-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RrqIPsljBWE1ShI0Qvoq4FgPM2i8uTAfv2uPiX8A465XWETIFfg1CvDCWRbebAWd WCQ2Pd87fRUl1CJDB/WhGQ== 0000950168-00-002589.txt : 20001218 0000950168-00-002589.hdr.sgml : 20001218 ACCESSION NUMBER: 0000950168-00-002589 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20001031 FILED AS OF DATE: 20001215 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AEROSONIC CORP /DE/ CENTRAL INDEX KEY: 0000109471 STANDARD INDUSTRIAL CLASSIFICATION: SEARCH, DETECTION, NAVIGATION, GUIDANCE, AERONAUTICAL SYS [3812] IRS NUMBER: 741668471 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-11750 FILM NUMBER: 789611 BUSINESS ADDRESS: STREET 1: 1212 N HERCULES AVE CITY: CLEARWATER STATE: FL ZIP: 34625 BUSINESS PHONE: 8134613000 10-Q 1 0001.txt FORM 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR QUARTER ENDED October 31, 2000 COMMISSION FILE NO. 0-4988 ------------------ ------ AEROSONIC CORPORATION --------------------- (Exact name of registrant as specified in its charter) DELAWARE 74-1668471 -------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1212 No. Hercules Avenue, Clearwater, Florida 33765 ------------------------------------------------------ (Address of principal executive offices) (Zip Code) (727) 461-3000 -------------- (Registrant's telephone number, including Area Code) Non applicable -------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether registrant (1) has filed all reports required to be filed by section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO --- --- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock, par value $.40 per share, 3,986,262 number of shares as of October 31, 2000. INDEX AEROSONIC CORPORATION Page No. ------- PART 1. FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements Condensed Consolidated Balance Sheets - 3 October 31, 2000 and January 31, 2000 Condensed Consolidated Statements of Operations - 4 Three months and nine months ended October 31, 2000 and 1999 Condensed Consolidated Statements of Cash Flows - 5 Nine months ended October 31, 2000 and 1999 Notes to Condensed Consolidated Financial Statements - 6 - 8 October 31, 2000 Item 2. Management's Discussion and Analysis of 9 - 10 Financial Condition and Results of Operations PART II. OTHER INFORMATION Item 1. Legal Proceedings 11 Item 6. Exhibits and Reports on Form 8-K 11 SIGNATURES 12 PART 1. FINANCIAL INFORMATION Item 1. Consolidated Financial Statements Aerosonic Corporation and Subsidiary Consolidated Balance Sheets (Unaudited)
October 31, January 31, 2000 2000 ------------ ------------ ASSETS Current assets: Cash and cash investments $ 1,009,000 $ 964,000 Accounts receivable 4,620,000 5,349,000 Inventory 10,241,000 10,606,000 Prepaid expenses 159,000 128,000 Income tax receivable 78,000 0 Deferred income tax benefit 388,000 388,000 ------------ ------------ Total current assets 16,495,000 17,435,000 Property, plant and equipment, net 4,198,000 4,462,000 Capitalized software cost and other assets 916,000 877,000 ------------ ------------ Total assets $ 21,609,000 $ 22,774,000 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current installments of long-term debt and notes payable $ 997,000 $ 542,000 Revolving credit facilities 497,000 2,314,000 Accounts payable, trade 1,353,000 1,968,000 Compensation and benefits 667,000 659,000 Income taxes payable 0 144,000 Other accrued expenses 581,000 597,000 ------------ ------------ Total current liabilities 4,095,000 6,224,000 Long-term debt, less current installments 4,660,000 3,751,000 Deferred income taxes 155,000 155,000 ------------ ------------ Total liabilities 8,910,000 10,130,000 ------------ ------------ Shareholders' equity: Common stock, $.40 par; 8,000,000 shares authorized; 3,986,262 shares issued 1,595,000 1,595,000 Additional paid-in capital 4,457,000 4,440,000 Retained earnings 7,262,000 7,244,000 Less treasury stock, 68,963 shares at 1/31/00 and 65,917 shares at 10/31/00, at cost (615,000) (635,000) ------------ ------------ Total shareholders' equity 12,699,000 12,644,000 ------------ ------------ $ 21,609,000 $ 22,774,000 ============ ============
See Notes to Consolidated Financial Statements. 3 Aerosonic Corporation and Subsidiary Consolidated Statements of Operations (Unaudited)
