UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 2000
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number I-4334
SUNAIR ELECTRONICS, INC.
A Florida Corporation I.R.S. Employer I.D. No. 59-0780772
Executive Offices, 3101 S.W. Third Avenue
Fort Lauderdale, FL 33315
Telephone (954) 525-1505
Securities registered pursuant to section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which Registered
------------------- -----------------------------------------
Common (Par Value 10 Cents) American Stock Exchange
Securities registered pursuant to Section 12 (g) of the Act:
None
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the preceding12 months (or for such
shorter period 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
------- ------
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 [ X ]
Issuer's Revenues for the most recent fiscal year ended September 30, 2000 was
7,674,814.
The aggregate market value of the voting stock held by non-affiliates of the
registrant approximated $3,016,799 as of December 1, 2000 based on the closing
price of stock on the American Stock Exchange on said date.
Registrant's common stock - par value 10 cents, outstanding as of December 1,
2000 - 3,692,570 shares.
Documents Incorporated by Reference:
Portions of the annual shareholders' report for the years ended September 30,
2000 and September 30, 1999 and related proxy statements are incorporated by
reference into Parts I and II.
Transitional Small Business Disclosure format. Yes X No
------- -------
This Annual Report on Form 10-KSB has 22 pages. The exhibit index (Item 14a) is
on page 20.
<PAGE>
PART I
------
ITEM 1. BUSINESS
-----------------
General
-------
Sunair Electronics, Inc. is a Florida corporation organized in 1956. It is
engaged in the design, manufacture and sale of high frequency single sideband
communications equipment utilized for long range voice and data communications
in fixed station, airborne, mobile and marine "para-military" applications.
Markets
-------
Sunair products are marketed both domestically and internationally and are
primarily intended for strategic military and other governmental applications.
Sales are executed direct through systems engineering companies, worldwide
commercial and business airframe manufacturers or direct to the U.S. Government
for foreign military assistance.
Products
--------
Sunair's line of equipment is composed of proprietary HF/SSB radio equipment and
ancillary items sold as operating units or combined into sophisticated systems
that may interface with teleprinters, antennae, power sources, modems, message
switching devices, cryptographic equipment and the like provided by others.
Sunair products employ advanced solid state designs with computer controlled
networking capabilities. Principal product areas are as follows:
High frequency transceivers
High frequency receivers
High frequency exciters
Automatic antenna couplers
Linear power amplifiers
Computer remote control systems
Digital modems
Frequency management systems
Transportable systems
High frequency airborne transceivers
In addition, the Company custom designs systems incorporating various
combinations of the above into equipment racks and control consoles that may
interface with products and systems of other manufacturers.
2
<PAGE>
Distribution
------------
Sunair sells through a network of dealers and representatives located throughout
the United States and over 100 other nations. In addition, sales are made on a
direct basis to segments of the U.S. government. A substantial amount of the
Company's sales are made to customers outside the United States and are handled
through its wholly owned subsidiary, Sunair International Sales Corp. The
Company maintains a sales and service organization geared to train and assist
not only its dealers, but larger governmental users throughout the world.
Training programs are conducted at the Company's facilities and in the field.
The following is included to supplement the business information.
a. Sunair competes with other US and foreign companies several of which
have substantially greater sales and assets than Sunair.
b. The backlog of unfilled orders of the Company as of September 30 is as
follows:
2000 1999
---------- ----------
$1,769,419 $5,090,834
All orders at September 30, 2000 are expected to be shipped within the current
fiscal year. Sunair attempts to fill most orders from its finished goods stock
and thus does not look to backlog as a major indication of activity.
c. Raw materials, purchased parts and related items are available from
various suppliers located throughout the country. Management believes that the
items required in the manufacture of its electronic equipment are available in
sufficient quantities to meet manufacturing requirements with some extended
deliveries.
d. The Company maintains an engineering department which included four
full-time engineers and one other full-time technician in 2000. The Company also
utilized the services of six contract engineers at various times throughout the
year. During the fiscal years ended September 30, 1999 and 2000, Sunair expended
$110,000 and $216,000 respectively, on product development and engineering.
e. The Company had 44 active full time employees at the end of the fiscal
year.
f. In the opinion of the Company, its business is subject to limited
seasonal variation.
g. Essentially all export sales are covered by irrevocable letters of
credit or sight drafts. It is believed that over 80% of the non-US Government
sales ultimately enter the export market either directly or via resale by
domestic customers. For amounts of export sales by geographic area, sales to
governmental agencies of the U.S. and to foreign governments for the years ended
September 30, 2000 and 1999, see Note 7 to the consolidated financial statements
included in Item 8 herein.
