SECURITIES AND EXCHANGE COMMISSION
Washington, DC. 20549
FORM 10-Q
(Mark one)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended July 1, 1995 OR
( ) 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 0-11691
ELEXSYS INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Delaware 95-3534864
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
18522 Von Karman Avenue, Irvine, California 92715
(Address of principal executive offices) (Zip Code)
(714) 833-0870
(Registrant's telephone number, including area code)
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 (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__
At August 7, 1995, there were 8,921,560 outstanding shares of
common stock.
ELEXSYS INTERNATIONAL, INC.
FORM 10-Q
INDEX
Page
Part I. Financial Information:
Item 1.
Consolidated Balance Sheets as of July 1, 1995 and September 30, 1994........... 2
Consolidated Statements of Operations for the Three and Nine Months
Ended July 1, 1995 and July 2, 1994.............................................. 3
Consolidated Statements of Cash Flows for the Nine Months
Ended July 1, 1995 and July 2, 1994.............................................. 4
Notes to the Consolidated Financial Statements................................... 5
Item 2.
Management's Discussion and Analysis of Financial Condition and
Results of Operations........................................................... 8
Part II. Other Information............................................................... 12
ELEXSYS INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(Thousands of dollars, except share data)
July 1, September 30,
1995 1994
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents ........................... $ 1,098 $ 1,562
Accounts receivable - net ........................... 13,669 9,063
Inventories ......................................... 7,364 7,277
Prepaid expenses and other current assets ........... 622 381
--------- ---------
Total current assets ......................... 22,753 18,283
--------- ---------
Property, plant and equipment ......................... 72,270 65,481
Less accumulated depreciation and amortization ...... (53,509) (47,703)
--------- ---------
Property, plant and equipment, net ........... 18,761 17,778
--------- ---------
Other assets .......................................... 997 922
--------- ---------
Total assets ............................. $ 42,511 $ 36,983
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable .................................... $ 7,231 $ 6,170
Accrued payroll and related costs ................... 2,511 1,950
Other current liabilities ........................... 2,387 2,866
Short-term borrowings ............................... 5,806 3,456
Current portion of long-term debt ................... 316 50
--------- ---------
Total current liabilities .................... 18,251 14,492
--------- ---------
Long term debt ........................................ 1,516 406
Convertible subordinated debentures ................... 12,000 16,000
Stockholders' equity
Common stock, $1.00 par value, 20,000,000 shares
authorized, 8,903,560 and 8,334,960 shares issued and
outstanding at July 1, 1995 and at September 30, 1994 8,904 8,335
Additional paid-in capital ............................ 5,359 3,373
Accumulated deficit ................................... (3,509) (5,623)
Cumulative foreign currency translation adjustment .... (10)
--------- ---------
Net stockholders' equity ..................... 10,744 6,085
--------- ---------
Total liabilities and stockholders' equity $ 42,511 $ 36,983
========= =========
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
ELEXSYS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
July 1, July 2, July 1, July 2,
1995 1994 1995 1994
Net sales ....................................... $ 27,298 $ 23,943 $ 73,458 $ 74,407
Cost of sales ................................... 23,010 21,539 64,434 68,536
-------- -------- -------- --------
Gross profit .................................. 4,288 2,404 9,024 5,871
Operating expenses:
Selling, general and administrative ........... 2,780 2,602 7,046 7,933
Research and development ...................... 115 156 364 593
Provision for restructuring of operations ..... 0 0 0 600
-------- -------- -------- --------
Total operating expenses ............... 2,895 2,758 7,410 9,126
-------- -------- -------- --------
Income/(loss) from operations ................... 1,393 (354) 1,614 (3,255)
Other (income) expenses:
Interest expense .............................. 470 638 1,312 1,698
Interest income ............................... 0 0 (1) (26)
-------- -------- -------- --------
Income (loss) before income taxes ............... 923 (992) 303 (4,927)
Provision for income taxes ...................... 22 0 22 0
-------- -------- -------- --------
Income (loss) before extraordinary item ......... 901 (992) 281 (4,927)
Extraordinary item: (Note 5)
Gain from exchange of 5 1/2 percent Convertible
Subordinated Debentures due 2012 for common
