SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended MARCH 31, 1996
Commission file number 1-4530
ASTREX, INC.
(Exact name of small business issuer as specified in its charter)
DELAWARE 13-1930803
(State of incorporation) (I.R.S. Employer Identification No.)
205 EXPRESS STREET, PLAINVIEW, NEW YORK 11803
(Address of principal executive offices) (Zip Code)
516 - 433-1700
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12 (b) of
the Act:
None
SECURITIES REGISTERED PURSUANT TO 12 (G) OF THE ACT:
COMMON STOCK, $.01 PAR VALUE
(Title of class)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to each filing requirements for the past 90
days. YES X No.
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ ]
State issuer's revenues for its most recent fiscal year. $13,518,149.
State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date with the past 60
days. $ 921,719 AS OF JUNE 21, 1996 (SEE ITEM 5).
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date. 5,375,363 SHARES OF COMMON STOCK AS
OF JUNE 21, 1996.
State whether the issuer has filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Securities Exchange Act after the
distribution of securities under a plan confirmed by a court. YES X No ___.
<PAGE>
PART I
Item 1. BUSINESS.
GENERAL
Astrex, Inc., a Delaware corporation (the "Company" or "Astrex"), is a
value-added distributor of electronic components used to connect, control,
regulate or store electricity in equipment. The principal products assembled and
sold by Astrex are "connectors." "Connectors" link a wire or group of wires to
another wire or group of wires. Other products sold include relays, switches,
and LED's.
The Company (including its wholly owned subsidiaries T.F. Cushing, Inc. and
AVest, Inc.) has 55 full time and 1 part time employees, principally at
facilities in Plainview, New York and West Springfield, Massachusetts and
carries in inventory over 25,000 different electronic parts from approximately
20 manufacturers, including Amphenol Corporation, Hirose Electric (U.S.A.),
Inc., ITT Cannon, ITW Switches, Litton Winchester Electronics, Micro Switch
(division of Honeywell, Inc.), Packard Hughes Interconnect, TriStar Electronics
International Inc., and WPI Salem Division (Wire Pro). While the Company sells a
portion of this inventory without any further value enhancements, a significant
portion of its sales consists of components assembled to customer
specifications. The Company's sales are worldwide with a concentration in the
Northeast and Mid-Atlantic States where the Company serves more than 3,000
customers representing a broad range of electronics users from major original
equipment manufacturers such as IBM Corporation, Lockheed Martin, Raymond
Corporation, and Raytheon Company to engineering firms and research and
educational institutions. The Company's largest industry markets include the
defense, aerospace, industrial, and computer industries.
The Company's principal credit facility is a line of credit ("Line")
measured by its inventory and receivables and secured by substantially all of
the Company's assets. On March 31, 1996 the Company owed $1,782,064 on the Line,
and as of May 31, 1996 approximately $1,570,000 was outstanding. The Company
believes that the Line will be adequate for the foreseeable future. The
Company's relations with its secured lender are satisfactory. The Line by its
terms expires on July 31, 1997 at which time the Company anticipates that it
will be renewed or replaced.
Approximately 80% of the products sold by the Company are connectors. A
connector links electronic components together and generally consists of a
shell, insert, contacts and adaptive hardware. Each of these four parts has many
variations and can be assembled together in almost unlimited combinations.
Connectors range in price, depending on design, complexity, use, and
availability from $0.25 to $2,500 a connector. The Company has traditionally
emphasized the sale of connectors which meet a higher standard of reliability
and performance including those meeting United States military specifications.
Most of the connectors sold by the Company range in price from $10 to $50 each.
The Company has the capacity to both assemble and test connectors to
customer's specifications, which is a capability that some of its competitors do
not have. The assembly capability also enables the Company to inventory fewer
finished parts and to deliver a wider variety of finished connectors,
substantially enhancing service to its customers. During the fiscal year ending
March 31, 1996 approximately 44% of the Company's sales represented assembled
connectors, approximately 31% of the
1
<PAGE>
Company's sales represented connectors not requiring further assembly by the
Company and approximately 5% of the Company's sales represented unassembled
connector parts.
The other products sold by the Company are devices that control or regulate
the flow of electricity to or within components, including relays and switches
which control current by opening or closing an electric circuit. These products
represented approximately 20% of sales.
Assembly of military specification connectors, a significant part of the
Company's business, usually requires government approval. The Company has such
approvals as are necessary for the military specification connectors it
assembles and does not perceive any future problems with respect to such
approvals. The nature of the Company's business does not require significant
expenditures for product research and development and the Company's expenditures
in that regard over the past two years have been nominal.
The Company markets the products of approximately 20 manufacturers. Its
four largest suppliers, Amphenol Corporation, ITT Cannon, ITW Switches and
Packard Hughes Interconnect accounted for approximately 49% of fiscal year
ending March 31, 1996 purchases.
During the fiscal year ended March 31, 1996, the Company added the Neutrik
USA, Inc. connector line, a niche commercial line of audio connectors.