3
<PAGE>
ITEM 2. PROPERTIES
-------------------
Manufacturing, Sales and Administrative operations are conducted in Fort
Lauderdale, Florida within two concrete block buildings containing approximately
67,700 sq. ft. of floor space on approximately 5 acres of land, all of which is
owned in fee simple by the Company.
ITEM 3. LEGAL PROCEEDINGS
--------------------------
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
------------------------------------------------------------
No matters were submitted during the fourth quarter of the fiscal year to a vote
of security holders, through the solicitation of proxies or otherwise.
PART II
-------
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
--------------------------------------------------------------
STOCKHOLDER MATTERS
--------------------
(a) The following table sets forth the high and low sale price of the Company's
common stock as traded on the American Stock Exchange under the symbol SNR.
2000
----
1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr.
------------ ------------ ------------ ---------
High 3 7 3/4 5 1/8 4 1/8
Low 2 1/8 2 1/4 2 1/2 2 7/16
1999
----
1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr.
------------ ------------ ------------ ---------
High 2 11/16 3 2 15/16 3 1/16
Low 1 7/8 2 1/2 2 3/4 2 13/16
(b) As of December 1, 2000, it is estimated that there were approximately 1200
shareholders of record.
4
<PAGE>
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
---------------------------------------------------------------------
AND RESULT OF OPERATIONS
------------------------
Liquidity
---------
During the fiscal year ended September 30, 2000, the Company had short term
investments and cash or cash equivalents more than adequate to cover known
requirements, unforeseen events or uncertainties that might occur. During this
twelve month period, cash and short term investments had an average balance of
$1,099,000 as opposed to an average balance of $1,058,000 for the twelve months
ending September 30, 1999. Short term investments are tax exempt money market
funds that are readily available for immediate use should the occasion arise. It
is anticipated that the Company will remain as liquid during fiscal 2001. The
current ratio of the Company as of September 30, 2000 was 20.7 compared to 12.5
as of September 30, 1999. Inventories contain no obsolescence as adjustments are
made as they occur. Accounts and notes receivable contain no bad debts. Non cash
interim reserves are maintained to cover items such as warranty repairs in
process and other charges that may be in dispute. All monetary transactions are
in U.S. dollars and no letters of credit involve foreign exchange.
Capital Resources
-----------------
During the twelve months of fiscal 2000, $86,160 was spent for Capital Assets.
These funds were primarily used for new computer hardware and software
development for Sunair equipment. No expenditures are contemplated for plant
expansion or extensive maintenance. The Company has no long term debt and none
is contemplated. Liabilities consist of current accounts payable, accrued
expenses related to the current accounting period, and the current and long term
portion of income taxes payable.
Results of Operations
---------------------
During 2000 shipments of $7,404,000 were up 173.4% or $4,696,000 from fiscal
1999. Domestic shipments of $4,956,000 for fiscal 2000 were up 168.5% or
$3,110,000 from fiscal 1999. Export shipments for fiscal 2000 were $2,448,000 up
184.0% or $1,586,000 from fiscal 1999. A large portion of the fiscal 2000
beginning backlog of $5,100,000 was shipped in the first quarter. Backlog at
September 30, 2000 was $1,769,000. Not included in this backlog are projected
orders on contracts received in fiscal 1999 and 2000 in excess of $19,000,000
over a five year period. $1,000,000 in orders on these contracts were shipped in
fiscal 2000. The largest deliveries against these contracts are budgeted for
fiscal 2002 and beyond.
Cost of sales was slightly higher at 69.7% of sales in fiscal 2000 as compared
to 69.0% of sales in fiscal 1999. Efforts to reduce inventory were successful in
fiscal 2000 with a reduction of 18.5% or $1,518,000 from fiscal 1999, although
investment in inventory to replace goods shipped in fiscal 2000 as well as meet
projected requirements for existing contracts was necessary.
Selling, general and administrative expenses increased $255,000 or 18.0% from
fiscal 1999 due primarily to increased marketing efforts associated with
increased shipments and our new position as a systems integrator. Interest
income increased due to increased investments resulting from higher revenues.
