U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
For the quarterly period ended June 30, 2001
OR
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ___________________ to _________________________
Commission file number 1-4530
ASTREX, INC.
(Exact name of small business issuer as specified in its charter)
Delaware | 13-1930803 |
(State or other jurisdiction of | (I.R.S. Employer Identification No.) |
incorporation or organization) | |
205 Express Street, Plainview, New York 11803 | |
(Address of principal executive offices) | |
(516) 433-1700 | |
(Issuer’s telephone number, including area code) |
(Former name, former address and former fiscal year, if changed since last report) |
Check whether the issuer (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 ý No o
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. As of July 30, 2001 common shares outstanding were 5,531,277 (does not include Convertible Preferred Stock).
ASTREX, INC. | |||
INDEX |
PART I - Financial Information
ASTREX, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, 2001 | March 31, 2001 | |||||||
(Unaudited) | ||||||||
(000's) Omitted | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 27 | $ | 11 | ||||
Accounts receivable (net of allowance for doubtful accounts of $87 at June 30, 2001 and $79 at March 31, 2001) | ||||||||
2,568 | 2,451 | |||||||
Inventory | 5,185 | 5,310 | ||||||
Prepaid expenses and other current assets | 194 | 61 | ||||||
Deferred tax asset | 200 | 200 | ||||||
Total current assets | 8,174 | 8,033 | ||||||
Property, plant and equipment at cost (net of accumulated depreciation of $634 at June 30, 2001 and $618 at March 31, 2001) | ||||||||
695 | 701 | |||||||
Other long-term assets | 93 | 88 | ||||||
Total Assets | $ | 8,962 | $ | 8,822 | ||||
Current Liabilities: | ||||||||
Accounts payable | 1,521 | 1,567 | ||||||
Accrued liabilities | 617 | 794 | ||||||
Total current liabilities | 2,138 | 2,361 | ||||||
Long-term debt | 2,180 | 2,000 | ||||||
Shareholders' Equity: | ||||||||
Preferred Stock, Series A - issued, none | - | - | ||||||
Convertible Preferred Stock, Series B - $.01 par value; authorized, 10,000,000; 1,897,381 shares issued and outstanding at June 30, 2001 and March 31, 2001 (liquidation preference of $.25 a share) | ||||||||
19 | 19 | |||||||
Common Stock - par value $.01 par value; authorized, 15,000,000 shares; issued, 6,605,363 at June 30, 2001 and at March 31,2001 | ||||||||
66 | 66 | |||||||
Additional paid-in capital | 3,928 | 3,928 | ||||||
Retained earnings | 952 | 767 | ||||||
Deferred compensation | (8 | ) | (11 | ) | ||||
Treasury stock, at cost (1,074,086 shares at June 30, 2001 and 1,059,086 shares at March 31, 2001) | ||||||||
(313 | ) | (308 | ) | |||||
Total shareholders' equity | 4,644 | 4,461 | ||||||
Total liabilities and shareholders' equity | $ | 8,962 | $ | 8,822 | ||||
See accompanying notes to unaudited consolidated financial statements.
