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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
__
|X| ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 1996
or
__
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-2892
THE DEWEY ELECTRONICS CORPORATION
(Exact name of registrant as specified in charter)
NEW YORK 13-1803974
(State of Incorporation) (I.R.S. Employer Identification No.)
27 Muller Road, Oakland, New Jersey 07436
(Address of principal executive offices)Zip Code
201-337-4700
(Registrant's telephone number)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common stock, $.01 par value
Title of class
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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form l0-K. [X]
The aggregate market value of the voting stock held by nonaffiliates of
registrant, computed by reference to the price at which the stock was sold as of
the close of business on August 30, 1996: $737,501.
The number of shares outstanding of the registrant's common stock, $.01 par
value was 1,339,531 at August 30, 1996.
THE DEWEY ELECTRONICS CORPORATION
TABLE OF CONTENTS
PART I
Item Page
1. Business 1
2. Properties 3
3. Legal Proceedings 3
4. Submission of Matters to a Vote of Security Holders 3
PART II
5. Market for Registrant's Common Equity and Related
Stockholder Matters 4
6. Selected Financial Data 5
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6
8. Financial Statements and Supplementary Data 12
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 27
PART III
10. Directors and Executive Officers of the Registrant 27
11. Executive Compensation 27
12. Security Ownership of Certain Beneficial Owners and
Management 27
13. Certain Relationships and Related Transactions 27
PART IV
14. Exhibits, and Reports on Form 8-K 28
PART I
Item 1. BUSINESS
The Dewey Electronics Corporation (herein referred to as the "Company") was
incorporated in the State of New York in 1955. It is a systems oriented
military electronics development, design and manufacturing organization
based in Oakland, New Jersey. The Company has two industry segments:
electronics; and leisure and recreation.
In the electronics segment, the Company is a diversified producer of
sophisticated electronics and electromechanical systems for the military.
Currently, the principal products of the electronics segment of the business
are manufactured, either as prime contractor or sub-contractor, for the U.S.
Navy.
In the leisure and recreation segment, the Company, through its HEDCO division,
designs, manufactures and markets advanced, sophisticated snowmaking equipment.
The sales and operating profit of each industry segment and the identifiable
assets attributed to each segment for the last three years ended June 30, 1996
are set forth in Note J ("Information About the Company's Operations in
Different Industries") of the Notes to Financial Statements.
During the last three fiscal years there have been no material expenditures for
Company-sponsored or customer-sponsored research and development activities.
Compliance with Federal, State and local environmental provisions has had no
material effect upon capital expenditures, earnings or the competitive position
of the Company. In addition, there are no material capital expenditures
anticipated for environmental control facilities.
As of August 30, 1996, the Company had a work force of 33 employees, of whom 9
were technical or professional personnel. Last year at the same date, the
workforce included 35 employees, of whom 9 were technical or professional
personnel. Fluctuations in the workforce may result from the seasonal nature of
the leisure and recreation segment of business as well as the flow of production
related to government contracts.
ELECTRONICS SEGMENT
This segment of business accounted for 85% of total revenues in fiscal 1996 and
88% of total revenues in fiscal 1995 and 1994.
The Company has continued to pursue both long-term and short-term awards from
various Government agencies and related business sectors in its areas of
electronic and mechanical expertise. The Company, however, is bidding for such
contracts in competition with other companies, including other small firms as
well as Fortune 500 companies, in a time of diminished and less predictable
military spending.
1
Since substantially all of the Company's electronics business comes from
contracts with various agencies of the United States Government or subcontracts
with prime Government contractors, the loss of Government business would have a
material adverse effect on this segment of business.
For the most part, working capital requirements for the electronics segment of
business are funded by progress payments provided by the Government.
All of the Company's contracts with the Government are subject to the standard
provision for termination at the convenience of the Government.