With the completion of the company funded development of the Pathfinder product
line and accompanying software, Sunair was successful in fulfilling contract
requirements for the three major systems orders shipped in fiscal 2000. This
substantially increased Sunair's capabilities to deliver the integrated systems
with the technologies required by todays complex market demands.
5
<PAGE>
The scope of this new market requires extensive planning and coordination on the
buyer's part to define his requirement with more direct marketing and
engineering involvement by the seller. This new approach has demonstrated
success with Sunair's products being required in a number of international
programs.
Procurement cycles continue to be extremely long due to the complexity of design
of the system requirements and the necessary budgeting and funding required due
to the monetary values involved.
The Company expended considerable efforts to identify future manufacturing
requirements for the coming years. The manufacturing process improvements have
been selected and will be implemented in fiscal 2001.
The Company continues to explore new markets and geographical areas not
previously covered and the Company continues to be optimistic for increased
business in the future.
During 1995, it was determined that continued operations of its Interest
Charge-Domestic International Sales Corporation (IC-DISC) subsidiary's election
was no longer advantageous to the Company. Accordingly, the election of the
subsidiary was discontinued and its retained earnings of approximately
$3,200,000 were distributed to the Company. Federal tax regulations provide for
the taxation of such distribution over a ten year period in equal annual
increments. Utilizing the maximum tax rates, the income tax consequence of such
distribution will approximate $123,000 per year. No interest is payable on this
unpaid portion.
6
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
----------------------------------------------------
PURITZ & WEINTRAUB, LLP
CERTIFIED PUBLIC ACCOUNTANTS
(A PARTNERSHIP OF PROFESSIONAL ASSOCIATIONS)
1244 N. UNIVERSITY DRIVE
PLANTATION, FLORIDA 33322
TELEPHONE (954) 370-2727 o FAX (954) 370-2776
INDEPENDENT AUDITOR'S REPORT
To The Board of Directors and Stockholders
of Sunair Electronics, Inc. and Subsidiary
We have audited the accompanying consolidated balance sheets of Sunair
Electronics, Inc. and Subsidiary as of September 30, 2000 and 1999, and the
related consolidated statements of income, stockholders' equity and cash flows
for the years then ended. These financial statements are the responsibility of
the company's management. Our responsibility is to express an opinion on these
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 consolidated financial position of Sunair
Electronics, Inc. and Subsidiary, as of September 30, 2000 and 1999 and the
results of its operations and its cash flows for the years then ended, in
conformity with generally accepted accounting principles.
November 15, 2000
Puritz and Weintraub, LLP
Certified Public Accountants
7
<PAGE>
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
September 30,
-------------------------------------
2000 1999
----------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 629,968 $ 533,478
Accounts receivable 1,480,449 618,791
Inventories 6,686,853 8,205,312
Prepaid expenses and other current assets 18,481 40,635
----------- -----------
Total current assets 8,815,751 9,398,216
INVESTMENTS 3,474,405 3,103,079
NOTE RECEIVABLE 289,597 --
PROPERTY, PLANT, AND EQUIPMENT
Land 127,850 127,850
Buildings and improvements 1,701,748 1,701,748
Machinery and equipment 2,390,590 2,416,235
----------- -----------
4,220,188 4,245,833
Less: Accumulated depreciation 3,352,145 3,303,934
----------- -----------
Total property, plant and equipment 868,043 941,899
----------- -----------
$13,447,796 $13,443,194
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
September 30,
-------------------------------------
2000 1999
----------- -----------
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 319,515 $ 681,463
Current portion of income taxes payable 105,853 72,080
----------- -----------
425,368 753,543
LONG-TERM PORTION OF INCOME TAXES PAYABLE 491,000 614,000
STOCKHOLDERS' EQUITY
Preferred stock, no par value,
500,000 shares authorized, no shares issued -- --
Common stock, $.10 par value, 6,000,000 shares
authorized, 3,692,570 and 3,718,070 shares issued and outstanding
at September 30, 2000 and 1999 respectively 369,257 371,807
Additional paid-in-capital 2,606,899 2,606,899
Retained earnings 9,555,272 9,096,945
----------- -----------
12,531,428 12,075,651
----------- -----------
$13,447,796 $13,443,194
=========== ===========
</TABLE>
Notes to Consolidated Financial Statements are an integral part of these
statements.
