SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20459
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended September 30, 1995 Commission File Number I-4383
ESPEY MFG. & ELECTRONICS CORP.
(Exact name of registrant as specified in charter)
NEW YORK 14-1387171
(State of Incorporation) (I.R.S. Employer's Ident No.)
P. O. Box 422, Saratoga Springs, New York 12866
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, include area code 518-584-4100
Number of shares outstanding of issuer's class of common stock
$.33-1/3 par value as at the end of the period covered by this
report 1,338,741 .
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
ESPEY MFG. & ELECTRONICS CORP.
I N D E X
PART I FINANCIAL INFORMATION PAGE
Item 1 Financial Statments:
Balance Sheets - September 30, 1995 1
and June 30, 1995
Statements of Earnings - Three Months 3
Ended September 30, 1995 and 1994
Statements of Cash Flows - Three Months 4
Ended September 30, 1995 and 1994
Notes to Financial Statements 5
September 30, 1995 and 1994
Item 2 Management's Discussion and Analysis of 7
Financial Condition and Results of
Operations.
PART II OTHER INFORMATION 9
SIGNATURES 10
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<TABLE>
<CAPTION>
ESPEY MFG. & ELECTRONICS CORP.
Balance Sheets
September 30, 1995 and June 30, 1995
A S S E T S
Unaudited
1995 1995
September 30 June 30
<S> <C> <C>
CURRENT ASSETS:
Cash $ 126,931 $ 231,675
Short-term investments at cost
(market value September 30, 1995,
$500,000 and June 30, 1995,
$1,497,681) 500,000 1,467,540
Total Cash and Short-term
Investments 626,931 1,699,215
Marketable investment securities - current 11,375,203 10,454,464
Trade accounts receivable net of
$3000 allowance September 30, 1995
and June 30, 1995 1,707,618 1,925,778
Other receivables 320,949 20,627
NET RECEIVABLES 2,028,567 1,946,405
Inventories:
Raw materials and supplies 275,092 400,778
Work-in-process 1,251,000 1,078,169
Costs relating to contracts in
process, net of progress payments
of $1,297,800 - September 30, 1995 and
$2,121,800 - June 30,1995 9,646,106 8,769,378
NET INVENTORIES 11,172,198 10,248,325
Income tax refund receivable 378,547 410,467
Prepaid expenses and other current assets 109,545 385,033
TOTAL CURRENT ASSETS 25,690,991 25,143,909
MARKETABLE INVESTMENT SECURITIES 100,000 100,000
PROPERTY, PLANT AND EQUIPMENT AT COST 11,486,517 11,464,636
Less: Accumulated depreciation and
amortization (7,973,746) (7,868,827)
NET PROPERTY, PLANT AND EQUIPMENT 3,512,771 3,595,809
TOTAL $ 29,303,762 $ 28,839,718
- 1 - (Continued)
<PAGE>
<CAPTION>
ESPEY MFG. & ELECTRONICS CORP.
Balance Sheets, Continued
September 30, 1995 and June 30, 1995
LIABILITIES AND STOCKHOLDERS' EQUITY
Unaudited
1995 1995
September 30 June 30
<S> <C> <C>
CURRENT LIABILITIES:
Accounts Payable $ 898,890 $ 596,823
Accrued expenses:
Salaries, wages and commissions 170,986 104,269
Employees' insurance costs 47,620 50,293
ESOP payable 106,572 -
Other 13,353 14,588
Payroll and other taxes withheld
and accrued 73,664 141,513
Dividends payable 937,119 -
Deferred income taxes - current 41,682 75,915
TOTAL CURRENT LIABILITIES 2,289,886 983,401
Deferred income taxes 48,947 30,697
TOTAL LIABILITIES 2,338,833 1,014,098
STOCKHOLDERS' EQUITY:
Common stock, par value .33-1/3 per
share. Authorized 2,250,000 shares;
issued 1,514,937 shares September 30, 1995
and June 30, 1995. 504,979 504,979
Capital in excess of par value 10,496,287 10,496,287
Retained earnings 23,884,592 24,678,208
34,885,858 35,679,474
Less: Common stock subscribed ( 5,027,962) ( 5,027,962)
Cost of 176,196 shares on September
30, 1995 and 171,489 shares on
June 30, 1995 of common stock in
treasury ( 2,892,967) ( 2,825,892)
TOTAL STOCKHOLDERS' EQUITY 26,964,929 27,825,620
TOTAL $ 29,303,762 $ 28,839,718
<FN>
<F1>
See accompanying notes to financial statements
</FN>
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<CAPTION>
ESPEY MFG. & ELECTRONICS CORP.