Although raw materials are generally available from a number of suppliers, the
Company is at times dependent upon a specific supplier or a limited number of
suppliers of material for a particular contract and has occasionally experienced
some delays in deliveries. Such delays have not had a material effect on
operations.
Reference is made to Item 7 ("Management's Discussion and Analysis of Financial
Condition and Results of Operations") for additional information regarding this
segment.
LEISURE AND RECREATION SEGMENT
The leisure and recreation segment of business accounted for 15% of the
Company revenues in fiscal 1996 and 12% of the Company's revenues in fiscal 1995
and 1994.
Snowmaking equipment is sold to ski areas as original equipment or as
replacement for existing equipment. Such equipment is sold under a sales
contract that provides for a substantial down payment and retention of a
security interest in the equipment until full payment is received. Most
snowmaking equipment is paid for in full at delivery to the
customer. Typically, in other cases, full payment is made within one year.
The Company has not experienced any losses due to resale of the equipment
following default by customers. The Company services the equipment at the
purchaser's expense beyond a warranty period that expires at the end of the
snowmaking season in which the sale occurs.
The Company has sold snowmaking equipment to over three hundred different
locations in the United States and abroad. Marketing is done by the Company's
employees and by distributors in domestic and foreign markets.
Orders for snowmaking equipment are normally received during the first and
fourth quarters of the fiscal year, though (as discussed under Item 7) this
pattern has been changing. For the most part shipments are made and revenues
recorded during the second quarter. Production usually takes place in the first
and second quarters and it is during this period that inventory is generated and
working capital demands are the greatest.
While there may be some temporary delays, problems regarding source and
availability of raw materials have had no material adverse effect on operations
of this segment.
Reference is made to Item 7 ("Management's Discussion and Analysis of Financial
Condition and Results of Operations") for additional information regarding this
segment.
2
Item 2. PROPERTIES
The Company's 49,200 square foot facility at 27 Muller Road, Oakland, New
Jersey, located on 90 acres of land owned by the Company, was constructed in
1981. Both the land and building are subject to the liens of the mortgages
securing the note and term loan referred to in Note F ("Long-Term Debt") of the
Notes to Financial Statements. This facility houses executive offices and
manufacturing operations and is used primarily for the electronics segment
of business. Approximately 90% of this facility is being utilized for
production (one shift), staging and storage.
In addition, the Company leases and occupies approximately 26,700 square feet
of a facility at 5 Raritan Road, Oakland, New Jersey. This facility is used
for manufacturing and storage of snowmaking equipment and storage of
inventory related to the electronics segment of business. The lease provides
for annual lease payments of $106,772 plus additional charges for utilities,
taxes, insurance and maintenance amounting to approximately $30,000, adjusted
according to actual expenses incurred.
The Company is currently renegotiating its lease for this facility. The current
lease had an expiration date of August 31, 1996. (See Note E ("Commitments and
Contingencies") of the Notes to Financial Statements.)
Item 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
3
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The Company's common stock is traded over-the-counter under the symbol "DEWY".
The table below sets forth the high and low market prices of the Company's
common stock for each quarter during the last two fiscal years.
Quarterly Common Stock Price Range
Fiscal Year 1996 Fiscal Year 1995
Quarter High Low High Low
lst .75 .25 1.75 .75
2nd .625 .1875 1.125 .50
3rd 1.0625 .375 1.00 .50
4th 1.0625 .4375 .875 .50
Price information is based on over-the-counter market quotations, which reflect
inter-dealer prices, without retail mark-up, mark-down or commissions, and may
not necessarily represent actual transactions.
Under provisions of the Company's term loan agreement with Fleet National Bank,
the Company cannot, during the term of the loan, without the Bank's written
consent, declare any dividend on any of its stock (other than one solely in
shares of its capital stock) in excess of 110% of the total cash dividend
declared in the preceding fiscal year in which a dividend was declared or
authorize any other distribution on any of its stock (other than one payable
solely in shares of its capital stock) or redeem any
shares of its stock for cash. The loan agreement is referred to under Item 7
(Managements Discussion and Analysis of Financial Condition and Results of
Operations) and in Note F ("Long-Term Debt") of the Notes to Financial
Statements.
