-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, d+fWahBd7rYGeJxt48pkBdYnBX0rsMaYTz6M45/0H2W0gIzuzeQF6r2Y0t+/GBP3 11K5GX2kBHK/Jr0CT+eziA== 0000950170-95-000052.txt : 19950530 0000950170-95-000052.hdr.sgml : 19950530 ACCESSION NUMBER: 0000950170-95-000052 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950508 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: SUNAIR ELECTRONICS INC CENTRAL INDEX KEY: 0000095366 STANDARD INDUSTRIAL CLASSIFICATION: 3663 IRS NUMBER: 590780772 STATE OF INCORPORATION: FL FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04334 FILM NUMBER: 95535216 BUSINESS ADDRESS: STREET 1: 3101 SW THIRD AVE STREET 2: EXECUTIVE OFFICES CITY: FORT LAUDERDALE STATE: FL ZIP: 33315 BUSINESS PHONE: 3055251505 MAIL ADDRESS: STREET 1: 3101 SW THIRD AVENUE CITY: FT LAUDERDALE STATE: FL ZIP: 33315 10-Q 1 10-Q SUNAIR ELECTRONICS INC. UNITED STATES 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 MARCH 31, 1995 COMMISSION FILE NUMBER 1-4334 ************** ************* SUNAIR ELECTRONICS, INC. ********************************************************************** (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) FLORIDA 59-0780772 ********************************* **************************** (STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 3101 SW THIRD AVE., FT. LAUDERDALE, FLA. 33315 **************************************** ************** (ADDRESS OR PRINCIPAL EXECUTIVE OFFICE) (ZIP CODE) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (305) 525-1505 ************** NONE ********************************************************************** (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 (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 CLOSE OF THE PERIOD COVERED BY THE REPORT. CLASS OUTSTANDING AT ***************************** **************************** COMMON STOCK, $0.10 PAR VALUE 03/31/95 - 3,932,370 SHARES (NET OF TREASURY SHARES) SUNAIR ELECTRONICS, INC. AND SUBSIDIARY INDEX ***** PAGE NO. ******** PART I. FINANCIAL INFORMATION: CONSOLIDATED CONDENSED BALANCE SHEETS - - MARCH 31, 1995 AND SEPTEMBER 30, 1994 2 CONSOLIDATED CONDENSED STATEMENTS OF INCOME - - SIX MONTHS ENDED MARCH 31, 1995 AND 1994 3 CONSOLIDATED CONDENSED STATEMENTS OF INCOME - - THREE MONTHS ENDED MARCH 31, 1995 AND 1994 4 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS - SIX MONTHS ENDED MARCH 31, 1995 AND 1994 5 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 6-7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE CONSOLIDATED CONDENSED STATEMENTS 8-9 PART II. OTHER INFORMATION 10 - 1 - PART I. FINANCIAL INFORMATION SUNAIR ELECTRONICS, INC. AND SUBSIDIARY CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED) ASSETS 3/31/95 9/30/94 ------ ----------- ----------- CURRENT ASSETS: --------------- CASH $ 503,609 $ 961,403 ACCOUNTS AND NOTES RECEIVABLE 391,700 186,734 INVENTORIES 7,807,731 7,492,385 OTHER PREPAID EXPENSES 83,699 161,073 ----------- ----------- TOTAL CURRENT ASSETS 8,786,739 