Statements of Earnings
Three Months Ended September 30, 1995 and 1994
Unaudited
Three Months
September 1995 September 1994
<S> <C> <C>
Net Sales $ 4,000,805 $ 4,161,569
Cost of sales 3,596,130 3,547,215
GROSS PROFIT 404,675 614,354
Selling, general and administrative
expenses 411,535 415,664
OPERATING INCOME ( 6,860) 198,690
Other Income:
Interest income and dividends 159,462 146,439
Sundry income 6,838 2,636
166,300 149,075
Earnings before income taxes 159,440 347,765
Provision for income taxes 61,000 173,000
NET EARNINGS $ 98,440 $ 174,765
Earnings per Share:
Net earnings $ .07 $ .13
Average number of shares outstanding 1,341,350 1,349,405
<FN>
<F1>
See accompanying notes to financial statements
</FN>
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<CAPTION>
ESPEY MFG. & ELECTRONICS CORP.
Statements of Cash Flows
Three Months Ended September 30, 1995 and 1994
Unaudited
September 30
1995 1994
<S> <C> <C>
Cash Flows From Operating Activities:
Net earnings $ 98,440 $ 174,765
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Tax effect of dividends on unallocated ESOP shares 45,063 50,070
Depreciation 104,919 102,073
Changes in assets and liabilities:
Decrease (increase) in receivables, net ( 82,162) ( 1,301,772)
Decrease (increase) in inventories, net ( 923,873) 761,620
Decrease (increase) in other current assets 275,488 94,432
Decrease (increase) in income tax refund receivable 31,920 143,691
Increase (decrease) in accounts payable 302,067 229,842
Increase (decrease) in accrued salaries, 66,717 67,353
wages and commissions
Increase (decrease) in accrued employee ( 2,673) ( 14,096)
insurance costs
Increase (decrease) in other accrued expenses ( 1,235) ( 3,390)
Increase (decrease) in payroll & other ( 67,849) ( 68,926)
taxes withheld and accrued
Decrease in deferred income taxes ( 15,983) ( 20,761)
Increase (decrease) in accrued ESOP contributions 106,572 108,148
Net cash provided by (used by)
operating activities ( 62,589) 323,049
Cash Flows From Investing Activities:
Additions to property, plant & equipment ( 21,881) ( 341,819)
Proceeds from sale of marketable investment securities 971,174 -
Purchases of marketable investment securities ( 1,891,913) -
Net cash provided by (used in)
investing activities ( 942,620) ( 341,819)
Cash Flows From Financing Activities:
Purchase of treasury stock ( 67,075) ( 31,837)
Net cash used in
financing activities ( 67,075) ( 31,837)
Increase (decrease) in cash and short-term investments ( 1,072,284) ( 50,607)
Cash and short-term investments, beginning of period 1,699,215 13,469,584
Cash and short-term investments, end of period $ 626,931 $ 13,418,977
Income Taxes Paid $ - $ -
<FN>
<F1>
See accompanying notes to financial statements.
</FN>
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<PAGE>
ESPEY MFG. & ELECTRONICS CORP.
Notes to Financial Statements
___________________
1.In the opinion of management, the accompanying unaudited financial statements
contain all adjustments (consisting of only normal recurring accruals)
necessary to present fairly the financial position of the Company as of
September 30, 1995, and the results of operations for each of the three
month periods ended September 30, 1995 and 1994.
2.The earnings per share computations for September 30, 1995 were based on
1,341,350 shares and on 1,349,405 shares for September 30, 1994. These
represent the average number of shares outstanding for each respective
period.
3.Revenues and other income include interest on Certificates of Deposit and
Treasury Bills in addition to dividends on preferred stocks.
4.There were no material unusual charges or credits to operations or a
change in accountants during the most recently completed quarter which
would require the filing of a Form 8-K.
5.There were no securities sold by the Company during the current quarter which
were not registered under the Securities Act of 1934 in reliance upon an
exemption from registration provided in Section 4 (2) of the Act.
6.For purposes of the statements of cash flows, the Company considers all liquid
debt instruments with original maturities of three months or less to be cash
equivalents.
7.In fiscal 1989 the Company established an Employee Stock Ownership Plan (ESOP)
for eligible non-union employees. The ESOP used the proceeds of a loan from
the Company to purchase 316,224 shares of the Company's common stock for
approximately $8.4 million and the Company contributed approximately $400,000
to the ESOP which was used by the ESOP to purchase an additional 15,000 shares
of the Company's common stock.
