<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter ended December 31, 1996 Commission file number 1-7404
AEIRE Corp.
(Exact name of registrant as specified in its charter)
Massachusetts 04-2156392
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
40 WASHINGTON STREET, WESTBOROUGH, MASSACHUSETTS 01581
(Address of principal executive offices)
Registrant's telephone number, including area code 508/366-8851
ALDEN ELECTRONICS, INC.
___________________________________________________________
Former name, former address and former fiscal year, if changed since last
report.
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, and (2) has been subject to such
filing requirements for the past 90 days.
Yes ___X____ No ______
Number of shares outstanding of each of the issuer's classes of common stock
as of the close of the period covered by this report.
Class A Common Stock -- 2,010,385 shares
Class B Common Stock -- 25,000 shares
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<TABLE>
PART I -- FINANCIAL INFORMATION
ITEM 1 -- FINANCIAL STATEMENTS
AEIRE CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
December 31 March 31
1996 1996
--------------- ----------------
(unaudited) (note)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 239,363 $ 209,438
Trade accounts receivable,
less allowance of $113,000 1,787,557 2,087,215
Inventories:
Finished Goods 261,360 435,153
Work in Process 266,141 1,080,012
Parts & Materials 159,507 207,606
--------------- ---------------
687,008 1,722,771
Prepaid Expenses 173,707 132,941
Deferred Income Tax Asset 20,000 20,000
Long-lived assets held for
disposal 962,695
Reserve for loss on sale of assets (1,320,000)
---------------- ---------------
TOTAL CURRENT ASSETS 2,550,330 4,172,365
PROPERTY, PLANT AND
EQUIPMENT
Land & Buildings 2,819,733 3,731,776
Equipment on Lease 282,176
Other Machinery and Equipment 7,748,327
---------------- ----------------
2,819,733 11,762,279
Less Allowance for depreciation 1,470,509 8,600,223
--------------- ----------------
1,349,224 3,162,056
Other assets 20,000 29,921
---------------- ----------------
$ 3,919,554 $ 7,364,342
================ ================
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PART I -- FINANCIAL INFORMATION
ITEM 1 -- FINANCIAL STATEMENTS
AEIRE CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31 March 31
1996 1996
---------------- ---------------
(unaudited) (note)
LIABILITIES AND
STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 230,557 $ 400,000
Accounts payable 845,140 1,480,823
Accrued expenses 624,138 714,433
Accrued warranty expenses 243,323 348,323
Deferred revenue 157,329 109,736
Other current liabilities 321,776 327,697
Current Portion - Long term debt 330,155
---------------- ---------------
TOTAL CURRENT LIABILITIES 2,422,263 3,711,167
DEFERRED INCOME TAXES 25,000 25,000
STOCKHOLDER'S EQUITY
Class A Common Stock, par value
$1 per share-- authorized 2,500,000
shares, issued 2,010,385 2,010,385 2,010,385
Class B Common Stock, without par
value-- authorized
and issued 25,000 shares 75 75
Additional paid-in capital 1,611,418 1,611,418
Retained earnings (2,119,484) 83,176
Currency translation adjustment (30,103) ( 76,879)
---------------- ---------------
1,472,291 3,628,175
---------------- ---------------
$ 3,919,554 $ 7,364,342
================ ===============
<FN>
Note: The balance sheet at March 31, 1996 was derived from the audited
financial statements at that date.
</TABLE>
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<TABLE>
AEIRE CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
<CAPTION>
Nine months ended Quarter Ended
December 31 December 31
---------------- ----------------
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
REVENUES
Net sales and
service revenues $ 6,278,069 $ 9,636,198 $ 1,974,988 $ 2,733,644
Income from leased
equipment 519,731 549,646 166,722 180,036
Interest income 5,277 17,040 2,241 734
------------ ------------ ------------ ------------
6,803,077 10,202,884 2,143,951 2,914,414
COSTS AND EXPENSES
Cost of products
sold and expenses
of leasing
equipment 5,166,355 8,484,909 1,502,537 3,070,610
Selling,
administrative
and general 2,406,235 3,156,151 586,330 993,338
Interest expense 71,589 104,217 17,559 27,405
Loss on sale or
write-down of
assets 1,351,786 766,886 1,320,600 766,886
------------ ------------ ------------ ------------
8,995,965 12,512,163 3,427,026 4,858,239
------------ ------------ ------------ ------------
EARNINGS (LOSS) BEFORE
INCOME TAXES (2,192,888) (2,309,279) (1,283,075) (1,943,825)
INCOME TAXES (BENEFIT) 9,770 72,905 ( 2,645) 47,034
------------ ------------ ------------ ------------
NET EARNINGS (LOSS) $(2,202,658) $(2,382,184) $(1,280,430) $(1,990,859)
============ ============ ============ ============
Net Earnings (loss)
per share $ ( 1.01) $ ( 1.09) $ ( 0.59) $ ( 0.91)
============ ============ ============ ============
<FN>
Note: No dividends were declared during the periods presented.
