<PAGE> 1
FORM 10Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 28, 1996
-------------
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 Number 1-6549
------
American Science and Engineering, Inc.
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Massachusetts 04-2240991
- ------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
829 Middlesex Turnpike
Billerica, Massachusetts 01821
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(508) 262-8700
----------------------------------------------------
(Registrant's telephone number, including area code)
- -------------------------------------------------------------------------------
(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
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date
Outstanding at
Class of Common Stock June 28, 1996
--------------------- -------------
$.66 2/3 par value 4,457,796
Page 1 of 10 Pages
The Exhibit Index is Located at Page 10
<PAGE> 2
AMERICAN SCIENCE AND ENGINEERING, INC.
PART I - FINANCIAL INFORMATION
<TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
For The Three Months Ended
----------------------------
Dollars and shares in thousands, except per June 28, 1996 June 30, 1995
share amounts ------------- -------------
<S> <C> <C>
NET SALES AND CONTRACT REVENUE $6,699 $3,517
------ ------
COSTS AND EXPENSES:
Cost of sales and contracts 4,608 2,453
Selling, general and
administrative expenses 1,399 959
Research and development 244 55
------ ------
Total costs and expenses 6,251 3,467
------ ------
OPERATING INCOME 448 50
------ ------
OTHER INCOME (EXPENSE):
Interest, net 47 31
Other, net (69) (29)
------ ------
Total other income (expense) (22) 2
------ ------
INCOME BEFORE PROVISION FOR
INCOME TAXES 426 52
PROVISION FOR INCOME TAXES 20 -
------ ------
NET INCOME $ 406 $ 52
====== ======
Income per common share and
common equivalent share $ .09 $ .01
====== ======
Income per common share,
assuming full dilution $ .09 $ .01
====== ======
Dividends paid per share NONE NONE
====== ======
Shares used in income per share
and common equivalent shares 4,712 4,317
====== ======
Shares used in income per common
share, assuming full dilution 4,712 4,317
====== ======
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
-2-
<PAGE> 3
AMERICAN SCIENCE AND ENGINEERING, INC.
<TABLE>
CONDENSED CONSOLIDATED BALANCE SHEETS
Dollars in thousands
<CAPTION>
June 28, 1996 Mar. 29, 1996
------------- -------------
(Unaudited)
<S> <C> <C> <C>
ASSETS CURRENT ASSETS:
Cash and cash equivalents $ 3,855 $ 3,377
Accounts receivable, net 4,903 3,875
Unbilled costs and fees, net 758 1,258
Inventories 4,213 4,314
Prepaid expenses and other
current assets 434 278
Deferred income taxes 10 10
------- -------
Total current assets 14,173 13,112
------- -------
NON CURRENT ASSETS:
Deposits 159 257
Property and equipment, net
of accumulated depreciation
of $8,588 at June 28,1996
and $8,507 at March 29,1996 993 926
------- -------
$15,325 $14,295
======= =======
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
-3-
<PAGE> 4
AMERICAN SCIENCE AND ENGINEERING, INC.
<TABLE>
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
Dollars in thousands
<CAPTION>
June 28, 1996 Mar. 29, 1996
------------- -------------
(Unaudited)
<S> <C> <C> <C>
LIABILITIES & CURRENT LIABILITIES:
STOCKHOLDERS' Current maturities of
INVESTMENT obligations under capital leases $ 16 $ 16
Accounts payable 2,253 2,021
Accrued legal 63 128
Accrued salaries and benefits 619 496
Accrued warranty costs 243 178
Accrued commissions 407 160
Deferred revenue 419 375
Customer deposits 2,505 2,670
Other current liabilities 276 258
------- -------
TOTAL CURRENT LIABILITIES 6,801 6,302
------- -------
NONCURRENT LIABILITIES:
Obligations under capital
leases, net of current maturities 55 59
Deferred compensation 189 192
Deferred rent 236 231
Deferred income taxes 10 10
------- -------
TOTAL NONCURRENT LIABILITIES 490 492
------- -------
STOCKHOLDERS' INVESTMENT:
Preferred stock, no par value
Authorized - 100,000 shares
Issued - None
Common stock, $.66-2/3 par value
Authorized - 8,000,000 shares
Issued 4,525,173 shares at June
28, 1996 and 4,500,627 shares at
Mar. 29, 1996 3,017 3,001
Capital in excess of par value 14,667 14,556
Accumulated deficit (8,884) (9,290)
------- -------
8,800 8,267
Note receivable-Officer (640) (640)
Less: treasury stock -
67,377 shares at June 28, 1996
and Mar. 29, 1996 at cost (126) (126)
------- -------
TOTAL STOCKHOLDERS' INVESTMENT 8,034 7,501
------- -------
$15,325 $14,295
======= =======
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
-4-
<PAGE> 5
AMERICAN SCIENCE AND ENGINEERING, INC.
<TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Dollars in thousands
<CAPTION>
For the Three Months Ended
----------------------------
CASH FLOWS FROM OPERATING ACTIVITIES: June 28, 1996 June 30, 1995
------------- -------------
<S> <C> <C>
Net income $ 406 $ 52
Adjustments to reconcile net income to net cash
provided by (used for) operating activities:
Depreciation and amortization 81 51
Provisions for contract, restructuring,
inventory and warranty reserves 213 (8)
Changes in assets and liabilities
Accounts receivable (1,078) (599)
Unbilled costs and fees 500 8
Inventories 101 216
Prepaid expenses and other current assets (156) (108)
Accounts payable 232 203
Customer deposits (165) -
Accrued expenses and other current liabilities 367 (125)
Noncurrent liabilities 2 6
------ ------
Total adjustments 97 (356)
------ ------
Net cash provided by (used for) operating
activities 503 (304)
------ ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (148) (59)
------ ------
Cash used for investing activities (148) (59)
------ ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings - 650
Proceeds from exercise of stock options 127 10
Principal payments of capital lease obligations (4) (144)
------ ------
Cash (used for) provided by financing activities 123 516
------ ------
NET INCREASE IN CASH AND CASH EQUIVALENTS 478 153
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 3,377 869
------ ------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $3,855 $1,022
====== ======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid $ 3 $ 27
Income taxes paid $ 30 $ -
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
-5-
<PAGE> 6
AMERICAN SCIENCE AND ENGINEERING, INC.
PREPARATION OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The condensed consolidated financial statements included herein have been
prepared by American Science and Engineering, Inc. (the Company) pursuant to the
rules and regulations of the Securities and Exchange Commission, and the annual
condensed consolidated financial statements are subject to year end audit by
independent public accountants. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to such
rules and regulations. The Company believes, however, that the disclosures are
adequate to make the information presented not misleading. It is suggested that
these condensed consolidated financial statements be read in conjunction with
the consolidated financial statements and the notes thereto included in the
Company's latest annual report on Form 10-K.
The condensed consolidated financial statements, in the opinion of management,
include all adjustments necessary to present fairly the Company's financial
position and the results of operations. These results are not necessarily to be
considered indicative of the results for the entire year.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
1. Nature of Operations and Significant Accounting Policies
--------------------------------------------------------
American Science and Engineering, Inc., is engaged in the development and
manufacture of sophisticated X-ray inspection systems for critical
detection and security screening solutions for sale primarily to U.S. and
foreign government agencies.
The significant accounting policies followed by the Company and its
subsidiary in preparing its consolidated financial statements are set forth
in Note 1 to the consolidated financial statements included in Form 10-K
for the year ended March 29, 1996. The Company has made no change in these
policies during this quarter.
2. Inventories
-----------
<TABLE>
Inventories consisted of:
<CAPTION>
June 28, 1996 Mar. 29, 1996
------------- -------------
<S> <C> <C>
Raw materials and
completed sub-assemblies $2,934,000 $3,014,000
Work in process 1,279,000 1,300,000
---------- ----------
Total $4,213,000 $4,314,000
========== ==========
</TABLE>
3. Income per Common and Common Equivalent Share
---------------------------------------------
Income per common share for the three month period ended June 28, 1996 was
computed by dividing net income by the weighted average number of common
stock and common stock equivalents outstanding during the year. If
dilutive, stock options and stock warrants were considered in the
computation of earnings per common and common equivalent shares.
-6-
<PAGE> 7
4. Income Taxes
------------
<TABLE>
At March 29, 1996, the Company had approximately $8,989,000 of federal net
operating loss carryforwards which can be used, subject to certain
limitations, to offset any future federal taxable income. The carryforwards
expire beginning in the year 1998 through the year 2010. The Company also
has unused investment tax and other credits of approximately $235,000
expiring from 1997 through 2001. The provision for income taxes in the
accompanying statement of income is substantially a current provision and
differs from the provision calculated by applying the statutory federal
income tax rate of 34% to income before provision for income taxes due to
the following:
<CAPTION>
June 28, 1996
-------------
<S> <C>
Provision for income taxes at
statutory rate $ 145,000
Benefit from net operating loss
carryforward (145,000)
Other tax liabilities 20,000
---------
$ 20,000
=========
</TABLE>
-7-
<PAGE> 8
AMERICAN SCIENCE AND ENGINEERING, INC.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Overview
- --------
In the first quarter of fiscal 1997, the Company produced revenue growth,
substantially improved profitability, and enhanced liquidity -- all the result
of the turnaround program accomplished during the past two fiscal years. Net
sales and contract revenues grew to $6,699,000 during the quarter, an 18%
increase over the fourth quarter of fiscal 1996 and a 91% increase from the
comparable year ago period. The company earned net profits of $406,000 in the
current quarter compared to net profit of $343,000 in the previous quarter and
net profit of $52,000 in the corresponding year ago period.