8
<PAGE>
CONSOLIDATED INCOME STATEMENTS
Year Ended September 30,
---------------------------
2000 1999
----------- -----------
Sales $ 7,403,859 $ 2,708,273
Cost of sales 5,159,845 1,869,314
----------- -----------
Gross profit 2,244,014 838,959
Selling, general and administrative expenses 1,670,353 1,415,155
----------- -----------
Income (loss) from operations 573,661 (576,196)
----------- -----------
Other income (expenses):
Interest income 270,955 231,884
Interest expense -- (1,087)
Gain on sale of land -- 705,831
Other income (expenses) 6,467 21,748
----------- -----------
277,422 958,376
----------- -----------
Income before provision for income taxes 851,083 382,180
Provision for income taxes (312,000) (139,500)
----------- -----------
Net income $ 539,083 $ 242,680
=========== ===========
Net income per common share
(basic and diluted) $ 0.15 $ 0.07
=========== ===========
Average shares outstanding 3,709,958 3,731,687
=========== ===========
Notes to Consolidated Financial Statements are an integral part of these
statements.
9
<PAGE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock Additional Total
------------------------------ Paid-in Retained Stockholders'
Shares Amount Capital Earnings Equity
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Balances at September 30, 1998 3,756,270 $ 375,627 $ 2,606,899 $ 8,950,626 $ 11,933,152
Purchase and
retirement of
common stock (38,200) (3,820) -- (96,361) (100,181)
September 30, 1999 net income -- -- -- 242,680 242,680
------------ ------------ ------------ ------------ ------------
Balances at September 30, 1999 3,718,070 371,807 2,606,899 9,096,945 12,075,651
Purchase and
retirement of
common stock (25,500) (2,550) (80,756) (83,306)
September 30, 2000 net income -- -- -- 539,083 539,083
------------ ------------ ------------ ------------ ------------
Balances at September 30, 2000 3,692,570 $ 369,257 $ 2,606,899 $ 9,555,272 $ 12,531,428
============ ============ ============ ============ ============
</TABLE>
Notes to Consolidated Financial Statements are an integral part of these
statements.
10
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended September 30,
------------------------------------
2000 1999
----------- -----------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 539,083 $ 242,680
Adjustments to reconcile net income to
net cash provided by (used in) operating activities:
Depreciation 160,016 143,032
Gain on sale of land -- (705,831)
(Increase) in accounts receivable (861,658) (144,726)
(Increase) decrease in inventories 1,518,459 (1,397,677)
Decrease in prepaid and other current assets 22,154 285
(Increase) in note receivable (289,597) --
Increase (decrease) in accounts payable and
accrued expenses (361,948) 449,529
(Decrease) in income taxes payable (89,227) (84,534)
----------- -----------
Net cash provided by (used in) operating activities 637,282 (1,497,242)
----------- -----------
INVESTING ACTIVITIES
Purchase of property, plant, and equipment (86,160) (128,573)
Purchase of investments (371,326) --
Proceeds from sale of land -- 803,243
----------- -----------
Net cash provided by (used in) investing activities (457,486) 674,670
----------- -----------
FINANCING ACTIVITIES
Principal payments on capital lease -- (7,495)
Purchase and retirements of common stock (83,306) (100,181)
----------- -----------
Net cash (used in) financing activities (83,306) (107,676)
----------- -----------
Net increase (decrease) in cash and cash equivalents 96,490 (930,248)
Cash and cash equivalents at beginning of year 533,478 1,463,726
----------- -----------
Cash and cash equivalents at end of year $ 629,968 $ 533,478
=========== ===========
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION
Cash paid during the year for interest $ -- $ 1,087
=========== ===========
Cash paid during the year for income taxes $ 284,000 $ 162,000
=========== ===========
</TABLE>
Notes to Consolidated Financial Statements are an integral part of these
statements.
11
<PAGE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Business activity
Sunair Electronics, Inc. is a Florida corporation organized in 1956.
The Company is engaged in the design, manufacture and sale of high
frequency single sideband communication systems utilized for long range
voice and data transmissions in fixed station, airborne, mobile and
marine "para-military" applications.
Principles of consolidation
The accompanying consolidated financial statements include the accounts
of Sunair Electronics, Inc. (the "Company") and its wholly owned
subsidiary. All significant inter-company accounts and transactions
have been eliminated in consolidation.
Revenue recognition
The Company and Subsidiary uses the accrual basis of accounting. Sales
revenues are recorded when products are shipped. Interest and dividends
earned on investments are recorded when earned.