There were no dividends declared or paid during the fiscal years 1996 and 1995.
The Corporation has no plans to pay dividends in the foreseeable future.
The number of holders of record of the Company's common stock as of August 30,
1996 was 891.
4
Item 6. Selected Financial Data
(In thousands of dollars except per share amounts)
Year ended June 30,
1996 1995 1994 1993 1992
Net Sales............................$4,595 $6,692 $8,473 $8,181 $9,080
Earnings before income taxes and
cumulative effect of Accounting
change. ..409 179 198(1) 318 364(1)
Net earnings.......................... 244 107 821(2) 318 364
Net earnings per share before income
taxes and cumulative effect of
Accounting change.. $ .31 $.13 $ .15 $ .24 $ .27
Net earnings per share...... .18 .08 .61 $ .24 $ .27
Cash dividends per common share -- -- -- -- --
Total assets........... $5,372 $5,555 $6,417 $6,015 $6,542
Long-term obligations. ....2,289 2,614 3,365 3,714 4,191
Working capital.... 1,879 1,770 2,310 2,471 2,417
Stockholders' equity/(deficit)........1,227 983 876 55 (263)
(1) Includes temporary expropriation expense of $100,000 in 1994 and
temporary expropriation income of $172,250 in 1992.
(2) See Note G (Taxes on Income) of the Notes to Financial Statements for
information as to the effect of adopting Statement of Financial Accounting
Standards (SFAS) No. 109 in fiscal 1994.
5
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis contains certain forward-looking
statements that should be read in conjunction with the cautionary statements
appearing under Current Business Environment and elsewhere in this discussion.
The sales and operating profit of each industry segment and the identifiable
assets attributed to each segment for the last three fiscal years ended June 30,
1996 are set forth in Note J (Information About the Companys Operations in
Different Industries) of the Notes to Financial Statements.
Revenues for the fiscal year 1996 were 31% lower than the revenues for 1995 and
46% lower than the revenues of 1994.
Electronics Segment
Electronic product revenues in fiscal year 1996 were 33% lower than the
revenues of 1995 (from $5,866,000 in 1995 to $3,925,000 in 1996) and 48% lower
than the revenues of fiscal year 1994 ($7,485,000), which was approximately
$700,000 higher than 1993 revenues as a result of a delay in the receipt of a
U.S. Navy contract award.
The decline reflects a generally lower level of activity in this segment of the
business. In addition, this years first quarter and early second quarter
revenues were adversely impacted by production curtailments due to engineering
changes in the Fleet Exercise Section (FES) project. These changes, initiated
by the Company because of incomplete Government provided project drawings,
delayed production until after Government approval of the changes was received
at the end of the first quarter. Fourth quarter revenues were $772,000 compared
to $854,000 in the last quarter of fiscal 1995. This years fourth quarter
revenues were favorably affected by approximately $343,000 of revenues
attributable to operations in prior years, recognized in this quarter upon
receipt of advice from the Government following contract review, amounting to
approximately $.15 net earnings per share.
This year, 74% of electronic product revenues were from the production efforts
under the Navys MK48 ADCAP Torpedo Program. Of this amount, the Fleet Exercise
Section (FES) project provided 60%, the MK21 Exploder Assembly Upgrade project
provided 9% and the 5% remaining was the result of efforts under the original
award of the ADCAP Torpedo Program.
The other 26% of this years electronic product revenues resulted from various
orders which were more limited in scope and duration. These orders were
generally for replacement parts for previously supplied Department of Defense
equipment and other projects performed as a subcontractor. A large part of such
other revenues is attributable to the Companys Pitometer Log Division, which
manufactures speed and distance measuring instrumentation for the Navy.
6
Delivery of the FES project is scheduled to be completed in January 1997.