Three Months Ended Nine Months Ended October 31, October 31, ----------------------------- ---------------------------- 2000 1999 2000 1999 ----------- ----------- ----------- ----------- Net sales $ 5,706,000 $ 6,237,000 $17,822,000 $16,992,000 Cost of goods sold 3,626,000 3,987,000 11,698,000 10,689,000 ----------- ----------- ----------- ----------- Gross Profit 2,080,000 2,250,000 6,124,000 6,303,000 Selling, general and administrative expenses 2,258,000 2,020,000 5,720,000 5,618,000 ----------- ----------- ----------- ----------- Operating Income (Loss) (178,000) 230,000 404,000 685,000 ----------- ----------- ----------- ----------- Other (income) deductions: Interest expense, net 148,000 109,000 379,000 280,000 Other, net (4,000) 12,000 (5,000) (14,000) ----------- ----------- ----------- ----------- 144,000 121,000 374,000 266,000 ----------- ----------- ----------- ----------- Income (Loss) before income taxes (322,000) 109,000 30,000 419,000 Income tax expense (benefit) (129,000) 41,000 12,000 158,000 ----------- ----------- ----------- ----------- Net Income (Loss) $ (193,000) $ 68,000 $ 18,000 $ 261,000 =========== =========== =========== =========== Earnings (loss) per share: $ (0.05) $ 0.02 $ 0.00 $ 0.07 =========== =========== =========== =========== Basic weighted average shares outstanding 3,922,000 3,934,000 3,917,000 3,941,000 =========== =========== =========== =========== Diluted weighted average shares outstanding 3,922,000 3,934,000 3,917,000 3,941,000 =========== =========== =========== ===========
See Notes to Consolidated Financial Statements 4 Aerosonic Corporation and Subsidiary Consolidated Statements of Cash Flows (Unaudited)
Nine Months Ended October 31, ----------------------------- 2000 1999 ----------- ----------- Cash flows from operating activities: Net income $ 18,000 $ 261,000 Adjustment to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 534,000 518,000 Stock compensation 188,000 176,000 Change in deferred income taxes 0 (133,000) Change in current assets and liabilities 218,000 (1,220,000) ----------- ----------- Net cash provided by (used in) operating activities 958,000 (398,000) ----------- ----------- Cash flows from investing activities: Purchase of property, plant and equipment (195,000) (702,000) Changes in other assets (114,000) (237,000) ----------- ----------- Net cash used in investing activities (309,000) (939,000) ----------- ----------- Cash flows from financing activities: Proceeds from/(repayment on) long-term debt and notes payable (453,000) 1,213,000 Purchase of treasury stock (151,000) (340,000) ----------- ----------- Net cash provided by (used in) financing activities (604,000) 873,000 ----------- ----------- Net increase (decrease) in cash and cash investments 45,000 (464,000) Cash and cash investments, beginning of period 964,000 1,718,000 ----------- ----------- Cash and cash investments, end of period $ 1,009,000 $ 1,254,000 =========== =========== Cash paid for: Interest $ 352,000 $ 351,000 =========== =========== Income taxes $ 70,000 $ 139,000 =========== ===========
See notes to consolidated financial statements 5 AEROSONIC CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) October 31, 2000 NOTE A - BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial reporting and with the instructions to form 10-Q of regulation S-X. 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-month period ended October 31, 2000 are not necessarily indicative of the results that may be expected for the year ended January 31, 2001. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on form 10-K for the year ended January 31, 2000. NOTE B - ENVIRONMENTAL MATTERS As reported in the annual report on form 10-K for the fiscal year ended January 31, 2000, in accordance with a consent agreement signed by the Company in 1993, the Company's environmental consultant has developed an interim remedial action plan to contain and remediate certain contamination on and underlying the Company's property. During 1997 the Company recorded a provision of approximately $175,000 related to the estimated costs to be incurred under this plan. As of January 31, 2000 the company had utilized all amounts originally recorded in other accrued expenses, and phase-one remediation had been completed. During the third quarter management assessed the post-remediation monitoring expense related to the environmental clean up of 1993 would cost approximately $125,000. This amount was accrued and expensed during the third quarter. Approximately $76,000 remains accrued in Other accrued expenses. 6 Note C - LONG-TERM DEBT AND NOTES PAYABLE Long-term debt and notes payable at October 31, 2000 and January 31, 2000 consisted of the following:
October 31, January 31, 2000 2000 ---------- ---------- Note Payable $1,155,000 $1,268,000 Industrial development revenue bonds 909,000 965,000 Mortgage note payable 793,000 831,000 Note payable, equipment 1,075,000 1,229,000 Note payable, II 1,725,000 -- ---------- ---------- 5,657,000 4,293,000 Less current maturity 997,000 542,000 ---------- ---------- Long-term debt and notes payable, less current maturity $4,660,000 $3,751,000 ---------- ----------