Results of Operations
- ---------------------
Net sales and contract revenues in the first quarter increased by $3,182,000
(91%) in comparison to the corresponding period a year ago and increased by
$1,000,000 (18%) compared to the fourth quarter of fiscal year 1996. Compared to
the previous quarter, security systems and related field service revenues were
up by $1,395,000 (29%) and research and engineering revenues were down $395,000
(47%). The decline in research and engineering revenues was due to completion of
certain contracts during the current quarter and a slight delay in new contract
starts which are expected to occur in the second quarter and beyond.
Several positive developments occurred during the quarter, including substantial
shipments to new and existing foreign government customers, factory completion
of the Company's first PalletSearch[Trademark] system, and shipment of several
units to support the security requirements at the Olympics in Atlanta.
For the first quarter, costs of sales and contracts increased to $4,608,000 from
$2,453,000 in the corresponding period a year ago due primarily to increased
sales volume of X-ray inspection systems and field services revenues in the
current period. Costs of sales and contracts represented 69% of revenues versus
70% for the corresponding period last year and 61% for the fourth quarter of
fiscal year 1996. The costs of sales percentage of revenues in the current
quarter increased over the previous quarter primarily due to a change in the
sales mix.
Selling, general and administrative expenses of $1,399,000 for the first quarter
were higher by 46% compared to the corresponding year-ago period and lower by 3%
compared to the fourth quarter of fiscal 1996. As a percent of sales, selling,
general and administrative expenses were 21% of revenues in the current quarter
compared to 27% of revenues for the corresponding year-ago period and 25% for
the fourth quarter of fiscal year 1996. This declining ratio of SG&A expenses to
sales is primarily the result of higher revenues.
Company-funded research and development expenses of $244,000 for the first
quarter were higher by $189,000 (344%) compared to the year-ago quarter and
higher by $7,000 (3%) compared to the fourth quarter of fiscal year 1996. This
increase is an intentional result of the Company's commitment to research and
development.
The Company produced a net profit of $406,000 during the first quarter. This is
an improvement of $354,000 over net profit in the year-ago quarter and an
improvement of $63,000 over the net profit reported in the previous fourth
quarter of fiscal 1996. The improved profitability results primarily from higher
revenue.
-8-
<PAGE> 9
Liquidity and Capital Resources
- -------------------------------
The Company continued to improve its liquidity and capital resources during the
current period. Net cash provided by operating activities during the first three
months of fiscal year 1997 was $503,000, compared to $304,000 net cash used
during the corresponding year-ago period.
Cash and cash equivalents increased by $478,000 to $3,855,000 as of June 28,
1996, compared to $3,377,000 on March 29, 1996. Working capital increased by
$562,000 (8%) since March 29, 1996, growing from $6,810,000 to $7,372,000 at the
end of the first quarter.
No external borrowings were outstanding at the end of either the current or
previous quarter. Management believes the Company has access to sufficient
capital resources to support operations over the next several quarters.
-9-
<PAGE> 10
AMERICAN SCIENCE AND ENGINEERING, INC.
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibit Index
-------------
Exhibit Page
------- ----
(11) Statement re: Computation of 6
Income per Common
and Common Equivalent Share
(b) Reports on Form 8-K
-------------------
No reports on Form 8-K were filed during the quarter.
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 hereunto duly authorized.
AMERICAN SCIENCE AND ENGINEERING, INC.
(Registrant)
Date: 31 July 1996
------------------------------------------
Lee C. Steele
Vice President and Chief Financial Officer
-10-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS OF AMERICAN SCIENCE AND ENGINEERING,
INC. FOR THE THREE MONTHS ENDED JUNE 28, 1996 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-28-1997
<PERIOD-START> MAR-30-1996
<PERIOD-END> JUN-28-1996
<EXCHANGE-RATE> 1
<CASH> 3,855
<SECURITIES> 0
<RECEIVABLES> 4,903
<ALLOWANCES> 0
<INVENTORY> 4,213
<CURRENT-ASSETS> 14,173
<PP&E> 993
<DEPRECIATION> 8,588
<TOTAL-ASSETS> 15,325
<CURRENT-LIABILITIES> 6,801
<BONDS> 0
<COMMON> 3,017
0
0
<OTHER-SE> 5,017
<TOTAL-LIABILITY-AND-EQUITY> 15,325
<SALES> 6,699
<TOTAL-REVENUES> 6,699
<CGS> 4,608
<TOTAL-COSTS> 6,251
<OTHER-EXPENSES> 22
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 426
<INCOME-TAX> 20
<INCOME-CONTINUING> 406
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 406
<EPS-PRIMARY> 0.09
<EPS-DILUTED> 0.09
</TABLE>