The Company has satisfactory relations with its suppliers, most of which
have done business with the Company for over 15 years. The Company believes that
most of the products it presently sells are available from other sources at
competitive prices. Most of the products sold by the Company are purchased
pursuant to franchise agreements that are typically cancelable by either party
at any time.
As of March 31, 1996 the Company's net inventory aggregated approximately
$3,934,000 of which approximately 83% consisted of connectors. While
manufacturers generally do not give distributors, such as the Company, the
absolute right to return unsold inventory, it is the policy of many
manufacturers to protect or partially protect franchised distributors, such as
the Company, against the potential write- down of inventories due to
technological change or manufacturer's price reductions. Similarly, a
manufacturer who elects to terminate a franchise may be required to purchase
from the distributor a substantial, if not the total, amount of its product
carried in inventory. No assurance can be given however, that these industry
practices will continue.
The Company serves more than 3,000 customers representing a broad spectrum
of electronic users ranging from major original equipment manufacturers to
engineering firms and research and educational institutions. Such customers
include manufacturers in the aerospace, industrial, defense and computer
industries, such as IBM Corporation, Lockheed Martin, Raymond Corporation and
Raytheon Company. No single customer accounted for more the 10% of sales.
Many of the Company's customers require delivery schedules which are
generally not available on direct purchase from manufacturers. The Company
offers its customers the convenience of diverse and extensive local inventories
and rapid deliveries. In addition, because of its expertise in connectors, the
Company can offer its customers technical advice and support, and innovative
solutions to customer problems. The Company believes that its good long-term
relationships with its customers extending, in some cases, over a period of 20
years, give it a strong competitive position throughout the United States, and
especially the Northeast.
2
<PAGE>
For the fiscal year ended March 31, 1996, 78% of the Company's sales were
in the Northeast and Middle Atlantic States, 20% of sales were to other parts of
the country and 2% of sales were for export.
Sales are generated by the Company's outside sales force which covers
specific geographic territories and customers; by the Company's inside telephone
sales force; by independent sales representatives; and by the use of space
advertising in industry publications. Sales are managed and coordinated by
regional sales managers and by product managers located in the Company's
Plainview, New York or West Springfield, Massachusetts facilities.
COMPETITION
The Company operates in a highly competitive environment. The sale and
distribution of products sold by the electronics distribution industry is
extremely competitive, particularly with regard to price and product
availability. The Company competes with numerous local, regional, and national
distributors, many of which have greater financial resources and sales than the
Company. To a certain extent, the Company also competes with manufacturers of
electronic parts and components, including some of its suppliers, which are
involved in the direct sales of their products.
BACKLOG
At April 1, 1996, the Company's total backlog of confirmed, unfilled orders
was approximately $2,859,000, an increase of 21% over the April 1, 1995 backlog
of $2,362,000. The Company expects almost all of the backlog to be shipped
before the end of fiscal 1997. The backlog at year-end is not necessarily
indicative of sales for any specific subsequent period.
COMPLIANCE WITH ENVIRONMENTAL LAWS
In the fiscal years ending March 31, 1996 and 1995 the Company expended
less than one thousand dollars in order to comply with environmental laws with
respect to the Plainview building. The Company has had no other expenditures
with respect to such laws in that time period.
EMPLOYEES
As of March 31, 1996 the Company had 55 full time and 1 part time
employees. The Company has senior operating personnel at both its Plainview, New
York and West Springfield, Massachusetts facilities, some of whom have been with
the Company or a subsidiary for more than 15 years. Management believes that its
relations with its employees are satisfactory.
3
<PAGE>
Item 2. PROPERTIES.
Through its wholly owned subsidiary, AVest, Inc., the Company owns a 22,000
square foot building at 205 Express Street, Plainview, New York. The Company's
principal executive offices occupy approximately 750 square feet of that
building with the balance of the building space constituting office, warehouse
and assembly facilities for the Company. The property is adequately covered by
insurance and there are at present no significant renovation, improvement or
development plans with respect to the facility. The Company's T.F. Cushing, Inc.
subsidiary occupies 3,500 square feet in West Springfield, Massachusetts at an
annual rent of $19,560 under a lease that expires August 31, 1997. In addition
the Company presently maintains sales offices in Endwell, New York (1,500 square
feet, $15,000 annual rent, under a lease that expires 12/31/96) and Willow
Grove, Pennsylvania (1,323 square feet, $18,052 annual rent, month-to-month
occupancy under a lease which expired 12/19/92). All of the Company's premises
are adequate for the Company's current and foreseeable requirements. The Company
has no present plans to significantly renovate or improve any of its leased
properties.
Item 3. LEGAL PROCEEDINGS.
As of March 31, 1996 and the date hereof there was no litigation believed
to be material pending against or on behalf of the Company or its properties.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
NONE
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Company's common stock ("Astrex Common Stock") trades on the
over-the-counter market under the symbol "ASXI". The following table sets forth
the high and low bids for Astrex Common Stock. These over-the-counter market
quotations reflect inter-dealer prices without retail mark-up, mark-down or
commission, are approximate and may not necessarily represent actual
transactions.
