-----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, Gh2TFtYFS35Z0/3LKBEfTntLbpuzIkx01/45zVseb3RJsq0avPo4KBWSyiKPbxe8 hPL0hDX7oMppYDoDQXjXIA== 0000002601-97-000005.txt : 19970222 0000002601-97-000005.hdr.sgml : 19970222 ACCESSION NUMBER: 0000002601-97-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970213 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AEROFLEX INC CENTRAL INDEX KEY: 0000002601 STANDARD INDUSTRIAL CLASSIFICATION: SEMICONDUCTORS & RELATED DEVICES [3674] IRS NUMBER: 111974412 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08037 FILM NUMBER: 97529979 BUSINESS ADDRESS: STREET 1: 35 S SERVICE RD CITY: PLAINVIEW STATE: NY ZIP: 11803 BUSINESS PHONE: 516-752-23 MAIL ADDRESS: STREET 1: 35 S SERVICE ROAD CITY: PLAINVIEW STATE: NY ZIP: 11803 FORMER COMPANY: FORMER CONFORMED NAME: ARX INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: AEROFLEX LABORATORIES INC DATE OF NAME CHANGE: 19851119 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended December 31, 1996 Commission File Number 1-8037 AEROFLEX INCORPORATED (Exact name of Registrant as specified in its Charter) DELAWARE 11-1974412 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 35 South Service Road Plainview, N.Y. 11803 (Address of principal executive offices) (Zip Code) (516) 694-6700 (Registrant's telephone number, including area code) *Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, 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. February 13, 1997 12,590,625 (excluding 66,956 shares held in treasury) (Date) (Number of Shares) NOTE: THIS IS PAGE 1 OF A DOCUMENT CONSISTING OF 15 PAGES. AEROFLEX INCORPORATED AND SUBSIDIARIES INDEX PAGE ---- PART I: FINANCIAL INFORMATION CONSOLIDATED BALANCE SHEETS December 31, 1996 and June 30, 1996 3-4 CONSOLIDATED STATEMENTS OF OPERATIONS Six Months Ended December 31, 1996 and 1995 5 CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended December 31, 1996 and 1995 6 CONSOLIDATED STATEMENTS OF CASH FLOWS Six Months Ended December 31, 1996 and 1995 7 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 8-10 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Six and Three Months Ended December 31, 1996 and 1995 11-13 PART II: OTHER INFORMATION ITEM 1 Legal Proceedings 14 ITEM 6 Exhibits and Reports on Form 8-K 14 SIGNATURES 15 -2- AEROFLEX INCORPORATED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
December 31, June 30, 1996 1996 -------------- -------- ASSETS Current assets: Cash and cash equivalents $ 1,025,000 $ 661,000 Invested cash 69,000 - Accounts receivable less allowance for doubtful accounts of $361,000 and $354,000 18,710,000 23,336,000 Income tax refund receivable - 926,000 Inventories 19,195,000 16,916,000 Deferred income taxes 1,921,000 1,871,000 Prepaid expenses and other current assets 1,008,000 554,000 ------------- ------------ Total Current Assets 41,928,000 44,264,000 Invested cash 512,000 603,000 Property, plant and equipment, at cost, net 14,517,000 14,854,000 Intangible assets acquired in connection with the purchase of businesses, net 8,353,000 8,707,000 Costs in excess of fair value of net assets of businesses acquired, net 10,052,000 10,054,000 Other assets 2,384,000 2,687,000 ------------ ------------ $ 77,746,000 $ 81,169,000 ============ ============ See notes to consolidated financial statements
-3- AEROFLEX INCORPORATED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (continued)
December 31, June 30, 1996 1996 ------------- --------- LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Current portion of long-term debt $ 4,312,000 $ 4,259,000 Accounts payable 4,727,000 5,243,000 Accrued expenses and other current liabilities 7,623,000 8,256,000 Income taxes payable 1,693,000 1,770,000 ------------ ------------ Total Current Liabilities 18,355,000 19,528,000 ------------ ------------ Long-term debt 16,111,000 20,337,000 ------------ ------------ Deferred income taxes 78,000 172,000 ------------ ------------ Other long-term liabilities 679,000 679,000 ------------ ------------ 7-1/2% Senior Subordinated Convertible Debentures 9,981,000 9,981,000 ------------ ------------ Stockholders' equity: Preferred stock, par value $.10 per share; Authorized 1,000,000 shares: Series A Junior Participating Preferred Stock, par value $.10 per share, authorized 150,000 shares - - Common stock, par value $.10 per share; authorized 25,000,000 shares; issued 12,550,000 and 12,380,000 shares 1,255,000 1,238,000 Additional paid-in capital 58,174,000 57,820,000 Accumulated deficit (26,460,000) (28,004,000) ------------ ------------ 32,969,000 31,054,000 Less: Treasury stock, at cost (89,000 and 129,000 shares) 427,000 582,000 ------------ ------------ 32,542,000 30,472,000 ------------ ------------ $ 77,746,000 $ 81,169,000 ============ ============ See notes to consolidated financial statements
