SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20459
FORM 10-Q/A
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended September 30, 1996 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 1,111,220 .
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
<PAGE>
This Amendment to the Form 10-Q filed with the United States Securities
and Exchange Commission on November 13, 1996, corrects the Statements of Cash
Flows for the three months ended September 30, 1996 and 1995.
<PAGE>
ESPEY MFG. & ELECTRONICS CORP.
I N D E X
PART I FINANCIAL INFORMATION PAGE
Item 1 Financial Statments:
Balance Sheets - September 30, 1996 1
and June 30, 1996
Statements of Earnings - Three Months 3
Ended September 30, 1996 and 1996
Statements of Cash Flows - Three Months 4
September 30, 1996 and 1995
Notes to Financial Statements 5
September 30, 1996 and 1995
Item 2 Management's Discussion and Analysis of 7
Financial Condition and Results of
Operations.
PART II OTHER INFORMATION 9
SIGNATURES 10
<PAGE>
<TABLE>
<CAPTION>
ESPEY MFG. & ELECTRONICS CORP.
Balance Sheets
September 30, 1996 and June 30, 1996
A S S E T S
Unaudited
1996 1996
September 30 June 30
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivelents $ 219,920 $ 1,112,767
Short-term investments at cost
(market value September 30, 1996,
$6,969,532 and June 30, 1996,
$4,577,305) 6,904,263 4,484,312
Total Cash and Short-term
Investments 7,124,183 5,597,079
Marketable investment securities - current 1,073,403 3,021,195
Trade accounts receivable net of
$3,000 allowance September 30, 1996
and June 30, 1996 3,826,767 1,556,404
Other receivables 500 18,177
Net Receivables 3,827,267 1,574,581
Inventories:
Raw materials and supplies 511,520 499,900
Work-in-process 2,823,110 1,561,742
Costs relating to contracts in
process 6,319,662 8,971,704
Net Inventories 9,654,292 11,033,346
Deferred income taxes 796 796
Prepaid expenses and other current assets 172,150 272,808
Total Current Assets 21,852,091 21,499,805
Deferred income taxes 43,920 9,088
PROPERTY, PLANT AND EQUIPMENT AT COST 11,923,814 11,813,137
Less: Accumulated depreciation and
amortization (8,538,999) (8,371,987)
Net Property, Plant and Equipment 3,384,815 3,441,150
Total $ 25,280,826 $ 24,950,043
- 1 - (Continued)
<PAGE>
<CAPTION>
ESPEY MFG. & ELECTRONICS CORP.
Balance Sheets, Continued
September 30, 1996 and June 30, 1996
LIABILITIES AND STOCKHOLDERS' EQUITY
Unaudited
1996 1996
September 30 June 30
CURRENT LIABILITIES:
<S> <C> <C>
Accounts Payable $ 133,150 $ 158,631
Accrued expenses:
Salaries, wages and commissions 168,884 116,351
Employees' insurance costs 48,310 54,739
ESOP payable 110,249 -
Other 11,397 17,440
Payroll and other taxes withheld
and accrued 70,985 156,890
Dividends payable 777,854 -
Income taxes payable 252,297 119,857
TOTAL CURRENT LIABILITIES 1,573,126 623,908
STOCKHOLDERS' EQUITY:
Common stock, par value .33-1/3 per
share. Authorized 2,250,000 shares;
issued 1,514,937 shares September 30, 1996
and June 30, 1996. 504,979 504,979
Capital in excess of par value 10,496,287 10,496,287
Retained earnings 23,813,997 24,316,400
34,815,263 35,317,666
Less: Common stock subscribed ( 4,469,299) ( 4,469,299)
Cost of 403,717 shares on September
30, 1996 and 396,291 shares on
June 30, 1996 of common stock in
treasury ( 6,638,264) ( 6,522,232)
TOTAL STOCKHOLDERS' EQUITY 23,707,700 24,326,135
TOTAL $ 25,280,826 $ 24,950,043
<FN>
See accompanying notes to financial statements
</FN>
- 2 -
<PAGE>
<CAPTION>
ESPEY MFG. & ELECTRONICS CORP.