8,801,595 ----------- ----------- INVESTMENT IN MARKETABLE SECURITIES 3,956,334 4,006,864 ----------------------------------- PROPERTY, PLANT AND EQUIPMENT-NET 923,384 975,078 --------------------------------- OTHER ASSETS 21,562 0 ------------ ----------- ----------- TOTAL ASSETS $13,688,019 $13,783,537 ============ =========== =========== LIABILITIES & SHAREHOLDERS' EQUITY ---------------------------------- CURRENT LIABILITIES: -------------------- ACCOUNTS PAYABLE AND ACCRUED EXPENSES $ 260,283 $ 386,141 CURRENT PORTION OF CAPITALIZED LEASE 20,184 19,404 ----------- ----------- TOTAL CURRENT LIABILITIES 280,467 405,545 ----------- ----------- LONG-TERM LIABILITIES: ---------------------- LONG-TERM PORTION OF CAPITAL LEASE 68,099 78,772 DEFERRED INCOME TAXES 102,000 62,000 ----------- ----------- TOTAL LONG-TERM LIABILITIES 170,099 140,772 ----------- ----------- SHAREHOLDERS' EQUITY 13,237,453 13,237,220 -------------------- ----------- ----------- TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $13,688,019 $13,783,537 ======================================== =========== =========== - 2 - CONSOLIDATED CONDENSED STATEMENTS OF INCOME FOR THE SIX MONTHS ENDED (UNAUDITED) 3/31/95 3/31/94 ---------- ---------- SALES $1,196,053 $1,697,177 COST OF SALES 699,589 957,496 ---------- ---------- GROSS PROFIT 496,464 739,681 SELLING, GENERAL & ADMINISTRATIVE EXPENSES 611,852 701,763 ---------- ---------- OPERATING INCOME ( 115,388) 37,918 OTHER INCOME: INTEREST INCOME 154,442 124,984 INTEREST EXPENSE ( 40,050) ( 20,901) OTHER, NET 1,234 11,651 ---------- ---------- INCOME BEFORE PROVISION (BENEFIT) FOR INCOME TAXES 238 153,652 PROVISION (BENEFIT) FOR INCOME TAXES 0 9,796 ---------- ---------- NET INCOME $ 238 $ 143,856 ========== ========== AVERAGE SHARES OUTSTANDING 3,932,370 3,932,370 EARNINGS PER SHARE $ 0.00 $ 0.04 ========== ========== - 3 - CONSOLIDATED CONDENSED STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED (UNAUDITED) 3/31/95 3/31/94 ---------- ---------- SALES $ 622,729 $ 612,276 COST OF SALES 337,453 325,979 ---------- ---------- GROSS PROFIT 285,276 286,297 SELLING, GENERAL & ADMINISTRATIVE EXPENSES 320,583 360,239 ---------- ---------- OPERATING INCOME ( 35,307) ( 73,942) OTHER INCOME: INTEREST INCOME 76,201 44,880 INTEREST EXPENSE ( 19,978) ( 11,381) OTHER, NET 682 10,572 ---------- ---------- INCOME BEFORE PROVISION (BENEFIT) FOR INCOME TAXES 21,598 ( 29,871) PROVISION (BENEFIT) FOR INCOME TAXES 7,100 ( 14,976) ---------- ---------- NET INCOME $ 14,498 ($ 14,895) ========== ========== AVERAGE SHARES OUTSTANDING 3,932,370 3,932,370 EARNINGS PER SHARE $ 0.00 $ 0.00 ========== ========== - 4 - CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED (UNAUDITED) 3/31/95 3/31/94 ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: NET INCOME (LOSS) $ 238 $ 143,856 ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES DEPRECIATION AND AMORTIZATION 52,907 56,285 CHANGES IN OPERATING ACTIVITIES: (INCR) DECR IN SHORT