-4- AEROFLEX INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS
Six Months Ended December 31, ---------------- 1996 1995 ---- ---- Net Sales $ 41,975,000 $ 28,344,000 Cost of Sales 28,440,000 19,715,000 ------------ ------------ Gross Profit 13,535,000 8,629,000 Selling, General and Administrative Costs 9,576,000 6,341,000 ------------ ------------ Operating Income 3,959,000 2,288,000 ------------ ------------ Other Expense (Income) Interest expense 1,551,000 616,000 Interest and other income (61,000) (333,000) ------------ ------------ Total Other Expense (Income) 1,490,000 283,000 ------------ ------------ Income Before Income Taxes 2,469,000 2,005,000 Provision for Income Taxes 925,000 400,000 ------------ ------------ Net Income $ 1,544,000 $ 1,605,000 ============ ============ Net Income per Common Share: Primary $ .12 $ .13 ===== ===== Fully Diluted $ .12 $ .13 ===== ===== Weighted Average Number of Common Shares Outstanding: Primary 13,276,000 12,671,000 ============ ============ Fully Diluted 15,120,000 14,459,000 ============ ============ See notes to consolidated financial statements
-5- AEROFLEX INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended December 31, ------------------- 1996 1995 ---- ---- Net Sales $ 22,914,000 $ 15,195,000 Cost of Sales 15,657,000 10,635,000 ------------ ------------ Gross Profit 7,257,000 4,560,000 Selling, General and Administrative Costs 5,096,000 3,163,000 ------------ ------------ Operating Income 2,161,000 1,397,000 ------------ ------------ Other Expense (Income) Interest expense 741,000 313,000 Interest and other income (15,000) (163,000) ------------ ------------ Total Other Expense (Income) 726,000 150,000 ------------ ------------ Income Before Income Taxes 1,435,000 1,247,000 Provision for Income Taxes 542,000 249,000 ------------ ------------ Net Income $ 893,000 $ 998,000 ------------ ------------ Net Income per Common Share: Primary $ .07 $ .08 ===== ===== Fully Diluted $ .07 $ .08 ===== ===== Weighted Average Number of Common Shares Outstanding: Primary 13,148,000 12,626,000 ============ ============ Fully Diluted 15,061,000 14,402,000 ============ ============ See notes to consolidated financial statements
-6- AEROFLEX INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended December 31, 1996 1995 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 1,544,000 $ 1,605,000 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 2,220,000 1,441,000 Deferred income taxes (144,000) (163,000) Other 12,000 89,000 Change in operating assets and liabilities: Decrease (increase) in accounts receivable 4,614,000 1,713,000 Decrease (increase) in inventories (2,279,000) (3,548,000) Decrease (increase) in prepaid expenses and other assets 774,000 (697,000) Increase (decrease) in accounts payable, accrued expenses and other long-term liabilities (1,301,000) (1,610,000) Increase (decrease) in income taxes payable 223,000 364,000 ----------- ----------- NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 5,663,000 (806,000) ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Net cash provided by discontinued operations - 94,000 Proceeds from sale of property, plant and equipment - 313,000 Decrease in invested cash 22,000 653,000 Capital expenditures (1,374,000) (643,000) ----------- ----------- NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (1,352,000) 417,000 ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Net debt repayments (4,173,000) (1,725,000) Proceeds from the exercise of stock options 226,000 360,000 ----------- ----------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (3,947,000) (1,365,000) ----------- ----------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 364,000 (1,754,000) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 661,000 11,330,000 ----------- ----------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,025,000 $ 9,576,000 =========== =========== See notes to consolidated financial statements