<TABLE>
<CAPTION>
CALENDAR YEAR
& QUARTER HIGH BID LOW BID
- -----------------------------------------------------------------------------------------------------
<C> <C> <C>
1995 First 3/32 3/32
Quarter
- -----------------------------------------------------------------------------------------------------
Second Quarter 3/32 3/32
- -----------------------------------------------------------------------------------------------------
Third Quarter 3/8 3/32
- -----------------------------------------------------------------------------------------------------
Fourth Quarter 5/16 1/4
- -----------------------------------------------------------------------------------------------------
1996 First 5/16 1/4
Quarter
- -----------------------------------------------------------------------------------------------------
Second Quarter 5/16 1/4
- -----------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
For purposes of the disclosure of the aggregate market value of the voting
stock held by non- affiliates as set forth on page 1 of this Report, the Company
has used the average of the bid and ask price of 11/32 as of June 21, 1996.
No dividends have been paid on common stock since April 1978 and the
Company does not anticipate paying dividends with respect to common stock in the
foreseeable future.
In March 1996, the Company determined to make available for purchase by all
interested employees, on a pro rata basis, up to a total of 150,000 unregistered
shares of the Company's common stock at thirty one cents a share, a price
substantially reflective of the then trading price for registered shares.
Pursuant thereto, 17 employees purchased a total of 150,000 unregistered shares
in the fiscal year to end March 31, 1997.
As of June 21, 1996 there were 5,375,363 shares of the Company's common
stock outstanding and held by 388 holders of record.
Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION.
RESULTS OF OPERATIONS
Fiscal year 1996 saw nearly a 10% improvement in sales. Net sales for the
fiscal year ended March 31, 1996 were approximately $13.5 million, up from $12.3
million for the fiscal year ended March 31, 1995. The $1.2 million, 9.8%
increase in sales for fiscal 1996 versus fiscal 1995 was due in significant part
to the Company's improved and restructured marketing efforts with the assistance
of a stabilizing (albeit reduced from historic highs) military market and
continued strong commercial and industrial markets. Sales to commercial and
industrial accounts were up 16% for fiscal 1996 versus 1995. Sales to military
accounts increased 3% for the same periods; this increase was aided by several
new niche lines added in fiscal year 1995.
At April 1, 1996, the Company's total backlog of confirmed, unfilled orders
was approximately $2.8 million, an increase of 21% over the April 1, 1995
backlog of $2.4 million.
Despite price pressure in all connector markets, the Company realized a
1.3% increase in gross profit margins (before inventory write-downs of $66,000
in fiscal 1996 and $750,000 in fiscal 1995), to 24.8% in fiscal 1996 from 23.5%
in fiscal 1995.
Coupled with significantly improved sales and margins, in fiscal 1996 the
Company was also able to achieve a 1.7% reduction in selling, general and
administrative expenses ("SG&A"). Fiscal 1996 SG&A decreased to approximately
$2.8 million from approximately $2.9 million for fiscal 1995. This decrease
resulted from the Company's ability to leverage existing selling and
administrative resources, and from improved cost control measures.
5
<PAGE>
Interest expense increased to $230,702 in fiscal 1996 from $199,809 in
fiscal 1995. This was due to increases in both average loan balances and average
interest rates for the two periods, the latter increase being offset in part by
a restructuring of the Company's principal lending agreement in the latter part
of fiscal 1996 which provided a 1.25 percentage point reduction in the Company's
effective borrowing rate.
LIQUIDITY AND CAPITAL RESOURCES
During the fiscal year ended March 31, 1996, the Company increased its debt
level by approximately $218,000, principally as a result of increased borrowings
from the Company's lender. This cash was essentially used to finance higher
inventory and receivable levels resulting from increased sales. At March 31,
1996, the Company had working capital of $2,010,000 and its stockholders' equity
was $2,701,758. The Company believes that its present working capital, cash
generated from operations and amounts available under the loan agreement will be
sufficient to meet its cash needs during the next year.
ITEM 1. BUSINESS - GENERAL.
Item 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Pages F-1 et. seq. of this Form 10-KSB are by this reference incorporated
herein.
Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
NOT APPLICABLE
PART III
Item 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY; COMPLIANCE WITH SECTION
16(A) OF THE EXCHANGE ACT.
The following table sets forth for current officers and directors, (i) that
person's name, (ii) if applicable the Director Class elected to , (iii) all
positions with the Company held by that person, (iv) that person's age, (v) that
person's principal occupation for the past five years and (vi) with respect to
directors the date on which that person first became a director of the Company.
Unless otherwise indicated, each person has held the position shown, or has been
associated with the named employer in an executive capacity, for more than five
years. The terms of the current directors expire upon the election and
qualification of their successors at the Annual Meeting. The terms of officers
expire at the pleasure of the Board of Directors.
6
<PAGE>
NAME, AGE, CAL. YEAR FIRST
BECAME A DIRECTOR OR OFFICER &
DIRECTOR CLASS IF APPLICABLE. Principal Occupation for past five years
- --------------------------------------------------------------------------------
Howard Amster Private investor and registered
Director representative with Everen Securities,
48 - since 1992 - Inc., Cleveland, Ohio. Director, Geauga
Class I Savings Bank, a northern Ohio savings
and loan; Trustee, CleveTrust Realty
Investors, a real estate company.
