligation $ 650,630 $ 681,502
Plan assets at fair value,
consisting of investments held
in a fixed income investment
account $ 384,808 $ 408,893
Projected benefit obligation
in excess of plan assets 265,822 272,609
Unrecognized net gain/(loss) (28,834) (18,937)
Unrecognized net obligation (43,379) (57,839)
Prior service cost not yet
recognized in net periodic pension cost (29,309) (36,637)
Adjustment required to
recognize minimum liability 50,235 57,642
Accrued pension cost $ 214,535 $ 216,838
Weighted average assumptions as
of December 31:
Expected long-term rate of
return on plan assets: 7.5% 8.0%
Discount rate: 7.5% 7.5%
Salary increase: 2.5% 2.5%
H. Earnings (Loss) Per Share
The number of shares used in the computation of earnings per share was
1,339,531 in each of the years ended June 30, 1999, 1998 and 1997. Since
the computation of diluted earnings (loss) per share is not materially
dilutive or anti-dilutive, the amounts reported for basic and diluted
earnings (loss) per share are the same.
I. Related Party Transaction
Due to Related Party represents notes payable to an officer (stockholder)
of the Company. The notes are due upon demand and are subordinate to the
mortgage note held by Sovereign Bank. The officer (stockholder) has agreed
not to seek repayment of the notes until the mortgage loan has been repaid.
Accordingly, the notes have been classified as long-term obligations.
J. Other Income
Other income/(expense) consists of the following for the year ended June 30:
1999 1998 1997
Sales of Scrap
and miscellaneous (net) $ 4,615 $ 14,045 $ (3,414)
Interest 870 6,827 11,159
$ 5,485 $ 20,872 $ 7,745
K. Operating Segments
The Company operates in two industries: electronics; and leisure and
recreation. Operations in the electronics industry is primarily related to
supplying electronics and electrical products and systems for the United
States Government as a prime contractor or subcontractor. Operations in
the leisure and recreation industry involve the production and sale of
snowmaking machinery and servicing of such machinery at the purchaser's
expense beyond the warranty period. Total revenue by industry represents
sales to unaffiliated customers, as reported in the Company's Statement of
Income(Loss). There are no inter-segment sales.
Some operating expenses, including general corporate expenses, have been
allocated by specific identification or based on direct labor for items which
are not specifically identifiable. In computing operating profit, none of the
following items have been added or deducted: interest expense, income taxes,
and non-operating income. Depreciation and amortization for the electronics
industry and the leisure and recreation industry, respectively, was
approximately $128,000 and $18,000 in 1999, $126,000 and $20,000 in 1998,
$106,000 and $29,000 in 1997. Capital expenditures for the electronics
industry were approximately $58,000 in 1999, $17,000 in 1998, $16,000 in
1997. There were no capital expenditures for the leisure and recreation
industry.
Identifiable assets by industry are those assets that are used in the
Company's operations in each industry. Corporate assets are principally cash,
prepaid expenses, and other current assets.
The following tables present information about reported segment revenues,
operating profit or loss, and assets, and reconcile such segment information
to the Company's consolidated totals:
Year ended June 30, 1999
Electronics Leisure and Total
Recreation Company
Total revenue $8,355 $ 277 $8,632
Operating
profit/(loss) $1,227 $ (81) $1,146
Interest expense
and other income -
net (211)
Earnings before
income taxes 935
Identifiable assets
at June 30, 1999 $3,955 $1,155 $5,110
Corporate assets 666
Total assets at
June 30, 1999 $5,776
Year ended June 30, 1998
Electronics Leisure and Total
Recreation Company
Total revenue $1,996 $329 $2,325
Operating
profit/(loss) $ (501) $ (55) (556)
Interest expense
and other income -
net (192)
Earnings before
income taxes $ (748)
Identifiable assets
at June 30, 1998 $2,520 $1,286 $3,806
Corporate assets 907
Total assets at
June 30, 1998 $4,713
Year ended June 30, 1997
Electronics Leisure And Total
Recreation Company
Total revenue $2,841 $ 987 $3,828
Operating profit(loss) 58 (2) 56
Interest expense and
other income - net (211)
Loss before income
taxes and
extraordinary gain (155)
Identifiable assets at
June 30, 1997 $2,375 $1,487 $3,862
Corporate assets 783
Total assets at June
30, 1997 $4,645
L. Unaudited Quarterly Financial Data
1999 Revenue Gross Net Income Earnings
Profit per share
basic and
diluted
Sept. 30 $1,740,718 $301,346 $42,748 $.03
Dec. 31 2,083,905 427,757 88,436 $.07
Mar. 31 2,026,158 609,759 215,515 $.16
Jun. 30 2,782,480 647,800 214,324 $.16
Year $8,632,261 $1,986,662 $561,023 $.42
1998 Revenue Gross Net Income Earnings
Profit per share
basic and
diluted
Sept. 30 $702,453 $230,559 $(7,202) $(.01)
Dec. 31 627,963 105,653 (91,041) $(.07)
Mar. 31 407,039 37,199 (139,935) $(.10)
Jun. 30 587,142 (101,601) (208,626) $(.15)
Year $2,324,597 $271,810 $(446,804) $(.33)
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information concerning Directors and Executive Officers of the Registrant is
incorporated herein by reference from the Company's definitive proxy statement
for the 1999 Annual Meeting of Stockholders.