TERM INVEST 0 (1,039,813) (INCR) DECR IN ACCOUNTS RECEIVABLE ( 204,966) 150,536 (INCR) DECR IN INVENTORY ( 315,346) ( 166,679) (INCR) DECR IN OTHER ASSETS 55,810 ( 17,138) (DECR) INCR IN ACCOUNTS PAYABLE AND ACCRUED EXPENSES ( 125,858) ( 196,183) (DECR) INCR IN ACCRUED INCOME TAX 0 ( 47,804) INCR IN DEFFERED INCOME TAX 40,000 0 ------------ ------------ NET CASH USED BY OPERATING ACTIVITIES ( 497,215) (1,116,940) ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES: PURCHASE OF PROPERTY, PLANT & EQUIPMENT ( 1,216) ( 21,510) SALES (PURCHASES) OF INVESTMENTS - NET 50,530 ( 636) ------------ ------------ NET CASH FROM INVESTING ACTIVITIES 49,314 ( 22,146) ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES: PRINCIPAL PAYMENT OF CAPITAL LEASE ( 9,893) ( 4,105) ----------- ----------- NET INCREASE (DECREASE) IN CASH ( 457,794) (1,143,191) CASH AT BEGINNING OF PERIOD 961,403 1,520,763 ------------ ------------ CASH AT END OF PERIOD $ 503,609 $ 377,572 ============ ============ SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: CASH PAID DURING THE YEAR FOR INTEREST $ 38,068 $ 32,693 ============ ============ CASH PAID DURING THE YEAR FOR INCOME TAXES $ 0 $ 55,258 ============ ============ - 5 - NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 1. BASIS OF PRESENTATION THE ACCOMPANYING UNAUDITED 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. OPERATING RESULTS FOR THE SIX MONTHS ENDED MARCH 31, 1995, ARE NOT NECESSARILY INDICATIVE OF THE RESULTS THAT MAY BE EXPECTED FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 1995. 2. ACCOUNTING POLICIES - (A) PRINCIPLES OF CONSOLIDATION- THE ACCOMPANYING CONSOLIDATED FINANCIAL STATEMENTS INCLUDE THE ACCOUNTS OF THE COMPANY AND ITS SUBSIDIARY. ALL SIGNIFICANT INTER-COMPANY ACCOUNTS AND TRANSACTIONS HAVE BEEN ELIMINATED IN CONSOLIDATION. (B) PROPERTY, PLANT AND EQUIPMENT- PROPERTY, PLANT AND EQUIPMENT IS DEPRECIATED OVER THE ESTIMATED USEFUL LIVES OF THE ASSETS USING BOTH STRAIGHT-LINE AND ACCELERATED METHODS. (C) RESEARCH AND DEVELOPMENT COSTS- ALL RESEARCH AND DEVELOPMENT COSTS ARE CHARGED TO EXPENSE AS INCURRED. (D) EARNINGS PER COMMON SHARE- EARNINGS PER COMMON SHARE ARE COMPUTED BASED ON WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING DURING EACH PERIOD. (E) INVENTORIES- INVENTORIES CONSIST OF THE FOLLOWING: 3/31/95 9/30/94 ---------- ----------- RAW MATERIALS $1,746,615 $1,506,005 WORK IN PROCESS 2,756,626 3,222,864 FINISHED GOODS 3,304,490 2,763,516 ----------- ----------- $7,807,731 $7,492,385 =========== =========== - 6 - 3. INCOME TAXES: ON OCTOBER 1, 1993, THE COMPANY CHANGED ITS METHOD OF ACCOUNTING FOR INCOME TAXES AS REQUIRED BY STATEMENT OF FINANCIAL ACCOUNTING STANDARDS ("SFAS") NO 109, "ACCOUNTING FOR INCOME TAXES". SFAS NO 109 RETAINS THE REQUIREMENT TO RECORD DEFERRED INCOME TAXES FOR TEMPORARY DIFFERENCES THAT ARE REPORTED IN DIFFERENT YEARS FOR FINANCIAL REPORTING AND FOR TAX PURPOSES; HOWEVER, THE METHODOLOGY FOR CALCULATING AND RECORDING DEFERRED