stock, net of expenses ........................ 0 10,167 1,833 10,167
-------- -------- -------- --------
Net income ............................. $ 901 $ 9,175 $ 2,114 $ 5,240
======== ======== ======== ========
Earnings per share (Note 3)
Primary ......................................... $ 0.10 $ 1.67 $ 0.24 $ 1.02
Fully diluted ................................... $ 0.10 $ 1.07 $ 0.23 $ 0.63
-------- -------- -------- --------
Weighted average common shares and common
equivalent shares outstanding
Primary ......................................... 9,285 5,610 8,947 5,158
Fully diluted ................................... 9,319 8,740 9,319 8,335
======== ======== ======== ========
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
ELEXSYS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of dollars)
(Unaudited)
Nine Months Ended
July 1, July 2,
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES
Net income ..................................................................... $ 2,114 $ 5,240
Adjustments to reconcile net income to
net cash provided (used) by operating activities:
Extraordinary gain ........................................................... (1,833) (10,167)
Depreciation and amortization ................................................ 4,063 4,948
Provision for restructuring of operations .................................... 600
Change in assets and liabilities, net of effects from purchase of Technet Ltd.:
Increase in accounts receivable .............................................. (3,749) (455)
Decrease in inventories ...................................................... 350 731
(Increase) decrease in prepaid expenses and other
current assets ............................................................... (195) 244
Increase (decrease) in accounts payable ...................................... 407 (6,252)
Increase (decrease) in accrued payroll and related taxes ..................... 415 (560)
Decrease in other current liabilities ........................................ (791) (1,445)
Other ........................................................................ (187) (94)
-------- --------
Net cash provided (used) by operating activities ............................. 594 (7,210)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturity of short-term investments ............................... 4,000
Purchase of Technet Ltd., net of cash acquired ................................. (560)
Purchase of property, plant and equipment ...................................... (3,087) (1,796)
-------- --------
Net cash (used) provided by investing activities ............................. (3,647) 2,204
-------- --------
CASH FLOWS USED BY FINANCING ACTIVITIES
Net borrowings on short-term borrowings ........................................ 2,350 3,354
Principal payments on long term debt ........................................... (280) (33)
Proceeds from options exercised ................................................ 529
-------- --------
Net cash provided by financing activities .................................... 2,599 3,321
-------- --------
Effects of exchange rate changes on cash flows ................................. (10)
Net decrease in cash and cash equivalents ..................................... (464) (1,685)
Cash and cash equivalents, beginning of period ................................. 1,562 2,415
-------- --------
Cash and cash equivalents, end of period ....................................... $ 1,098 $ 730
======== ========
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest payments .............................................................. $ 481 $ 1,212
======== ========
Income tax payments ............................................................ $ 24 $ 30
======== ========
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
ELEXSYS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Basis of Presentation
The accompanying unaudited consolidated financial statements of Elexsys
International, Inc. and its subsidiaries (the "Company") contain all
adjustments, consisting of only normal recurring adjustments, which, in
the opinion of management, are necessary to present fairly the
financial position of the Company as of July 1, 1995 and September 30,
1994, the results of its operations for the three and nine months ended
July 1, 1995 and July 2, 1994 and its cash flows for the nine months
ended July 1, 1995 and July 2, 1994. Certain information and footnote
disclosures normally included in the financial statements have been
condensed or omitted pursuant to rules and regulations of the
Securities and Exchange Commission, although the Company believes that
the disclosures in the consolidated financial statements are adequate
to make the information presented not misleading.
The consolidated financial statements included herein should be read in
conjunction with the consolidated financial statements of the Company
for the year ended September 30, 1994, included in the Company's Annual
Report on Form 10-K for that fiscal year.