John C. Loring Attorney and private investor, Chicago,
Director and Chairman Illinois. Director, Fleet Aerospace,
51 - since 1988 - Inc., a manufacturer of components for
Class I the aerospace market; Director, Guardian
Bankcorp., Inc., and Director, Geauga
Savings Bank, northern Ohio savings and
loan.
Michael McGuire Mr. McGuire joined the Company in 1969.
CEO and President Prior to becoming CEO and President he
42 - since 1991 was the Company's General Manager and
Director of Operations.
Irene S. Marcic Prior to joining the Company in 1993,
CFO, Vice President, Ms. Marcic, a Certified Public,
Treasurer and Accountant was employed with KPMG Peat Marwick as a
Secretary Senior Accountant.
28 - since 1993
Mark Schindler Mr. Schindler is a self-employed
Director consultant, private investor, and a
74 - since 1960 - partner of Madison Venture Capital
Class II Partners, New York, New York. Mr.
Schindler was formerly a director and
officer of Natural Child Care,
Inc./Winners All International, Ltd.,
Light Savers U.S.A., Inc., and Servtex
International Inc./Hymedix, Inc. Mr.
Schindler is also a founder, officer and
director of Kushi Macrobiotics, Inc.
Mr. Schindler founded Astrex, Inc.
David S. Zlatin Chief Operating Officer of Ramat
Director Securities, Ltd., Rabbi and private
44 - since 1993 - investor.
Class II
Nancy Shields Ms. Shields joined the Company in 1990.
Vice President Prior to becoming Vice President she was
39 - since 1995 the Corporate Product Manager and has
worked in the electronics distribution
industry since 1977.
Kenneth Chaplar Mr. Chaplar joined the Company in 1994
Vice President as the Director of New Business
58 - since 1995 Development. Prior to 1994 Mr. Chaplar
was part owner of a manufacturers
representative firm and has worked in
the electronics industry since 1960.
In addition John Loring is Chairman and Secretary of the Company's wholly
owned subsidiary AVest, and David Zlatin is President and Treasurer of AVest.
They are also AVest's two directors. The officers and directors of T.F. Cushing
are the same as for the Company.
7
<PAGE>
Irene S. Marcic, David S. Zlatin, Nancy Shields and Kenneth Chaplar, who
owned no common stock at the time of their respective elections to office, have
each belatedly filed one SEC Form 3. The Company is not aware of any other
persons who failed to file on a timely basis any reports relating to the Company
required by Section 16(a) of the Securities Exchange Act during the fiscal year
that ended March 31, 1996.
Item 10. EXECUTIVE COMPENSATION.
The following table shows information concerning the compensation paid or
awarded by the Company and its subsidiaries for services to its Chief Executive
Officer during fiscal years ending March 31, 1996, 1995 and 1994. Other then Mr.
McGuire there were no executive officers of the Company whose compensation was
or exceeded $100,000. The Company (i) has no retirement, pension, profit
sharing, stock option, stock appreciation rights or long term incentive plans
for the years in question, (ii) has not awarded any bonuses during or for the
years in question, except as set forth in the table below, and to one other
executive officer, and (iii) has no employment contracts or termination of
employment and change of control arrangements for any of the Company's executive
officers.
In the first quarter of fiscal year 1997, the Company awarded 135,000
unregistered lettered shares of the Company's common stock to 19 employees
(including Mr. McGuire), none of whom received more than 15,000 shares. To the
extent an employee ceases to be employed by the Company prior to March 31, 2000
(other than on account of death) the shares awarded to said employee are forfeit
to the Company.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
--------------------------
ANNUAL COMPENSATION
-------------------
NAME AND PRINCIPAL POSITION FISCAL YEAR SALARY BONUS
- --------------------------- ----------- ------ -----
<S> <C> <C> <C>
Michael McGuire 1996 $150,000 $51,500
CEO & President 1995 $150,000 -
since November 1991 1994 $153,662 $30,000
</TABLE>
The Board of Directors held three meetings during fiscal year ending March
31, 1996. Each of the directors of the Company attended each of those meetings.
There were no active standing committees of the Board of Directors during that
fiscal year. During that fiscal year the board of directors meeting fees were
$750 for attendance in person and by telephone. Pursuant to this arrangement
each of the directors received $2,250. In addition, during the fiscal year
ending March 31, 1996 (i) Mr. Loring for services as Chairman of the Board
received 200,000 shares of unregistered and restricted Common Stock and $25,000,
and (ii) Mr. Amster received 200,000 shares of unregistered and restricted
Common Stock. The stock compensation received by Messr. Loring and Amster was
subject to the right of the Company to repurchase said shares for one cent per
share if the director who received said shares ceases to be a director of the
Company prior to January 1, 1997 other than because of his death or disability
or the dissolution of the Company. In fiscal 1996, the charge to earnings as a
consequence of Messr. Amster and Loring's stock compensation was $12,000. For
the fiscal year ended March 31, 1995, Mr. Loring received $40,000 for services
as Chairman of the Board.