-7- AEROFLEX INCORPORATED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Basis of Presentation The consolidated balance sheet of Aeroflex Incorporated and Subsidiaries ("the Company") as of December 31, 1996 and the related consolidated statements of operations for the six and three months ended December 31, 1996 and 1995 and the statements of cash flows for the six months ended December 31, 1996 and 1995 have been prepared by the Company and are unaudited. In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at December 31, 1996 and for all periods presented have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted. It is suggested that these consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Company's June 30, 1996 annual report to shareholders. There have been no changes of significant accounting policies since June 30, 1996. Certain reclassifications have been made to previously reported financial statements to conform to current classifications. Results of operations for the six and three month periods are not necessarily indicative of results of operations for the corresponding years. 2. Acquisition of Business MIC Effective March 19, 1996, the Company acquired all of the outstanding stock of MIC Technology Corporation ("MIC") for approximately $36,000,000 of cash, 300,000 shares of common stock and warrants to purchase 400,000 shares of common stock (at exercise prices ranging from $7.05 to $7.50 per share). The purchase price was paid with available cash of $9,000,000 and borrowings under the Company's bank loan agreement of $27,000,000. The purchase agreement also provides for a contingent payment of $4,000,000 based upon certain operating results. MIC manufactures high frequency thin film circuits and interconnects for miniaturized, high frequency, high performance electronic products for growing commercial markets such as wireless communications, satellite based communications hardware and high technology military electronics. The acquired company's net sales were approximately $25,000,000 for its fiscal year ended October 31, 1995. The acquisition was accounted for as a purchase and, accordingly, the acquired assets and liabilities assumed were recorded at their estimated fair values at the date of acquisition. The operating results of MIC are included in the consolidated statement of operations from the acquisition date. The Company commissioned an independent asset valuation study of acquired tangible and identifiable intangible assets to serve as a basis for allocation of the purchase price. Based on this study, the Company allocated the purchase price as follows: Net tangible assets $ 6,237,000 Identifiable intangible assets 8,406,000 In-process research and development 23,200,000 ----------- $37,843,000 ===========
-8- The identifiable intangible assets which include existing technology, customer relationships and assembled work force will be amortized on a straight-line basis over thirteen years based on the study described above. The acquired in-process research and development was not considered to have reached technological feasibility and, in accordance with generally accepted accounting principles, the value of such was expensed in the third quarter of fiscal 1996. Summarized below are the unaudited pro forma results of operations of the Company as if MIC had been acquired at the beginning of the fiscal periods presented. The $23,200,000 write-off has been included in the June 30, 1996 pro forma income but not included in the December 31, 1995 pro forma income in order to provide comparability to the respective historical periods.
Pro Forma Pro Forma Pro Forma Six Months Three Months Year Ended Ended Ended June 30, 1996 December 31, 1995 December 31, 1995 ------------- ----------------- ----------------- (in thousands, except per share data) Net Sales $ 90,097 $ 40,318 $ 20,473 Net Income (Loss) (19,392) 656 79 Earnings (Loss) Per Share Primary $ (1.62) $ .05 $ .01 Fully Diluted * .05 .01 * Due to the loss, all options, warrants and convertible debentures are anti-dilutive.