The Company's long-term debt agreements include certain restrictive covenants, including restrictions on dividends (dividends during any single calendar year cannot exceed 25 percent of net income for that year), limitations on business acquisitions and sales of assets, and the requirement to maintain: a debt to tangible net worth ratio of 1.0:1, a current ratio of 2.0:1 and a long-term debt service coverage of 1.25:1. The Company is in compliance with all of the above debt covenants at October 31, 2000. Note Payable, II During July 2000, the Company converted $1,800,000 of its Revolving Credit Facility into a long term note payable. This note bears interest at the rate of 8.71% per annum until October 31, 2000; on October 31, 2000 the interest rate shall be adjusted to 275 basis points over the "trailing 90 day average of the 90 day Treasury bill rate" on the last day of each of the Company's fiscal calendar quarters. (Approximately 8.95% at October 31, 2000) This note is payable in thirty-seven monthly principal installments of $37,103, plus accrued interest, with the outstanding principal balance due on or before September 30, 2003. This note is collateralized by receivables, inventory and general intangibles. 7 NOTE D - REVOLVING CREDIT FACILITY During July 2000, the company acquired a revolving credit facility in the amount of $1,000,000 to replace the prior facility that matured in June 2000. The interest is payable monthly and bears interest at the rate of 8.71% per annum until October 31, 2000; on October 31, 2000 the interest rate shall be adjusted to 275 basis points over the "trailing 90 day average of the 90 day Treasury bill rate" on the last day of each of the Company's fiscal calendar quarters. (Approximately 8.95% at October 31, 2000) Approximately $503,000 of additional credit was available under this facility at October 31, 2000. This note is due and payable on demand, and if no demand is made, is due and payable May 30, 2001. The revolving credit facility agreement is collateralized by receivables, inventory and general intangibles, and is subject to the same covenants that are included in the Company's long-term debt agreements. NOTE E - LEGAL PROCEEDINGS David S. Goldman, former President and Chief Executive Officer of Aerosonic Corporation sued the Company in September 1996, for an alleged breach of a consulting agreement between Mr. Goldman and the Company. The suit seeks damages in excess of $15,000. During fiscal year 1997, the Company sued Mr. Goldman and Mil-Spec Finishers, Inc., a former subcontractor to Aerosonic Corporation controlled by Mr. Goldman, seeking damages in excess of $15,000, for alleged fraud and misappropriation of funds, appropriation of corporate opportunity, breach of fiduciary duty and conversion. The Company filed an amended complaint, adding claims for civil theft against both defendants, in October of 1997. Discovery has not yet been completed, however a trial date has been set for February of 2001. Management believes that the ultimate resolution of this matter will not have a material, negative effect on the financial position of the Company. 8 PART 1. FINANCIAL INFORMATION Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF OPERATIONS Year to date sales for fiscal year 2001 continues to outpace the previous period with a 5% increase to 17,822,000 as compared to 16,992,000. Net sales for the third quarter, ended October 31, 2000 decreased by 9% to $5,706,000 as compared to $6,237,000 for the same period in the preceding year. Gross profit as a percentage of net sales equaled 36% in the third quarter of both fiscal year 2001 and fiscal year 2000. The decrease in sales is primarily due to delays in shipments of the multi-function probe, the impact of the delays were partially offset by increased sales of altimeters and air speeds. The strong sales in the mechanical instruments along with increased efficiencies in the manufacturing process of these instruments have helped maintained the gross margin. Selling, General and Administrative (SG&A) expenses increased during the third quarter ended October 31, 2000 to $2,258,000 as compared to $2,020,000 during the same period in the prior fiscal year. Legal expense in the third quarter increased to approximately $214,000 as compared to $68,000 in the previous period. This large increase is primarily due to the increased activity in the legal proceedings described in Part II, item 1. In addition, there was $125,000 worth of post-remediation monitoring expenses incurred and accrued for during the third quarter. Management continues efforts to grow the Company and continue research and development while controlling SG&A cost. Interest expense totaled $148,000 for the three months ended October 31, 2000 versus $109,000 during the same period in the preceding year. The increase is due primarily to increases in the interest rates