Statements of Earnings
Three Months Ended September 30, 1996 and 1995
Unaudited
Three Months
September 1996 September 1995
<S> <C> <C>
Net Sales $ 4,586,892 $ 4,000,805
Cost of sales 3,888,874 3,596,130
GROSS PROFIT 698,018 404,675
Selling, general and administrative
expenses 447,335 411,535
OPERATING INCOME (LOSS) 250,683 ( 6,860)
Other Income:
Interest income 124,661 159,462
Sundry income 375 6,838
125,036 166,300
Earnings before income taxes 375,719 159,440
Provision for income taxes 147,000 61,000
NET EARNINGS $ 228,719 $ 98,440
Earnings per Share:
Net earnings $ .21 $ .07
Average number of shares outstanding 1,114,610 1,341,350
<FN>
See accompanying notes to financial statements
</FN>
-3-
<PAGE>
<CAPTION>
ESPEY MFG. & ELECTRONICS CORP.
Statements of Cash Flows
Three Months Ended September 30, 1996 and 1995
Unaudited
September 30
1996 1995
Cash Flows From Operating Activities:
<S> <C> <C>
Net earnings $ 228,719 $ 98,440
Adjustments to reconcile net earnings to net
cash used in operating activities:
Tax effect of dividends on unallocated ESOP shares 46,732 45,063
Depreciation 167,012 104,919
Changes in assets and liabilities:
Increase in receivables, net ( 2,252,686) ( 82,162)
Decrease (increase) in inventories, net 1,379,054 ( 923,873)
Decrease in other current assets 100,658 275,488
Decrease in income tax refund receivable - 31,920
Increase (decrease) in accounts payable ( 25,481) 302,067
Increase in accrued salaries, wages and commissions 52,533 66,717
Decrease in accrued employee insurance costs ( 6,429) ( 2,673)
Decrease in other accrued expenses ( 6,043) ( 1,235)
Decrease in payroll & other taxes withheld and accrued ( 85,905) ( 67,849)
Decrease in deferred income taxes ( 34,832) ( 15,983)
Increase in income taxes payable 132,440 -
Increase in accrued ESOP contributions 110,249 106,572
Net cash used in
operating activities ( 193,979) ( 62,589)
Cash Flows From Investing Activities:
Additions to property, plant & equipment ( 110,677) ( 21,881)
Proceeds from maturity of marketable investment securities 2,921,195 971,174
Purchases of marketable investment securities ( 973,403) ( 1,891,913)
Net cash provided by (used in)
investing activities 1,837,115 ( 942,620)
Cash Flows From Financing Activities:
Purchase of treasury stock ( 116,032) ( 67,075)
Net cash used in
financing activities ( 116,032) ( 67,075)
Increase (decrease) in cash and short-term investments 1,527,104 ( 1,072,284)
Cash and short-term investments, beginning of period 5,597,079 1,699,215
Cash and short-term investments, end of period $ 7,124,183 $ 626,931
Income Taxes Paid $ 2,660 $ -
<FN>
See accompanying notes to financial statements.
</FN>
- 4 -
<PAGE>
</TABLE>
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, 1996, and
the results of operations for each of the three months ended
September 30, 1996 and 1995 and cash flows for each of the three
months ended September 30, 1996 and 1995.
2. The earnings per share computations for September 30, 1996 were
based on 1,114,610 shares and on 1,341,350 shares for September
30, 1995. These represent the average number of shares
outstanding for each respective period.
3. Other income consists principally of interest on Certificates of
Deposit, Treasury Bills and money market accounts.
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.
- 5 -
<PAGE>
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.
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, 1996 there were 132,571 shares allocated to participants.
8. The Company adopted the provisions of SFAS No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets
to Be Disposed Of", as of July 1, 1995. This accounting standard
required that certain long-lived assets be reviewed for
impairment when events or circumstances indicate that the
carrying amount of the assets may not be recoverable. If such
review indicates that the carrying value is written down to fair
value. Long-lived assets to be disposed of are reported at the
lower of carrying amount or fair value less cost to sell. The
adoption of this accounting standard had no effect on the
financial position or results of operations of the Company.
- 6 -
<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, 1996 were
$4,586,892 as compared to $4,000,805 for the same period
in 1995. 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 $228,719 or
$.21 per share compared to $98,440 or $.07 per share for
the corresponding period of last year.