The pro forma financial information presented above is not necessarily indicative of either the results of operations that would have occurred had the acquisition taken place at the beginning of the periods presented or of future operating results of the combined companies. 3. Bank Loan Agreements As of March 15, 1996 the Company replaced a previous agreement with a revised revolving credit and term loan agreement with two banks which is secured by substantially all of the Company's assets not otherwise encumbered. The agreement provides for a revolving credit line of $22,000,000 and a term loan of $16,000,000. The revolving credit line expires in March 1999. The term loan is payable in quarterly installments of $900,000 with final payment on September 30, 2000. The interest rate on borrowings under this agreement is at various rates depending upon certain financial ratios, with the current rate substantially equivalent to the prime rate (8.25% at December 31, 1996) on the revolving credit borrowings and prime plus 1/4% on the term loan borrowings. The terms of the agreement require compliance with certain covenants including minimum consolidated tangible net worth and pre-tax earnings, maintenance of certain financial ratios, limitations on capital expenditures and indebtedness and prohibition of the payment of cash dividends. -9- 4. Inventories Inventories consist of the following:
December 31, June 30, 1996 1996 ------------- ---------- Raw Materials $ 10,864,000 $ 9,352,000 Work in Process 5,761,000 5,301,000 Finished Goods 2,570,000 2,263,000 ------------ ------------ $ 19,195,000 $ 16,916,000 ============ ============
5. Income Taxes At June 30, 1996 the Company had net operating loss carryforwards of approximately $8,000,000 for Federal income tax purposes which expire through 2006. The income tax provisions for the six and three months ended December 31, 1995 include benefits relating to the recognition of unrealized and realized net operating loss carryforwards. The Company is undergoing routine audits by various taxing authorities of several of its state and local income tax returns covering different periods from 1993 to 1995. Management believes that the probable outcome of these various audits should not materially affect the consolidated financial statements of the Company. 6. Contingencies A subsidiary of the Company whose operations were discontinued in 1991, is one of several defendants named in a personal injury action initiated in August, 1994, by a group of plaintiffs. The plaintiffs are seeking damages which cumulatively may exceed $500 million. The complaint alleges, among other things, that the plaintiffs suffered injuries from exposure to substances contained in products sold by the subsidiary to one of its customers. Considering its various defenses, together with its product liability insurance, in the opinion of management of the Company, the outcome of the action against its subsidiary is not expected to have a materially adverse effect on the Company's consolidated financial statements. -10- AEROFLEX INCORPORATED MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Six Months Ended December 31, 1996 Compared to Six Months Ended December 31, 1995 Net sales increased to $41,975,000 for the six months ended December 31, 1996 from $28,344,000 for the six months ended December 31, 1995. Operating profits increased 73% from last year. Net income decreased to $1,544,000 for the six months ended December 31, 1996 from $1,605,000 for the comparable period in the prior year. Net sales in the electronics segment increased to $34,042,000 for the six months ended December 31, 1996 from $21,396,000 for the six months ended December 31, 1995 primarily as a result of the acquisition of MIC Technology Corporation in March 1996. Operating profits increased by $1,404,000 as a result of both the increased sales volume and higher profit margins in the existing product lines. Net sales in the isolator products segment increased to $7,933,000 for the six months ended December 31, 1996 from $6,948,000 for the six months ended December 31, 1995. The increase reflects increased sales volume in each of the commercial, industrial and military isolator divisions. Operating profits increased by $224,000 primarily due to the higher sales volume and higher profit margins, offset, in part, by increased selling, general and administrative expenses. Cost of sales as a percentage of sales decreased to 67.8% from 69.6% between the two periods primarily as a result of increased margins in microelectronics in the six months ended December 31, 1996 and inefficiencies in the final production runs of military isolators in the Company's Puerto Rican facility in the period ended December 31, 1995. Selling, general and administrative costs as a percentage of sales increased to 22.8% from 22.4%. Interest expense increased to $1,551,000 from $616,000 due to increased levels of borrowings related to the MIC acquisition in March 1996. Interest and other income decreased to $61,000 from $333,000 as a result of lower interest income on reduced cash amounts due to the acquisition of MIC. The income tax provisions for the two periods differed from the amount computed by applying the U.S. Federal income tax rate to income before income taxes primarily as a result of the tax benefits of loss carryforwards (both unrealized