<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
F O R M 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended OCTOBER 31, 1995
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Commission file number 1-9276
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PRECISION AEROTECH, INC.
a Delaware Corporation IRS ID# 33-0171440
7777 Fay Avenue, Suite 200, La Jolla, CA 92037
Telephone (619) 456-2992
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
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APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the Registrant has filed all documents
and reports required to be filed by Sections 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
YES ________ NO _________
Indicate the number of shares outstanding of each of the Issuer's classes of
common stock, as of the latest practicable date. 789,250
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<PAGE>
Part I - FINANCIAL INFORMATION
PRECISION AEROTECH, INC.
Consolidated Condensed Balance Sheets
(in thousands)
ASSETS
------
<TABLE>
<CAPTION>
October 31, April 30,
1995 1995
----------- ---------
(Unaudited) (Note)
<S> <C> <C>
Current assets
Cash $ 107 $ 240
Accounts receivable, net 5,317 4,664
Inventories 8,554 7,700
Deferred tax assets 725 961
Prepaid expenses and other current assets 65 103
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Total current assets 14,768 13,668
Property, plant & equipment, net 9,628 9,535
Other non-current assets 75 75
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$24,471 $23,278
======= =======
</TABLE>
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
<TABLE>
<CAPTION>
Current liabilities
<S> <C> <C>
Accounts payable $ 3,281 $ 3,130
Income taxes payable 380 235
Current portion of long-term debt and capital
lease obligation 1,347 1,227
Accrued expenses 3,355 3,370
------- -------
Total current liabilities 8,363 7,962
Long-term debt and capital lease obligations,
less current portion 13,587 13,690
Deferred tax liabilities 673 820
Shareholders' equity
Common stock 8 8
Additional paid-in capital 735 735
Retained earnings since May 1, 1994 ($15,927
accumulated deficit eliminated
in quasi-reorganization) 1,105 63
------- -------
Total shareholders' equity 1,848 806
------- -------
$24,471 $23,278
======== =======
</TABLE>
Note: The Balance Sheet at April 30, 1995 has been derived from the audited
financial statements at that date.
See notes to consolidated condensed financial statements
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<PAGE>
Part I - FINANCIAL INFORMATION
PRECISION AEROTECH, INC.
Consolidated Condensed Statements of Operations - (Unaudited)
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
October 31, October 31,
1995 1994 1995 1994
------- ------- ------- --------
<S> <C> <C> <C> <C>
Net sales $10,089 $ 8,896 $22,454 $16,593
Cost of sales 7,893 6,489 16,187 12,668
------- ------- ------- -------
Gross profit 2,196 2,407 6,267 3,925
Selling, general and
administrative expenses 1,694 1,591 3,805 3,143
(Income) on disposal of
subsidiary - (97) - (97)
------- ------- ------- -------
Operating income 502 913 2,462 879
Other income (expense):
Interest expense (397) (447) (800) (874)
Other income (expense), net 5 14 10 11
------- ------- ------- -------
Total other expense (392) (433) (790) (863)
------- ------- ------- -------
Income before income taxes 110 480 1,672 16
Income tax expense 48 9 630 10
------- ------- ------- -------
Net income $ 62 $ 471 $ 1,042 $ 6
======= ======= ======= =======
Earnings per share: $ .08 $ .60 $ 1.32 $ .01
======= ======= ======= =======
Weighted average number of
common shares outstanding 789,250 789,250 789,250 789,250
</TABLE>
See notes to consolidated condensed financial statements.
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<PAGE>
Part I - FINANCIAL INFORMATION
PRECISION AEROTECH, INC.
Consolidated Statements of Cash Flow - (Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended
October 31,
1995 1994
------ -------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $1,042 $ 6
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization of property,
plant and equipment 1,186 1,180
Deferred income taxes 143 -
Provision for losses on inventory - 9
(Gain) loss on disposal of assets - 2
Changes in operating assets and liabilities:
Decrease (increase) in:
Accounts receivable (653) (671)
Inventories (853) 3
Prepaid expenses and other current assets (16) (13)
Non-current assets - (20)
Increase (decrease) in:
Accounts payable 151 682
Accrued expenses 145 4
Income taxes payable (16) -
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NET CASH PROVIDED BY
OPERATING ACTIVITIES $1,129 $1,182
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CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (461) (439)
Proceeds from disposal of assets - 1
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NET CASH (USED IN) INVESTING ACTIVITIES $ (461) $ (438)
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</TABLE>
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<PAGE>
Part I - FINANCIAL INFORMATION
PRECISION AEROTECH, INC.
Consolidated Statements of Cash Flow -- Continued - (Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended
October 31,
1995 1994
-------- ------------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings on long-term debt $ 4,662 $ 1,818
Principal payments on long-term debt and
capital lease obligations (5,463) (3,048)
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NET CASH (USED IN)
FINANCING ACTIVITIES $ (801) $(1,230)
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NET (DECREASE) IN CASH (133) (486)
Cash at beginning of period 240 711
------- -------
CASH AT END OF PERIOD $ 107 $ 225
======= =======
Supplemental disclosures of cash flow
information
Cash paid for:
Interest $ 798 $ 874
Income taxes 468 -
Supplemental schedule of non-cash
investing and financing activities
Capital equipment acquired under
capital leases 818 532
</TABLE>
See notes to consolidated condensed financial statements.
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<PAGE>
Part I - FINANCIAL INFORMATION
NOTES TO CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS(UNAUDITED)
October 31, 1995
NOTE A - INTERIM FINANCIAL STATEMENTS
The preceding unaudited interim consolidated condensed financial statements
("statements") should be read in conjunction with the Registrant's audited
financial statements for the year ended April 30, 1995.
