FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended May 28, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission File No. 1-10655
ENVIRONMENTAL TECTONICS CORPORATION
(Exact name of registrant as specified in its charter)
Pennsylvania 23-1714256
(State or other jurisdiction (IRS Employer
of incorporation or organization Identification No.)
COUNTY LINE INDUSTRIAL PARK
SOUTHAMPTON, PENNSYLVANIA 18966
(Address of principal executive offices)
(Zip Code)
(215) 355-9100
(Registrant'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 at least the past 90 days.
Yes x No
The number of shares outstanding of the registrant's common
stock as of June 30, 1999 is: 6,841,628
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Environmental Tectonics Corporation
Consolidated Income Statements
(unaudited)
Three Months Ended
May 28, May 29,
1999 1998
(thousands, except
share and per share
information)
Net sales $8,295 $7,460
Cost of goods sold 4,877 4,711
Gross profit 3,418 2,749
Operating expenses:
Selling and administrative 1,870 1,662
Research and development 122 88
1,992 1,750
Operating income 1,426 999
Other expenses:
Interest expense 177 265
Other, net 18 22
195 287
Income before income taxes 1,231 712
Provision for income taxes 431 248
Income before minority interest 800 464
Income (loss) attributable to
minority interest (35) -
Net income $ 835 $ 464
Per share information:
Income available to common
shareholders $ 669 $ 386
Income per share: basic $ 0.11 $ 0.07
Income per share: diluted $ 0.10 $ 0.07
Number of shares: basic 6,293,000 5,180,000
Number of shares: diluted 6,925,000 5,620,000
Note: All share amounts have been restated to reflect a 2 for
1 stock split effective May 28, 1999.
The accompanying notes are an integral part of the
consolidated financial statements.
<PAGE 1>
Environmental Tectonics Corporation
Consolidated Balance Sheets
(unaudited)
May 28, February 26,
1999 1999
(amounts in thousands,
except share and per
share information)
Assets
Current assets:
Cash and cash equivalents $ 6,642 $ 5,344
Cash equivalents restricted for
letters of credit 47 47
Accounts receivable, net 8,689 9,656
Costs and estimated earnings
in excess of billings on
uncompleted long-term
contracts 8,304 10,416
Inventories 4,570 3,118
Deferred tax asset 1,136 1,136
Prepaid expenses and other
current assets 625 787
30,013 30,504
Property, plant and equipment,
at cost, net of accumulated
depreciation of $7,652 at
May 28, 1999 and $7,527 at
Feb 26, 1999 2,823 2,842
Software development costs, net
of accumulated amortization
of $4,795 at May 28, 1999
and $4,619 at February 26, 1999 961 1,137
Other assets 991 965
Total assets $34,788 $35,448
Liabilities and Stockholders' Equity
Liabilities
Current liabilities:
Current portion of long-
term debt $ 121 $ 121
Accounts payable - trade 1,582 1,554
Billings in excess of costs
and estimated earnings on
uncompleted long-term
contracts 6,071 6,775
Customer deposits 5,091 5,696
Accrued income taxes 1,120 920
Accrued liabilities 1,358 1,683
Total current liabilities 15,343 16,749
<PAGE 2>
Long-term debt, less current portion:
Subordinated debt 4,135 4,124
Other 61 95
4,196 4,219
Deferred income taxes 702 702
Total liabilities 20,241 21,670
Redeemable cumulative preferred
stock, $100 par and redemption
value; 25,000 shares authorized,
issued and outstanding at
May 29, 1998. (See Note 5) 0 2,372
Minority interest 341 376
Stockholders' Equity
Common stock; $.05 par value;
10,000,000 shares authorized;
6,840,128 and 6,166,412 issued
and outstanding at May 28, 1999
and February 26,1999, respectively 342 308
Capital contributed in excess of par
value of common stock 5,720 3,240
Foreign currency exchange adjustment 14 21
Retained earnings 8,130 7,461
Total stockholders' equity 14,206 11,030
Total liabilities and stockholders'
equity $34,788 $35,448
Note: All share amounts have been restated to reflect a 2 for
1 stock split effective May 28, 1999.
The accompanying notes are an integral part of the
consolidated financial statements.