Note 2 - Inventories
Inventories consist of the following (thousands of dollars):
July 1, September 30,
1995 1994
(Unaudited)
Raw materials ............................ $2,910 $4,233
Work in progress ......................... 4,454 3,044
------ ------
Totals ................................... $7,364 $7,277
====== ======
Note 3 - Income Taxes
As of September 30, 1994, the Company had net operating losses carry
forwards for federal and state income tax purposes of $29,636,000 and
$25,296,000, respectively. Provision for income taxes resulted from
income from the Company's United Kingdom subsidiary for the three and
nine months ended July 1, 1995. Net operating loss carry forwards were
used to offset income from the Company's United States operations
resulting in no income tax provision for the three and nine months
ended July 1, 1995, respectively, for these operations. The remaining
carry forwards, for which future benefit is not assured, expire through
2008.
ELEXSYS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 4 - Earnings Per Common Share
Earnings per common share for the three and nine months ended July 1,
1995 has been computed based on weighted average common shares
outstanding and common stock equivalents as of the above dates and does
not include the assumed conversion of the 5 1/2 percent Convertible
Subordinated Debentures due 2012 as such effect would have been
anti-dilutive. The earnings per share for the three months ended July
2, 1994 has been computed based on average common shares outstanding as
of July 2, 1994 and includes the assumed conversion of the 5 1/2
percent Convertible Subordinated Debentures due 2012. The earnings per
share for the nine months ended July 2, 1994 has been computed based on
average common shares outstanding as of July 2, 1994 and does not
include the assumed conversion of the 5 1/2 percent Convertible
Subordinated Debentures due 2012 as such effect would have been
anti-dilutive.
Three Months Nine Months
July 1,1995 July 1, 1995
(Unaudited) (Unaudited)
Net income before extraordinary item ..................... $ 901 $ 281
Net income ............................................... $ 901 $2,114
Earnings per common share and common share
equivalent, primary
Income before extraordinary item ......................... $ 0.10 $ 0.03
Extraordinary item .................................. $ 0.00 $ 0.20
Net income .......................................... $ 0.10 $ 0.24
Earnings per common share and common share
equivalent, fully diluted
Income before extraordinary item .................... $ 0.10 $ 0.03
Extraordinary item .................................. $ 0.00 $ 0.20
Net income .......................................... $ 0.10 $ 0.23
Weighted average of common and dilutive common
equivalent shares outstanding
Primary weighted average shares ...................... 8,870 8,532
Stock option equivalent ............................. 415 415
Primary common and common equivalent shares ......... 9,285 8,947
Fully diluted weighted average shares ................ 8,904 8,809
Stock option equivalent ............................. 415 415
Fully diluted common and common equivalent share .... 9,319 9,319
ELEXSYS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 5 - Stock Options
During the first nine months of fiscal 1995, the Company has granted
pursuant to the 1994 Incentive Stock Option Plan options to purchase
234,500 shares of common stock, including 100,000 options to the Chief
Operating Officer, at option prices ranging from $2.88 to $3.63 per
share. All of these options vest at the rate of either 25 or 33 1/3
percent per year commencing one year from the date of grant.
Note 6 - Acquisition
On April 28, 1995, the Company announced it had acquired substantially
all the assets of Technet Electronics Limited, a manufacturer of
printed circuit boards located in Great Britain, for approximately
$3,300,000 which consisted of $560,000 of cash and assumption of
liabilities of approximately $2,740,000 including its current lines of
credit. To complete the transaction, the Company borrowed $1,300,000 on
its line of credit from an asset based lender of which $740,000 will be
utilized as working capital. Subsequent to the acquisition, long term
debt of approximately $182,000 was paid.
Note 7 - Extraordinary Item
On March 31, 1995, the Company exchanged for $4,000,000 of its 5 1/2
percent Convertible Subordinated Debentures due 2012 an aggregate of
400,000 newly issued shares of common stock, par value $1.00 per share,
to Mr. Milan Mandaric. The net gain of $1,833,000 was recorded as an
extraordinary item. The net gain included a reduction of debt issuance
costs related to the 5 1/2 percent Convertible Subordinated Debentures
due 2012 and additional professional fees associated with the
transaction. The transaction included a payment of $18,333 for accrued
interest on the Debentures exchanged.