and realized) for the six months ended December 31, 1995 and primarily due to state income taxes for the six months ended December 31, 1996. The income tax rates were 37% and 20% for 1996 and 1995, respectively. Management believes that potential reductions in military spending will not materially affect its operations. In certain product areas, the Company has suffered reductions in sales volume due to cutbacks in the military budget. In other product areas, the Company has experienced increased sales volume due to a realignment of government spending towards upgrading existing systems instead of purchasing completely new systems. The overall effect of the cutbacks and realignment has not been material to the Company. Three Months Ended December 31, 1996 Compared to Three Months Ended December 31, 1995 Net sales increased to $22,914,000 for the three months ended December 31, 1996 from $15,195,000 for the three months ended December 31, 1995. Operating profits increased 55% from last year. Net income decreased to $893,000 for the three months ended December 31, 1996 from $998,000 for the comparable period in the prior year. -11- Net sales in the electronics segment increased to $18,811,000 for the three months ended December 31, 1996 from $11,552,000 for the three months ended December 31, 1995 primarily as a result of the acquisition of MIC Technology Corporation in March 1996. Operating profits increased by $847,000 as a result of both the increased sales volume and higher profit margins in the existing product lines partially offset by the addition of MIC's selling, general and administrative costs. Net sales in the isolator products segment increased to $4,103,000 for the three months ended December 31, 1996 from $3,643,000 for the three months ended December 31, 1995. The increase is attributable to higher sales volume primarily in the commercial isolator division. Operating profits decreased by $72,000 as a result of increased selling, general and administrative costs. Cost of sales as a percentage of sales decreased to 68.3% from 70.0% between the two periods as a result of improved margins in the microelectronics, frequency synthesizer and military isolator divisions. Selling, general and administrative costs as a percentage of sales increased to 22.2% from 20.8% primarily as a result of the addition of MIC which has a higher S,G&A cost structure than the balance of the Company. Interest expense increased to $741,000 from $313,000 due to increased levels of borrowings related to the MIC acquisition in March 1996. Interest and other income decreased to $15,000 from $163,000 as a result of lower interest income on reduced cash amounts due to the acquisition of MIC. The income tax provisions for the two quarters differed from the amount computed by applying the U.S. Federal income tax rate to income before income taxes primarily as a result of the tax benefits of loss carryforwards (both unrealized and realized) for the three months ended December 31, 1995 and primarily due to state income taxes for the three months ended December 31, 1996. The income tax rates were 38% and 20% for 1996 and 1995, respectively. Financial Condition The Company's working capital at December 31, 1996 was $23,573,000 as compared to $24,736,000 at June 30, 1996. The current ratio was 2.3 to 1 at both dates. Cash provided by operating activities of $5,663,000 for the six months ended December 31, 1996 was primarily due to the continued profitability of the Company and the collection of receivables. Cash used by investing activities of $1,352,000 was comprised primarily of capital expenditures. The cash provided by operating activities net of the cash used by investing activities for the six month period was used to reduce debt by $4,173,000. Management believes that the revolving credit and term loan facility, coupled with cash to be provided by future operations, will be sufficient for its presently anticipated working capital requirements, capital expenditure needs and the servicing of its debt. -12- Effective March 19, 1996, the Company acquired all of the outstanding stock of MIC Technology Corporation ("MIC") for approximately $36,000,000 of cash, 300,000 shares of common stock and warrants to purchase 400,000 shares of common stock (at exercise prices ranging from $7.05 to $7.50 per share). The purchase price was paid with available cash of $9,000,000 and borrowings under the Company's bank loan agreement of $27,000,000. The purchase agreement also provides for a contingent payment of $4,000,000 based upon certain operating results. MIC manufactures high frequency thin film circuits and interconnects for miniaturized, high frequency, high performance electronic products for growing commercial markets such as wireless communications, satellite based communications hardware and high technology military electronics. The acquired company's net sales were approximately $25,000,000 for its fiscal year ended October 31, 1995. As of March 15, 1996 the Company replaced a previous agreement with a revised revolving credit and term loan agreement with two banks which is secured by substantially all of the Company's assets not otherwise encumbered. The agreement provides for a revolving credit line of $22,000,000 and a term loan of $16,000,000. The revolving credit line expires in March 1999. The term loan is payable