8
<PAGE>
Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth the number and percentage of shares of the
Company's Common Stock beneficially owned as of June 21, 1996 by persons who are
known by the Company to be the beneficial owners of more than 5% of the
Company's outstanding Common Stock as of that date, and the directors of the
Company and its chief executive officer, and all officers and directors of the
Company as a group. For purposes of this Report, beneficial ownership is defined
in accordance with Rule 13d-3 of the Securities and Exchange Commission (the
"Commission") to mean generally the power to vote or dispose of shares,
regardless of any economic interest therein. The persons listed have sole voting
power and sole dispositive power with respect to all shares set forth in the
table unless otherwise specified in the footnotes to the table.
<TABLE>
<CAPTION>
BENEFICIAL HOLDERS OF MORE THAN 5%
- -------------------------------------------------------------------------------------------------------------
NAME AND ADDRESS OF BENEFICIAL OWNERS Shares Held Percentage 1
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Howard Amster 2 1,209,311 22.50%
205 Express Street
Plainview, New York 11803
- -------------------------------------------------------------------------------------------------------------
William Costaras 336,184 6.25%
1300 North Point Tower
1001 Lakeside Avenue
Cleveland, Ohio 44114
- -------------------------------------------------------------------------------------------------------------
FMR, Corp. 565,723 10.52%
82 Devonshire Street
Boston, Massachusetts 02109
- -------------------------------------------------------------------------------------------------------------
Herzog, Heine, Geduld, Inc. 590,723 10.99%
26 Broadway
New York, New York 10004
- -------------------------------------------------------------------------------------------------------------
Libra-Wilshire Partners, LP 923,586 17.18%
11766 Wilshire Boulevard
Los Angles, California 90025
- -------------------------------------------------------------------------------------------------------------
John C. Loring3 980,263 18.24%
205 Express Street
Plainview, New York 11803
- -------------------------------------------------------------------------------------------------------------
<CAPTION>
OFFICER AND DIRECTOR HOLDINGS
- -------------------------------------------------------------------------------------------------------------
NAME AND ADDRESS OF BENEFICIAL OWNERS Shares Held Percentage 1
- -------------------------------------------------------------------------------------------------------------
Howard Amster 2 1,209,311 22.50%
- -------------------------------------------------------------------------------------------------------------
John C. Lorin 3 980,263 18.24%
- -------------------------------------------------------------------------------------------------------------
Michael McGuire 4 217,975 4.06%
- -------------------------------------------------------------------------------------------------------------
Mark Schindler 1,449 *
- -------------------------------------------------------------------------------------------------------------
9
<PAGE>
- -------------------------------------------------------------------------------------------------------------
David S. Zlatin -- --
- -------------------------------------------------------------------------------------------------------------
All Other Officers 87,058 1.62%
- -------------------------------------------------------------------------------------------------------------
All Officers and Directors as a 2,496,056 46.44%
group (8 persons)
- -------------------------------------------------------------------------------------------------------------
</TABLE>
* Less than 1%.
1 Based on 5,375,363 shares outstanding.
2 Includes 73,886 shares owned by his spouse, the beneficial ownership of
which he disclaims.
3 Includes 77,170 shares owned by his spouse's IRA, the beneficial ownership
of which he disclaims
4 Includes 90,537 shares owned by his spouse's IRA, the beneficial ownership
of which he disclaims.
Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
See "ITEM 1. BUSINESS - GENERAL"
PART IV
Item 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a)(1) Financial Statements Page No.
-------------------- --------
Report of KPMG Peat Marwick LLP, Certified Public F-1
Accountants
Consolidated Balance Sheet as of March 31, 1996 F-2
Consolidated Statements of Operations for the years F-3
ended March 31, 1996 and 1995
Consolidated Statements of Shareholders' Equity F-4
for the years ended March 31, 1996 and 1995
Consolidated Statements of Cash Flows for the F-5
years ended March 31, 1996 and 1995
Notes to Consolidated Financial Statements F-6
(a)(3) Exhibits
The exhibits listed on the accompanying Exhibit Index are
filed as part of this report.