INCOME TAXES HAS CHANGED. UNDER THE LIABILITY METHOD ADOPTED BY SFAS NO 109, DEFERRED TAX LIABILITIES OR ASSETS ARE COMPUTED USING THE TAX RATES EXPECTED TO BE IN EFFECT WHEN THE TEMPORARY DIFFERENCES REVERSE. ALSO, REQUIREMENTS FOR RECOGNITION OF DEFERRED TAX ASSETS AND OPERATING LOSS AND TAX CREDIT CARRYFORWARDS WERE LIBERALIZED BY REQUIRING THEIR RECOGNITION WHEN AND TO THE EXTENT THAT THEIR REALIZATION IS DEEMED TO BE MORE LIKELY THAN NOT. UNDER THE TAX REFORM ACT OF 1984, SUNAIR INTERNATIONAL SALES CORP. (SISC) ELECTED TO BE TREATED AS AN INTEREST CHARGE DISC (ICD) AS OF JANUARY 1, 1985. ACCORDINGLY, ONLY ONE-SEVENTEENTH (1/17) OF ITS NET INCOME WILL BE CONSIDERED AS A DEEMED DIVIDEND TO ITS PARENT CORPORATION, THE COMPANY. THE COMPANY INTENDS THAT THE BALANCE OF SISC'S NET INCOME WILL BE PERMANENTLY RETAINED BY SISC AND THAT THE COMPANY WILL ONLY BE REQUIRED TO PAY AN ANNUAL INTEREST CHARGE ON THE AMOUNT OF TAXES IT DEFERS ON THIS RETAINED INCOME. HOWEVER, DUE TO SFAS NO 109, BEGINNING IN FISCAL 1994 THE COMPANY HAS A DEFERRED INCOME TAX LIABILITY OF $102,900 AT MARCH 31, 1995, AND $62,000 AT SEPTEMBER 30, 1994. DEFERRED INCOME TAXES WERE NOT PROVIDED ON SISC'S PRIOR YEARS' UNDISTRIBUTED RETAINED EARNINGS SINCE IT IS INTENDED TO BE INDEFINITELY INVESTED. SISC'S UNDISTRIBUTED RETAINED EARNINGS ARE APPROXIMATELY $3,000,000. 4. PREFERRED STOCKS: THE COMPANY HAS 500,000 AUTHORIZED SHARES OF PREFERRED STOCK, NO PAR VALUE, THAT MAY BE ISSUED AT SUCH TERMS AND PROVISIONS AS DETER- MINED BY THE BOARD OF DIRECTORS. 5. STOCK OPTIONS: AS OF MARCH 31, 1995, THE COMPANY HAD GRANTED STOCK OPTIONS ON 23,100 SHARES OF COMMON STOCK. - 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF OPERATIONS LIQUIDITY: ---------- DURING THE FIRST AND SECOND QUARTERS OF THE CURRENT FISCAL YEAR ENDING MARCH 31, 1995, THE COMPANY MAINTAINED CASH AND SHORT TERM INVESTMENTS MORE THAN ADEQUATE TO COVER KNOWN REQUIREMENTS, UNFORESEEN EVENTS OR UNCERTAINTIES THAT MIGHT OCCUR. DURING THE SIX MONTH PERIOD, CASH AND SHORT TERM INVESTMENTS MAINTAINED AN AVERAGE BALANCE OF $ 716,000, COMPARED TO AN AVERAGE BALANCE OF $2,850,000 FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 1994, OR AN AVERAGE BALANCE OF $3,407,000 FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 1993. SHORT TERM INVESTMENTS ARE TAX EXEMPT MONEY MARKET FUNDS THAT ARE READILY AVAILABLE FOR IMMEDIATE USE SHOULD THE OCCASION ARISE. IT IS ANTICIPATED THAT THE COMPANY WILL REMAIN AS LIQUID DURING THE REST OF FISCAL 1995. INVENTORIES CONTAIN NO OBSOLESCENCE AS ADJUSTMENTS ARE MADE AS THEY OCCUR. ACCOUNTS AND NOTES RECEIVABLE CONTAIN NO BAD DEBTS. INTERIM RESERVES ARE MAINTAINED TO COVER CANCELLATION CHARGES UNPAID AND ANY FREIGHT CHARGE DISPUTES. ALL MONETARY TRANSACTIONS ARE IN U.S. DOLLARS AND NO LETTERS OF CREDIT INVOLVE FOREIGN EXCHANGE. CAPITAL RESOURCES: ------------------ DURING THE FIRST SIX MONTHS OF THE CURRENT FISCAL YEAR, THE COMPANY EXPENDED $1,216 FOR CAPITAL ASSETS. NO EXPENDITURES