-----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, VvRBPdA1gsdkqGQNr4AI0gxeNMWVy3YCGn98rn/UhnOrLGT1SXHcSjHL/2mXGkYZ 0AAqnQ4bDejAhj/adNu2UQ== 0000889812-96-001092.txt : 19960816 0000889812-96-001092.hdr.sgml : 19960816 ACCESSION NUMBER: 0000889812-96-001092 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: LUNN INDUSTRIES INC /DE/ CENTRAL INDEX KEY: 0000060911 STANDARD INDUSTRIAL CLASSIFICATION: METAL FORGING & STAMPINGS [3460] IRS NUMBER: 111581582 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-01298 FILM NUMBER: 96613870 BUSINESS ADDRESS: STREET 1: 1 GARVIES POINT RD CITY: GLEN COVE STATE: NY ZIP: 11542-2828 BUSINESS PHONE: 5166719000 MAIL ADDRESS: STREET 1: 1 GARVIES POINT RD CITY: GLEN COVE STATE: NY ZIP: 11542-2828 FORMER COMPANY: FORMER CONFORMED NAME: LUNN LAMINATES INC DATE OF NAME CHANGE: 19780425 10QSB 1 QUARTERLY REPORT SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: June 30, 1996 ___ TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from____________________________________ to________________________________ Commission File number 0-1298 LUNN INDUSTRIES, INC. (Exact name of Registrant as specified in its charter) Delaware 11-1581582 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 1 Garvies Point Road, Glen Cove, New York 11542-2828 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (516) 671-9000 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 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 [ ] The aggregate number of shares of Common Stock outstanding as of August 6, 1996 was 11,391,999. Transitional Small Business Disclosure Format (check one) Yes ________ No X PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS LUNN INDUSTRIES, INC. AND SUBSIDIARY CONSOLIDATED CONDENSED BALANCE SHEET JUNE 30, 1996 ASSETS June 30, 1996 (unaudited) CURRENT ASSETS Cash and cash equivalent $85,046 Accounts Receivable - trade, less allowance for doubtful accounts of $67,857 3,422,471 Inventories 4,741,840 Prepaid expense and other current assets 408,940 TOTAL CURRENT ASSETS 8,658,297 PROPERTY AND EQUIPMENT Net of Accumulated Depreciation of $4,151,563 7,457,927 Other Assets: Security deposits and other assets 114,834 Intangible assets - net 453,741 Total other assets 568,575 TOTAL ASSETS $16,684,799 LUNN INDUSTRIES, INC. AND SUBSIDIARY CONSOLIDATED CONDENSED BALANCE SHEET JUNE 30, 1996 LIABILITIES AND STOCKHOLDERS' EQUITY JUNE 30, 1996 (unaudited) LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable - trade 1,269,261 Accrued liabilities 1,024,410 Accrued income taxes 23,677 Notes payable 833,250 Capital lease obligations 8,140 TOTAL CURRENT LIABILITIES 3,158,738 LONG-TERM LIABILITIES: Notes Payable 3,246,089 Capital Lease Obligations 12,615 TOTAL LONG TERM LIABILITIES 3,258,704 TOTAL LIABILITIES 6,417,442 STOCKHOLDERS' EQUITY: Common stock: par value, $.01 per share, authorized 113,470 20,000,000 shares; outstanding 11,346,999 Additional paid-in capital 13,840,328 Accumulated deficit (3,686,104) 10,267,694 Less treasury stock (150 shares) (337) TOTAL STOCKHOLDERS' EQUITY 10,267,357 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $16,684,799 LUNN INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1996 AND 1995 UNAUDITED Three Months Ended Six Months Ended June 30, June 30, 1996 1995 1996 1995 NET SALES $4,641,694 $3,806,937 $8,855,004 $7,144,709 Cost of Sales 3,679,946 2,990,820 6,942,619 5,664,034 Gross Profit (Loss) 961,748 816,117 1,912,385 1,480,675 Selling, General and Administrative Expenses 653,850 538,584 1,394,785 1,083,915 Operating Income 307,898 277,533 517,600 396,760 Other Income (Expense) Interest Income (Expense) (121,376) (111,439) (247,721) (212,088) Other Income (Expense) 14,844 12,443 24,950 20,589 (106,532) (98,996) (222,771) (191,499) Income (loss) from Continuing Operations Before Income Taxes 201,366 178,537 294,829 205,261 Provision for Income Tax 0 0 0 0 NET INCOME $201,366 $178,537 $294,829 $205,261 Weighted Average Number of Shares 13,218,710 7,357,519 9,912,769 7,251,927 Income Per Share Ordinary $0.02 $0.02 $0.03 $0.03 Extraordinary - - $0.02 $0.02 $0.03 $0.03 Dividends None None None None LUNN INDUSTRIES, INC. AND SUBSIDIARY CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995 (UNAUDITED) 1996 1995 CASH FLOWS FROM OPERATING ACTIVITIES Net Income $294,828 $205,261 Adjustments to Reconcile Net Income Provided by Operating Activities: Depreciation and Amortization 561,717 504,696 Allowance for Doubtful Accounts (57,149) 0 Expenses Paid Through Issuance of Stock 71,800 0 Debt Paid Through Issuance of Stock 46,666 0 Changes in Assets & Liabilities: Accounts Receivable (Increase) (1,099,901) (897,621) Inventory (Increase) (635,899) (356,158) Prepaid Exp & Other Assets (Increase) (70,903) (69,312) Accounts Payable - Increase (Decrease) (360,109) 459,570 Accrued