The preceding statements reflect all adjustments which are, in the opinion of
management, necessary to a fair statement of financial position at October 31,
1995, and the results of operations for the three month period then ended. All
adjustments are of a normal recurring nature.
NOTE B - BACKLOG
Backlog of unfilled orders for which contractual commitments have been received
as of October 31, 1995 was $31.5 million.
NOTE C - QUASI REORGANIZATION
After the debt restructuring accomplished on April 28, 1994, the Registrant
implemented for accounting purposes, a "quasi-reorganization", an elective
accounting procedure that permits a company which has emerged from previous
financial difficulty to restate its accounts and establish a fresh start in an
accounting sense. After implementation of the accounting quasi-reorganization,
the Registrant's assets and liabilities were adjusted to fair value, however,
these adjustments were limited so as to not increase net assets. The deficit
balance in retained earnings was changed to additional paid-in capital. The
Registrant effected the accounting quasi-reorganization as of April 30, 1994.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations from Continuing Operations
- - ------------------------------------------------
Consolidated sales for the three months ended October 31, 1995 of $10.1 million
were $1.2 million higher than the $8.9 million reported for the same three-month
period one year earlier. Sales for the first six months were $22.5 million
compared to $16.6 million for the same six-months a year earlier. Sales for the
first six months of the fiscal year increased a minimum of 25% at each
subsidiary, when contrasted to the comparable period last year. Sales increases
were broadly based in nearly all markets.
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<PAGE>
Gross margins also improved at all subsidiaries, with a significant increase at
one business related to a single, unusually profitable large order. Pre-tax
income of $1.7 million for the current six-month period substantially exceeded
the slightly better than breakeven results for the same period one year earlier.
Net income for the three months ended October 31, 1995 was $0.1 million compared
with $0.5 million for the same three months one year earlier. The year earlier
results included the favorable impact of one large and unusually profitable
program shipped during the quarter and a lower tax provision. Net income of
$1.0 for the most recent six-month period compares favorably to the breakeven
performance reported one year earlier and includes a provision of $0.6 million
for taxes.
Earnings per share for the current three-month reporting period was $.08 per
common share compared with $.60 per share one year earlier. Earnings per common
share for the most recent six months year-to-date were $1.32 per common share
compared to $.01 per share for the same period ended 12 months earlier.
Liquidity and Financial Condition
- - ---------------------------------
Cash provided by operations of $1.1 million for the six months ended October 31,
1995 was comparable to the amount generated for the same period of the prior
year of $1.2 million. Net income for the current period was significantly
higher in the current period but was offset by increases in net current assets
during the period. Inventory levels continued to increase due to general sales
level improvements and short-term delays in customer shipments at two of the
subsidiaries.
Net cash used in financing activities decreased in the six months ended October
31, 1995 compared to the same period one year earlier. The reduction was due to
a lower amount of reduction of the revolving credit agreement in the current
period.
Capital expenditures, including capital leases, during the six-month period
ended October 31, 1995 and 1994 were $1.3 and $1.0 respectively. As of October
31, 1995, there were purchase order commitments for capital equipment of $.3
million of which $.2 million is expected to be financed by leasing.
The Registrant has available, a maximum revolving credit agreement of $4.0
million. Availability of this line of credit is based on a calculation
utilizing a percentage of accounts receivable and a percentage of certain
components of inventory. As of October 31, 1995, $3.7 million was available,
with $.3 million drawn against the calculated borrowing base.
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<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 11: Schedule of Computation of Net Earnings Per Share
(b) There were no Reports on Form 8-K.
SIGNATURE
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 there unto duly authorized.
PRECISION AEROTECH, INC.
12/14/95
- - --------------- -----------------------------------
Date Richard W. Detweiler
Chairman, President, Chief Executive
Officer, and duly authorized to
sign on behalf of the Registrant
-8-
<PAGE>
EXHIBIT 11
PRECISION AEROTECH, INC.
SCHEDULE OF COMPUTATION OF NET EARNINGS PER SHARE
THREE MONTHS ENDED OCTOBER 31, 1995 AND 1994
(IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
October 31 October 31
------------------ -----------------
1995 1994 1995 1994
------- ------- ------ ------
<S> <C> <C> <C> <C>
Net income $ 62 $ 471 $ 1,042 $ 6
Earnings per share $ .08 $ .60 $ 1.32 $ .01
Weighted average number of
shares outstanding 789,250 789,250 789,250 789,250
======= ======= ======= =======
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
CONDENSED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATIONS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-START> MAY-01-1995
<PERIOD-END> OCT-31-1995
<CASH> 107
<SECURITIES> 0
<RECEIVABLES> 5,401
<ALLOWANCES> 84
<INVENTORY> 8,554
<CURRENT-ASSETS> 14,768
<PP&E> 13,168
<DEPRECIATION> 3,540
<TOTAL-ASSETS> 24,471
<CURRENT-LIABILITIES> 8,363
<BONDS> 13,587
<COMMON> 8
0
0
<OTHER-SE> 735
<TOTAL-LIABILITY-AND-EQUITY> 24,471
<SALES> 22,454
<TOTAL-REVENUES> 22,454
<CGS> 16,187
<TOTAL-COSTS> 16,187
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 800
<INCOME-PRETAX> 1,672
<INCOME-TAX> 630
<INCOME-CONTINUING> 1,042
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,042
<EPS-PRIMARY> 1.32
<EPS-DILUTED> 1.32
</TABLE>