<PAGE 3>
Environmental Tectonics Corporation
Consolidated Statements of Cash Flows
(unaudited)
Three months ended
May 28, May 29,
1999 1998
(amounts in thousands)
Cash flows from operating activities:
Net income $ 835 $ 464
Adjustments to reconcile net income
to net cash (used) provided by
operating activities:
Depreciation and amortization 419 373
Provision for losses on accounts
receivable and inventories 20 (14)
Minority interest (35) 0
Changes in operating assets and
liabilities:
Accounts receivable 967 (321)
Costs and estimated earnings in
excess of billings on uncompleted
long-term contracts 2,112 (2,909)
Inventories (1,402) 429
Prepaid expenses and other assets 119 (99)
Other assets (51) 0
Accounts payable 28 (235)
Billings in excess of costs and
estimated earnings on uncompleted
long-term contracts (704) (105)
Customer deposits (605) (463)
Accrued income taxes 200 (699)
Other accrued liabilities (325) 527
Payments under settlement agreements (30) (60)
Net cash provided (used) by operating
activities 1,548 (3,112)
Cash flows from investing activities:
Acquisition of equipment (207) (158)
Capitalized software development costs 0 (99)
Purchase of subsidiary, net 0 60
Net cash used in investing activities (207) (197)
<PAGE 4>
Cash flows from financing activities:
Net borrowings under credit facility 0 4,164
Payment of dividends on preferred stock (38) (68)
Increase in cash equivalents restricted
for letters of credit 0 (10)
Decrease in notes payable - related party 0 (500)
issuance of common stock/warrants (12) 0
Capital leases/other 7 27
Net cash (used) provided by
financing activities (43) 3,613
Net increase in cash and cash
equivalents 1,298 304
Cash and cash equivalents at
beginning of period 5,344 225
Cash and cash equivalents at
end of period $ 6,642 $ 529
Supplemental schedule of cash flow
information:
Interest paid 0 188
Income taxes paid 284 756
Supplemental information on noncash operating and investing
activities: During the three month period ended May 28, 1999,
the Company transferred a $100 demonstration unit from property,
plant and equipment to inventory. The unit was subsequently sold.
During the three month period ended May 29, 1998, the Company
transferred $36 of other assets to property, plant and equipment.
In connection with an acquisition in April 1998, the Company
issued 55,000 shares of its common stock and a three-year
interest-only note for $350.
The accompanying notes are an integral part of the
consolidated financial statements.
<PAGE 5>
Environmental Tectonics Corporation
Notes to Consolidated Financial Statements
1. Basis of Presentation
The accompanying consolidated financial statements include
the accounts of Environmental Tectonics Corporation ("ETC" or the
"Company"), its wholly-owned subsidiaries ETC International
Corporation and Entertainment Technology Corporation, and its
majority-owned subsidiary ETC-PZL Aerospace Industries, Ltd.
("ETC-PZL").
The accompanying consolidated financial statements have been
prepared by Environmental Tectonics Corporation, without audit,
pursuant to the rules and regulations of the Securities and
Exchange Commission, and reflect all adjustments which, in the
opinion of management, are necessary for a fair statement of the
results for the interim periods presented. All such adjustments
are of a normal recurring nature.
Certain information in footnote disclosures normally
included in financial statements prepared in accordance with
generally accepted accounting principles has been condensed or
omitted pursuant to such rules and regulations, although the
Company believes the disclosures are adequate to make the
information presented not misleading. These financial statements
should be read in conjunction with the financial statements and
the notes thereto included in the Company's Annual Report on Form
10-KSB for the year ended February 26, 1999.
Certain reclassifications have been made to the 1998
financial statements to conform with the 1999 presentation.
2. Earnings per Share
Basic earnings per share excludes dilution and is computed
by dividing income available to common shareholders by the
weighted average common shares outstanding for the period.
Diluted earnings per share reflects the potential dilution that
could occur if securities or other contracts to issue common
stock were exercised and converted into common stock or resulted
in the issuance of common stock that then shared in the earnings
of the entity. The following table demonstrates the components
of basic and diluted earning per share for the three month
periods ended May 28, 1999 and May 29, 1998.
All earnings per share and share amounts have been restated
to reflect a 2 for 1 stock split effective May 28, 1999.