Based on the current rate at which exploder assemblies are being received from
the Navy for upgrading, scheduled completion of the MK21 project is estimated
to be July 1997. However, this delivery schedule is still being reviewed.
Production efforts under the ADCAP Torpedo Program accounted for 68% of
electronic product revenues in fiscal 1995 (with FES production accounting
for 42%, MK21 production accounting for 24% and the original award under the
Program accounting for 2%) and 73% of such revenues in fiscal 1994 (of which
the FES project provided 45%, the original award provided 24% and the MK21
project provided 4%). Other electronic product revenues were derived from
various orders, limited in scope and duration, for Department of Defense and
other replacement equipment.
The aggregate value of the Companys backlog of electronic products not
previously recorded as revenues was $1 million on June 30, 1996, $1 million on
June 30, 1995 and $6 million on June 30, 1994. It is estimated that the present
backlog will be shipped during the next 18 months and that the $1 million of
this backlog not previously recorded as revenues will be recognized as revenues
during the 1997 fiscal year.
On August 23, 1996, the Company was awarded a contract with the U.S. Army to
provide tactical generator sets. The Army has placed an initial order for
approximately $1 million. The contract allows for additional production orders
spanning a 5 year period, with 5 separate ordering periods, and has the
potential for sales of up to approximately $40 million. However, the Army is
not obligated to order any additional amounts and there can be no assurance
that it will do so.
Leisure and Recreation Segment
In the leisure and recreation industry segment, revenues for 1996, 1995 and
1994 amounted to approximately $670,000, $826,000 and $988,000, respectively.
Included in these revenues are export sales amounting to approximately $92,000,
$121,000 and $321,000, respectively. This decline in export sales has been a
principal factor in the reduction of leisure and recreation revenues.
The Company is continuing to face stronger competition in foreign markets and
has directed more efforts in that area. By utilizing its strong professional
and designing capabilities, the Company has also expanded the type of
services that it provides to the snowmaking industry, which is anticipated
to increase revenues in the domestic market.
The backlog of orders of snowmaking equipment to be shipped was approximately
$156,000 on June 30, 1996, $166,000 on June 30, 1995 and $291,000 on June 30,
1994. All of the current backlog will be shipped during the current fiscal
year.
Gross Profit
Gross profit was 37% in fiscal year 1996, 24% in fiscal year 1995 and 23% in
fiscal year 1994.
7
Gross profit on electronic product revenues increased to 43% in fiscal year
1996 due to favorable results of the completion of the original award of the
ADCAP Torpedo Program and more economical production efforts on the FES
project. Without the additional $343,000 of fourth quarter revenue referred
to above, gross profit on electronic product revenues would have been 32%.
The gross profit in this segment was 24% in fiscal years 1995 and 1994.
Gross profit on leisure products for the same periods was 5% in 1996, 21% in
1995 and 13% in 1994. The reduction in gross profit percentage this year is
attributed to marketing pressures in the machine sale market causing more
competitive pricing and increased development costs. The Company believes that
it has improved its marketing position compared to last year as a result of
these development efforts.
Selling and Administrative Expenses
Selling and administrative expenses amounted to $1,070,659 (23% of revenues) in
fiscal 1996, $1,082,596 (16% of revenues) in fiscal 1995 and $1,175,389 (14% of
revenues) in fiscal 1994. The Company is currently evaluating further cost
reduction possibilities.
Interest Expense
Interest expense for the last three fiscal years was: $262,905 in 1996,
$279,087 in 1995 and $383,757 in 1994.
Interest on a 9% note payable to the New Jersey Economic Development Authority,
and interest on borrowings under a term loan agreement with Fleet National Bank
(successor in interest to National Westminster Bank) (the "Bank"), referred to
below and in Note F ("Long Term Debt") of the Notes to Financial Statements,
constitute essentially all of the Company's interest expense.
Reduced interest expense on borrowings other than the 9% note can be attributed
to principal reduction payments made during the fiscal year.