The loan from the Company to the ESOP is repayable in annual installments of
$1,039,605, including interest, through June 30, 2004. Interest is payable
at a rate of 9% per annum. The Company's receivable from the ESOP is recorded
as common stock subscribed in the accompanying balance sheets.
- 5 -
<PAGE>
Each year, the Company will make contributions to the ESOP which will be used
to make loan interest and principal payments. With each loan and interest
payment, a portion of the common stock will be allocated to participating
employees. As of September 30, 1995 there were 119,680 shares allocated to
participants.
8.The Company adopted the provisions of Statement of Financial Accounting
Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt and
Equity Securities," at July 1, 1994. Upon adoption of SFAS No. 115, at July
1, 1994, all amounts included in short-term investments matured within three
months of the adoption date. Therefore no amounts were transferred to
marketable investment securities upon adoption and there was no cumulative
effect from this change.
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<PAGE>
ESPEY MFG. & ELECTRONICS CORP.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Sales for the three months ended September 30, 1995 were $4,000,805 as compared
to $4,161,569 for the same period in 1994. Sales volume is largely dependent on
both lead times required for new orders and the specific delivery needs of our
customers.
Net earnings for the three month period were $98,440, or $.07 per share compared
to $174,765, or $.13 per share for the corresponding period of last year.
Most of the contracts shipped in the current quarter carried a lower gross
profit margin than those shipped last year. As a result, cost of sales rose to
90% compared to the 85% reflected last year. This increase is the primary
reason for the decrease in net profits. As previously indicated in prior
reports we are making every effort to alleviate this situation, primarily by
attempting to introduce products and services of a more proprietary nature into
both the military and industrial marketplace. The President's message contained
in the Annual Report addressed some of our specific areas of concentration.
Selling and G & A expenses decreased marginally during the current period.
Although our investment base was somewhat lower during the current period,
investment income rose by approximately 10% due to a continuing increase in
short-term interest rates. The Company does not feel that there is any risk
associated with its investment policy, since approximately 90% of our
investments are represented by U.S. Government T-Bills, with the balance
represented by Certificates of Deposit and one preferred stock issue in a major
utility.
Since the debt of the Company's ESOP is not to an outside party, we have
eliminated from the Statements of Earnings the offsetting items of Interest
Income and Interest Expense relating to the ESOP. We have also eliminated the
offsetting accruals from the Balance Sheets.
The Company, when possible, funds all of its operations including Financing
Activities and Investing Activities with cash flows resulting from Operating
Activities. It is felt that in the future, funds from Operating Activities will
continue to be adequate to meet these needs. For the current three month period
capital expenditures were approximately $22,000.
During the three month period ended September 30, 1995 the Company repurchased
4,707 shares of its common stock.
Under existing authorizations, as of September 30, 1995, funds in the amount of
$1,016,242 were available for the continuing repurchase of the Company's shares.
The backlog as of September 30, 1994 was $18,055,689. The backlog as of
September 30, 1995 was $18,319,247.
A dividend in the amount of $.70 per share was declared payable November 21,
1995 to shareholders of record on October 27, 1995.
- 7 -
<PAGE>
ESPEY MFG. & ELECTRONICS CORP.
PART II: Other Information and Signatures
Item 4. Submission of Matters to a Vote of Security Holders
None during the quarter.
Item 5. Other Information
None during the quarter.
Item 6. Exhibits and Reports on Form 8-K
None during the quarter.
- 8 -
S I G N A T U R E S
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.
ESPEY MFG. & ELECTRONICS CORP.
Sol Pinsley, President
Herbert Potoker, Treasurer and
Chief Financial Officer
06 November 1995
Date
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 1ST
QUARTER 10-Q FILING AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> SEP-30-1995
<CASH> 126,931
<SECURITIES> 11,375,203
<RECEIVABLES> 2,028,567
<ALLOWANCES> 0
<INVENTORY> 11,172,198
<CURRENT-ASSETS> 25,690,991
<PP&E> 11,486,517
<DEPRECIATION> 7,973,746
<TOTAL-ASSETS> 29,303,762
<CURRENT-LIABILITIES> 2,338,833
<BONDS> 0
<COMMON> 504,979
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 29,303,762
<SALES> 4,000,805
<TOTAL-REVENUES> 4,000,805
<CGS> 2,596,130
<TOTAL-COSTS> 2,596,130
<OTHER-EXPENSES> 411,535
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 159,440
<INCOME-TAX> 61,000
<INCOME-CONTINUING> 98,440
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 98,440
<EPS-PRIMARY> .07
<EPS-DILUTED> 0