Previously Filed and
Incorporated by
Reference or
Filed Herewith
Exhibit Description
3 (a) Certificate of Incorporation of Astrex, Filed as Exhibit
Inc. (a Delaware corporation) 3 (a) to the
Form 10-K of the
Company for
year ended March
31, 1993
10
<PAGE>
3 (b) By-Laws of Astrex, Inc., as amended Filed as Exhibit
3 (b) to the
Form 10-K of the
Company for
year ended March
31, 1992
4 (a) Astrex, Inc. Certificate of Designations, Filed as Exhibit
Preferences and Rights of Preferred 4 (a) to the
Stock - Two and a Half Cent Form 10-KSB of
Non-Cumulative Series B Preferred Stock the Company for
year ended March
31, 1994
10 (a) Amendment between Astrex, Inc. and Filed as Exhibit
Congress Financial Corporation dated 10 (b) to the
March 31, 1992 Form 10-K of the
Company for
year ended March
31, 1992
10 Second Amendment between Astrex, Inc. and Filed as Exhibit
(b) Congress Financial Corporation dated 10 (c) to the
June 30, 1994 Form 10-KSB of
the Company for
year ended March
31, 1994
10 (c) Pledge and Security Agreement between Filed as Exhibit
Astrex, Inc. and Congress Financial 10 (d) to the
Corporation dated June 30, 1994 Form 10-KSB of
the Company for
year ended March
31, 1994
10 (d) Second Amendment to Mortgage between Filed as Exhibit
Astrex, Inc. and Congress Financial 10 (e) to the
Corporation dated June 30, 1994 Form 10-KSB of
the Company for
year ended March
31, 1994
10 (e) Mortgage, Security Agreement, Financing Filed as Exhibit
Statement and Assignment of Leases and 10 (f) to the
Rents between AVest, Inc. and Congress Form 10-KSB of
Financial Corporation dated June 30, 1994 the Company for
year ended March
31, 1994
10 (f) Limited Recourse Guarantee between AVest, Filed as Exhibit
Inc. and Congress Financial Corporation 10 (g) to the
dated June 30, 1994 Form 10-KSB of
the Company for
year ended March
31, 1994
10 (g) Landlord/Mortgagee Waiver between AVest, Filed as Exhibit
Inc. and Congress Financial Corporation 10 (h) to the
dated June 30, 1994 Form 10-KSB of
the Company for
year ended March
31, 1994
10 (h) Subordination Agreement between AVest, Filed as Exhibit
Inc. and Congress Financial Corporation 10 (i) to the
dated June 30, 1994 Form 10-KSB of
the Company for
year ended March
31, 1994
(b) No Current Reports on Form 8-K were filed by the Company during the last
quarter of the period covered by this Report.
11
<PAGE>
Independent Auditors' Report
The Board of Directors and Shareholders
Astrex, Inc.:
We have audited the accompanying consolidated balance sheet of Astrex, Inc. and
subsidiaries as of March 31, 1996 and the related consolidated statements of
operations, shareholders' equity and cash flows for each of the years in the
two-year period ended March 31, 1996. These consolidated financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Astrex, Inc. and
subsidiaries as of March 31, 1996 and the results of their operations and their
cash flows for each of the years in the two-year period ended March 31, 1996 in
conformity with generally accepted accounting principles.
/s/ KPMG PEAT MARWICK LLP
KPMG PEAT MARWICK LLP
Jericho, New York
May 24, 1996
F-1
<PAGE>
<TABLE>
<CAPTION>
ASTREX, INC. AND SUBSIDIARIES
Consolidated Balance Sheet
March 31, 1996
Assets
Current assets:
<S> <C>
Cash $ 2,076
Accounts receivable (net of allowance for doubtful
accounts of $87,000) 1,764,451
Inventory 3,934,074
Prepaid expenses and other current assets 21,242
------
Total current assets 5,721,843
Fixed assets, net 691,871
-------
$ 6,413,714
===========
Liabilities and Shareholders' Equity
Current liabilities:
Loans payable 1,782,064
Accounts payable 1,649,569
Accrued liabilities 280,323
-----------
Total current liabilities 3,711,956
---------
Commitments
Shareholders' equity:
Preferred stock, Series A - par value
$5 per share; authorized,
200,000 shares; issued, none --
Preferred stock, Series B - par
value $.01 per share; authorized,
7,500,000 shares; issued, none --
Common stock - par value $.01 per share;
authorized, 15,000,000 shares;
5,090,363 issued and outstanding 50,904
Additional paid-in capital 3,547,931
Accumulated deficit (897,077)
-----------
Total shareholders' equity 2,701,758
---------
$ 6,413,714
================
</TABLE>
F-2
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
ASTREX, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
Years ended March 31, 1996 and 1995
1996 1995
------------ -----------
<S> <C> <C>
Net sales $ 13,518,149
12,308,531
Cost of sales 10,233,692 10,171,206
------------ -----------
Gross profit 3,284,457 2,137,325
Selling, general and administrative expenses 2,833,240 2,881,111
Income (loss) from operations 451,217 (743,786)
Interest expense (230,702) (199,809)
Other income, net 254 4,949
Expenses related to proposed rights offering -- (74,593)
Income (loss) before provision
for income taxes 220,769 (1,013,239)
Provision for income taxes 17,895 9,978
------------ -----------
Net income (loss) $ 202,874 (1,023,217)
Net income (loss) per share $ .04 (.22)
Weighted average number of shares outstanding 4,957,030 4,690,363
</TABLE>
F-3
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
ASTREX, INC. AND SUBSIDIARIES
Consolidated Statements of Shareholders' Equity
Years ended March 31, 1996 and 1995
Common stock Additional
par value $.01 per share paid-in Accumulated
Shares Amount capital deficit Total
------ ------ ------- ------- -----
<S> <C> <C> <C> <C> <C>
Balance, March 31, 1994 4,690,363 $ 46,904 3,539,931 (76,734) 3,510,101
Net loss - - - (1,023,217) (1,023,217)
------------ --------- ------------ ------------- --------------
Balance, March 31, 1995 4,690,363 46,904 3,539,931 (1,099,951) 2,486,884
Shares granted to directors 400,000 4,000 8,000 - 12,000