<PAGE 6>
Three months ended
May 28, May 29,
1999 1998
(amounts in thousands,
except share and per
share information)
Net income $ 835 $ 464
Less preferred stock dividends (38) (68)
Less accretion of preferred stock (128) (10)
Income available to common stockholders $ 669 $ 386
Basic earnings per share:
Weighted average shares 6,293,000 5,180,000
Per share amount $ 0.11 $ 0.07
Diluted earnings per share:
Weighted average shares 6,293,000 5,180,000
Effect of dilutive securities:
Stock options 170,000 49,000
Stock warrants 462,000 391,000
6,925,000 5,620,000
Per share amount $ 0.10 $ 0.07
As of May 29, 1998, 800,000 shares of common stock issuable
pursuant to the conversion provisions of convertible subordinated
debt and preferred stock were not included in the computation of
diluted earnings per share because the effect of the assumed
conversion was anti-dilutive.
3. Accounts Receivable
The components of accounts receivable are as follows:
May 28, February 26,
1999 1999
(amounts in thousands)
U.S. Government receivables billed and
unbilled contract costs subject to
negotiation $5,543 $ 4,529
U.S. commercial receivables billed 763 598
International receivables billed 2,768 4,914
9,074 10,041
Less allowance for doubtful accounts (385) (385)
$8,689 $ 9,656
<PAGE 7>
U.S. Government receivables billed and unbilled contract costs
subject to negotiation:
Unbilled contract costs subject to negotiation represent
claims made or to be made against the U.S. Government under a
contract for a centrifuge. These costs were recorded during
fiscal years 1994, 1995 and 1998. The Company has recorded
claims, amounting to $2.75 million, to the extent of contract
costs incurred, and accounts receivable of $1.7 million,
representing the balance due under the contract. Claim costs have
been incurred in connection with U.S. Government caused delays,
errors in specifications and designs, and other unanticipated
causes and may not be received in full during fiscal 2000. In
accordance with generally accepted accounting principles, revenue
recorded by the Company from a claim does not exceed the incurred
contract costs related to the claim. The Company currently has
approximately $12.0 million in claims filed with the U.S.
Government (including the aforementioned recorded claim and
accounts receivable balances), which are subject to negotiation
and audit by the U.S. Government. The U.S. Government has
responded to the claims with either denials or deemed denials
that the Company has appealed. In February 1999, the U.S.
Government made an unsolicitated offer for settlement which the
Company deemed inadequate.
International receivables billed:
International receivables billed includes $0.9 million
related to a certain contract with the Royal Thai Air Force
("RTAF").
In October 1993, the Company was notified by the RTAF that
the RTAF was terminating a certain $4.6 million simulator
contract with the Company. Although the Company had performed in
excess of 90% of the contract, the RTAF alleged a failure to
completely perform. In connection with this termination, the
RTAF made a call on a $229,000 performance bond, as well as a
draw on an approximately $1.1 million advance payment letter of
credit. Work under this contract had stopped while under
arbitration, but on October 1, 1996, the Thai Trade Arbitration
Counsel rendered its decision under which the contract was
reinstated in full and the Company was given a period of nine
months to complete the remainder of the work. Except as noted in
the award, the rights and obligations of the parties remain as
per the original contract including the potential invoking of
penalties or termination of the contract for delay. On
December 22, 1997, the Company successfully performed acceptance
testing and the unit passed with no discrepancy reports.
Although the contract was not completed in the time allotted, the
Company has requested an extension on the completion time due to
various extenuating circumstances, including allowable "force
majeure" events. The balance due on the contract is still under
review. However, the Company is not able to determine what, if
any, impact the extended completion period and the current
<PAGE 8> economic condition in Thailand will have upon the
receipt of final payment.
