Prepared by R.R. Donnelley Financial -- Period: April 30, 2002
Table of Contents
 
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
 
 
FORM 10-Q
 
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
 
For Quarter Ended April 30, 2002
 
Commission File No. 0-4988
 
 
AEROSONIC CORPORATION
(Exact name of registrant as specified in its charter)
 
Delaware
  
74-1668471
(State or other jurisdiction of
incorporation or organization)
  
(I.R.S. Employer
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, 3,919,845 number of shares as of April 30, 2002.
 

Table of Contents
 
INDEX
 
AEROSONIC CORPORATION
 
           
Page No.
PART 1.    FINANCIAL INFORMATION
       
Item 1.
   
Condensed Consolidated Financial Statements
       
         
3
         
4
         
5
         
6
Item 2.
        
7
PART II.    OTHER INFORMATION
       
Item 6.
        
8
    
10

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PART 1.    FINANCIAL INFORMATION
 
Item 1.    Consolidated Financial Statements
 
Aerosonic Corporation and Subsidiary
Consolidated Balance Sheets
 
    
April 30,
2002
     
January 31,
2002
  
    
(unaudited)
         
ASSETS
                  
Current assets:
                  
Cash and cash investments
   
$
734,000
 
   
$
1,705,000
 
Accounts receivable
   
 
4,347,000
 
   
 
4,263,000
 
Inventory
   
 
11,173,000
 
   
 
10,948,000
 
Prepaid expenses
   
 
167,000
 
   
 
131,000
 
Deferred income tax benefit
   
 
422,000
 
   
 
422,000
 
    
  
Total current assets
   
 
16,843,000
 
   
 
17,469,000
 
Property, plant and equipment, net
   
 
4,308,000
 
   
 
4,233,000
 
Other assets
   
 
435,000
 
   
 
517,000
 
    
  
    
$
21,586,000
 
   
$
22,219,000
 
    
  
LIABILITIES AND SHAREHOLDERS’ EQUITY
                  
Current liabilities:
                  
Current installments of long-term debt and notes payable
   
$
1,027,000
 
   
$
1,027,000
 
Revolving credit facilities
   
 
500,000
 
   
 
500,000
 
Accounts payable, trade
   
 
745,000
 
   
 
793,000
 
Compensation and benefits
   
 
950,000
 
   
 
884,000
 
Income taxes payable
   
 
161,000
 
   
 
406,000
 
Other accrued expenses
   
 
625,000
 
   
 
943,000
 
    
  
Total current liabilities
   
 
4,008,000
 
   
 
4,553,000
 
Long-term debt, less current installments
   
 
3,092,000
 
   
 
3,347,000
 
Deferred income taxes
   
 
148,000
 
   
 
148,000
 
    
  
Total liabilities
   
 
7,248,000
 
   
 
8,048,000
 
    
  
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
   
 
8,907,000
 
   
 
8,740,000
 
Less treasury stock, 66,417 shares and 66,417 shares at 4/30/02 and 1/31/02, respectively, at cost
   
 
(621,000
)
   
 
(621,000
)
    
  
Total shareholders’ equity
   
 
14,338,000
 
   
 
14,171,000
 
    
  
    
$
21,586,000
 
   
$
22,219,000
 
    
  
Note:
 
The balance sheet at January 31, 2002 has been derived from the audited financial statements at this date.
 
See Notes to Consolidated Financial Statements.

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AEROSONIC CORPORATION AND SUBSIDIARY
 
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
 
    
Three Months Ended
April 30,
    
2002
   
2001
Net sales
   
$
6,187,000
   
$
6,522,000
Cost of goods sold
   
 
4,075,000
   
 
4,204,000
    
  
Gross profit
   
 
2,112,000
   
 
2,318,000
Selling, general and administrative expenses
   
 
1,772,000
   
 
1,876,000
    
  
Operating income
   
 
340,000
   
 
442,000
    
  
Other (income) deductions:
              
Interest expense, net
   
 
61,000
   
 
142,000
Other, net
   
 
6,000
   
 
3,000
    
  
    
 
67,000
   
 
145,000
    
  
 
Income before income taxes
   
 
273,000
   
 
297,000
Income tax expense
   
 
106,000
   
 
117,000
    
  
Net income
   
$
167,000
   
$
180,000
    
  
Earnings per share:
   
$
0.04
   
$
0.05
    
  
Basic and Diluted weighted average shares outstanding
   
 
3,920,000
   
 
3,920,000
    
  
 
 
See Notes to Consolidated Financial Statements.

