U.S. Securities and Exchange Commission
Washington, D. C. 20549
Form 1O-QSB
(Mark One)
|x| QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 27, 1998
|_| TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE EXCHANGE ACT
For the transition period from_____________to_____________
Commission file number 0-122
EICO Electronic Instrument Co., Inc.
---------------------------------------------------
(Exact name of small business issuer as
specified in its charter)
New York 11-1524626
-------------------------------- --------------------------------
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
233 Broadway, Suite 1085, New York, N.Y. 10279
-----------------------------------------------------
(Address of principal executive offices)
(212) 566-4995
-----------------------------------------------------
(Issuer's telephone number)
-----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such report(s), and (2) has been
subject to such filing requirements for the past 9O days. Yes |X| No |_|
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes |_| No |_|
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: July 23, 1998
Capital stock - $1 par value - 600,380 shares
<PAGE>
EICO ELECTRONIC INSTRUMENT CO., INC.
QUARTERLY REPORT ON FORM 10-QSB
FOR THE QUARTER ENDING JUNE 27, 1998
-INDEX-
Part I - Financial Information:
Item 1 - Financial Statements
Balance sheet - June 27, 1998 (unaudited)
Statement of operations - for the thirty-nine weeks and thirteen weeks
ended June 27, 1998 and June 28, 1997 (unaudited)
Statement of cash flows - for the thirty-nine weeks ended June 27, 1998
and June 28, 1997 (unaudited)
Notes to Form 10-QSB (unaudited)
Item 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations
Signature Page
<PAGE>
Item 1. Financial Statements
EICO ELECTRONIC INSTRUMENT CO., INC.
BALANCE SHEET
AS AT JUNE 27, 1998
(UNAUDITED)
ASSETS
Cash $ 44,103
Mortgage receivable (less unrecognized
gain on sale of property of $3,987,484) --
Prepaid expenses 27,183
Deferred income taxes 560, 000
Investment in U.S. Treasury obligations
(at amortized cost; which approximates
market) 1,045,561
Other assets 6,673
----------
TOTAL $1,683,520
==========
LIABILITIES
Accrued wages, taxes and other expenses $ 3l,911
Income taxes payable 59,883
Escrow deposit payable (less cash
in bank account of $41,970) --
----------
Total liabilities 91,794
----------
STOCKHOLDERS' EQUITY
Capital stock - $1 par value - authorized
1,000,000 shares; issued 608,293 shares
(including treasury shares) 608,293
Additional paid-in capital 617,213
Retained earnings 386,211
----------
Total 1,611,717
Less cost of 7,913 shares capital
stock in treasury 19,991
----------
Total stockholders' equity 1,591,726
----------
TOTAL $1,683,520
==========
The attached notes are made a part hereof.
<PAGE>
EICO ELECTRONIC INSTRUMENT CO., INC.
STATEMENT OF OPERATIONS
(NOTES A AND B)
(UNAUDITED)
Thirty-Nine Thirteen
Weeks Ended Weeks Ended
------------------- -------------------
June 27, June 28, June 27, June 28,
1998 1997 1998 1997
-------- -------- -------- --------
Income:
Interest on mortgage $241,199 $245,641 $ 80,011 $ 81,523
Interest on
investment 37,544 39,954 12,544 12,970
Gain on sale
of property 57,968 53,526 19,711 18,199
-------- -------- -------- --------
Total 336,711 339,121 112,266 112,692
General and corporate
expenses 148,060 145,645 45,942 42,293
-------- -------- -------- --------
Earnings before
income taxes 188,651 193,476 66,324 70,399
Income taxes 82,000 85,000 27,000 30,000
-------- -------- -------- --------
NET EARNINGS $106,651 $108,476 $ 39,324 $ 40,399
======== ======== ======== ========
Net earnings
per share $ .18 $ .18 $ .07 $ .07
======== ======== ======== ========
Number of shares
used in computing
net earnings
per share 600,380 600,375 600,380 600,380
======== ======== ======== ========
Dividends declared
per share None None None None
======== ======== ======== ========
The attached notes are made a part hereof.
Management's discussion and analysis of financial condition and results of
operations is included in item 2.
<PAGE>
EICO ELECTRONIC INSTRUMENT CO., INC.
STATEMENT OF CASH FLOWS
(UNAUDITED)
Thirty-Nine
Weeks Ended
-------------------------
June 27, June 28,
1998 1997
----------- -----------
Cash flows from operating activities:
Cash paid to suppliers and employees $ (170,019) $(134,192)
Interest received 277,034 285,595
Income taxes paid (65,270) (78,224)
----------- -----------
Net cash provided by
operating activities 41,745 73,179
----------- -----------
Cash flows provided by investing activities:
Proceeds from sale of property -
collection of mortgage principal 57,968 53,526
Proceeds from redemption of U.S.
Treasury obligations 907,448 115,000
Investment in U.S. Treasury obligation (1,033,009) (155,456)
----------- -----------
Net cash provided by (used in)
investing activities (67,593) 13,070
----------- -----------
Cash flows from financing activities -
dividends paid (120,016) (120,076)
----------- -----------
NET (DECREASE) IN CASH (145,924) (33,827)
Cash - beginning of period 190,027 189,957
----------- -----------
CASH - END OF PERIOD $ 44,103 $ 156,130
=========== ===========
(Continued)
<PAGE>
EICO ELECTRONIC INSTRUMENT CO., INC.
