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Previous: FINANCING FOR SCIENCE INTERNATIONAL INC, 15-15D, 1996-09-10 |
Next: SAMSONITE CORP/FL, 10-Q, 1996-09-10 |
<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 31, 1996
-------------
( ) 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 0-22760
--------------------------------
AIRPORT SYSTEMS INTERNATIONAL, INC.
-----------------------------------
(Exact name of small business issuer as specified in its charter)
Kansas 48-1099142
- ------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
11300 West 89th Street
Overland Park, Kansas 66214
---------------------------------
(address of principal executive offices)
(913)492-0861
----------------------------------
(Issuer's telephone number)
Indicate by check mark whether the registrant (1) filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the previous 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 ( )
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
Common stock, $0.01 par value - 2,230,500 shares outstanding as of September 2,
1996
<PAGE> 2
AIRPORT SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
FORM 10-QSB
QUARTER ENDED JULY 31, 1996
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I - FINANCIAL INFORMATION
ITEM I - CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Condensed Consolidated Balance Sheets 3
Condensed Consolidated Statements of Income 4
Condensed Consolidated Statements of Cash Flows 5
Notes to Condensed Consolidated Financial Statements 6
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS 7
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K 9
SIGNATURE PAGE 10
EXHIBIT INDEX 11
</TABLE>
<PAGE> 3
PART I. - FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
AIRPORT SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JULY 31, APRIL 30,
1996 1996
------------ ---------------
(In thousands)
(Unaudited) (Note)
<S> <C> <C>
ASSETS
Current assets:
Cash & cash equivalents $ 2,990 $ 621
Restricted cash 210 ---
Accounts receivable, net 3,128 4,722
Inventories, net 2,970 3,686
Other current assets 229 490
------- --------
Total current assets 9,527 9,519
Property and equipment, at cost 3,060 3,030
Accumulated depreciation and amortization 1,229 1,136
------- --------
1,831 1,894
Cost in excess of net assets acquired, net 1,318 1,337
Other assets 107 128
------- --------
Total assets $12,783 $12,878
======= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 881 $ 1,279
Accrued expenses 1,468 1,267
Current portion of long-term debt 17 16
Other current liabilities 129 165
------- --------
Total current liabilities 2,495 2,727
Long-term debt, less current portion 1,216 1,221
Stockholders' equity:
Common stock 22 22
Additional paid-in capital 7,293 7,286
Retained earnings 1,757 1,622
------- --------
Total stockholders' equity 9,072 8,930
------- --------
Total liabilities and stockholders' equity $12,783 $12,878
======= ========
</TABLE>
NOTE: The balance sheet at April 30, 1996 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. See notes to condensed consolidated financial
statements.
Page 3
<PAGE> 4
AIRPORT SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JULY 31,
---------------------------
1996 1995
-------- --------
(In thousands, except per share data)
<S> <C> <C>
Sales $5,155 $3,314
Cost of products sold 3,597 2,226
------ ------
Gross margin 1,558 1,088
Selling, general and administrative expenses 1,093 818
Research and development expenses 235 270
------ ------
Operating income 230 0
Other income (expense):
Interest expense (26) (33)
Other, net 10 34
------ ------
Income before income taxes 214 1
Provision for income taxes 79 ---
------ ------
Net income $ 135 $ 1
====== ======
Income per share:
Primary $ 0.06 $ 0.00
====== ======
Fully diluted $ 0.06 $ 0.00
====== ======
</TABLE>
See notes to condensed consolidated financial statements.
Page 4
<PAGE> 5
AIRPORT SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JULY 31,
---------------------------
1996 1995
------------ ------------
(In thousands)
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $135 $ 1
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 129 123
Changes in operating assets and liabilities:
Restricted cash (210) (1)
Accounts receivable, net 1,594 857
Inventories, net 716 (189)
Accounts payable (398) (29)
Accrued expenses 201 (685)
Other, net 234 (89)
------ ------
Net cash provided by (used in) operating activities 2,401 (12)
INVESTING ACTIVITIES:
Liquidation of short-term investments ---- 968
Purchases of property and equipment (35) (57)
------ ------
Net cash provided by (used in) investing activities (35) 911
FINANCING ACTIVITIES:
Principal payments on notes payable to banks (570) ---
Borrowing on notes payable to banks 570 ---
Payments on long-term debt and capital lease
obligations (4) (3)
Proceeds from exercise of stock options 7 ---
------ ------
Net cash provided by (used in) financing activities 3 (3)
Net increase in cash and cash equivalents 2,369 896
Cash and cash equivalents at beginning of period 621 556
------ ------
Cash and cash equivalents at end of period $2,990 $1,452
====== ======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for:
Interest $29 $ 33
====== ======
Income taxes --- $ 24
====== ======
</TABLE>
Page 5
<PAGE> 6
AIRPORT SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
JULY 31, 1996
1. Basis of presentation
The accompanying unaudited condensed consolidated financial statements of
Airport Systems International, Inc. (the Company) include the accounts of the
Company and the accounts of its wholly owned subsidiary, ASII International,
Inc., a foreign sales corporation incorporated in Barbados. All intercompany
balances and transactions have been eliminated. The condensed consolidated
financial statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-QSB. Accordingly, they 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. Operating results for the three months
ended July 31, 1996, are not necessarily indicative of the results that may be
expected for the year ended April 30, 1997. For further information, refer to
the consolidated financial statements and footnotes included in the Airport
Systems International Inc. and Subsidiary annual report on Form 10-KSB for the
year ended April 30, 1996.