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AEROSONIC CORPORATION AND SUBSIDIARY
 
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
 
    
Three months ended
April 30
  
    
2002
     
2001
  
Cash flows from operating activities:
 
                  
Net income
   
$
167,000
 
   
$
180,000
 
Adjustment to reconcile net income to netcash provided by (used in) operating activities:
                  
Depreciation and amortization
   
 
228,000
 
   
 
214,000
 
Change in current assets and liabilities
   
 
(875,000
)
   
 
(486,000
)
    
  
Net cash used in operating activities
   
 
(480,000
)
   
 
(92,000
)
    
  
Cash flows from investing activities:
                  
Purchase of property, plant and equipment
   
 
(236,000
)
   
 
(80,000
)
    
  
Net cash used in investing activities
   
 
(236,000
)
   
 
(80,000
)
    
  
Cash flows from financing activities:
                  
(Repayments on) / Proceeds from long-term debt and notes payable
   
 
(255,000
)
   
 
294,000
 
    
  
Net cash (used in) provided by financing activities
   
 
(255,000
)
   
 
294,000
 
    
  
Net (decrease) increase in cash and cash investments
   
 
(971,000
)
   
 
122,000
 
Cash and cash investments, beginning of period
   
 
1,705,000
 
   
 
1,077,000
 
    
  
Cash and cash investments, end of period
   
$
734,000
 
   
$
1,199,000
 
    
  
Cash paid for:
                  
Interest
   
$
45,000
 
   
$
132,000
 
    
  
Income taxes
   
$
351,000
 
   
$
140,000
 
    
  
 
 
See Notes to Consolidated Financial Statements

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AEROSONIC CORPORATION
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
APRIL 30, 2002
 
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 months ended April 30, 2002 are not necessarily indicative of the results that may be expected for the year ended January 31, 2003. 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, 2002.
 
NOTE B—COMMITMENTS & CONTINGENCES
 
The Company remains involved in litigation with its former President and Chief Executive Officer, David Goldman and his company Mil-Spec Finishers, Inc. The Case was originally scheduled to go to trial in June of 2001. However, Mr. Goldman and Mil-Spec Finishers filed Chapter 7 Bankruptcy on May 25, 2001. Accordingly, all actions pending in the litigation were automatically stayed pursuant to the bankruptcy code. The Company has elected to pursue Mr. Goldman and Mil-Spec Finishers, Inc. in the Bankruptcy Court.
 
Additionally, from time to time the Company can be involved in certain claims and legal actions arising in the ordinary course of business. In the opinion of management, at this time there are no claims or legal actions that will have a material adverse effect on the Company’s financial position, results of operations, or liquidity.

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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, 2002 were $6,187,000 as compared to $6,522,000 for the same period in the preceding year. Sales decrease was attributed to a one time large sale to a long standing OEM customer in the first quarter ended April 30, 2001. Consequently, Gross profit as a percentage of net sales decreased to 34% in the first quarter of FY2003 versus 36% during the same period in the prior year.
 
Selling, General and Administrative (SG & A) expenses decreased during the first quarter ended April 30, 2002 to $1,772,000 as compared to $1,876,000 during the same period in the prior fiscal year. The decrease was attributed to Management’s effort to reduce administrative expenses. As a percentage of net sales SG& A was 29% as compared to 29% during the same period in the prior year.
 
Interest expense decreased to $61,000 for the three months ended April 30, 2002 from $142,000 during the same period in the preceding year. This reduction is due primarily to reduced outstanding debt and lower interest rates.
 
For the first quarter ended April 30, 2002 the Company recorded a net income of $167,000 or $0.04 per share, compared to a net income of $180,000, or $0.05 per share during the same period in the preceding year.
 
Working capital equaled $12,835,000 at April 30, 2002 and the Company’s current ratio approximated 4.2:1. Cash flow used by operations was $480,000 through the first quarter ended April 30, 2002. 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.

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PART II.    OTHER INFORMATION
 
AEROSONIC CORPORATION
 
Item 1.    Legal Proceedings
 
The Company remains involved in litigation with its former President and Chief Executive Officer, David Goldman and his company Mil-Spec Finishers, Inc. The Case was originally scheduled to go to trial in June of 2001. However, Mr. Goldman and Mil-Spec Finishers filed Chapter 7 Bankruptcy on May 25, 2001. Accordingly, all actions pending in the litigation were automatically stayed pursuant to the bankruptcy code. The Company has elected to pursue Mr. Goldman and Mil-Spec Finishers, Inc. in the Bankruptcy Court.
Additionally, from time to time the Company can be involved in certain claims and legal actions arising in the ordinary course of business. In the opinion of management, at this time there are no claims or legal actions that will have a material adverse effect on the Company’s financial position, results of operations, or liquidity.
 
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, 2002.

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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.

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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)
By:
  
/s/    ERIC J. MCCRACKEN     
   
Eric J. McCracken
Executive Vice President
and Chief Financial Officer
 
Date:    June 14, 2002

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