STATEMENT OF CASH FLOWS
(UNAUDITED)
-Sheet 2 -
Thirty-Nine
Weeks Ended
----------------------
June 27, June 29,
1998 1997
--------- ---------
Reconciliation of net earnings to net
cash provided by operating activities:
Net earnings $ 106,651 $ 108,476
Adjustments to reconcile net
earnings to net cash provided by
operating activities:
Gain on the sale of property (57,968) (53,526)
Deferred income taxes 7,000 7,000
Decrease (increase) in:
Prepaid expenses (16,620) 5,460
Other costs 2,000 2,445
Increase (decrease) in:
Accrued wages, taxes and
other expenses (9,048) 3,548
Income taxes payable 9,730 (224)
--------- ---------
Net cash provided by
operating activities $ 41,745 $ 73,179
========= =========
The attached notes are made a part hereof.
<PAGE>
EICO ELECTRONIC INSTRUMENT CO., INC.
NOTES TO FORM 10-QSB
(UNAUDITED)
(Note A):
The financial information contained in this Form 10-QSB represents
condensed financial data and, therefore, does not include all footnote
disclosures required to be included in financial statements prepared in
conformity with generally accepted accounting principles. Such footnote
information was included in the Company's annual Form 10-KSB for the year ended
September 27, 1997; the condensed financial data included herein should be read
in conjunction with the annual report.
(Note B):
(1) In management's opinion, all necessary adjustments have been made in
order to present fairly the consolidated results for the interim periods.
(2) The results of operations for the thirty-nine weeks ended June 27,
1998 are not necessarily indicative of the results of operations for the year
ending October 3, 1998.
(Note C):
Earnings per share is based on the average number of shares outstanding
during each period, exclusive of treasury shares.
(Note D):
Income taxes on the consolidated statement of operations comprises:
Thirty-Nine Thirteen
Weeks Ended Weeks Ended
----------------- -----------------
June 27, June 28, June 27, June 28,
1998 1997 1998 1997
------- ------- ------- -------
Currently payable:
Federal $46,000 $52,000 $l5,000 $21,000
State and local 29,000 26,000 10,000 7,000
Deferred:
Federal 4,000 5,000 1,000 2,000
State and local 3,000 2,000 1,000
------- ------- ------- -------
Tota1 $82,000 $85,000 $27,000 $30,000
======= ======= ======= =======
(Continued)
<PAGE>
EICO ELECTRONIC INSTRUMENT CO., INC.
NOTES TO FORM 10-QSB
(UNAUDITED)
-Sheet 2 -
(Note D) (Continued):
Federal income taxes are computed at statutory rates, including the effect
of surtax exemptions.
Deferred income taxes result from reporting the sale of property on the
cost recovery method for financial accounting purposes and on the installment
method for income tax purposes.
(Note E):
On June 25, 1993, the Company sold its property for $5,000,000. The
contract of sale required the payment of $750,000 by the purchasers at the
closing and a first mortgage of $4,250,000 to be held by the Company. The
mortgage principal with interest at 8% a year is due in 60 monthly payments of
$33,241 beginning September 1993, with a balloon payment of $4,000,617 due
September 1998. For financial accounting purposes, the Company has recorded the
sale on the cost recovery method.
The sale comprises:
Sales price $ 5,000,000
Less real estate transfer taxes
and other closing costs 788,876
-----------
Balance 4,211,124
Cost basis 535,219
-----------
Gain on sale of property 3,675,905
Interest collected (unrecognized)
to September 30, 1995 544,651
Recognized gain to September 27, 1997 (175,104)
-----------
Unrecognized gain on sale of property
at September 27, 1997 4,045,452
Period September 28, 1997 to June 27,
1998 - recognized gain (57,968)
-----------
Unrecognized gain on sale of property
at June 27, 1998 $ 3,987,484
===========
<PAGE>
Item 2
EICO ELECTRONIC INSTRUMENT CO., INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
On June 25, 1993, the Company sold its real property in Flushing for
$5,000,000. The contract of sale required the purchasers to pay $750,000 at the
closing. In addition, a first mortgage with a balance of $4,082,216 is held by
the Company. The mortgage principal, with interest at 8% a year, is payable in
60 monthly payments of $33,241 beginning September 1993, with balloon payment of
$4,000,617 due September 1998. For financial accounting purposes, the Company
has recorded the sale on the cost recovery method. Using this method, no profit
is recognized until cash payments by the buyers exceed the Company's cost basis
of the property plus selling expenses. This level of buyer payment occurred
during the year ended September 30, 1995.
The $299,167 reflected as interest income on mortgage and gain on
sale of property in the thirty-nine weeks ended June 27, 1998 is the same amount
received in the prior comparative period.
Interest income decline slightly due to lower rates on new
investments compared to rates on redeemed investments.
The Company has cash and investments in U.S. Treasury obligations at
June 27, 1998 of $1,090,000.
The Company has no formal material commitment for future capital
expenditures.
<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.
EICO ELECTRONIC INSTRUMENT CO., INC.
(Registrant)
August 1, 1998 By /s/ Linda Ashley
----------------------------
Principal Financial Officer
August 1, 1998 By /s/ Gordon Katz
----------------------------
Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> OCT-03-1998
<PERIOD-START> SEP-28-1997
<PERIOD-END> JUN-27-1998
<CASH> 44,103
<SECURITIES> 1,045,561
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,683,520
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,683,520
<CURRENT-LIABILITIES> 91,794
<BONDS> 0
0
0
<COMMON> 608,293
<OTHER-SE> 983,433
<TOTAL-LIABILITY-AND-EQUITY> 1,683,520
<SALES> 0
<TOTAL-REVENUES> 336,771
<CGS> 0
<TOTAL-COSTS> 148,060
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 188,651
<INCOME-TAX> 82,000
<INCOME-CONTINUING> 106,651
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 106,651
<EPS-PRIMARY> .18
<EPS-DILUTED> 0
</TABLE>