Other Income/(Expense)-Net
Other Income for fiscal 1996 is the result principally of interest income of
$8,679 and income from miscellaneous sales of $20,376, net of a prorated portion
($8,072) of the minimum restructuring fee resulting from a 1992 amendment to the
Companys term loan agreement (See Note F (Long-Term Debt) of the Notes to
Financial Statements).
For fiscal 1995, Other Expense includes a prorated portion ($59,535) of the
minimum restructuring fee, interest income of $15,348 and income from
miscellaneous sales of $4,399.
Other Expense for fiscal 1994 includes a prorated portion ($59,535) of the
minimum restructuring fee, miscellaneous discounts of $9,138, interest income of
$3,289 and a gain on used equipment sold of $696.
8
Income Taxes
Federal income tax net operating loss carryforwards mainly arise from prior
years' losses and temporary differences between financial and taxable income.
On July 1, 1993 the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 109, "Accounting for Income Taxes". The Company has
reported the cumulative effect of the change in accounting methods as of the
beginning of the 1994 fiscal year.
Deferred income taxes reflect the net tax effects of (a) temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes, and (b) operating loss
carryforwards. See Note G ("Taxes on Income") of the Notes to Financial
Statements for further information regarding the effect of adopting SFAS No.
109.
The tax provisions for the fiscal years ended June 30, 1996, 1995 and 1994
were at an effective rate of 40%.
Changing Prices
Price changes and inflation did not have any material effect on operations over
the last three years.
Liquidity and Capital Resources
The Companys working capital was $1,879,138 at June 30, 1996 and $1,769,550 at
June 30, 1995. This increase in working capital resulted from a reduction in
current liabilities.
The ratio of current assets to current liabilities was 2:06:1 at June 30, 1996
and 1:93:1 at June 30, 1995.
In fiscal year 1996, operating activities used net cash of $42,406, expenditures
for plant and equipment used $124,897 and $322,609 was used in payment of long
term debt. These activities resulted in a net reduction in cash and cash
equivalents of $489,912.
In fiscal year 1995, operating activities provided net cash of $1,187,372,
expenditures for plant and equipment used $79,383 and $896,877 was used in
payment of long term debt including a voluntary principal reduction payment
under the term loan agrement. These activities resulted in a net increase in
cash and cash equivalents of $211,112.
In fiscal year 1994, operating activities provided net cash of $763,501,
expenditures for plant and equipment used $156,698, the sale of used equipment
provided $8,425 and $493,792 was used in payment of long term debt. The effect
of these activities was a net increase in cash and cash equivalents of $121,436.
9
The Company continues to meet its short term liquidity needs arising out of
electronic product operations through a combination of progress payments on
government contracts (based on costs incurred) and billings at the time of
delivery of products.
On a long term basis, the Companys liquidity will be dependent on the
ability to maintain borrowing arrangements with the Bank (or other lenders).
The term loan under the agreement with the Bank requires monthly principal
payments of $18,400 plus accrued interest and matures on October 31, 2000.
The interest rate is nine percent per annum. The term loan agreement requires
that the Company maintain working capital of at least $1,500,000 and maintain
net worth (excluding subordinated shareholder loans, characterized as due to
related party on the balance sheet) of at least $750,000. The Company is also
required to have earnings before interest, taxes, depreciation and amortization
of intangibles (EBITDA) for each fiscal year which shall
exceed the current principal payments due plus all interest payments due during
such fiscal year and EBITDA shall not be less than twice the aggregate amount
of all interest payments due for such fiscal year. The term loan agreement
contains other covenants and provides for a release of the Banks lien on
Company assets, except for real property, when the principal balance of the
loan is less than $1,500,000.
The Company has no material commitments for capital expenditures as of the end
of this fiscal year.