</TABLE>
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<TABLE>
AEIRE CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<CAPTION>
Nine Months Ended
December 31
----------------
1996 1995
---------------- ---------------
<S> <C> <C>
OPERATING ACTIVITIES
Net (loss) $ ( 2,202,658) $ ( 2,382,184)
Adjustments to reconcile net
earnings to net cash provided by
operating activities;
Depreciation & amortization 423,630 784,920
Provision for doubtful accounts 32,500
Provision for inventory and equipment
write-downs and loss on disposal of
assets 1,350,902 956,886
Provision for warranty costs 350,000
Decrease/(increase) in operating assets
and (decrease)/increase in
liabilities:
Accounts receivable 419,306 237,861
Refundable income taxes 98,000
Inventories 326,720 871,625
Other current assets ( 39,552) 17,793
Accounts payable, accrued
expenses and other
current liabilities ( 578,704) ( 153,495)
Deferred revenue 47,593 40,961
Foreign currency translation ( 12,010)
-------------- ---------------
NET CASH PROVIDED BY
(USED IN) OPERATING
ACTIVITIES ( 252,763) 842,857
INVESTING ACTIVITIES
Proceeds from sales of assets 944,677
Purchases of property, plant
and equipment ( 181,718) ( 406,997)
--------------- ---------------
NET CASH USED FOR
INVESTING ACTIVITIES 762,959 ( 406,997)
FINANCING ACTIVITIES
Principal payments on
long term debt and
Notes payable ( 499,598) ( 322,558)
Sale of treasury stock 2,086
--------------- ---------------
NET CASH USED FOR
FINANCING ACTIVITIES ( 499,598) ( 320,472)
--------------- ---------------
Effect of exchange rate changes
on cash equivalents 19,327 7,763
--------------- ---------------
INCREASE (DECREASE) IN
CASH AND CASH
EQUIVALENTS 29,925 123,151
Cash and cash equivalents at
beginning of period 209,438 143,238
--------------- ---------------
CASH AND CASH
EQUIVALENTS AT
END OF PERIOD $ 239,363 $ 266,389
=============== ===============
</TABLE>
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AEIRE CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996
NOTE A -- BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with the instructions to Form 10-Q and do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. The results
of operations for the period ended December 31, 1996 are not necessarily
indicative of results to be expected for the full fiscal year. For further
information, refer to the consolidated financial statements and footnotes
included in the Company's annual report on Form 10-K for the year ended March
31, 1996.
NOTE B -- Disposition of Assets
On January 31, 1997, AEIRE Corp. f/k/a Alden Electronics, Inc., pursuant to
an Asset Purchase Agreement of December 19, 1996, sold all of its operating
assets, consisting of its meteorological and imaging operations, to a company
affiliated with Platinum Equity Holdings, an investment company. The purchase
price included a cash payment of $125,000, a promissory note in the principal
amount of $125,000 and the assumption of obligations related to the assets
and operations acquired. The Company will continue to own its real property
located in Westborough, Massachusetts.
As of December 31, 1996 the Company has reclassified long-lived assets
relating to this transaction as current assets and recorded a $1,320,000
charge to operations to reflect the excess net recorded value of assets
sold (recorded value of assets sold less the recorded value of liabilities
assumed) over purchase price.
As part of the transaction, the Company changed its name from Alden
Electronics, Inc. to AEIRE Corp.
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<TABLE>
AEIRE CORP. AND SUBSIDIARIES
EXHIBIT - COMPUTATION OF EARNINGS PER SHARE
<CAPTION>
Nine Months Ended Quarter Ended
December 31 December 31
---------------- ----------------
1996 1995 1996 1995
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
Average number of
shares of Class A
Common Stock 2,010,385 2,010,385 2,010,385 2,010,385
Effect of conversion
of Class
B Common Stock 175,000 175,000 175,000 175,000
------------ ------------ ------------ ------------
Total 2,185,385 2,185,385 2,185,385 2.185,385
============ ============ ============ ============
Net earnings (loss) $(2,202,658) $(2,382,184) $(1,280,430) $(1,990,859)
============ ============ ============ ============
Net earnings per share $ (1.01) $ (1.09) $ (0.59) $ (0.91)
============ ============ ============ ============
</TABLE>
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AEIRE CORP. AND SUBSIDIARIES
ITEM 2 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Revenues for the quarter ended December 31, 1996 were $2,143,951 compared to
$2,914,414 for the same period in the prior year. The overall decrease in
revenues is attributable to the effects of discountinuing certain marine
electronics products during the quarter ended June 30, 1996 ($804,000 less in
the quarter ended December 31, 1996 when compared to the same period in the
prior year), reduced shipments of weather display terminals ($104,000 less
in the quarter) and reduced sales of paper ($250,000 less in the quarter).