ASTREX, INC. AND SUBSIDIARIES | |
CONSOLIDATED STATEMENTS OF INCOME | |
(Unaudited) |
THREE MONTHS ENDED | |||||||||
JUNE 30, | |||||||||
2001 | 2000 | ||||||||
(000's) Omitted | |||||||||
Net sales | $ | 5,157 | $ | 4,567 | |||||
Cost of sales | 3,974 | 3,542 | |||||||
Gross profit | 1,183 | 1,025 | |||||||
Selling, general and | |||||||||
administrative expenses | 954 | 829 | |||||||
Income from operations | 229 | 196 | |||||||
Interest expense | 39 | 43 | |||||||
Income before provision | |||||||||
for income taxes | 190 | 153 | |||||||
Provision for income taxes | 6 | 0 | |||||||
Net income | $ | 184 | $ | 153 | |||||
Per share data for the three months ended June 30, 2001 and 2000 are as follows: | |||||||||
Weighted average common shares and | |||||||||
common equivalent shares outstanding: | |||||||||
Basic | 5,471,552 | 5,626,777 | |||||||
Diluted | 7,433,933 | 5,628,206 | |||||||
Net income per share: | |||||||||
Basic | $ | 0.03 | $ | 0.03 | |||||
Diluted | $ | 0.02 | $ | 0.03 | |||||
See accompanying notes to unaudited consolidated financial statements. |
ASTREX, INC. AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF CASH FLOWS |
(Unaudited) |
FOR THE THREE MONTHS ENDED JUNE 30, | ||||||||||
2001 | 2000 | |||||||||
(000's) Omitted | ||||||||||
Cash Flows From Operating Activities: | ||||||||||
Net income | $ | 184 | $ | 153 | ||||||
Adjustments to reconcile net income to net | ||||||||||
cash (used in) operating activities: | ||||||||||
Depreciation and amortization | 16 | 24 | ||||||||
Amortization of deferred stock compensation | 4 | - | ||||||||
Changes in assets and liabilities: | ||||||||||
(Increase)/decrease in accounts receivable, net | (117 | ) | 274 | |||||||
Increase in prepaid expenses and other current assets | (133 | ) | (111 | ) | ||||||
Decrease in inventory | 125 | 49 | ||||||||
Increase in non-current assets | (8 | ) | - | |||||||
Decrease in accounts payable | (46 | ) | (370 | ) | ||||||
Decrease in accrued liabilities | (177 | ) | (56 | ) | ||||||
Net cash (used in) operating activities | (152 | ) | (37 | ) | ||||||
Cash flows used in investing activities: | ||||||||||
Capital expenditures | (10 | ) | (9 | ) | ||||||
Net cash (used in) investing activities | (10 | ) | (9 | ) | ||||||
Cash flows from financing activities: | ||||||||||
Purchase of Treasury Stock | (5 | ) | - | |||||||
Deferred financing costs | 3 | 3 | ||||||||
Principal payments under capital lease obligations | - | (12 | ) | |||||||
Proceeds from loans payable, net | 180 | - | ||||||||
Net cash provided by/(used in) financing activities | 178 | (9 | ) | |||||||
Net change in cash and cash equivalents | 16 | (55 | ) | |||||||
Cash and cash equivalents - beginning of period | 11 | 57 | ||||||||
Cash and cash equivalents - end of period | $ | 27 | $ | 2 | ||||||
See accompanying notes to unaudited consolidated financial statements. |
ASTREX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - - UNAUDITED FINANCIAL STATEMENTS
The consolidated balance sheet as of June 30, 2001 and the consolidated statements of income and the statement of cash flows for the three months ended June 30, 2001 and 2000 and the statement of cash flows for the three months ended June 30, 2001 and 2000, have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normally recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at June 30, 2001 (and for all periods presented) have been made.
Certain information and note disclosures, normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America, have been condensed or omitted. It is suggested that these consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Annual Report on Form 10-KSB for the year ended March 31, 2001 filed by the Company. The results of operations for the periods ended June 31, 2001 and 2000 are not necessarily indicative of the operating results for the respective full years.
NOTE B – EARNINGS PER COMMON SHARE
The following table sets forth the reconciliation of the weighted average number of common shares:
Three months ended | ||||
June 30, | ||||
2001 | 2000 | |||
(Unaudited) | (Unaudited) | |||
Basic | 5,471,552 | 5,626,777 | ||
Effect of Series B Convertible Preferred Stock | 1,897,381 | |||
Effect of dilutive securities (non- vested restricted stock) | 65,000 | 1,429 | ||
Diluted | 7,433,933 | 5,628,206 | ||
NOTE C - SHAREHOLDERS’ EQUITY
During the first quarter of fiscal year ended March 31, 2002, the Company purchased 15,000 shares of its stock on the open market. These shares were recorded as treasury stock at their aggregate cost of approximately $5,000. In fiscal year ended March 31, 2001, the Company purchased 145,500 shares of its common stock for $43,042 on the open market. These shares are being held as treasury shares.
ASTREX, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATIONS
RESULTS OF OPERATIONS
Net income for the three months ended June 30, 2001 was approximately $184,000, an increase of $31,000 or 20% from the same three month period last fiscal year. This increase is principally the result of higher sales volume.