2. Notes Payable to Banks
The Company has a line of credit agreement with a bank which expires September
2, 1996. The agreement allows for borrowings up to a maximum of $3,000,000, at
an interest rate of prime (8.25% at July 31, 1996), secured by accounts
receivable, inventory, and equipment. The Company had no borrowings outstanding
under this line of credit at July 31, 1996.
During September 1996, the Company amended its line of credit to provide for
maximum borrowings of $4,000,000 with maturity in September, 1997. All other
terms and conditions outlined above remained the same.
Page 6
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Sales for the first quarter of fiscal 1997 increased 55.6%, to $5.2 million
from $3.3 million for the first quarter of fiscal 1996. The increase in sales
for the first quarter is due to an increase in units shipped as a result of a
higher beginning backlog compared to the first quarter of fiscal 1996.
Gross margin increased to $1.6 million (or 30.2% of sales) in the first
quarter of fiscal 1997 compared to $1.1 million (or 32.8% of sales) in the
first quarter of fiscal 1996. Gross margin as a percent of sales decreased
during the first quarter compared to the same quarter in fiscal 1996 due to the
delivery of lower gross margin services, primarily lower margin installation
and training revenue. The Company expects margins to continue to fluctuate due
to the timing and mix of contract awards and delivery of product and services.
Selling, general, and administrative expenses increased during the first quarter
to $1,093,000 from $818,000 in the first quarter of fiscal 1996, reflecting
growth associated with increased sales, backlog, and international marketing
opportunities. As a percent of sales, though, selling, general, and
administrative expenses decreased to 21.2% compared to 24.7% in the first
quarter of fiscal 1996. The reduction is primarily the result of economies of
scale associated with higher sales as certain costs are fixed in nature.
Research and development expenses decreased during the first quarter to $235,000
from $270,000 in the first quarter of fiscal 1996. The decrease during the
quarter compared to the prior year is a result of decreased labor associated
with the current integration and testing stage of the Company's GPS navaids
product. In the first quarter of fiscal 1996, the Company was primarily
involved in the labor intensive initial design stage of the project which
resulted in higher levels of research and development expenses.
Interest expense for the first quarter decreased $7,000 compared to the first
quarter in fiscal 1996 due to a decrease in the average debt and capital lease
obligations outstanding compared to the prior year period. Other income
decreased $24,000 compared to the first quarter of fiscal 1996 due to lower
average cash and short-term investment balances.
The Company's provision for income taxes for the first quarter was approximately
37%. In the first quarter of fiscal 1996, the Company's provision for income
taxes was minimal due the approximate break-even income level.
Net income for the first quarter was $135,000, compared with fiscal 1996 first
quarter net income of $1,000. On a per share basis, net income for the quarter
was $.06 compared with $.00 in the prior year first quarter. The per share
increase in net income is primarily due to increased sales, as previously
mentioned.
Page 7
<PAGE> 8
BACKLOG
The Company's backlog was $4.6 million at July 31, 1996, compared to $4.3
million at July 31, 1995, and $6.5 million at April 30, 1996. Approximately
51% of the backlog at July 31, 1996, was represented by a contract with Taiwan,
with an additional 17% of the backlog represented by a contract from the Middle
East and 11% relating to various contracts with the Republic of Korea.
Significantly all of the backlog at July 31, 1996 is expected to be completed
and shipped in fiscal 1997.
The decline in backlog, as compared to April 30, 1996, is the result of
bookings not keeping pace with shipments. During the first quarter, the
Company was awarded contracts totaling $3.2 million. Subsequent to
quarter-end, the Company announced contract awards of $4.0 million from Lebanon
and Thailand. A number of bids remained active at quarter end, but the Company
is unable to determine when or if the related contracts will be awarded. The
Company is continuing with plans to strengthen its marketing group and expand
its international sales representative network during the remainder of fiscal
1997. The Company expects that these actions, combined with a planned increase
in marketing activities, will better position the Company to capture existing
programs and identify and market upcoming programs. The Company expects
backlog and bidding activities as well as contract awards to continue to
fluctuate due to the size and timing of contract programs.
