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 April 30, 2001 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
April 30, 2001.
INDEX
AEROSONIC CORPORATION
Page No.
-------
PART 1. FINANCIAL INFORMATION
------ ---------------------
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets - 3
April 30, 2001 and January 31, 2001
Condensed Consolidated Statements of Income - 4
Three months ended April 30, 2001 and 2000
Condensed Consolidated Statements of Cash Flows - 5
Three months ended April 30, 2001 and 2000
Notes to Condensed Consolidated Financial Statements - 6
April 30, 2001
Item 2. Management's Discussion and Analysis of 7 - 8
Financial Condition and Results of Operations
PART II. OTHER INFORMATION
---------------------------
Item 6. Exhibits and Reports on Form 8-K 9
SIGNATURES 10
----------
PART 1. FINANCIAL INFORMATION
------------------------------
Item 1. Consolidated Financial Statements
Aerosonic Corporation and Subsidiary
Consolidated Balance Sheets
April 30,
2001 January 31,
(unaudited) 2001
------------- -------------
ASSETS
Current assets:
Cash and cash investments $ 1,199,000 $ 1,077,000
Accounts receivable 5,143,000 5,055,000
Inventory 9,890,000 9,949,000
Prepaid expenses 492,000 122,000
Deferred income tax benefit 295,000 295,000
------------- -------------
Total current assets 17,019,000 16,498,000
Property, plant and equipment, net 4,094,000 4,157,000
Other assets 766,000 818,000
------------- -------------
$ 21,879,000 $ 21,473,000
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt and notes payable $ 1,029,000 $ 1,019,000
Revolving credit facilities 500,000 0
Accounts payable, trade 1,437,000 1,252,000
Compensation and benefits 815,000 849,000
Income taxes payable 157,000 153,000
Other accrued expenses 398,000 621,000
------------- -------------
Total current liabilities 4,336,000 3,894,000
Long-term debt, less current installments 4,119,000 4,335,000
Deferred income taxes 113,000 113,000
------------- -------------
Total liabilities 8,568,000 8,342,000
------------- -------------
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 4,457,000
Retained earnings 7,880,000 7,700,000
Less treasury stock, 66,417 shares and 66,417 shares
at 1/31/01 and 4/30/01, respectively, at cost (621,000) (621,000)
------------- -------------
Total shareholders' equity 13,311,000 13,131,000
------------- -------------
$ 21,879,000 $ 21,473,000
============= =============
Note: The balance sheet at January 31, 2001 has been derived from the
audited financial statements at this date.
See Notes to Consolidated Financial Statements.
Aerosonic Corporation and Subsidiary
Consolidated Statements of Income (Unaudited)
Three Months Ended
April 30,
----------------------------
2001 2000
----------- -----------
Net sales $ 6,522,000 $ 6,484,000
Cost of goods sold 4,204,000 4,394,000
----------- -----------
Gross profit 2,318,000 2,090,000
Selling, general and administrative
expenses 1,876,000 1,842,000
----------- -----------
Operating income 442,000 248,000
----------- -----------
Other (income) deductions:
Interest expense, net 142,000 118,000
Other, net 3,000 (21,000)
----------- -----------
145,000 97,000
----------- -----------
Income before income taxes 297,000 151,000
Income tax expense 117,000 60,000
----------- -----------
Net income $ 180,000 $ 91,000
=========== ===========
Earnings per share: $ 0.05 $ 0.02
=========== ===========
Basic and Diluted weighted
average shares outstanding 3,920,000 3,917,000
=========== ===========
See Notes to Consolidated Financial Statements
Aerosonic Corporation and Subsidiary
Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended
April 30, 2001
--------------------------
2001 2000
----------- -----------
Cash flows from operating activities:
Net income $ 180,000 $ 91,000
Adjustment to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization 214,000 158,000
Stock compensation 10,000
Change in current assets and liabilities (486,000) 233,000
----------- -----------
Net cash provided by (used in) operating activities (92,000) 492,000
----------- -----------
Cash flows from investing activities:
Purchase of property, plant and equipment (80,000) (42,000)
----------- -----------
Net cash used in investing activities (80,000) (42,000)
----------- -----------
Cash flows from financing activities:
Proceeds from/(repayment on) long-term debt
and notes payable 294,000 (105,000)
Purchase of treasury stock 0 (44,000)
----------- -----------
Net cash provided by (used in) financing activities 294,000 (149,000)
----------- -----------
Net increase (decrease) in cash and cash investments 122,000 301,000
Cash and cash investments, beginning of period 1,077,000 964,000
----------- -----------
Cash and cash investments, end of period $ 1,199,000 $ 1,265,000
=========== ===========
Cash paid for:
Interest $ 132,000 $ 129,000
=========== ===========
Income taxes $ 140,000 $ 130,000
=========== ===========
See notes to consolidated financial statements
AEROSONIC CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
APRIL 30, 2001
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 April 30, 2001 are not
necessarily indicative of the results that may be expected for the year ended
January 31, 2002. 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, 2001.