in quarterly installments of $900,000 with final payment on September 30, 2000. The interest rate on borrowings under this agreement is at various rates depending upon certain financial ratios, with the current rate substantially equivalent to the prime rate (8.25% at December 31, 1996) on the revolving credit borrowings and prime plus 1/4% on the term loan borrowings. The terms of the agreement require compliance with certain covenants including minimum consolidated tangible net worth and pre-tax earnings, maintenance of certain financial ratios, limitations on capital expenditures and indebtedness and prohibition of the payment of cash dividends. During June 1994, the Company completed a sale of $10,000,000 principal amount of 7-1/2% Senior Subordinated Convertible Debentures to non-U.S. persons. The debentures are due June 15, 2004 subject to prior sinking fund payments of 10%, 10%, 15% and 15% of the principal amount on September 15, 2000, 2001, 2002 and 2003, respectively. The debentures are convertible into the Company's common stock at a price of $5-5/8 per share. As of December 31, 1996, $19,000 principal amount of debentures was converted. A subsidiary of the Company whose operations were discontinued in 1991, is one of several defendants named in a personal injury action initiated in August, 1994, by a group of plaintiffs. The plaintiffs are seeking damages which cumulatively may exceed $500 million. The complaint alleges, among other things, that the plaintiffs suffered injuries from exposure to substances contained in products sold by the subsidiary to one of its customers. Considering its various defenses, together with its product liability insurance, in the opinion of management of the Company, the outcome of the action against its subsidiary is not expected to have a materially adverse effect on the Company's consolidated financial statements. The Company's backlog of orders at December 31, 1996 and 1995 was $45,800,000 and $39,900,000, respectively. At June 30, 1996 the Company had net operating loss carryforwards of approximately $8,000,000 for Federal income tax purposes. The Company is undergoing routine audits by various taxing authorities of several of its state and local income tax returns covering different periods from 1993 to 1995. Management believes that the probable outcome of these various audits should not materially affect the consolidated financial statements of the Company. -13- AEROFLEX INCORPORATED AND SUBSIDIARIES PART II - OTHER INFORMATION Item 1. Legal Proceedings None Item 2. Changes in Securities None Item 3. Defaults upon Senior Securities None Item 4. Submission of Matters to a Vote of Security Holders None Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit 11 - Computation of Earnings Per Common Share Exhibit 27 - Financial Data Schedule (b) Reports on Form 8-K None -14- AEROFLEX INCORPORATED AND SUBSIDIARIES 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. AEROFLEX INCORPORATED (REGISTRANT) February 13, 1997 By: /s/Michael Gorin Michael Gorin President, Chief Financial Officer and Principal Accounting Officer -15- EX-11 2 Exhibit 11 AEROFLEX INCORPORATED AND SUBSIDIARIES COMPUTATION OF EARNINGS PER COMMON SHARE
Six Months Three Months Ended December 31 Ended December 31, 1996 1995 1996 1995 ---- ---- ---- ---- COMPUTATION OF ADJUSTED NET INCOME: Net income for primary earnings per common share $ 1,544,000 $ 1,605,000 $ 893,000 $ 998,000 Add: Debenture interest and amortization expense, net of income taxes 246,000 304,000 123,000 152,000 ----------- ----------- ---------- ---------- Adjusted net income for fully diluted earnings per common share $ 1,790,000 $ 1,909,000 $1,016,000 $1,150,000 =========== =========== ========== ========== COMPUTATION OF ADJUSTED WEIGHTED AVERAGE SHARES OUTSTANDING: Weighted average shares outstanding 12,387,000 11,845,000 12,442,000 11,882,000 Add: Effect of options and warrants outstanding 889,000 826,000 706,000 744,000 ----------- ----------- ---------- ---------- Weighted average shares and common share equivalents used for computation of primary earnings per common share 13,276,000 12,671,000 13,148,000 12,626,000 Add: Effect of additional options and warrants outstanding for fully diluted computation 70,000 11,000 139,000 - Add: Shares assumed to be issued upon conversion of debentures 1,774,000 1,777,000 1,774,000 1,776,000 ----------- ----------- ---------- ---------- Weighted average shares and common share equivalents used for computation of fully diluted earnings per common share 15,120,000 14,459,000 15,061,000 14,402,000 =========== =========== =========== =========== NET INCOME PER COMMON SHARE AND COMMON SHARE EQUIVALENT: Primary $ .12 $ .13 $ .07 $ .08 ===== ===== ===== ===== Fully Diluted $ .12 $ .13 $ .07 $ .08 ===== ===== ===== =====
EX-27 3
5 The schedule contains summary financial information extracted from the consolidated financial statements for the six months ended December 31, 1996 and is qualified in its entirety by reference to such statements. 6-MOS JUN-30-1997 DEC-31-1996 1,025,000 69,000 19,071,000 361,000 19,195,000 41,928,000 38,488,000 23,971,000 77,746,000 18,355,000 9,981,000 0 0 1,255,000 31,287,000 77,746,000 41,975,000 41,975,000 28,440,000 38,016,000 0 0 1,551,000 2,469,000 925,000 1,544,000 0 0 0 1,544,000 .12 .12
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