The Company owns approximately 90 acres of land and the building it occupies in
Bergen County, New Jersey, which are carried on its books at approximately
$1,000,000 but which are believed to have a fair market value substantially in
excess of this amount. This property is adjacent to a full interchange of
Interstate Route 287. Management continues to investigate possible uses of this
property which would be favorable to the Companys stockholder equity.
While the adoption of SFAS No. 109 has the effect of recognizing for balance
sheet purposes certain deferred tax assets arising from loss carryforwards and
consequently increasing stockholders' equity, this accounting change is not
significant from a liquidity standpoint.
Current Business Environment
The Company continues to redirect its marketing strategy to include the
types of programs more likely to be funded by the Government and more resistant
to cost cutting. Present marketing activities include participation in bidding
efforts involving the upgrading of existing military equipment. The scope of
the Company's efforts includes utilization of the Company's precision machining
capabilities, as well as focusing on those programs which require production of
highly complex electromechanical systems.
Each of the Companys two business segments -- electronic products and leisure
and recreation products -- is experiencing intense competition and the impact of
difficult economic environments, as are other companies in the same or similar
industries.
10
Electronic Products
Most of the Companys revenues are derived from the electronic product segment
of its business. Virtually all electronic product revenues are attributable to
business with the Department of Defense of the Federal Government (or with
Government contractors). During the last two fiscal years, projects derived
from a single U.S. Navy program, the MK48 ADCAP Torpedo Program, have been
responsible for all of the Companys long-term Government contract revenues and
have accounted for two-thirds to three-quarters of total revenues from
Government related business. The Company expects that the U.S. Navy will
continue to consider this program as necessary to
national defense and that the Company will continue to participate in this
program. However, there can be no assurance that this will occur.
Electronic product revenues are determined by the percentage of completion
method of accounting. The use of estimates to complete projects is required
under this accounting method. These estimates are reviewed by management on an
ongoing basis and are adjusted when necessary in the opinion of management. No
significant adjustments are anticipated to be made to current estimates, but
changes in contract requirements and the efforts needed to meet such changes
are normal events in the defense electronics industry.
Leisure and Recreation Products
Taking advantage of competitive pressures in the snowmaking machine industry,
ski areas have become reluctant to make purchase commitments for machines in
advance of required delivery dates, forcing manufacturers to carry larger
inventories and adding to such uncertainties of the snowmaking machine business
as weather conditions.
Properties
The Company has for some time been exploring alternative methods of increasing
its shareholders equity by realizing the value of its 90 acres of land and
building situated thereon, such as the sale of some or all of the property,
a sale/lease-back arrangement or long-term financing. The northern New Jersey
real estate market has not been favorable for such a transaction in recent
years and no assurance can be given that any transaction will occur.
11
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Financial Statements and Supplementary Data
Page
Independent Auditors' Report 13
Financial Statements:
Balance Sheets, June 30, 1996 and 1995 14
Statements of Earnings, Years Ended June 30, 1996,
1995 and 1994 15
Statements of Stockholders' Equity/(Deficit), Years Ended June
30, 1996, 1995 and 1994 15
Statements of Cash Flows, Years Ended June 30, 1996
1995 and 1994 16
Notes to Financial Statements 17
12
INDEPENDENT AUDITORS REPORT
Board of Directors of
The Dewey Electronics Corporation
Oakland, New Jersey
We have audited the accompanying balance sheets of The Dewey Electronics
Corporation as of June 30, 1996 and 1995, and the related statements of
earnings, stockholders' equity (deficit) and cash flows for each of the three
years in the period ended June 30, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The Dewey Electronics
Corporation at June 30,1996 and 1995 and the results of its operations and its
cash flows for each of the three years in the period ended June 30, 1996 in
conformity with generally accepted accounting principles.
As discussed in Note A to the financial statements, the Corporation changed its
method of accounting for income taxes effective July 1, 1993 to conform with
Statement of Financial Accounting Standards No. 109.