LIQUIDITY AND CAPITAL RESOURCES
Net cash of $2,401,000 was provided by operations for the first three months of
fiscal 1997 compared to $12,000 used in the first three months of fiscal 1996.
The increase was principally the result of cash generated from lower accounts
receivable and inventory balances compared to year end in addition to higher
net income compared to the first quarter of fiscal 1996.
Cash used in investing activities was $35,000 for the first three months of
fiscal 1997 compared to cash provided of $911,000 in the first three months of
fiscal 1996. The decrease in cash provided is primarily the result of the
liquidation of short-term investments in the prior year period of $968,000.
Cash provided by financing activities was $3,000 in the first three months of
fiscal 1997 compared to cash used of $3,000 in the first three months of fiscal
1996. The increase is mainly due to proceeds received from the exercise of
stock options in the current year quarter.
The Company expects that it will meet its ongoing requirements for working
capital and capital expenditures from a combination of cash expected to be
generated from operations, existing cash and cash equivalents, and available
borrowings under its existing revolving credit facility.
Page 8
<PAGE> 9
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 11.1 - Computation of Earnings Per Share
Exhibit 27 - Financial Data Schedule (SEC Use Only)
(b) Reports on Form 8-K: No reports on Form 8-K were filed by
the Registrant during the three months ended July 31, 1996.
Page 9
<PAGE> 10
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.
AIRPORT SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
September 10, 1996 /s/ THOMAS C. CARGIN
- -------------------- ----------------------------------
Date Thomas C. Cargin, Vice President of
Finance and Administration, Secretary, and
Principal Accounting Officer
Page 10
<PAGE> 11
EXHIBIT INDEX
<TABLE>
<CAPTION>
Number Description
- ------ -----------
<S> <C>
11.1 Computation of Earnings Per Share, filed herewith.
27 Financial Data Schedule (for SEC use only)
</TABLE>
Page 11
<PAGE> 1
EXHIBIT 11.1
AIRPORT SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
NET INCOME PER SHARE COMPUTATION
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JULY 31,
----------------------------
1996 1995
-------- ---------
(In thousands, except per share data)
<S> <C> <C>
PRIMARY
- -----------------------------------------------
Net income applicable to common stockholders $135 $1
===== =====
Weighted average number of common
shares outstanding during the periods 2,228 2,190
Add - dilutive common equivalent shares
(determined using the "treasury stock method")
representing shares issuable upon the exercise
of stock options 172 206
----- -----
Weighted average number of shares used
in calculation of primary net income per share 2,400 2,396
===== =====
Net income per common share - primary $0.06 $0.00
===== =====
FULLY DILUTED
- -----------------------------------------------
Net income applicable to common stockholders $135 $1
===== =====
Weighted average number of shares used in calculating
primary net income per common share computation 2,400 2,396
Add (deduct) incremental shares representing:
Shares issuable upon exercise of stock options
included in primary calculation above (172) (206)
Shares issuable upon exercise of stock options
based on period-end market price 172 207
----- -----
Weighted average number of shares used in
calculation or fully diluted net income per share 2,400 2,397
===== =====
Net income per common share - fully diluted $0.06 $0.00
===== =====
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
AIRPORT SYSTEMS INTERNATIONAL, INC. FORM 10-QSB FOR THE PERIOD ENDED JULY 31,
1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-QSB.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-START> MAY-01-1996
<PERIOD-END> JUL-31-1996
<EXCHANGE-RATE> 1
<CASH> 3,200
<SECURITIES> 0
<RECEIVABLES> 3,190
<ALLOWANCES> 62
<INVENTORY> 2,970
<CURRENT-ASSETS> 9,527
<PP&E> 3,060
<DEPRECIATION> 1,229
<TOTAL-ASSETS> 12,783
<CURRENT-LIABILITIES> 2,495
<BONDS> 1,216
0
0
<COMMON> 22
<OTHER-SE> 9,050
<TOTAL-LIABILITY-AND-EQUITY> 12,783
<SALES> 5,155
<TOTAL-REVENUES> 5,155
<CGS> 3,597
<TOTAL-COSTS> 4,925
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 14
<INTEREST-EXPENSE> 26
<INCOME-PRETAX> 214
<INCOME-TAX> 79
<INCOME-CONTINUING> 135
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 135
<EPS-PRIMARY> 0.06
<EPS-DILUTED> 0.06
</TABLE>
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