Net income - - - 202,874 202,874
------------ --------- ------------ ------------- --------------
Balance, March 31, 1996 5,090,363 $ 50,904 3,547,931 (897,077) 2,701,758
============ ========= ============ ============= ==============
</TABLE>
F-4
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
ASTREX, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years ended March 31, 1996 and 1995
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 202,874 (1,023,217)
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Depreciation and amortization 57,251 48,920
Stock compensation 12,000 --
Changes in assets and liabilities:
(Increase) decrease in accounts receivable, net (330,127) 88,491
(Increase) decrease in inventory (149,055) 910,183
Decrease in prepaid expenses and other current assets 62,848 19,154
Increase (decrease) in accounts payable 30,552 (126,424)
Decrease in accrued liabilities (74,161) (73,721)
------- -------
Net cash used in operating activities (187,818) (156,614)
-------- --------
Cash flows from investing activities:
Capital expenditures (31,018) (29,292)
------- -------
Net cash used in investing activities (31,018) (29,292)
------- -------
Cash flows from financing activities:
Net proceeds (repayments) of short-term funding 217,675 (413,984)
Payments of notes receivable -- 600,243
-------
Net cash provided by financing activities 217,675 186,259
------- -------
Net (decrease) increase in cash (1,161) 353
Cash, beginning of year 3,237 2,884
----- -----
Cash, end of year $ 2,076 3,237
========= =====
Supplemental disclosures of cash flow information
Cash paid during the year for:
Interest $ 230,702 199,809
========= =======
Income taxes $ 27,933 7,084
========= =====
</TABLE>
F-5
See accompanying notes to consolidated financial statements.
<PAGE>
ASTREX, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 1996 and 1995
(1) Organization of Business
Astrex, Inc. and subsidiaries (the Company) sell and distribute ------
electronic parts and components. Approximately 80% of the Company's sales
consist of connectors that connect a wire or group of wires to another wire or
group of wires. The other products sold by the Company, which comprise the
remaining 20% of sales, are devices that control or regulate the flow of
electricity to or within components. The Company's largest markets include the
defense, aerospace, industrial and computer industries, which sales are
worldwide with a concentration in the Northeast and Mid- Atlantic states.
In the fiscal year ended March 31, 1992, the Company was restructured
pursuant to its Second Amended Joint Plan of Reorganization (POR) under the
United States Bankruptcy Code (Chapter 11). The POR became effective on March
31, 1992, and the Company adopted Fresh Start reporting as of that date.
(2) Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of the Company
and its subsidiaries, all of which are wholly-owned. All significant
intercompany accounts and transactions have been eliminated.
Fair Value of Financial Instruments
The carrying value of all financial instruments approximate fair value.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Actual amounts are not expected to differ materially from
those estimates.
Inventory
Inventory, consisting principally of finished goods, is stated at the lower
of cost (first-in, first-out) or market.
Depreciation and Amortization
Depreciation of fixed assets is computed by the straight-line method at
rates adequate to allocate the cost over their expected useful lives.
(Continued)
F-6
<PAGE>
2
ASTREX, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
Income Taxes
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
Net Income (Loss) Per Share
Net income (loss) per share is based on net income (loss) for each year
divided by the weighted average number of shares outstanding during each year.
(3) Inventory Reserves
During the fourth quarter of fiscal 1995, the Company increased its reserve
for excess and obsolete inventory by $750,000 to reflect the sharp reduction in
orders for military specification connectors as compared to historic levels and
the anticipated future level of such sales. During the fiscal year ended March
31, 1996 the Company added $66,000 to the inventory reserve for additional older
inventory.
(4) Fixed Assets
<TABLE>
<CAPTION>
Fixed assets consist of the following:
Estimated
useful life
<S> <C>
Land $ 128,836 -
Building and improvements 553,540 30 years
Equipment, furniture and fixtures 194,549 5 years
--------
876,925
Less accumulated depreciation 185,054
-------
$ 691,871
=============
</TABLE>
(5) Loans Payable
The Company has a loan agreement with a lender, which expires on July 31,
1997. The loan agreement provides for a $2,500,000 line of credit with interest
payable monthly at 2.25% above the prime rate (prime rate at March 31, 1996 was
8.25% per annum). The line is limited to a maximum of 85% of eligible accounts
receivable and 16% of gross inventory. The loan is payable on demand and is
collateralized by substantially all of the Company's assets. The amount
outstanding under this loan is $1,782,064 at March 31, 1996. At March 31, 1995,
the line had an interest rate of 3.5% above prime (prime rate at March 31, 1995
was 9.0% per annum) and was limited to 80% of eligible accounts receivable and
13.5% of gross inventory.
(Continued)
F-7
<PAGE>
3
ASTREX, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(6) Expenses Related to Previously Contemplated Rights Offering
During fiscal 1995, the Company incurred expenses of $74,593 relating to an
unconsummated private placement of the Company's equity securities and
previously contemplated rights offering.