Deloitte & Touche LLP
September 11, 1996
Parsippany, New Jersey
13
Balance Sheets
June 30,
1996 1995
ASSETS
CURRENT ASSETS:
Cash and cash equivalents...........................$88,402 $ 578,314
Accounts receivable (includes U.S. Government
receivables of approximately $816,000 in 1996
and $266,000 in 1995).. ...1,029,246 506,200
Inventories...................................... 1,416,163 1,350,403
Contract costs and related estimated profits
in excess of billings....... ........ 1,111,967 1,188,189
Prepaid expenses and other current assets........ 11,334 47,019
TOTAL CURRENT ASSETS..............................3,657,112 3,670,125
PROPERTY, PLANT AND EQUIPMENT:
Land and land improvements......................... 513,161 513,161
Building and improvements.........................1,799,383 1,797,864
Machinery and equipment...........................2,298,705 2,195,586
Furniture and fixtures............................ 147,512 147,512
4,758,761 4,654,123
Less accumulated depreciation and amortization....3,556,102 3,450,882
1,202,659 1,203,241
DEFERRED TAX ASSET..................................422,295 587,338
OTHER NON-CURRENT ASSETS......................... 89,876 93,919
TOTAL ASSETS.....................................$5,371,942 5,554,623
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts payable...................................$370,807 $ 269,108
Accrued expenses and other liabilities..............282,904 183,287
Pension costs accrued.............................. 90,497 80,358
Billings in excess of contract costs and related
estimated profits..... .......... 701,608 1,045,214
Current portion of long-term debt...................332,158 322,608
TOTAL CURRENT LIABILITIES.........................1,777,974 1,900,575
LONG-TERM DEBT.................................. 2,089,477 2,413,564
OTHER LONG-TERM LIABILITY............................77,179 57,318
DUE TO RELATED PARTY............................... 200,000 200,000
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, par value $1.00; authorized 250,000
shares, issued and outstanding,
none...................................... -- --
Common stock, par value $.01; authorized
3,000,000 shares... 16,934 16,934
Paid-in capital..................................2,835,307 2,835,307
Accumulated deficit.............................(1,104,832) (1,348,978)
1,747,409 1,503,263
Less: Treasury stock, at cost................. 520,097 520,097
1,227,312 983,166
TOTAL LIABILITY AND STOCKHOLDERS EQUITY $5,371,942 $5,554,623
See notes to financial statements--
14
Statements of Earnings
Years ended June 30,
1996 1995 1994
Revenues..................................$4,594,993 $6,691,731 $8,473,118
Cost of revenues.......................... 2,875,201 5,111,451 6,550,853
Gross profit...............................1,719,792 1,580,280 1,922,265
Selling, general and administrative
expenses......... 1,070,659 1,082,576 1,175,389
Operating profit.............................649,133 497,704 746,876
Interest expense............................(262,905) (279,087) (383,757)
Temporary expropriation expense............ -- -- (100,000)
Other income/(expense) -net...................22,408 (39,738) (64,688)
Earnings before income taxes and cumulative
effect of accounting change..................408,636 178,879 198,431
Income tax provision........................(164,490) (72,005) (79,875)
Earnings before cumulative effect of accounting
change.....................................244,146 106,874 118,556
Cumulative effect of accounting change.... -- -- 702,935
NET EARNINGS................................$244,146 $106,874 $821,491
Earnings per share before cumulative effect
of accounting change........................$ .18 $ .08 $ .09
Cumulative effect of accounting change... -- -- $ .52
NET EARNINGS PER SHARE......................$ .18 $ .08 $ .61
Statements of Stockholders' Equity/(Deficit)
Treasury stock
Common Stock at cost
Paid in Accumulated
Shares Amount capital Deficit Shares Amount
Balance,
June 30, 1993 1,693,397 $16,934 $2,835,307 $(2,277,343) 353,866 $520,097
Net Earnings -- -- -- 821,491 -- --
Balance,
June 30, 1994 1,693,397 16,934 2,835,307 (1,455,852) 353,866 520,097
Net Earnings -- -- -- 106,874 -- --
Balance,
