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 the Quarter ended June 30, 1996 Commission file number 1-7404 ALDEN ELECTRONICS, INC. (Exact name of registrant as specified in its charter) Massachusetts 04-2156392 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 40 WASHINGTON STREET, WESTBOROUGH, MASSACHUSETTS 01581 (Address of principal executive offices) Registrant's telephone number, including area code 508/366-8851 N/A ___________________________________________________________ Former name, former address and former fiscal year, if changed since last report. 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 ________ Number of shares outstanding of each of the issuer's classes of common stock as of the close of the period covered by this report. Class A Common Stock -- 2,010,385 shares Class B Common Stock -- 25,000 shares PART I -- FINANCIAL INFORMATION ITEM 1 -- FINANCIAL STATEMENTS ALDEN ELECTRONICS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS June 30 March 31 1996 1996 --------------- --------------- (unaudited) (note) ASSETS CURRENT ASSETS Cash and cash equivalents $ 299,079 $ 209,438 Trade accounts receivable, less allowance of $113,000 1,781,506 2,087,215 Inventories: Finished Goods 315,755 435,153 Work in Process 546,705 1,080,012 Parts & Materials 121,299 207,606 --------------- -------------- 983,759 1,722,771 Prepaid Expenses 127,446 132,941 Deferred Income Tax Asset 20,000 20,000 ---------------- --------------- TOTAL CURRENT ASSETS 3,211,790 4,172,365 PROPERTY, PLANT AND EQUIPMENT: Land & Buildings 3,623,070 3,731,776 Equipment on Lease 284,217 282,176 Other Machinery and Equipment 7,474,350 7,748,327 ---------------- --------------- 11,381,637 11,762,279 Less Allowance for depreciation 8,481,643 8,600,223 --------------- --------------- 2,899,994 3,162,056 Other assets 20,000 29,921 ---------------- --------------- $ 6,131,784 $ 7,364,342 ================ =============== PART I -- FINANCIAL INFORMATION ITEM 1 -- FINANCIAL STATEMENTS ALDEN ELECTRONICS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS June 30 March 31 1996 1996 ---------------- --------------- (unaudited) (note) LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Notes payable $ 350,000 $ 400,000 Accounts payable 797,100 1,480,823 Accrued expenses 826,341 714,433 Accrued warranty expenses 313,323 348,323 Deferred revenue 73,384 109,736 Other current liabilities 358,160 327,697 Current Portion - Long term debt 313,989 330,155 ---------------- --------------- TOTAL CURRENT LIABILITIES 3,032,297 3,711,167 DEFERRED INCOME TAXES 25,000 25,000 STOCKHOLDER'S EQUITY Class A Common Stock, par value $1 per share-- authorized 2,500,000 shares, issued 2,010,385 2,010,385 2,010,385 Class B Common Stock, without par value-- authorized and issued 25,000 shares 75 75 Additional paid-in capital 1,611,418 1,611,418 Retained earnings (deficit) ( 475,293) 83,176 Currency translation adjustment ( 72,098) ( 76,879) ---------------- --------------- 3,074,487 3,628,175 ---------------- --------------- $ 6,131,784 $ 7,364,342 ================ =============== <FN> Note: The balance sheet at March 31, 1996 was derived from the audited financial statements at that date. ALDEN ELECTRONICS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED) Quarter ended Quarter ended June 30, 1996 June 30, 1995 --------------- --------------- REVENUES Net sales and service revenues $ 2,268,424 $ 3,648,099 Income from leased equipment 178,984 184,189 Interest 1,545 2,199 --------------- --------------- 2,448,953 3,834,487 COSTS AND EXPENSES Cost of products sold and expenses of leasing equipment 1,814,268 2,679,560 Selling, administrative and general 1,136,570 1,117,769 Interest expense 23,378 36,928 Asset Write-down 130,260 Gain on sale of assets ( 114,312) --------------- --------------- 2,990,164 3,834,257 --------------- --------------- EARNINGS (LOSS) BEFORE INCOME TAXES ( 541,211) 230 INCOME TAXES 17,258 7,493 --------------- --------------- NET EARNINGS (LOSS) $ ( 558,469) $ ( 7,263) =============== =============== Net Earnings (loss) per share $ ( 0.26) $ ( 0.00) =============== =============== <FN> Note: No dividends were declared during the periods presented. ALDEN ELECTRONICS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Quarter ended Quarter ended June 30, 1996 June 30, 1995 ---------------- --------------- OPERATING ACTIVITIES Net (loss) $ ( 558,469) $ ( 7,263) Adjustments to reconcile net earnings to net cash provided by operating activities; Depreciation & amortization 154,286 248,595 Provision for doubtful accounts 1,500 Provision for asset writedown 130,260 Gain on disposal of assets ( 114,312) Provision for severence obligations 220,684 Decrease/(increase) in operating assets and (decrease)/increase in liabilities: Accounts receivable 283,708 24,796 Refundable income taxes 98,000 Inventories 14,932 678,355 Other current assets 5,651 ( 23,698) Accounts payable, accrued expenses and other current liabilities ( 398,930) ( 718,925) Deferred revenue ( 36,352) ( 39,250) --------------- ---------------- NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES ( 298,542) 262,110 INVESTING ACTIVITIES Proceeds from sale of assets 555,385 Purchases of property, plant and equipment ( 103,565) ( 289,720) ---------------- ---------------- NET CASH USED FOR INVESTING ACTIVITIES 451,820 ( 289,720) FINANCING ACTIVITIES Principal payments on long term debt ( 66,166) ( 24,168) Sale of treasury stock 2,086 ---------------- ---------------- NET CASH USED FOR FINANCING ACTIVITIES ( 66,166) ( 22,082) ---------------- ---------------- Effect of exchange rate changes on cash equivalents 2,529 2,222 ---------------- ---------------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 89,641 ( 47,470) Cash and cash equivalents at beginning of period 209,438 143,238 ---------------- ---------------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 299,079 $ 95,768 ================ ================ ALDEN ELECTRONICS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS June 30, 1996 NOTE A -- BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and 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. The results of operations for the three months ended June 30, 1996 are not necessarily indicative of results to be expected for the full fiscal year. For further information, refer to the consolidated financial statements and footnotes included in the Company's annual report on Form 10-K for the year ended March 31, 1996. NOTE B -- ASSET WRITEDOWN The Company has entered into an agreement to sell a portion of its real estate holdings. At June 30, 1996 the recorded value of such assets, net of accumulated depreciation, exceeded the agreed sale price by $130,260. A loss equal to this amount has been recorded for the quarter ended June 30, 1996. NOTE C -- GAIN ON DISPOSAL OF ASSETS On June 11, 1996 the Company sold certain equipment and inventory relating to a marine product line. Net proceeds from this transaction amounted to $555,385 and a gain of $114,312 was recognized during the quarter ended June 30, 1996. NOTE D -- SEVERANCE PROVISION Effective June 10, 1996, the Company entered into termination agreements with two senior executives. Compensation and termination benefits amounting to $220,684 were recognized to reflect the Company's obligations under these agreements. ALDEN ELECTRONICS, INC. AND SUBSIDIARIES EXHIBIT - COMPUTATION OF EARNINGS PER SHARE Quarter Ended Quarter Ended June 30, 1996 June 30, 1995 ---------------- --------------- Average number of shares of Class A Common Stock 2,010,385 2,010,385 Effect of conversion of Class B Common Stock 175,000 175,000 ---------------- --------------- Total 2,185,385 2,185,385 ================ =============== Net earnings (loss) $ ( 558,469) $ ( 7,263) ================ =============== Net earnings per share $ (0.26) $ (0.00) ALDEN ELECTRONICS, INC. AND SUBSIDIARIES ITEM 2 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Revenues for the quarter ended June 30, 1996 were $2,448,000 compared to $3,834,000 for the same period in the prior year. The overall decrease in revenues is attributable to the effects of discontinuing certain marine electronics products during the quarter ($770,000 less in the quarter ended June 30, 1996 when compared to the prior year) and the reductions in sales of weather display terminals amounting to approximately $500,000. Gross profit, as a percent of sales, was 25.9% for the quarter ended June 30, 1996 compared to 30.1% for the same period in the prior year. The 1995 margin was affected by the recording of a benefit amounting to approximately $223,000 from agreements reached with various suppliers of components and services to the Company to offset costs of the Company's December 19, 1994 recall of its SATFIND-406(tm) SURVIVAL EPIRB. Selling, administrative and general expenses were approximately $19,000 (or 0.8% of sales) greater for the quarter when compared to the same period in the prior year. This increase reflects the provision for severence amounts recorded as the result of termination agreements entered into with two senior executives during the quarter amounting to $220,000 offseting reductions in expenditures from staff reductions and other cost containment measures. Cash and cash equivalents increased by $90,000 for the quarter ended June 30, 1996. This increase was primarily due from the sale of certain assets relating to the production of marine electronics which resulted in proceeds of $555,000 being offset by repayment of trade indebtness, investments in property, plant and equipment and repayment of debt made in the normal course of business. The Company continues to implement cost containment measures with the objective of maintaining revenues and reducing costs. Concurrently the Company is reviewing strategic alternatives with respect to all of its product lines and assets. The alternatives under consideration include divestiture of some or all its product lines and liquidation of some or all of its assets. ALDEN ELECTRONICS, INC. AND SUBSIDIARIES PART II -- OTHER INFORMATION ITEMS 1- 3-- INCLUSIVE Not Applicable ITEM 4 -- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS At the Deferred Annual Meeting of Stockholders, held on July 23, 1996, the Company's Class B Common Stockholders unaminously voted to elect the following individuals to its Board of Directors: Elizabeth J. Alden William L. Alden George P. Bauer Arnold A. Kraft J. David Luening The Class B Common Stockholders voted to elect Robert J. Wentworth as Treasurer and Clerk. The Class B Common Stockholders also approved the appointment of Ernst & Young LLP as the independent auditors for the Company for the year ended March 31, 1997. ITEM 5 -- OTHER INFORMATION Not applicable ITEM 6 -- EXHIBITS AND REPORTS ON FORM 8-K Exhibit 27. Financial Data Schedule. On June 26, 1996, the Company filed a Report on Form 8-K regarding the disposition of certain assets which occured on June 11, 1996. 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. ALDEN ELECTRONICS, INC. Date: August 14, 1996 By:/s/ Arnold A. Kraft ______________________ Arnold A. Kraft President and Chief Executive Officer (Principal Executive Officer) Date: August 14, 1996 By:/s/ Robert J. Wentworth _____________________ Robert J. Wentworth Treasurer (Principal Financial Officer)