Statements of cash flows
The Company considers all highly liquid investments with maturities of
three months or less to be cash equivalents unless the investments are
legally or contractually restricted for more than three months. The
carrying amount of cash and cash equivalents approximates fair value
because of their short term maturities.
Accounts receivable
Accounts receivable consists of balances due from sales transactions
and interest receivable from notes and investments. The Company uses
the direct write-off method of accounting for uncollectible accounts
receivable. Bad debts are insignificant.
Inventories
Inventories are stated at the lower of cost or market value using the
first in, first out method. Costs include material, labor and overhead.
Investments
Investments include Private Export Funding Corporation (PEFCO) notes
and Federal National Mortgage Association Bonds (FNMA) at September 30,
2000 and PEFCO notes at September 30, 1999. These PEFCO notes are
guaranteed by the Export-Import Bank of the United States, an agency of
the United States. The Company has classified the PEFCO notes as
"held-to-maturity" securities, in accordance with Statement of
Financial Accounting Standards (SFAS) No. 115, "Accounting for Certain
Investments in Debt and Equity Securities". Held-to-maturity securities
are recorded at amortized cost. Amortization of $28,670, related to the
PEFCO premium, is included in the determination of net income for each
of the years ended September 30, 2000 and 1999.
The FNMA bonds are classified as "available-for-sale", and are recorded
at current market value. During the year ended September 30, 2000, no
adjustment from cost to market was necessary.
The following schedule reflects values at September 30, 2000 and 1999:
<TABLE>
<CAPTION>
Name of issuer and
Title of issue Principal Cost Market Carrying
-------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
2000
----
PEFCO 7.95% secured note
series UU due November 1, 2006 $2,900,000 $3,215,375 $3,019,625 $3,074,405
FNMA 7.55%
due March 7, 2007 400,000 400,000 400,000 400,000
------------- ------------- ------------- -------------
Total $3,300,000 $3,615,375 $3,419,625 $3,474,405
=========== =========== =========== ===========
1999
----
PEFCO 7.95% secured note
series UU due November 1, 2006 $2,900,000 $3,215,375 $3,061,327 $3,103,079
=========== =========== =========== ===========
</TABLE>
12
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
1. Summary of Significant Accounting Policies (continued)
Property, plant and equipment
Property, plant and equipment are carried at cost. Depreciation is
provided over the estimated useful lives of the assets using both the
straight-line and accelerated methods. The estimated useful lives used
to compute depreciation are as follows:
Buildings and improvements 10 to 30 years
Machinery and equipment 4 to 10 years
The cost of maintenance and repairs is charged to income as incurred;
renewals and betterments are capitalized. When properties are retired
or otherwise disposed of, the cost of such properties and the related
accumulated depreciation are removed from the accounts. Any profit or
loss is credited, or charged to income.
The Company performs reviews for the impairment of long lived assets
whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. An impairment loss would be
recognized when estimated future cash flows expected to result from the
use of the assets and its eventual disposition are less than its
carrying amount.
Research and development
Expenditures for research and development are charged to income as
incurred and amounted to approximately $216,000 and $110,000 for the
years ended September 30, 2000 and 1999, respectively.
Income per share
Basic and diluted income per share is based upon the weighted average
number of shares outstanding during each year.
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 in the consolidated
financial statements and accompanying notes. Actual results could
differ from those estimates.
Fair value of financial instruments
The carrying amounts of cash and cash equivalents, accounts receivable,
accounts payable and accrued liabilities, approximate fair value due to
the short-term maturities of these assets and liabilities. Other
financial instruments approximate their fair values by the use of
quoted market prices and other appropriate valuation techniques, based
on information available as of year end.
Concentration of credit risk
The Company maintains cash in bank deposit accounts with a financial
institution which, at times, may exceed federally insured limits. The
Company has not experienced any losses in such accounts. The Company
believes it is not exposed to any significant credit risk on cash and
cash equivalents.
Reclassification
Certain amounts in the prior period have been reclassified to conform
to the 2000 presentations.
13
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
2. Income taxes
The components of the Company's income tax provision are as follows:
Current: 2000 1999
---------- ----------
Federal $ 281,000 $ 128,000
State 31,000 11,500
--------- ----------
$ 312,000 $ 139,500
========= ==========
During 1995, it was determined that continued operations of its Interest
Charge-Domestic International Sales Corporation (IC-DISC) subsidiary's tax
election was no longer advantageous to the Company. Accordingly, the
election of the subsidiary was discontinued and its retained earnings, of
approximately $3,200,000 ,were distributed to the Company. Federal tax
regulations provide for the taxation of such distribution over a ten year
period in equal annual increments. Utilizing the maximum tax rates, the
income tax consequence of such distribution will approximate $123,000 per
year. No interest is payable on this unpaid portion.