4. Inventories
Inventories are valued at the lower of cost or market using
the first-in, first out (FIFO) method and consist of the
following (net of reserves):
May 28, February 26,
1999 1999
(amounts in thousands)
Raw materials $ 494 $ 388
Work in Process 4,076 2,730
$4,570 $3,118
5. Subordinated Debt and Preferred Stock
The components of the subordinated debt and preferred stock
at May 28, 1999 and February 26, 1999, were as follows:
May 28, 1999 February 26, 1999
Subordinated Preferred Subordinated Preferred
Debt Stock Debt Stock
(amounts in thousands)
Face value $4,000 $0 $4,000 $2,500
Deferred
financing
costs (311) 0 (311) (208)
Amortization
of finance
costs 96 - 85 -
Accretion of
preferred
stock - 0 - 80
3,785 0 3,774 2,372
Debt issued
for acqui-
sition 350 0 350 0
Total $4,135 $0 $4,124 $2,372
On February 26, 1999, the Company issued a redemption notice
to redeem the outstanding 25,000 shares of Series A Preferred
Stock in their entirety. On March 25, 1999, the Company received
notice that Sirrom Capital Corporation had exercised its
conversion rights to convert its 25,000 shares of Series A
Preferred Stock into the Company's common shares. Consequently,
on April 19, 1999, the Series A Preferred Stock was retired and
666,666 shares of common stock were issued to Sirrom Capital
Corporation. Concurrent with this transaction, the Company
charged retained earnings for $128 representing the difference
between carrying amount and face value of the Preferred Stock.
<PAGE 9>
6. Stockholders' Equity
The components of stockholders' equity at May 28, 1999 and
February 26, 1999 were as follows:
<TABLE>
<CAPTION>
Common Stock Additional Foreign Retained
Shares Amount Capital Currency Earnings Total
<S> <C> <C> <C> <C> <C> <C>
(amounts in thousands, except share information)
Balance, February 26, 1999 3,083,206 $308 $3,240 $21 $7,461 $11,030
Net income for three month period ended
May 28, 1999 - - - - 835 835
Stock Split effective May 28, 1999 3,083,206 - - -
Dividend on Preferred stock - - - - (38) (38)
Accretion of preferred stock - - - - (128) (128)
Shares issued in connection with
conversion of Preferred Stock 666,666 33 2,467 - - 2,500
Shares issued in connection with employee
stock purchase and stock option plans 7,050 1 13 - - 14
Foreign currency exchange adjustments - - - (7) - (7)
Balance at May 28, 1999 6,840,128 $342 $5,720 $14 $8,130 $14,206
</TABLE>
7. Acquisition of ETC-PZL Aerospace Industries, Ltd.
On April 21, 1998, ETC acquired 65% ownership of MP-PZL
Aerospace Industries, Ltd. ("MP-PZL"), a simulation and advanced
training device manufacturing company located in Warsaw, Poland
for $375,000 in cash, a 8% interest-only three-year note payable
for $350,000 and 55,000 shares of ETC's common stock. MP-PZL
was subsequently renamed ETC-PZL Aerospace Industries, Ltd.
("ETC-PZL"). ETC's cost for this acquisition was $1,220,000 and
has been recorded in the accompanying balance sheet under the
purchase method of accounting for business combinations. In
connection with the acquisition, the Company recorded goodwill
of $662,000 and a minority interest of $300,000. Amortization
expense was $8 and $0 respectively for the three month periods
ending May 28, 1999 and May 29, 1998. Additionally, accumulated
amortization was $33 and $25, respectively, at May 28, 1999 and
February 26, 1999. ETC-PZL's fiscal period ends December 31,
1999. The results of ETC-PZL for the period January 1, 1999
through March 31, 1999 have been included in ETC's results of
operations for the three months ended May 28, 1999. On a pro
forma basis, had the Company consolidated the results of ETC-PZL
in the prior fiscal period, the following comparisons would
result:
Three months ended:
May 28, May 29, May 29,
1999 1998 1998
(pro forma)
(amounts in thousands, except
share and per share data)
<PAGE 10>
Net Sales 8,295 7,460 7,836
Gross Profit 3,418 4,711 4,821
Operating Income 1,426 999 918
Net Income 835 464 430
Per share information:
Income available to
common shareholders $ 669 $ 386 $ 352
Income per share:
basic $ 0.11 $ 0.07 $ 0.07
Income per share:
diluted $ 0.10 $ 0.07 $ 0.06
Number of shares:
basic 6,293,000 5,180,000 5,180,000
Number of shares:
diluted 6,925,000 5,620,000 5,620,000
8. Reporting Comprehensive Income
In June 1997, the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standards
("SFAS") No. 130, "Reporting Comprehensive Income." SFAS No. 130
establishes standards to provide prominent disclosure of
comprehensive income items. Comprehensive income is the change
in equity of a business enterprise during a period from
transactions and other events and circumstances from non-owner
sources. SFAS No. 130 is effective for all periods beginning
after December 15, 1997. Effective February 28, 1998, the
Company adopted SFAS No. 130 which had no material impact on the
Company's consolidated financial position or results of
operation.