Note 8 - Translation of Foreign Currencies:
Assets and liabilities of the Company's United Kingdom subsidiary are
translated into US. dollars at the exchange rates in effect at the end
of the period. Revenue and expense accounts are translated at a
weighted average of exchange rates which were in effect during the
year. Translation adjustments that arise from translating the Company's
United Kingdom subsidiary's financial statements from the pound
sterling to US. dollars are accumulated in a separate component of
stockholders' equity. Transaction gains and losses that arise from
exchange rate changes on transactions denominated in a currency other
than the local currency are included in results of operations as
incurred. For the three and nine months ended July 1, 1995, there were
no transaction gains or losses.
ELEXSYS INTERNATIONAL, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Consolidated
Financial Statements and Notes thereto contained elsewhere within this Report on
Form 10-Q.
Results of Operations
Net sales
Net sales for the three months ended July 1, 1995 increased 14 percent
compared to the third quarter of fiscal year 1994. The increase in net
sales resulted from increased demand for the Company's circuit board
products from the Company's recurring customer base and two months of
sales from the Company's recent acquisition in the United Kingdom. The
increase in net sales was partially offset by lower volume of sales
from the Company's back panel line due to changes in product mix and
lower pricing on all products due to the competitive nature of the
printed circuit board industry.
Net sales for the nine months ended July 1, 1995 decreased 1.3 percent
from the comparable nine month period of fiscal 1994. The decrease in
net sales resulted from lower volume of sales from the Company's back
panel line due to changes in product mix. Circuit board sales decreased
due to changes in product mix and competitive pricing, partially offset
by increased demand for circuit board products. Management has
reorganized its sales and technical team for the purpose, among other
things, of improving sales of its back panel product line; however,
management does not expect improvement to occur in the near future.
Cost of sales
Cost of sales as a percentage of net sales decreased from 90 percent in
the third quarter of fiscal year 1994 to 84.3 percent for the third
quarter of fiscal year 1995. For the nine months ended July 1, 1995,
cost of sales as a percentage of net sales decreased from 92.1 percent
to 87.7 percent for the nine months ended July 2, 1994. The decrease in
cost of sales as a percentage of net sales for the three and nine
months ended July 1, 1995 was attributable to a favorable change in
product mix, cost reductions, and improved efficiencies in circuit
board operations resulting in lower material, labor, and overhead costs
per unit shipped. The improvement in the circuit board operations was
partially offset by increased material, labor, and overhead costs per
units shipped for the Company's back panel product line due to changes
in product mix. Management believes it has corrected the previously
reported problem of matching circuit board products with the circuit
board operations' capabilities, but there can be no assurance that
increased operational efficiencies will result.
Selling, General and Administrative
Selling, general and administrative (SG&A) expense for the three months
ended July 1, 1995 increased 6.8 percent compared to the third quarter
of fiscal 1994. As a percentage of net sales, SG&A decreased from 10.9
percent for the third quarter of fiscal year 1994 to 10.2 percent for
the third quarter of fiscal 1995. The increase in SG&A for the three
months ended July 1, 1995 was primarily due to higher commissions to
manufacturers' representatives, profit sharing, costs associated with
reorganizing the sales and technical team, and two months of SG&A costs
for the Company's United Kingdom acquisition, partially offset by a
reduction in legal and consulting fees.
ELEXSYS INTERNATIONAL, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
For the nine months ended July 1, 1995, SG&A decreased 11.2 percent
from the comparable nine month period of fiscal 1994. As a percentage
of net sales, SG&A decreased from 10.7 percent for the nine months
ended July 2, 1994 to 9.6 percent for the nine months ended July 1,
1995. The decrease in SG&A for the nine months ended July 1, 1995 was
primarily due to a reduction in legal and consulting fees and cost
reductions, partially offset by higher commission costs to
manufacturers' representatives and profit sharing.
Research and development
Research and development expenditures decreased 26.3 percent during the
three months ended July 1, 1995 compared to the third quarter of fiscal
1994. For the nine months ended July 1, 1995, research and development
expenditures decreased 38.6 percent from the comparable nine month
period of fiscal 1994. The decrease in expenditures is directly
attributable to lower labor and benefit costs of engineers related to
the past restructuring by the Company.