Liabilities Increase (Decrease) 256,128 298,449 Customer Advances Increase (Decrease) 103,021 18,000 Net Cash (Used) Provided by Operating Activities (889,801) 162,885 CASH FLOW FROM INVESTING ACTIVITIES Sale of Property, Plant & Equipment (Purchase) (244,618) (842,816) Intangibles 0 (528,515) Leasehold Improvements (35,094) 0 Construction in Progress (223,301) 0 Net Cash used in Investing Activities (503,013) (1,371,331) CASH FLOWS FROM FINANCING ACTIVITIES Bank Overdraft - 9,058 Repayment of Debt (858,830) (101,469) New Borrowing 850,015 1,175,000 Sale of Capital Stock 1,273,225 127,080 Increase Capital Lease Obligations 7,375 (1,223) Net Cash Provided by Financing Activities 1,271,785 1,208,446 Net Increase (Decrease) in Cash (121,029) 0 Cash Balance - Beginning 206,075 0 Cash Balance - Ending $85,046 $0 LUNN INDUSTRIES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED CONDENSED STATEMENTS NOTE 1 - CONSOLIDATED CONDENSED FINANCIAL STATEMENTS The information contained in the condensed consolidated financial statements for the period ended June 30, 1996 is unaudited, but includes all adjustments, consisting of normal recurring adjustments, which the Company considers necessary for a fair presentation of the financial position and the results of operations for these periods. The financial statements and notes are presented as permitted by Form 10-QSB, and do not contain certain information included in the Company's annual statements and notes. Those financial statements should be read in conjunction with the Company's annual financial statement as reported in its most recent Annual Report on Form 10-KSB. The unaudited results of operations for the period ended June 30, 1996 are not necessarily indicative of the results to be expected for the full year. NOTE 2 - STOCK OFFERING On March 21, 1996, the Company sold 3.5 million shares of its common stock for $.40 per share in a private placement. Total proceeds, net of underwriting, commissions and expenses were $1,244,000. The Company has used $581,000 of the proceeds to reduce its bank debt obligations, pay down a portion of the outstanding balance due to bridge lenders, and reduce its obligation to a shareholder. The balance has been applied toward working capital. In addition, during the first quarter of 1996, the Company issued 229,666 shares of its common stock to pay expenses and reduce debt valued at $97,000. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION The Company reported profitable operating results for the second quarter ended June 30, 1996. This marks the sixth consecutive quarter the Company has reported profitable results. Consolidated sales during the second quarter were $4.6 million compared to $3.8 million in the second quarter of 1995, an increase of 21%. Consolidated sales for the first six months of 1996 were $8.9 million compared to $7.1 million in 1995, an increase of 25%. Quarterly and six month sales increases were reflected across all business segments of the Company. Sales for the aluminum honeycomb segment for the second quarter and first six months of 1996 increased to $3.1 and $6.1 million, respectively, compared to $2.6 and $5.2 million, respectively during similar periods in 1995. Increased honeycomb sales resulted from a number of factors, including increased commercial aircraft manufacturing, increased foreign sales to Asian customers, improved lead times resulting from a new program to provide small quantity overnight deliveries, and the general availability of substantially increased backlog released for shipments during this period compared to previous periods. Sales for the composite segment for the second quarter and first six months of 1996 increased to $1.5 and $2.8 million, respectively compared to $1.2 and 2.0 million, for 1995. Improved composite sales resulted from increased military orders for composite fuel tanks, and steadily improving bonded assembly shipments to both military and commercial aircraft manufacturers. In addition, first and second quarter results for 1995 were impacted by the relocation and consolidation of the Company's composite businesses from Wyandanch, New York and Newtown, Connecticut to Glen Cove, New York at the beginning of 1995. The backlog of customer orders as of June 30, 1996 was approximately $16.9 million, an increase of $5.3 million or 46% compared to a backlog of $11.6 million at the end of the second quarter 1995. Approximately $7.9 million or 47% of the backlog is anticipated to be released for shipments during the second half of 1996. Consolidated operating income for the second quarter 1996 was $308 thousand, compared to $278 thousand in the second quarter of 1995, an increase of 11%. Consolidated operating income for the first six months of 1996 was $518 thousand, compared to $397 thousand in 1995, an increase