The total provision for 2000 and 1999 are more than amounts computed by
applying the 34% statutory rates to income before income taxes for the
following reasons:
2000 1999
---------- ----------
Income taxes at the statutory rates $ 289,728 $ 129,941
State income taxes, net of federal
tax benefit 16,900 7,500
Other 5,372 2,059
---------- ---------
$ 312,000 $ 139,500
========= =========
3. Inventories
Inventories consist of the following:
September 30,
-----------------------------
2000 1999
---------- ----------
Materials $ 1,955,711 $ 1,605,639
Work in Process 4,026,102 4,956,626
Finished goods 705,040 1,643,047
----------- -----------
$ 6,686,853 $ 8,205,312
=========== ===========
4. Note Receivable
As partial payment for goods and services delivered, a foreign
government agency has issued a note to one of the Company's customers.
The note matures on April 15, 2007. The customer has assigned an
interest therein to the Company, currently valued at approximately
$290,000. Interest thereon is paid semi-annually at the rate of 9%.
Interest receivable of $9,580, is included in accounts receivable at
September 30, 2000.
14
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
5. Common stock
During the years ended September 30, 2000 and 1999, the Company
purchased 25,500 and 38,200 shares of its common stock at an average
price of $3.27 and $2.62, respectively.
At the annual meeting of shareholders held on January 24, 2000, the
shareholders approved the cancellation of the stock option plan,
previously adopted by the shareholders at the January 1998 shareholders
meeting, and, in its stead, approved an aggregate of 400,000 shares of
the Company's unissued common stock to be reserved for issuance to key
employees as non-qualified stock options. The purchase price will be
determined at the time of grant.
6. Employee benefits
The Company has a profit sharing and 401(k) Plan. Under the Plan,
eligible employees may contribute up to 15% of their annual
compensation. The Company may contribute to the Plan at the discretion
of the Board of Directors. During the years ended September 30, 2000
and 1999, the Company did not contribute to the plan.
7. Segment information
The Company operates in a single industry, its principal products being
communications equipment.
Sales by geographic area, and to U.S. and foreign governmental
agencies were as follows:
Year Ended September 30,
-------------------------
2000 1999
---------- ----------
Geographic area:
North America $4,933,765 $1,865,487
Africa 1,994,057 1,808
Asia 258,812 571,658
Europe 208,904 225,181
Other 8,321 44,139
---------- ----------
7,403,859 2,708,273
========== ==========
Sales to U.S. governmental agencies 1,668,073 791,041
========== ==========
Direct sales to foreign governmental agencies $2,116,015 $ 295,388
========== ==========
8. Other Matters
On June 25, 1999, the Company sold approximately 4 acres of vacant
land, and recognized a gain of $705,831.
15
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
---------------------------------------------------------------------
AND FINANCIAL DISCLOSURE
------------------------
NONE
16
<PAGE>
PART III
--------
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
-----------------------------------------------------------
Family
Name Age Position Held Relationship
----------------------- ------- ------------------------ ------------
James E. Laurent 64 Vice President/ Marketing None
Since 1988
President, Chief
Executive Officer
and Director
Since 2000
Henry A. Budde 48 Chief Engineer None
Since 1994
Vice President /Operations
Since 2000
Synnott B. Durham 59 Cost Manager None
Since 1979
Treasurer, Chief
Financial Officer
Since 1994
Shirley Uricho 67 Assistant None
Secretary
Since 1959
Secretary
Since 1992
Earl M. Anderson, Jr. 75 Director None
Since 1969
George F. Arata, Jr. 71 Director None
Since 1995
Note - All directors' terms are for one year and until their successors are duly
elected and qualified.
17
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION
--------------------------------
The following information is given on an accrual basis for the year ending
September 30, 2000 with respect to each director of the corporation whose
aggregate salary and fees paid by the Corporation and its subsidiaries were more
than $100,000 and each of the five highest paid officers of the Corporation
whose aggregate direct remuneration exceeded that amount and all officers and
directors of the Corporation as a group.
