U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1995
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended to
Commission File Number: 0-3344
ASTROSYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-5691210
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6 Nevada Drive, Lake Success, New York 11042
(Address of principal executive offices) (Zip Code)
(516) 328-1600
(Registrant's telephone number, including area code)
N/A
(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 Exchange Act during
the past 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
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Check whether the issuer filed all documents and reports
required to be filed by Sections 12, 13 or 15(d) of the Exchange
Act after the distribution of securities under a plan confirmed
by a court. Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS:
State the number of shares outstanding of each of the
issuer's classes of common stock equity, as of the latest
practicable date: December 31, 1995 - 4,594,092
PART I - FINANCIAL INFORMATION
ASTROSYSTEMS, INC. AND SUBSIDIARIES
The financial information herein is unaudited. However, in
the opinion of management, such information reflects all
adjustments (consisting only of normal recurring accruals)
necessary to a fair presentation of the results of operations for
the periods being reported. Additionally, it should be noted
that the accompanying condensed financial statements do not
purport to be complete disclosures in conformity with generally
accepted accounting principles.
The results of operations for the six months ended December
31, 1995 are not indicative of the results of operations for the full
fiscal year ending June 30, 1996. Reference is made to Item 5 of Part
II hereof for a discussion of the approval in February 1996 of the
Registrant's Plan of Complete Liquidation and Dissolution and the sale
by the Registrant during such month of its operating assets.
The balance sheet as at June 30, 1995 was condensed from the
audited balance sheet in the 1995 Annual Report on Form 10-KSB.
All other financial statements presented are unaudited. These
condensed financial statements should be read in conjunction with
the Registrant's financial statements for the year ended
June 30, 1995.
The following pro forma unaudited liquidating balance sheet
reflects the financial position of the Company and its subsidiaries as
if the Plan was approved and adopted on December 31, 1995 and carried
out through the estimated liquidation date of June 1999 including the
sale of the Company's operating divisions and subsidiary. The pro
forma unaudited liquidating balance sheet assumes no material value
for the Company's holdings of AstroPower, Inc. for which the Company's
carrying value at December 31, 1995 is zero. In the opinion of
management of the Company, all adjustments necessary to present fairly
such pro forma unaudited liquidating balance sheet have been made.
The pro forma unaudited liquidating balance sheet should be read
in conjunction with the notes thereto and the Company's financial
statements included in the Company's Annual Report on Form 10-KSB for
the year ended June 30, 1995. The pro forma unaudited liquidating
balance sheet is not necessarily indicative of what the actual
financial position of the Company would have been had the transactions
contemplated in the Plan occurred at December 31, 1995, nor does it
purport to represent the future financial position of the Company.
ASTROSYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
As at
December 31, June 30,
1995 1995
_______________________
(Unaudited)
(In Thousands)
ASSETS
Current Assets:
Cash and cash equivalents $14,807 $13,119
Marketable securities (at lower
of cost or market) 12,804 8,680
Accounts receivable (less estimated
doubtful accounts of $58,000 in
December 1995 and June 1995) 1,249 4,099
Accounts receivable - claims 360 360
Inventories (Note 1) 4,013 3,528
Prepaid expenses and other current assets 552 437
_______ _______
Total current assets $33,785 $30,223
U.S. Treasury Notes 8,928 12,980
Long-term investments 275 275
Factory, laboratory and other equipment at
cost (less accumulated depreciation of