9. Business Segment Presentation:
In June 1997, FASB issued SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information." SFAS No. 131
requires that public business enterprises report certain
financial information about operating segments in the complete
sets of financial statements of the enterprise and in condensed
financial statements of interim periods issued to shareholders.
It also requires that public business enterprises report certain
information about their products and services, the geographic
areas in which they operate and their major customers. SFAS No.
131 is effective for all periods beginning after December 15,
1997. Effective February 28, 1998, the Company adopted SFAS No.
131 which had no impact on the Company's consolidated financial
position or results of operation.
10. Derivative Instruments and Hedging Activity
In June 1998, FASB issued SFAS No. 133, "Accounting and
Derivative Instruments and Hedging Activity." SFAS No. 133
establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments imbedded in
other contracts and for hedging activities. It requires that an
<PAGE 11> entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure
those instruments as fair value. If certain conditions are met,
a derivative may be specifically designated as a hedge. The
accounting for changes in the fair value of a derivative (gains
and losses) depends on the intended use of the derivative and
resulting designation. SFAS No. 133 is effective for all fiscal
quarters of fiscal years beginning after June 15, 1999. Earlier
application is permitted only as of the beginning of any fiscal
quarter. The Company is currently reviewing the provisions of
SFAS No. 133.
<PAGE 12>
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition
Certain statements contained herein constitute "forward-
looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements
include but are not limited to: statements regarding future
product development, technological advances and market acceptance
of products. Such forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause
the actual results, performance or achievements of the Company,
or industry results, to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among other
things, general economic and business conditions, competition,
technological advances, political unrest in customer countries,
contract cancellations and other risk factors that are detailed
in this document and in other periodic reports and registration
statements filed by the Company with the Securities and Exchange
Commission. All forward-looking statements included in this
document are based on information available to the Company on the
date hereof, and the Company assumes no responsibility to update
any such forward-looking statements. Accordingly, past results
and trends should not be used by investors to anticipate future
results or trends.
Results of Operations
Three months ended May 28, 1999 compared to May 29, 1998.
The Company had net income of $835,000, or $.10 per share
(diluted, post-split), for the three months ended May 28, 1999,
versus net income of $464,000, or $.07 per share (diluted,
post-split), for the corresponding first quarter of fiscal 1999.
Sales for the quarter were $8,295,000, an increase of $835,000 or
11% over the corresponding prior period. The primary contributor
to the sales increase was international contracts for the
Company's Aircrew Training Systems. Overall, international sales
were up $1,661,000, 32% over the prior period, and represented
83% of the Company's total sales, up from 70% a year ago. Sales
of the Company's Aircrew Training Systems increased $849,000, or
14%, primarily reflecting the international activity.
Gross profit increased $669,000, or 24%, reflecting higher
sales at a higher gross margin rate. As a percentage of sales,
gross profit was 41%, compared to 37% for the same period a year
ago.
Selling and administrative expenses increased $208,000, or
13%, primarily reflecting the addition of local expenses for the
Company's Polish subsidiary acquired in April 1998. Selling and
administrative expenses were 23% of revenues for the three months
ended May 28, 1999, which approximated the prior period rate.
<PAGE 13>
Research and development expenses were $122,000, an increase
of $34,000, or 39%, from the prior period reflecting additional
product development primarily in the hyperbaric line.
Interest and other fees were down from the prior period
reflecting reduced interest charges on reduced cash borrowings.
The Company's tax rate approximates the statutory rate.
Liquidity and Capital Resources
During the three month period ended May 28,1999, the Company
generated $1,548,000 of cash from operating activities. This was
primarily a result of a reduction in costs and estimated earnings
in excess of billings on uncompleted long-term contracts, a
reduction in accounts receivable and cash generated from net
income. Strong collections on large percentage-of-completion
contracts as well as other billings was the primary contributor
to the cash generation. Partial offsets were a build-up in
inventory reflecting the production cycle, a reduction in
billings in excess of costs and estimated earnings on uncompleted
long-term contracts, and a reduction in customer deposits.
Investment activities consisted solely of purchases for
capital equipment.