These reductions were partially offset by increased revenues from the sales
of the Company's 9315CTP and 9315TRT printers, which experienced a $230,000
increase in sales over the same period in the prior year and increased service
revenues of $97,000 for the quarter.
Gross profit, as a percent of sales, was 29.9% for the quarter ended
December 31, 1996 compared to -5.36% for the same period in the prior year.
The 1995 margin was adversely effected by the recording of warranty reserves
for $350,000 and $190,000 in additional reserves for excess and obsolete
inventories. The 1996 margin also reflected improvement due to product mix.
Selling, administrative and general expenses were approximately $407,000
less for the quarter when compared to the same period in the prior year due
to the elimination of selling, marketing and advertising expenses relating
to marine electronics and the continuation of cost containment measures.
Revenues for the nine months ended December 31, 1996 were $6,803,077 compared
to $10,202,884 for the same period in the prior year. The overall decrease in
revenues is attributable to the effects of discountinuing certain marine
electronics products during the quarter ended June 30, 1996 ($2,190,000 less
in the nine months ended December 30, 1996 when compared to the same period
in the prior year), reduced shipments of weather display terminals
($1,254,000 less for the period) and reduced sales of paper ($500,000 less
for the period). These reductions were partially offset by increased revenues
from the sales of the Company's 9315CTP and 9315TRT printers, which
experienced a $525,000 increase in sales over the same period in the prior
year.
Gross profit, as a percent of sales, was 24.1% for the nine months compared to
16.8% for the same period in the prior year. The 1995 margin was adversely
effected by the recording of warranty reserves for $350,000 and $190,000 in
additional reserves for excess and obsolete inventories. The 1996 margin also
reflected improvement due to product mix.
Selling, administrative and general expenses were approximately $750,000
less for the nine months ended December 31, 1996 when compared to the same
period in the prior year due to the elimination of selling, marketing and
advertising expenses relating to marine electronics and the continuation
of cost containment measures.
Cash and cash equivalents increased by $30,000 for the nine months ended
December 31, 1996. This increase was primarily due to the proceeds from the
sale of assets offseting cash used to fund operating losses and the
repayment of debt.
As noted above the Company has sold substantially all of its operating assets.
A component of the sale price was that the buyer assumed substanially all of
the obligations of the Company, with the exception of amounts due to the
Company's bank, certain costs of the transaction and income tax obligations.
The buyer also agreed to lease a portion of the Company's real property for a
period of twelve months. Proceeds from the sale were used to extinguish the
remaining bank debt.
Management is actively marketing the Company's real estate.
It is the opinion of management that income from the lease of it's property
and prinicipal and interest to be received on the note issued by the
buyer will be sufficent to meet it's ongoing obligations.
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AEIRE CORP. AND SUBSIDIARIES
PART II -- OTHER INFORMATION
ITEMS 1- 3-- INCLUSIVE
Not Applicable
ITEM 4 -- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On January 31, 1997 the Company held a special meeting of stockholders at
which the sale of substantially all of it's operating assets was approved by
it's voting stockholders.
At this meeting a change in the name of the Company to AEIRE Corp. was also
approved.
ITEM 5 -- OTHER INFORMATION
Not applicable
ITEM 6 -- EXHIBITS AND REPORTS ON FORM 8-K
On January 9, 1997 and February 14, 1997, the Company filed Reports on
Form 8-K regarding the disposition of certain assets which occured on
January 31, 1997.
Exhibit 27. Financial Data Schedule.
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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.
AEIRE Corp.
Date: February 28, 1997
By:/s/ Robert J. Wentworth
______________________
Robert J. Wentworth
President and
Chief Financial Officer
(Principal Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 239
<SECURITIES> 0
<RECEIVABLES> 1900
<ALLOWANCES> 113
<INVENTORY> 687
<CURRENT-ASSETS> 2550
<PP&E> 2819
<DEPRECIATION> 1470
<TOTAL-ASSETS> 3919
<CURRENT-LIABILITIES> 2422
<BONDS> 0
<COMMON> 2010
0
0
<OTHER-SE> 700
<TOTAL-LIABILITY-AND-EQUITY> 3919
<SALES> 6797
<TOTAL-REVENUES> 6803
<CGS> 5166
<TOTAL-COSTS> 8995
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 71
<INCOME-PRETAX> 0
<INCOME-TAX> 9
<INCOME-CONTINUING> (2,202)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,202)
<EPS-PRIMARY> (1.01)
<EPS-DILUTED> (1.01)
</TABLE>