ARE CONTEMPLATED FOR PLANT EXPANSION OR EXTENSIVE MAINTENANCE. THE COMPANY HAS NO LONG TERM DEBT AND NONE IS CONTEMPLATED OTHER THAN THE LEASE OF THE COMPUTER. LIABILITIES CONSIST OF CURRENT ACCOUNTS PAYABLE AND EXPENSES RELATED TO THE CURRENT ACCOUNTING PERIOD AND THE CAPITAL LEASE. RESULTS OF OPERATIONS: ---------------------- DURING THE SECOND QUARTER OF THE CURRENT FISCAL YEAR ENDED MARCH 31, 1995, SHIPMENTS WERE $ 622,729, UP SLIGHTLY FROM SHIPMENTS OF $ 573,324 FOR THE QUARTER ENDED DECEMBER 31, 1994. SHIPMENTS FOR THE SIX MONTHS ENDED MARCH 31, 1995 WERE $ 1,196,053 DOWN FROM $ 1,697,177 OR 29.5% FOR THE SAME PERIOD ONE YEAR AGO AND DOWN $ 2,915,882 OR 70.9% FROM THE SIX MONTHS ENDED MARCH 31, 1993. EXPORT SHIPMENTS FOR THE SIX MONTHS ENDED MARCH 31, 1995 WERE $665,033 OR 55.6% OF TOTAL SALES, DOWN $ 454,495 OR 40.6% FROM THE SAME PERIOD ONE YEAR AGO. DOMESTIC SHIPMENTS FOR THE FIRST SIX MONTHS OF THE CURRENT FISCAL YEAR WERE $ 531,020, COMPARABLE TO SHIPMENTS FOR THE SAME PERIOD ONE YEAR AGO OF $ 577,649. MANAGEMENT CONTINUES TO MONITOR - 8 - RESULTS OF OPERATIONS: (CONTINUED) ---------------------- SELLING, GENERAL AND ADMINISTRATIVE EXPENSES WHICH DECREASED $ 89,911 FROM THE SAME PERIOD ONE YEAR AGO. THE DIRECT LABOR FORCE CONTINUES AT A REDUCED LEVEL DUE TO SUFFICIENT INVENTORY LEVELS IN FINISHED GOODS. THE DOMESTIC MARKET CONTINUES TO REFLECT A SEVERE LACK OF NEW PROGRAMS AND FUNDING. THE COMPANY IS, HOWEVER, OBTAINING A SHARE OF THE LIMITED BUSINESS AVAILABLE. ON THE INTERNATIONAL SCENE, A NUMBER OF POTENTIAL PROGRAMS WERE UNCOVERED DURING EXTENSIVE TRAVEL INCURRED BY THE INTERNATIONAL MARKETING DEPARTMENT IN THE SECOND QUARTER, AS WELL AS AN INDICATION OF THE EASING OF BUDGETARY CONSTRAINTS EXPERIENCED IN THE RECENT PAST. WHILE THE COMPANY IS OPTIMISTIC ABOUT FUTURE REQUIREMENTS FOR ITS EQUIPMENT THE LENGTH OF TIME FOR THE PROCUREMENT CYCLE CONTINUES TO BE EXTREMELY LONG. - 9 - PART II OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K ON FEBRUARY 6, 1995, THE COMPANY ISSUED A REPORT ON FORM 8-K TO ADVISE OF THE RESIGNATION OF GEORGE V. LENNON III, VICE PRESIDENT - GENERAL MANAGER EFFECTIVE JANUARY 15, 1995. - 10 - SIGNATURES ---------- PURSUANT TO THE REQUIREMENTS OF THE SECURITIES AND EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED THEREUNTO DULY AUTHORIZED. SUNAIR ELECTRONICS, INC. /S/ ROBERT URICHO, JR. DATE MAY 2, 1995 _____________________________ ----------- ROBERT URICHO, JR., PRINCIPAL EXECUTIVE OFFICER /S/ SYNNOTT B. DURHAM DATE MAY 2, 1995 ____________________________ ----------- SYNNOTT B. DURHAM, PRINCIPAL ACCOUNTING OFFICER - 11 - EX-27 2 FINANCIAL DATA SCHEDULE
5 0000095366 SUNAIR ELECTRONICS 6-MOS SEP-30-1995 OCT-01-1994 MAR-31-1995 503,609 3,956,334 391,700 600 7,807,731 8,786,739 3,884,188 2,960,804 13,688,019 280,467 0 480,074 0 0 12,757,379 13,688,019 1,196,053 1,350,495 699,589 699,589 611,852 600 40,500 238 0 238 0 0 0 238 .00 .00
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