Sales increased by approximately $590,000 or 13%, for the three months ended June 30, 2001, from the comparable three month period in 2000. To a significant extent "Sales" reflect shipping of past confirmed orders (i.e. "backlog") as opposed to placement of orders during the quarter (i.e. "bookings"). During the quarter ended June 30, 2001 backlog increased approximately 7% with confirmed but unshipped orders at June 30, 2001 of approximately $4,496,000 as compared to approximately $4,220,000 at June 30, 2000. Bookings for the quarter ended June 30, 2001 were basically even as compared to the comparable quarter in 2000, $4,679,000 compared to $4,721,000, but with some slippage toward the end of the quarter ended June 30, 2001 which has continued into the quarter ended September 30, 2001.
The Company’s gross margin remained relatively constant at 22.9% for three months ended June 30, 2001 as compared to 22.4% for the same period last fiscal year.
Selling, general and administrative expenses increased by approximately $125,000, or 15%, for the three months ended June 30, 2001 from the comparable previous three month period in 2000. This increase was primarily the result of advertising, salary, bonus, commission and employee benefit related expenses.
Interest expense decreased by approximately $4,000 for the three months ended June 30, 2001, from the previous comparable three month period in 2000 due to a reduction in interest rates.
The provision for income taxes for the three months ended June 30, 2001 consists principally of state and local taxes. The Company did not record a provision for income tax expense for the three months ended June 30, 2000 based on the recognition of certain tax benefits available to the Company.
ASTREX, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The Company utilized approximately $152,000 in cash from its operating activities for the three months ended June 30, 2001. At June 30, 2001, the Company had working capital of $6,036,000 and its stockholders’ equity was $4,644,000. The Company believes that its present working capital, cash generated from operations and amounts available under the loan agreement will be sufficient to meet its cash needs during the next year. The Company's principal credit facility is a line of credit and a term loan from the same bank lender (“Line”). The Line is secured by substantially all of the Company's assets including a mortgage on the 205 Express Street property. The term of the Line runs to April 30, 2002. Borrowings under the line of credit portion of the Line, are based on the Company’s inventory and receivables. On June 30, 2001, the Company owed $2,180,000 on the Line. The Company’s relationship with its secured lender is satisfactory and the Company believes that the lending arrangement will be adequate for the foreseeable future.
CAUTIONARY LANGUAGE REGUARDING FORWARD LOOKING STATEMENTS
When used herein, the words “believe,” “anticipate,” “think,” “intend,” “will be,” “expect” and similar expressions identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are not guarantees of future performance and involve certain risks and uncertainties discussed herein, which could cause actual results to differ materially from those in the forward-looking statements. Readers are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date hereof. Readers are also urged carefully to review and consider the various disclosures made by the Company which attempt to advise interested parties of the factors which affect the Company’s business, including, without limitation, the disclosures made in the Company’s Annual Report on Form 10-KSB for the fiscal year ended March 31, 2001 under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operation.”
Item 2. Changes in Securities.
none
Item 4. Submission of Matters to a Vote of Security Holders.
none
Item 5. Other Information
In the three months ended June 30, 2001, the Company purchased 15,000 shares of its stock on the open market. These shares were recorded as treasury stock at their aggregate cost of approximately $5,000.
Item 6. Exhibits and Reports on Form 8–K.
none
(A) Exhibits
Exhibit | Description | Previously Filed and Incorporated by reference or Filed Herewith |
3 (a) | Certificate of Incorporation of Astrex, Inc., as amended (a Delaware corporation) | Filed as Exhibit 3(a) to the Form 10-QSB of the Company for the quarter ended September 30, 1997 |
3 (b) | By-Laws of Astrex, Inc., as amended | Filed as Exhibit 3(b) to the Form 10-QSB of the Company for the quarter ended September 30, 1996 |
4 | Astrex, Inc. Certificate of Designations, Preferences and Rights of Series B Convertible Preferred Stock | Filed as Exhibit 4 to the Form 10-QSB of the Company for the quarter ended June 30, 2000 |
(B) Reports on Form 8-K:
None
In accordance with the requirements of Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf, thereunto duly authorized.
ASTREX, INC. | |
Date: August 10, 2001 | By: s/ Michael McGuire |
Michael McGuire | |
Director, President and | |
Chief Executive Officer | |
CHIEF FINANCIAL OFFICER | |
OF ASTREX, INC. | |
Date: August 10, 2001 | By: s/ Lori A. Sarnataro |
Lori A. Sarnataro | |
Chief Financial Officer, Executive Vice President, Treasurer, and Secretary |