Restructure
At the beginning of fiscal 1995, the Company's balance for
restructuring reserve was $861,000, which is expected to be fully paid
out by the end of the current fiscal year, mainly to executives who had
severance agreements. During the first nine months of fiscal 1995, the
Company reduced its restructuring reserve by $572,000 through severance
payments to such executives. As of July 1, 1995, the Company's other
current liabilities included $289,000 of restructuring reserve.
Interest income and interest expense
Interest income decreased 100 percent and 96.2 percent for the three
and nine months ended July 1, 1995, respectively, from the comparable
fiscal 1994 periods. The decrease was primarily due to a reduction in
interest bearing investments held by the Company during fiscal 1995
compared to fiscal 1994.
Interest expense decreased 26.3 percent and 22.7 percent for the three
and nine months ended July 1, 1995, respectively, as compared to the
similar fiscal 1994 periods. The decrease is attributable to lower
interest expense due to the exchange of $16,000,000 in principal amount
of the Company's 5 1/2 percent Convertible Subordinated Debentures due
2012 (the "Debentures") held by Mr. Milan Mandaric for 3,200,000 newly
issued shares of the Company's common stock in a two part transaction
which closed on June 30, 1994 and July 13, 1994 and the exchange of
$4,000,000 in principal amount of Debentures held by Mr. Mandaric for
400,000 newly issued shares of the Company's stock in a transaction
which closed on March 31, 1995. Partially offsetting the lower interest
expense was interest due to short-term borrowings from the Company's
asset based lender.
Liquidity and Capital Resources
At July 1, 1995, the Company had cash, cash equivalents and short-term
investments of $1,098,000, which reflects a $464,000 decrease in the
balance from September 30, 1994. Cash of $594,000 was generated from
operating activities. The increase in accounts receivable is
attributable to higher net sales for the third quarter of fiscal year
1995 compared to the fourth quarter of fiscal year 1994. The decrease
in inventories is attributable to better purchasing practices of raw
materials utilized in the Company's back panel product line, partially
offset by an increase in work in process due to improvement in the
order cycle.
ELEXSYS INTERNATIONAL, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The decrease in other current liabilities was due in part to the
$572,000 decrease in restructuring reserve during the nine month period
ended July 1, 1995. All other operating activities experienced normal
fluctuations.
The cash generated from operating activities was offset by investing
activities of $3,087,000 for the purchase of capital equipment. The
purchase of capital equipment was for normal replacement, equipment for
processes that the Company has outsourced, and equipment to enhance our
assembly capabilities.
Financing activities were partially funded by the exercise of stock
options by certain employees, offset by payment of approximately
$182,000 of long term debt of Technet Electronics Limited.
As of July 1, 1995, the Company had borrowed $6,732,000 under the line
of credit that was established December 17, 1993 with an asset based
lender. In the first nine months of fiscal 1995, the Company repaid
borrowings of $520,000, leaving net borrowings of $6,212,000 Also,
under the terms of the loan agreement, all of the Company's cash
collections are applied to any outstanding borrowings upon the receipts
clearing the bank. At July 1, 1995, the asset based lender was in
possession of $406,000 of the Company's cash collections and,
accordingly, such funds have been applied to reduce the amount
outstanding under the Company's line of credit to $5,806,000.
As of July 1, 1995, the Company's ratio of current assets to current
liabilities was 1.2 to 1. In addition, the Company had $1,098,000 in
cash and cash equivalents which are available for current operations,
capital expenditures and other purposes. The Company has no material
cash obligations or requirements for capital expenditures other than
normal replacements. Management believes that the Company's existing
working capital, the remaining borrowing capacity, and funds generated
from operations will be sufficient to meet presently anticipated
working capital requirements.
In June 1994, the Company agreed with Mr. Milan Mandaric to exchange
$16,000,000 of Debentures for 3,200,000 newly issued shares of common
stock. The transaction included a payment of $293,000 for accrued
interest on the Debentures exchanged and reimbursement of $50,000 for
Mr. Mandaric's professional expenses. All legal and consulting costs
related to this transaction were accrued for in the third quarter of
fiscal 1994 and were applied against the extraordinary gain recorded in
the third quarter of fiscal 1994. There was no cash infusion made by
Mr. Mandaric as a result of this transaction. The Company subsequently
delivered those Debentures to the Trustee for credit against the future
sinking fund payments under the terms of the Indenture relating to the
Debentures.