NOTE B - ENVIRONMENTAL MATTERS
------------------------------
As reported in the annual report on form 10-K for the fiscal year ended January
31, 2001, 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 of 2001, management assessed the post-remediation
monitoring expense related to the environmental cleanup of 1993 would cost
approximately $125,000. This amount was accrued and expensed during the third
quarter of FY 2001. Approximately $55,000 remains accrued in Other accrued
expenses at April 30, 2001. Management believes that any additional liability
for any further remediation will not have a material affect on the financial
position of the company.
NOTE C - WEIGHTED AVERAGE COMMON SHARES AND COMMON EQUIVALENTS OUTSTANDING
--------------------------------------------------------------------------
COMPUTATION OF EARNINGS PER SHARE
----------------------------------
For the three months ended
April 30, April 30,
2001 2000
---- ----
Basic weighted average common
shares outstanding 3,920,000 3,917,000
Weighted average common equivalents 0 0
--------- ---------
Shares used in diluted EPS calculation 3,920,000 3,917,000
PART 1. FINANCIAL INFORMATION
------------------------------
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT
OF OPERATIONS
Company wide net sales for the first quarter ended April 30, 2001 were
$6,522,000 as compared to $6,484,000 for the same period in the preceding year.
Gross profit as a percentage of net sales equaled 36% in the first quarter of
FY2002 versus 31% during the same period in the prior year. The increase in
sales and gross profit margin are primarily the result of an increased focus on
sales of higher margin products.
Selling, General and Administrative (SG&A) expenses increased during the first
quarter ended April 30, 2001 to $1,876,000 as compared to $1,842,000 during the
same period in the prior fiscal year. As a percentage of net sales SG&A
increased slightly to 29% from 28% in the prior year period. The increase in
costs represents the additional effort by management to grow the Company's sales
while controlling other SG&A costs.
Interest expense totaled $142,000 for the three months ended April 30, 2001
versus $118,000 during the same period in the preceding year. The increase is
due primarily to slightly higher interest rates.
For the first quarter ended April 30, 2001 the Company recorded a net profit of
$180,000 or $0.05 per share, compared to a net profit of $91,000, or $0.02 per
share during the same period in the preceding year.
Working capital equaled $12,683,000 at April 30, 2001 and the Company's current
ratio approximated 3.93:1. Negative cash flow from operations during the first
quarter of fiscal year 2002 was due largely to an advance payment to a vendor
related to a new program with the integrated multi-function probe. Company
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.
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 first quarter by approximately $12,000 based on the
balance of variable rate debt outstanding at April 30, 2001.
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.
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. 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
None
(b) Reports on form 8-K
The company did not file any report on form 8-K during
the three months ended April 30, 2001.
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: June 13, 2001 /s/ Eric J. McCracken
----------------------------- ---------------------------
Eric J. McCracken
Executive Vice President
and Chief Financial Officer