$2,651,000 in December 1995 and
$2,599,000 in June 1995) 152 198
Excess of cost over the fair value of net
assets acquired, net of accumulated
amortization 207 230
Other assets 356 351
_______ _______
TOTAL $43,703 $44,257
======= =======
LIABILITIES
Current liabilities:
Accounts payable $ 352 $ 354
Accrued payroll and employee benefits 186 304
Other accrued liabilities 810 1,034
Income taxes payable 2 3
_______ _______
Total current liabilities $ 1,350 $ 1,695
Deferred income taxes 8,130 8,240
_______ _______
Total liabilities $ 9,480 $ 9,935
======= =======
SHAREHOLDERS' EQUITY
Capital Stock
Common-authorized 10,000,000 shares,
$.10 par value; issued and outstanding
4,594,092 shares in December 1995 and
4,581,727 shares in June 1995 $ 459 $ 458
Additional paid-in capital 6,912 6,848
Retained earnings 26,852 27,016
_______ _______
Total shareholders' equity $34,223 $34,322
_______ _______
TOTAL $43,703 $44,257
======= =======
Inventories:
Estimated inventories are comprised of
the following:
Raw material $ 2,222 $ 1,762
Work in process 1,791 1,766
_______ _______
TOTAL $ 4,013 $ 3,528
======= =======
ASTROSYSTEMS, INC. AND SUBSIDIARIES
(000 OMITTED)
(EXCEPT PER SHARE AMOUNTS)
Adjustments
Historical to Record Pro Forma
Condensed Estimated Liquidating
Balance Sheet Realizable Balance
December 31, 1995 Value Sheet
_________________ __________ ___________
(unaudited) (unaudited)
ASSETS
Cash and securities $36,814 $ 6,366 (1) $49,330
5,286 (2)
864 (3)
Accounts receivable 1,609 (1,609) (1) 0
Inventories 4,013 (4,013) (1) 0
Prepaid expenses and
other 552 (552) (3) 0
Fixed assets 152 (112) (1) 0
(40) (3)
Goodwill 207 (207) (3) 0
Other assets (5) 356 (356) (3) 0
_______ _______ _______
Total $43,703 $ 5,627 $49,330
======= ======= =======
LIABILITIES
Accounts payable,
accrued expenses
and other 1,350 (1,350) (4) 0
Deferred income taxes 8,130 (8,130) (4) 0
Contingency reserve 0 11,700 (4) 11,700
_______ _______ _______
9,480 2,220 11,700
_______ _______ _______
SHAREHOLDERS' EQUITY
Common stock 459 168 (2) 627
Additional paid-in
capital 6,912 5,118 (2) 12,662
632 (1)
Retained Earnings 26,852 (291) (3) 24,341
(2,220) (4)
_______ _______ _______
34,223 3,407 37,630
_______ _______ _______
Total $43,703 $ 5,627 $49,330
======= ======= =======
ESTIMATED NET ASSETS
AVAILABLE FOR
LIQUIDATION $37,630
=======
NUMBER OF SHARES
ESTIMATED TO BE
OUTSTANDING 4,586 1,680 (2) 6,266
======= ======= =======
ESTIMATED NET ASSETS
AVAILABLE FOR
LIQUIDATION PER
OUTSTANDING SHARE $6.01
=======
ASTROSYSTEMS, INC. AND SUBSIDIARIES
NOTES TO PROFORMA LIQUIDATING BALANCE SHEET
DECEMBER 31, 1995
(Unaudited)
(1) Adjustment to record management's estimate of the proceeds
from the sale and liquidation of the three operating units.
Collection of accounts receivable $1,609
Estimated proceeds from sale of operating units:
Inventory 4,013
Fixed assets 112
Gain on sale (net of costs of $350) 632
______
Net estimated cash from sale and liquidation
of operating units $6,366
======
(2) Assumes the exercise of all outstanding options at prices
of $2.88 to $4.00 per share.
(3) Net estimated loss on disposition of the assets.
(4) Establishment at December 31, 1995 of a contingency reserve,
which the Company believes will be adequate for payment of all
expenses and other known liabilities and possible contingent
obligations, as well as an amount estimated to be required to
carry out the Plan.
Increase/
Amount of (Decrease) to
Contingency Shareholders'
Reserve Equity
___________ _____________
Existing liabilities at December 31, 1995:
Accounts payable, accrued expenses
and other $1,350
Deferred income taxes 8,130
Anticipated loss from operations for
the period from December 31, 1995 thru
sales of operating units 893 $(893)
Minimum payments on nonrecourse obligation 176 (176)
Shut down costs and estimated operating
costs (including compensation) to
administer the Plan through dissolution 4,019 (4,019)
Estimated interest income (1,415) 1,415
Estimated tax benefit of losses
through dissolution (2,766) 2,766
Reserve for other contingencies 1,313 (1,313)
_______ _______
$11,700 $(2,220)
======= =======
(5) Assumes no material value for the Company's holdings of
AstroPower, Inc.
ASTROSYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Six Months Ended Three Months Ended
December 31, December 31,
1995 1994 1995 1994
____ ____ ____ ____
(In Thousands)
(Except Earnings per Common Share)
Sales $3,617 $5,225 $1,857 $3,020
______ ______ ______ ______
Cost of sales (Note 1) 3,116 3,888 1,708 2,158
Selling, general and
administrative expenses 1,820 2,092 823 982
______ ______ ______ ______
4,936 5,960 2,531 3,140
______ ______ ______ ______
(Loss) from operations
Note (2) (1,319) (755) (674) (120)
Investment and other
income (net) 1,045 692 517 428
______ ______ ______ ______
Earnings (loss) before
taxes on income (274) (63) (157) 308
Income taxes (benefit) (110) (25) (63) 123
______ ______ ______ ______
Net earnings (loss) $ (164) $ (38) $ (94) $ 185
====== ====== ====== ======
Primary earnings(loss)
per common share $ (.04) $ (.01) $ (.02) $ .03
Weighted average out-
standing shares 4,586 5,282 4,584 5,286
NOTE (1) For interim financial statements the Registrant estimates
its costs of sales.
NOTE (2) The Company sold all of its operating units on February 7,
1996.
ASTROSYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
December 31, December 31,
1995 1994
____________ ____________
(In Thousands)
Cash flows from operating activities:
Net (loss) $ (164) $ (38)
Adjustments to reconcile net (loss)
to net cash (used in)
provided by operating activities:
Depreciation and amortization 75 115
Shares issued to retirement plan 65 69
Options extended 175
Deferred taxes (110) (25)
Changes in operating assets
and liabilities:
(Increase) decrease in accounts
receivable 2,850 (1,069)
(Increase) decrease in inventories (485) 474
(Increase) in prepaid expenses and
other current assets (120) (184)
(Decrease) in accounts payable (2) (173)
(Decrease) in accrued payroll and
employee benefits (118) (104)
(Decrease) in other accrued
liabilities (224) (187)
(Decrease) in taxes payable (1) (3)
_______ _______
Net cash (used in) provided
by operating activities 1,766 (950)
_______ _______
Cash flows from investing activities:
Marketable securities (72) (6,416)
(Acquisition) of equipment (6) (8)
_______ _______
Net cash (used in) investing activities (78) (6,424)
_______ _______
NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS 1,688 (7,374)
Cash and cash equivalents, beginning
of period 13,119 22,916
_______ _______
CASH AND CASH EQUIVALENTS,
END OF PERIOD $14,807 $15,542
======= =======
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
_________________________________________________________
Liquidity, Capital Resources and Impact of Inflation
____________________________________________________
The Board of Directors adopted, and the stockholders approved
on February 2, 1996, a Plan of Complete Liquidation and Dissolution of
the Company. See "Plan of Complete Liquidation and Dissolution"
below.
The Company announced on October 23, 1992 a Board of Directors
authorization for the repurchase of up to 500,000 shares of Common
Stock to be made from time to time through open market and privately
negotiated transactions. Since that time, 408,727 shares have been
repurchased. No repurchases were made during the six month period
ended December 31, 1995.
Inflation has not materially impacted the operations of the
Company.
On February 7, 1996 the Company sold all of its operating
divisions.
Results of Operations
_____________________
The Company, under its liquidation plan (see "Plan of Complete
Liquidation and Dissolution" below), has sold all of its operating
assets as of February 7, 1996.
Comparison of six months ended December 31, 1995 vs six months
ended December 31, 1994
______________________________________________________________________
Sales decreased from $5,225,000 for the six months ended
December 31, 1994 to $3,617,000 for the six months ended December 31,
1995. The decrease was due to reduced sales for the Military
Division, and in particular, the phaseout of a major production
contract for power supplies used on the Navy's advanced capability
ADCAP torpedo.
Cost of Sales as a percentage of revenue for the six months
ended December 31, 1995 was 86% of revenue versus 74% for the prior
equivalent period. Included in Cost of Sales are fixed expenses such
as rent; in addition, the Company's Government contracts and
subcontracts require certain fixed expenses such as quality assurance
personnel, which cannot be reduced in proportion to revenue.
Selling, General and Administrative expenses for the period
ended December 31, 1995 decreased from the prior period primarily due
to a charge included in the prior period for a non-cash item of
$175,000 for the extension of employee stock options as well as a
decrease in selling expenses for the current period.
Investment income for the six months ended December 31, 1995
increased due to an increase in funds available for investment as well
as a higher percentage of funds being invested in higher yielding U.S.
Treasury obligations.