Many of the contracts shipped in the current quarter
carried a somewhat higher gross profit margin than those
shipped during the corresponding quarter of last year. As
a result, cost of sales dropped to 85% compared to the
90% reflected last year. This factor, together with the
increase in sales, are the primary reasons for the
increase in net profits. In an effort to continue this
positive trend we have enhanced and expanded our Sales
and Marketing departments. Various specifics concerning
the products we are concentrating on are addressed in
both the President's message acompanying our 1996 Annual
Report and in our most recently filed Form 10K.
Management has confidence that the Company can accomplish
its goals.
Selling and G & A expenses show an increase of
approximately 9% during the current period. This is
principally due to the reclassification of certain
salaries from manufacturing expenses to general and
administrative expenses.
In the Statements of Cash Flows the decrease in
inventories is in line with the increase in Sales. The
increase in Accounts Receivable is due to a large volume
of shipments made toward the end of the quarter. Most of
these receivables have already been paid, and the Company
feels that its reserve is adequate.
Investment income declined by approximately 22% for the
current three month period primarily due to a reduction
in our investment base brought about by a major
repurchase of our common stock during the latter part of
our last fiscal year. The Company does not feel that
there is any risk associated with its investment policy,
since the majority of our investments are represented by
U.S. Government securities, Certificates of Deposit and
money market accounts.
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.
-7-
<PAGE>
The Company, when possible, funds all of its operations
including Financing Activities and Investing Activities
with cash flows resulting from Operating Activities. It
is currently felt that during the next fiscal year, funds
from Operating Activities will continue to be adequate to
meet these needs. For the current three month period
capital expenditures were approximately $110,677.
During the three month period ended September 30, 1996
the Company repurchased 7,426 shares of its common stock.
Under existing authorizations, as of September 30, 1996,
funds in the amount of $1,883,969 were available for the
continuing repurchase of the Company's shares.
The backlog as of September 30, 1995 was $18,319,247. The
backlog as of September 30, 1996 was $12,218,320.
Although customer order patterns are inherently difficult
to predict, the Company believes that it will continue to
obtain contracts consistent with our past experience. We
are currently anticipating a new contract for our high
power radar transmitters, which, if received, along with
our other anticipated new business will result in
substantially increasing our backlog.
A dividend in the amount of $.70 per share was declared
payable November 22, 1996 to shareholders of record on
October 28, 1996.
-8-
<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
On August 1, 1996 Mr. Joseph Canterino assumed the duties
of President and Chief Executive Officer of the Company
in accordance with the Form 8-K described below.
Item 6. Exhibits and Reports on Form 8-K
On July 15, 1996 a Form 8-K was filed with an attached
press release dated July 10, 1996 indicating that Mr. Sol
Pinsley would retire as President and Chief Executive
Officer but pursuant to his employment contract would
remain as Chairman of the Board and a non-executive
officer employee of the Corporation at a reduced
compensation level. Mr. Joseph Canterino, Vice-President
of Manufacturing, would assume the duties of President
and Chief Executive Officer.
- 9 -
<PAGE>
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.
Joseph Canterino, President
05 December 1996
Date
- 10 -
<PAGE>
<TABLE> <S> <C>
<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-30-1997
<PERIOD-END> SEP-30-1996
<CASH> 7,124,183
<SECURITIES> 1,073,403
<RECEIVABLES> 3,827,267
<ALLOWANCES> 0
<INVENTORY> 9,654,292
<CURRENT-ASSETS> 21,852,091
<PP&E> 11,923,814
<DEPRECIATION> 8,538,999
<TOTAL-ASSETS> 25,280,826
<CURRENT-LIABILITIES> 1,573,126
<BONDS> 0
0
0
<COMMON> 504,979
<OTHER-SE> 23,707,700
<TOTAL-LIABILITY-AND-EQUITY> 25,280,826
<SALES> 4,586,892
<TOTAL-REVENUES> 4,586,892
<CGS> 3,888,874
<TOTAL-COSTS> 3,888,874
<OTHER-EXPENSES> 447,335
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 375,719
<INCOME-TAX> 147,000
<INCOME-CONTINUING> 228,719
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 228,719
<EPS-PRIMARY> .21
<EPS-DILUTED> 0
</TABLE>