(7) Income Taxes
The provision for income tax expense for the years ended March 31, 1996 and
1995 consists principally of state and local income taxes. Income tax expense in
1996 and 1995 has been offset by the utilization of net operating loss
carryforward available to the Company.
Total income tax expense for fiscal 1996 and 1995 differed from the amounts
computed by applying the United States Federal income tax rate of 34% to income
before income taxes as a result of the following:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Computed "expected" tax expense $ 75,000 (344,000)
State income taxes 17,895 9,978
Change in beginning of the year balance of the
valuation allowance for deferred tax assets
allocated to income tax expense (75,000) 344,000
---------- -----------
$ 17,895 9,978
============== =====
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at March 31,
1996 and 1995 are presented below:
<TABLE>
<CAPTION>
1996 1995
---- ----
Deferred tax assets:
<S> <C> <C>
Net operating loss carryforward $ 2,186,000 2,261,000
Inventory reserve and cost capitalization 834,000 827,000
Bad debts 35,000 42,000
------------- ------------
Total gross deferred tax assets 3,055,000 3,130,000
Less valuation allowance 3,001,000 3,076,000
------------- ------------
54,000 54,000
Deferred tax liabilities:
Depreciation 54,000 54,000
------------- ------------
$ - -
===============
</TABLE>
Primarily due to competitive pricing pressures in the Company's industry
and their potential impact on operating results, the Company does not believe
that it is more likely than not that it will utilize its deferred tax assets. As
a result, the Company established a valuation allowance against its deferred tax
assets at March 31, 1996 and 1995. The amount of deferred tax assets and
corresponding valuation allowance decreased by $75,000 during the year ending
March 31, 1996 due to the utilization of net operating loss carryforwards.
(Continued)
F-8
<PAGE>
4
ASTREX, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
At March 31, 1996, the Company has a net operating loss carryforward
available for federal income tax purposes of approximately $6,400,000, expiring
by 2010. Pursuant to Section 382 of the Internal Revenue Code of 1986, as
amended and Section 383 of the Code, utilization of net operating loss
carryforwards will be limited in future years due to the change in ownership of
the Company (note 1).
(8) Employee 401(k) Plan
The Company established an employee 401(k) plan (the Plan) in fiscal 1996.
The Plan is a defined contribution plan which is administered by the Company.
All regular, full-time employees are eligible for voluntary participation upon
completing one year of service and having attained the age of twenty-one. The
plan provides for growth in savings through contributions and income from
investments. It is subject to the provisions of the Employee Retirement Income
Security Act of 1974 (ERISA), as amended. Plan participants are allowed to
contribute a specified percentage of their base salary. The Company retains the
right to make optional contributions for any plan year. The Company contributed
$15,000 to the Plan in fiscal 1996.
(9) Shareholders' Equity
On August 1, 1995, the Company granted 400,000 shares of its common stock
to two directors. The fair value of the shares granted of $12,000 is included in
selling, general and administrative expenses for the year ended March 31, 1996.
(10) Commitments
(a) Leases
Years ended March 31,
1997 $ 40,000
1998 17,400
1999 7,800
2000 3,200
Rent expense (for leased property and equipment) included in selling,
general and administrative expenses for the two years ended March 31, 1996 and
1995 was $67,749 and $68,097, respectively.
(b) Deferred Compensation
The Company had a deferred compensation plan amounting to $17,000 for
certain key employees who remained employed by the Company through January 2,
1996. Costs of approximately $3,000 and $6,000 relating to this plan have been
included in selling, general and administrative expenses for the fiscal years
ended March 31, 1996 and 1995, respectively.
(Continued)
F-9
<PAGE>
5
ASTREX, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(11) Business and Credit Concentration
Most of the Company's customers are located in the Northeast and Mid
Atlantic states. No single customer accounted for more than ten percent of the
Company's sales in 1996 and 1995, and no account receivable from any customer
amounted to more than 5 percent of the Company's total stockholders' equity at
March 31, 1996.
The Company markets the products of approximately 20 manufacturers. Its
four largest suppliers accounted for approximately 49% of fiscal year ending
March 31, 1996 purchases.
F-10
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
ASTREX, INC.
(Registrant)
by /s/ Michael McGuire
----------------------
Michael McGuire, President
and Chief Executive Officer
(principal executive officer)
Dated: June 27, 1996
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the Registrant and in the capacities and on
the dates indicated.
/s/ John C. Loring /s/ Irene S. Marcic
- ------------------ --------------------
John C. Loring, Chairman of the Irene S. Marcic, CFO and
Board Treasurer
and Director (principal financial
and accounting officer)
Dated: June 27, 1996 Dated: June 27, 1996
------------- -------------
/s/ Howard Amster /s/ Mark Schindler
- ----------------- ------------------
Howard Amster, Director Mark Schindler, Director and
Vice President
Dated: June 27, 1996 Dated: June 27, 1996
------------- -------------
/s/ David S. Zlatin
David S. Zlatin, Director
Dated: June 27, 1996
-------------