<TABLE>
<CAPTION>
Cash and Cash Equivalent
Forms of Remuneration
Salaries, Fees, Securities or Property
Capacity Director's Fees, Insurance Benefits or
In Which Commissions and Reimbursements, Personal
Name Served Bonuses Benefits
--------------- ------------------------- ----------------------- ----------------------------------
<S> <C> <C>
Robert Chairman of the $175,000 ?
Uricho, Jr. Board, President
and Chief
Executive Officer
All Officers $495,892 ?
and Directors
(7 Persons
including the 1
named above)
</TABLE>
18
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
------------------------------------------------------------------------
The following information is given with respect to any person who to the
knowledge of the Corporation owns beneficially more than 5% of any class of
voting securities of the Corporation outstanding on the most recent record date,
and with respect to ownership of such securities by the Corporation's officers
and directors.
Based solely upon a review of information furnished to the registrant during the
most recent fiscal year, including written representations, no director, officer
or beneficial owner of more than 10% of the company's common stock failed to
file on a timely basis reports required by Section 16(A) of the Exchange Act
during fiscal year 2000.
<TABLE>
<CAPTION>
(A) Security Ownership of Certain Beneficial Owners.
Title Name and Address Amount and Nature Percent
of Class of Beneficial Owner of Beneficial Ownership of Class (1)
-------- -------------------- ----------------------- ------------
<S> <C> <C> <C>
Common Shirley Uricho *2,272,900 61.55%
Corporate Secretary
3101 S.W. 3rd Avenue
Fort Lauderdale, FL
(B) Security Ownership of Directors and Officers
Title Name and Address Amount and Nature Percent
of Class of Beneficial Owner of Beneficial Ownership of Class (1)
-------- ------------------- ----------------------- ------------
Common Shirley Uricho *2,272,900 61.55%
Corporate Secretary
3101 S.W. 3rd Avenue
Fort Lauderdale, FL
Common All Other 2,281 **
Officers and Directors
Common All Officers and Directors 2,275,181 61.62%
As a group (6)
</TABLE>
* Includes 278,900 shares held by the University of Florida Foundation, Inc.
as Trustee of a Charitable Remainder Unitrust of which Mrs. Uricho is the
income beneficiary.
** Less than 1%.
(1) Based upon 3,692,570 shares outstanding at December 4, 2000.
While the Corporation has 500,000 authorized shares of preferred stock, no par
value, none have been issued. The only stock outstanding is 10 cents par value
Common Stock.
19
<PAGE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
--------------------------------------------------------
Not Applicable
ITEM 13. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES AND REPORTS ON FORM 8-K
--------------------------------------------------------------------------
(a) 1. Financial Statements filed as a part of the Form 10-K
Consolidated Balance Sheets as of
September 30, 2000 and 1999 Page 8
Statements of Consolidated Income for each of the
three years in the period ended September 30, 2000 Page 9
Statements of stockholders' equity for each of the
three years in the period ended September 30, 2000 Page 10
Consolidated Statements of Cash Flows for each
of the three years in the period ended September
30, 2000 Page 11
Notes to Consolidated Financial Statements Pages 12-15
(a) 2. Financial Statement Schedules filed as part of the
Form 10-KSB:
Report on Financial Statements Schedules of
Independent Public Accountants Page 7
Other schedules are omitted because of the absence of conditions under
which they are required or because the required information is given in
the financial statements or notes thereto.
Separate financial statements of the Company are omitted because of the
absence of the conditions under which they are required.
(b) Reports on Form 8-K
A Form 8-K was issued in December, 2000 to report the
death of Mr. Robert Uricho, Jr., Chairman and Chief Executive
Officer, on November 29, 2000. Also reported was the
designation of Mr. James E. Laurent as Board Member
and Chief Executive Officer effective December 1, 2000.
20
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) 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.
SUNAIR ELECTRONICS, INC. Date December 1, 2000
-----------------------
By /S/ James E. Laurent
--------------------------
James E. Laurent
Director, President
and Principal
Executive Officer
By /S/ Synnott B. Durham
--------------------------
Synnott B. Durham
Treasurer and Principal
Accounting Officer
By /S/ Shirley Uricho
--------------------------
Shirley Uricho
Secretary
By /S/ Earl M. Anderson, Jr.
--------------------------
Earl M. Anderson, Jr.
Director
By /S/ George F. Arata, Jr.
--------------------------
George F. Arata, Jr.
Director
21