Item 11. EXECUTIVE COMPENSATION
Executive compensation information is incorporated herein by reference from
the Company's definitive proxy statement for the 1999 Annual Meeting of
Stockholders.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Information concerning security ownership of certain beneficial owners and
management is incorporated herein by reference from the Company's definitive
proxy statement for the 1999 Annual Meeting of Stockholders.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information in response to this item is incorporated herein by reference from
the Company's definitive proxy statement for the 1999 Annual Meeting of
Stockholders.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K
(a) (1) The following financial statements are included in Part II
Item 8:
Page
Independent Auditors' Report 16
Balance Sheets, June 30, 1999 and 1998 17
Statements of Income (Loss), Years Ended June 30,
1999, 1998 and 1997 18
Statements of Stockholders' Equity, Years Ended
June 30, 1999, 1998 and 1997 18
Statements of Cash Flows, Years Ended June 30,
1999, 1998 and 1997 19
Notes to Financial Statements 20
(2) Exhibits 33
A list of the exhibits required to be filed as part
of this report is set forth in the Index to Exhibits,
which immediately follows the signature page, and is
incorporated herein by this reference.
(b) Reports on Form 8-K
No reports on Form 8-K have been filed by the Registrant
during the last quarter of the period covered by this
report.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, The Dewey Electronics Corporation has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized:
THE DEWEY ELECTRONICS CORPORATION
_________/s/___________________ ____________/s/______________________
BY: Gordon C. Dewey BY: Thom A. Velto, Treasurer
President, Chief Executive
Officer and Chief Financial
Officer
DATE: September 24, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
___________/s/________________________ Date: September 24, 1999
Alexander A. Cameron, Director
___________/s/________________________ Date: September 24, 1999
Frances D. Dewey, Director
___________/s/________________________ Date: September 24, 1999
Gordon C. Dewey, Director
__________/s/________________________ Date: September 24, 1999
John H.D. Dewey Director
__________/s/_______________________ Date: September 24, 1999
Peter Eustis, Director
__________/s/_________________________ Date: September 24, 1999
John G. McQuaid, Director
_________/s/__________________________ Date: September 24, 1999
Pat Nolletti Director
THE DEWEY ELECTRONICS CORPORATION
INDEX TO EXHIBITS
The following exhibits are filed as part of this report. For convenience of
reference, exhibits are listed according to the numbers assigned in the
Exhibit table to Regulation S-K.
Number Page No.
3 (a)- Certificate on Incorporation as amended. This item was filed
as part of the Registrant's Form 10-K for the year ended June 30, 1988 and is
herein incorporated by reference. --
3 (b)- By Laws as amended. This item was filed as part of the
Registrant's Form 10-K for the year ended June 30, 1988 and is herein
incorporated by reference. --
4 (a)- Agreement dated as of September 18, 1997 with Sovereign Bank
providing for the borrowing of $2,300,000 against issuance of a mortgage
note payable to the Bank. This item was filed as part of the Registrant's Form
10-K for the year ended June 30, 1997 and is herein incorporated by reference.
--
4 (b)- Line of credit agreement dated as of September 18, 1997 with
Sovereign Bank providing for the borrowing of up to $500,000. This item was
filed as part of the Registrant's Form 10-K for the year ended June 30, 1997
and is herein incorporated by reference. --
4 (c)- 1983 Stock Option Plan. This item was filed with the
Registrant's Definitive Proxy Statement for the 1983 annual meeting of
stockholders on December 6, 1983 and is herein incorporated by reference.
--
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> JUN-30-1999
<CASH> 288,859
<SECURITIES> 0
<RECEIVABLES> 1,240,412
<ALLOWANCES> 28,571
<INVENTORY> 1,064,996
<CURRENT-ASSETS> 4,413,079
<PP&E> 4,836,296
<DEPRECIATION> 3,956,251
<TOTAL-ASSETS> 5,776,126
<CURRENT-LIABILITIES> 2,000,510
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 5,776,126
<SALES> 8,632,261
<TOTAL-REVENUES> 8,632,261
<CGS> 6,645,599
<TOTAL-COSTS> 835,622
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 216,017
<INCOME-PRETAX> 935,023
<INCOME-TAX> (374,000)
<INCOME-CONTINUING> 561,023
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 561,023
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