and a higher average balance during the quarter. For the third quarter ended October 31, 2000 the Company recorded a net loss of $193,000 or $0.05 per share, compared to a net profit of $68,000, or $0.02 per share during the same period in the preceding year. The third quarter loss is primarily attributed to non-recurring SG&A and Other deductions during the third quarter. Working capital equaled $12,400,000 at October 31, 2000 and the Company's current ratio approximated 4:1. The increase in the Company's current ratio is primarily the result of negotiating a new loan agreement. The Company's management anticipates that cash flow from operations, existing cash balances and the availability under the Company's line of credit arrangement will be sufficient to fund future growth. 9 PART 1. FINANCIAL INFORMATION Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The primary market risks exposure for the Company is interest rate risk. The Company does not currently utilize any financial instruments to manage interest rate risk. The Company is exposed to changes in interest rates primarily as a result of its variable rate short and long term borrowings. A hypothetical 10% increase in the Company's weighted average interest rate would have increased the Company's interest expense for the third quarter by approximately $14,000 based on the balance of variable rate debt outstanding at October 31, 2000 FORWARD LOOKING STATEMENTS This document contains statements that constitute "forward-looking" statements within the meaning of the Securities Act of 1933 and the Securities Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995. "Forward-looking" statements contained in this document include the intent, belief or current expectations of the Company and its senior management team with respect to the future prospects of the Company's operations, and belief concerning profits from future operations and the Company's overall future business prospects, as well as the assumptions upon which such statements are based. Investors are cautioned that any such forward-looking statements are not guarantees of future performance, and that actual results may differ materially from those contemplated by such forward-looking statements. Important factors currently known to management that could cause actual results to differ materially from those contemplated by the forward-looking statements in this document include, but are not limited to, adverse developments with respect to the operations of the Company's business units, failure to meet operating objectives or to execute the business plan, and the failure to reach revenue or profit projections. The Company undertakes no obligation to update or revise the forward-looking statements contained in this document to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time. 10 PART II. OTHER INFORMATION AEROSONIC CORPORATION Item 1. LEGAL PROCEEDINGS David S. Goldman, former President and Chief Executive Officer of Aerosonic Corporation sued the Company in September 1996, for an alleged breach of a consulting agreement between Mr. Goldman and the Company. The suit seeks damages in excess of $15,000. During fiscal year 1997, the Company sued Mr. Goldman and Mil-Spec Finishers, Inc., a former subcontractor to Aerosonic Corporation controlled by Mr. Goldman, seeking damages in excess of $15,000, for alleged fraud and misappropriation of funds, appropriation of corporate opportunity, breach of fiduciary duty and conversion. The Company filed an amended complaint, adding claims for civil theft against both defendants, in October of 1997. Discovery has not yet been completed, however a trial date has been set for February of 2001. Management believes that the ultimate resolution of this matter will not have a material, negative effect on the financial position of the Company. Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Exhibit No. Description ----------- ----------------------- 27 Financial Data Schedule (b) Reports on form 8-K The company did not file any report on form 8-K during the three months ended October 31, 2000. 11 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. AEROSONIC CORPORATION ------------------------------------ (Registrant) Date: December 14, 2000 /s/ Eric J. McCracken ----------------- ------------------------------------ Eric J. McCracken Executive Vice President and Chief Financial Officer 12 EX-27 2 0002.txt FDS -- FINANCIAL DATA SCHEDULE
5 9-MOS JAN-31-2001 FEB-01-2000 OCT-31-2000 1,009,000 0 4,697,000 77,000 10,241,000 16,495,000 9,594,000 5,396,000 21,609,000 4,095,000 0 0 0 1,595,000 11,104,000 21,609,000 17,822,000 17,822,000 11,698,000 11,698,000 5,720,000 0 379,000 30,000 12,000 18,000 0 0 0 0 0 0
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