Comparison of three months ended December 31, 1995 vs three months
ended December 31, 1994
______________________________________________________________________
The decrease in sales for the three months comparison as well
as the increase in Cost of Sales was due to the same reasons described
above.
Selling, General and Administrative expenses of the period
ending December 31, 1995 decreased from the prior period primarily due
to the same reasons described above.
Investment income for the three months ended December 31, 1995
increased primarily due to the same reasons described above.
Plan of Complete Liquidation and Dissolution
____________________________________________
The Board of Directors of the Company has adopted a Plan of
Complete Liquidation and Dissolution for the Company (the "Plan")
which was approved by the stockholders on February 2, 1996. Pursuant
to the Plan, the Company intends to sell such of its assets as are not
to be distributed in kind to its stockholders (see discussion below
with regard to the sale of the Company's operating units), to provide
for payment of all expenses, liabilities and obligations of the
Company and to liquidate via distributions to stockholders.
Although the Board has not established a firm timetable for
distributions to stockholders, the Board intends, subject to
exigencies inherent in winding up the Company's business, to make such
distributions as promptly as practicable. The Company anticipates
making the first cash distribution in 1996. The Board is, however,
currently unable to predict the precise amount of any distributions of
cash pursuant to the Plan. The actual amount and timing of, and
record date for, all distributions will be determined by the Board of
Directors, in its sole discretion, and will depend in part upon the
Board's determination as to whether particular assets are to be
distributed in kind or otherwise disposed of, and the amounts deemed
necessary by the Board to pay or provide for all the Company's
liabilities and obligations.
Pursuant to the Plan, the Company has consummated the sales of
its three operating units (Military Division, Behlman Electronics
subsidiary, and Industrial Automation Division) as of February 7,
1996. The exact amount of the proceeds to the Company depends upon a
final fixed asset and inventory evaluation. See Item 5 of Part II
hereof.
PART II - OTHER INFORMATION
Item 5. Other Information.
__________________
Effective February 6, 1996, pursuant to a certain Asset
Purchase Agreement dated as of January 11, 1996 (the "Orbit
Agreement") by and among Astrosystems, Inc. (the "Company"), Behlman
Electronics, Inc. ("Behlman"), a wholly-owned subsidiary of the
Company, Orbit International Corp. ("Orbit") and Cabot Court, Inc.
("Cabot"), a wholly-owned subsidiary of Orbit, the Company sold to
Cabot certain assets of its Defense Electronics Division and Behlman
sold to Cabot certain of its assets for an aggregate purchase price of
$3,706,700. The purchase price is subject to adjustment based upon a
valuation of the transferred inventory and equipment as of the closing
date. Pursuant to the Orbit Agreement, $1,000,000 of the purchase
price is being held in escrow to provide for indemnification claims
that Cabot may assert against the Company or Behlman thereunder.
Effective February 7, 1996, pursuant to an Asset Purchase
Agreement of such date (the "North Atlantic Agreement") by and between
the Company and North Atlantic Instruments, Inc. ("North Atlantic"),
the Company sold to North Atlantic certain assets of its Industrial
Automation Division for a purchase price of $704,500. The purchase
price is subject to adjustment based upon a valuation of the
transferred inventory and equipment as of the closing date. Pursuant
to the North Atlantic Agreement, $100,000 of the purchase price is
being held in escrow pending a determination of the closing date
inventory and equipment amounts.
The consummation of the Orbit Agreement and the North
Atlantic Agreement followed the February 2, 1996 Annual Meeting of
Stockholders of the Company at which the stockholders approved the
Company's Plan of Complete Liquidation and Dissolution
as well as the sales described above.
Item 6. Exhibits and Reports on Form 8-K.
_________________________________
(a) Exhibits.
(i) Asset Purchase Agreement dated as of January 11,
1996 by and among Astrosystems, Inc., Behlman Electronics,
Inc., Orbit International Corp. and Cabot Court, Inc. -
incorporated by reference to Exhibit B to Proxy Statement
of the Company dated January 12, 1996 with respect to Annual
Meeting of Stockholders held February 2, 1996 (File No. 0-
3344).
(b) Reports on Form 8-K.
None.
No other reportable items
SIGNATURES
In accordance with the requirements of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ASTROSYSTEMS, INC.
February 15, 1996 BY: /S/
Date Gilbert H. Steinberg,
Vice President
February 15, 1996 /S/
Date Gilbert H. Steinberg,
Treasurer and
Chief Financial Officer