of 30.5%. The improvement in operating income resulted entirely from improved operating results to the aluminum honeycomb segment. Operating income for the honeycomb segment for the second quarter and first six months of 1996 increased to $292 thousand and $488 thousand, respectively, compared to $225 and $333 thousand during similar periods in 1995. These year-to-year increases were offset by the composite segment where operating income for the second quarter and first six months of 1996, decreased to $16 and $30 thousand, compared to $52 and $64 thousand during similar periods in 1995. The overall improvement in consolidated operating income for 1996 resulted from a higher sales and a slight (22% vs. 21%) increase in gross margin due primarily to reduced factory overhead expenses. Selling, marketing and administrative expenses as a percentage of revenue for the second quarter and first six months of 1996 remained at approximately the same level for the similar period in 1995. The decline in composite segment operating income resulted from losses sustained on two government orders where margins fell below desired levels. These orders have now been completed. Composite backlog and shipments for the remainder of 1996 have been analyzed to insure higher margins. Consolidated net income for the second quarter 1996 was $201 thousand, compared to $179 thousand in the second quarter of 1995, an increase of 12%. Consolidated net income for the first six months of 1996 was $295 thousand, compared to $205 thousand in 1995, an increase of 44%. Other non-operating expenses declined in 1996 compared to last year. This decline was offset by a slight increase in interest expense due to higher revolving loan borrowing. FINANCIAL CONDITION Net cash used by operations during the first six months of 1996 was $890 thousand compared to $163 thousand generated in the corresponding period of 1995. Net cash provided from operations in the first six months of 1996 was $295 thousand net income plus $623 thousand in non-cash items, offset by approximately $1.8 million in changes in assets and liabilities related to increase accounts receivable, inventory, other liabilities and a decrease in accounts payable. Net cash provided from operations in the first six months of 1995 was $205 thousand net income, offset for non-cash items of approximately $505 thousand and changes in assets and liabilities of $547 thousand. Net cash used in investing activities during 1996 was $503 thousand, comprised of $245 thousand utilized for the purchase of machinery and equipment and $258 thousand for leasehold improvements and construction in progress at the Company's Glen Cove, New York and Maryland facilities. Net cash provided by financing activities was approximately $1.3 million. This was comprised of $2.1 million from the sale of common stock and new borrowing on the existing revolving line of credit, offset by the use of $800 thousand to repay Fleet Bank, the bridge lenders, reduce its obligation to a shareholder and other loan obligations. On March 21, 1996, the Company sold 3.5 million shares of its common stock for $.40 per share in a private placement. Total proceeds, net of underwriting commissions and expenses were $1,244,000. The Company has used $581,000 of the proceeds to reduce its bank debt obligations, pay down a portion of the outstanding balance due to bridge lenders, and reduce its obligation to a shareholder. The balance has been applied toward working capital. In addition, during the first quarter of 1996, the Company issued 229,666 shares of its common stock to pay expenses and reduce debt valued at $97 thousand. The Company believes that cash flow from future operations and funds available under its credit facilities as amended, will be sufficient to meet its working capital requirements for the foreseeable future. The Company, based on operating results and continued improvements in backlog, is exploring increases in its existing credit facility with its primary lender. PART II - OTHER INFORMATION Item 6. Exhibits and Reports (a) Exhibits None (b) Reports on Form 8-K. None THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK. LUNN INDUSTRIES, INC. 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 duly authorized. LUNN INDUSTRIES, INC. Dated: August 8, 1996 By: s/ Lawrence Schwartz ---------------------------------------- Lawrence Schwartz Vice President, Secretary and Treasurer (Chief Accounting Officer) EX-27 2 FINANCIAL DATA SCHEDULE
5 1 6-MOS DEC-31-1996 JAN-01-1996 JUN-30-1996 85,046 0 3,490,328 67,857 4,741,840 8,658,297 11,609,490 4,151,563 16,684,799 3,158,738 3,258,704 0 0 113,470 10,153,887 16,684,799 8,855,004 8,855,004 6,942,619 1,394,785 (24,950) 0 247,721 294,829 0 294,829 0 0 0 294,829 0.03 0.000
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