In March 1995, the Company agreed with Mr. Mandaric to exchange
$4,000,000 of Debentures for 400,000 newly issued shares of common
stock. The transaction included a payment of $18,333 for accrued
interest on the Debentures exchanged. All legal and consulting costs
related to this transaction were accrued for in the second quarter of
fiscal 1995 and were applied against the extraordinary gain recorded in
that quarter. There was no cash infusion made by Mr. Mandaric as a
result of this transaction. The Company subsequently delivered those
Debentures to the Trustee for credit against the future sinking fund
payments under the terms of the Indenture relating to the Debentures.
ELEXSYS INTERNATIONAL, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Environmental
The Company's manufacturing processes utilize substantial quantities of
heavy metals, acids and other hazardous substances, as well as
substantial quantities of water. The Company is subject to federal,
state and local environmental laws and regulations regarding air, water
and land use, the generation, use, storage and disposal of hazardous
materials and wastes, and the operation and closure of manufacturing
facilities at which hazardous materials are used or hazardous wastes
are generated. The Company is aware of contamination of soil and ground
water (principally by metals and solvents) at two of its former
facilities in Northern California. At one of these facilities, soil has
been remediated, but the likely future cost of ground water cleanup at
that facility is not yet reasonably estimable. Investigative costs of
$30,000 have been incurred. At the other former facility in Northern
California, the Company incurred costs of approximately $137,000 for
cleanup of soil contamination and the property was returned to its
owner during the second quarter of fiscal 1995. In addition the
facility is adjacent to an existing State of California administered
Superfund site and may become part of a related State of California
administered regional ground water investigation; the likely future
cost to the Company in connection with possible ground water cleanup is
not yet reasonably estimable. At a former facility in Southern
California, the Company conducted limited ground water sampling in
connection with a potential sale of the property, and low
concentrations of solvents were detected. Notification was made to the
proper agencies. At this time, it is not possible to determine whether
any response actions will need to be taken; and accordingly, the likely
future cost to the Company is not yet reasonably estimable.
The Company is further aware of soil and ground water contamination
(principally by metals and solvents) at two currently used facilities,
one in Northern California and one in Southern California. At its
Northern California facility, the Company is indemnified by the former
property owner who acknowledged his obligation. At its Southern
California facility, the Company's preliminary estimate of remedial
costs, expected to be incurred over five to seven years, ranges from
approximately $880,000 to $1,480,000 (including between approximately
$300,000 and $400,000 estimated capital expenditures for waste
treatment equipment acquisition and installation costs). At its
Northern California facility, the Company has also received notice that
regulatory authorities plan to reduce the discharge limits for
industrial waste water discharge containing heavy metals. New limits
are expected to become effective in October 1996. Based on proposed
limits, the cost to the Company of additional equipment and process
modifications needed to comply with the reduced limits is preliminarily
estimated by the Company to be between $100,000 and $250,000. As of
July 1, 1995, the Company believes it has appropriately recorded all
known costs related to environmental matters, including the minimum
amounts where the estimated costs are within a range, and are primarily
accrued in other current liabilities. However, actual future
environmental related expenditures are subject to numerous
uncertainties, including the discovery of additional environmental
concerns, further development of cost estimates, new and changing
environmental laws and requirements, or new interpretations of existing
laws and requirements. Accordingly, there can be no assurance that
future environmental related expenditures will not exceed the Company's
current estimates, or that they will not have a materially adverse
effect on the Company.
Part II. OTHER INFORMATION
Item 6 a. Exhibits
3.1 Amended and Restated Certificate of Incorporation of the Company
3.2 Amended and Restated Bylaws of the Company
27 Financial Data Schedule
b. Current reports on Form 8-K
None
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.
ELEXSYS INTERNATIONAL, INC.
---------------------------
(Registrant)
Date: August 14, 1995 By: /s/ Michael S. Shimada
--------------- ----------------------
Michael S. Shimada
Chief Financial Officer
(Principal Financial Officer
and Duly Authorized Officer)