Financing activities were minimal and consisted primarily of
dividend payments on preferred stock for a partial period in the
quarter. On April 19, 1999, the Series A Preferred Stock was
converted into common stock. Thus, the Company's obligation to
make dividend payments on the Series A Preferred Stock ceased as
of that date. On May 31, 1999, the Company's revolving credit
agreement with its lender expired, although there were no cash
borrowings outstanding and the Company had a significant cash
balance. The lender has indicated its intention to renew the
agreement for at least one year.
The Company's sales backlog at May 28, 1999, and
February 26, 1999 for work to be performed and revenue to be
recognized under written agreements after such dates was
approximately $35.2 million and $33.5 million, respectively.
Year 2000 Disclosures
The majority of the Company's information technology and
non-information technology systems are Year 2000 compliant. The
Company presently anticipates that the remainder of the Company's
systems will be Year 2000 compliant by September 1999. The
Company is in the process of investigating its supply-chain.
The Company has expended $3,000 in the three-month period
ended May 28, 1999 with respect to Year 2000 compliance, and
expects to incur approximately $86,000 of additional expenses to
complete the compliance process.
<PAGE 14>
The Company's most likely worst case Year 2000 scenario
would be to lose the Company's accounting and network
applications and PC's in the Company's main facility located in
Southampton, Pennsylvania. If this event occurs, the Company will
be able to continue its manufacturing activities and would
manually proceed to perform other tasks and activities. The
Company has a written contingency plan to address potential Year
2000 problems.
<PAGE 15>
PARt II - OTHER INFORMATION
Item 1. Legal Proceedings
In June 1999, a lawsuit commenced against the Company in
April 1997, in the United States District Court for the District
of Puerto Rico by an employee of a customer who claimed to have
been injured as a result of an alleged malfunction of a
sterilizer manufactured by the Company was settled with no
material impact on the Company.
Item 2. Changes in Securities
The constituent instruments defining the rights of the
holders of any class of securities were not modified nor were the
rights evidenced by any class of registered securities materially
limited or qualified during the period covered by this report.
Item 3. Defaults Upon Senior Securities
No defaults occurred during the period covered in this
report.
Item 4. Submission of Matters to Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
3.1 Articles of Incorporation (Incorporated herein by
reference to Exhibit 3.1 to the Registrants'
Annual Report on Form 10-KSB for the fiscal year
ended February 28, 1997).
3.2 Bylaws (Incorporated herein by reference to
Exhibit 3 (ii) to the Registrant's Annual Report
on Form 10-K for the fiscal year ended February
25, 1994).
27 Financial Schedule Data
(b) Reports on Form 8-K
None
<PAGE 16>
Signatures
Pursuant to the requirements of the Securities Act of 1934,
the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
ENVIRONMENTAL TECTONICS CORPORATION
(Registrant)
Date: July 12, 1999 By: /s/ Duane Deaner
Duane Deaner
Chief Financial Officer
(authorized officer and
principal financial officer)
<PAGE 17>
EXHIBIT INDEX
3.1 Articles of Incorporation (Incorporated herein by
reference to Exhibit 3.1 to the Registrants' Annual
Report on Form 10-KSB for the fiscal year ended
February 28, 1997).
3.2 Bylaws (Incorporated herein by reference to Exhibit 3
(ii) to the Registrant's Annual Report on Form 10-K for
the fiscal year ended February 25, 1994).
27 Financial Schedule Data
<PAGE 18>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-25-2000
<PERIOD-END> MAY-28-1999
<CASH> 6,689
<SECURITIES> 0
<RECEIVABLES> 8,689
<ALLOWANCES> 360
<INVENTORY> 4,570
<CURRENT-ASSETS> 30,013
<PP&E> 10,475
<DEPRECIATION> 7,652
<TOTAL-ASSETS> 34,788
<CURRENT-LIABILITIES> 15,343
<BONDS> 0
0
0
<COMMON> 3,548
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 34,788
<SALES> 8,295
<TOTAL-REVENUES> 8,295
<CGS> 4,877
<TOTAL-COSTS> 1,992
<OTHER-EXPENSES> 18
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 177
<INCOME-PRETAX> 1,231
<INCOME-TAX> 431
<INCOME-CONTINUING> 835
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 835
<EPS-BASIC> 0.11
<EPS-DILUTED> 0.10
</TABLE>