June 30, 1995 1,693,397 16,934 2,835,307 (1,348,978) 353,866 $520,097
Net Earnings -- -- -- 244,146 -- --
Balance,
June 30, 1996 1,693,397 $16,934 $2,835,307 $(1,104,832) 353,866 $520,097
See notes to financial statements
15
Statements of Cash Flows
Years ended June 30,
1996 1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings...............................$244,146 $106,874 $821,491
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation..............................125,479 122,696 121,470
Amortization.......................... 4,043 6,789 5,500
Gain on sale of property, plant and equipmen -- -- (696)
Deferred financing costs................. 8,072 59,535 59,535
(Increase)/Decrease in accounts receivable (523,046) 280,433 (120,303)
(Increase)/Decrease in Inventories..... ..(65,760) 3,343 (101,994)
Decrease in contract costs and related estimated
profits in excess of applicable billing 76,222 693,858 585,978
Decrease in billings in excess of contract
costs and related estimated profits......(343,606) -- (28,386)
Decrease in prepaid expenses and other current
assets................................ 35,686 2,855 15,601
Decrease in other noncurrent assets...... 19,861 18,662 11,300
Decrease/(Increase) in deferred tax asset.165,043 72,558 (623,060)
Increase/(Decrease) in accounts payable...101,699 (116,867) 19,722
Increase/(Decrease) in accrued expenses and
other liabilities..... 99,616 (24,716) (17,570)
Increase/(Decrease) in pension costs
accrued........... 10,139 (38,648) 14,913
Total adjustments..........................(286,552) 1,080,498 (57,990)
Net cash (used)/provided by operating
activities.... .... (42,406) 1,187,372 763,501
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property, plant and
equipment........ -- -- 8,425
Expenditures for property, plant and
equipment. (124,897) (79,383) (156,698)
Net cash used in investing activities.....(124,897) (79,383) (148,273)
CASH USED IN FINANCING ACTIVITIES:
Payment of long-term debt.................(322,609) (896,877) (493,792)
NET (DECREASE)/INCREASE IN CASH AND
CASH EQUIVALENTS.......... (489,912) 211,112 121,436
CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR..................................578,314 367,202 245,766
CASH AND CASH EQUIVALENTS AT END
OF YEAR...... .....$ 88,402 $578,314 $367,202
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash (paid) received during the year for:
Interest.................................$(246,594) $(279,785) $(383,549)
Interest received.....................$ 8,679 $ 15,398 $ 3,289
See notes to financial statements
16
Notes to Financial Statements
Years ended June 30, 1996, 1995, and 1994
A. Summary of Significant Accounting Policies
1. Government Contract Accounting
Revenues and estimated earnings under defense contracts are recorded using the
percentage-of-completion method of accounting, measured as the percentage of
costs incurred to estimated total costs for each contract. Provisions for
estimated losses on uncompleted contracts are made in the period in which such
losses are determined. Changes in job performance, job conditions, and
estimated profitability may result in revisions to costs and income and
are recognized in the period in which the revisions are determined.
An amount equal to contract costs and estimated profit (limited to
estimated net realizable value) attributable to claims is included in revenue
when realization is probable and the amount can be reasonably estimated.
Claims settled in excess of recorded amounts are recognized as collected.
During fiscal year 1996, the Company recorded $343,000 of income related to the
settlement of a government contract.
2. Inventories
Inventories are valued at the lower of cost (first-in, first-out method) or
market. Components of cost include materials, direct labor and factory
overhead.
3. Property, plant and equipment
Property, plant and equipment are stated at cost. Allowance for depreciation
and amortization is provided on a straight-line basis over estimated useful
lives of three to ten years for machinery and equipment, ten years for furniture
and fixtures, and twenty years for building and improvements.
4. Intangibles
The excess of investment over net assets acquired had been amortized on a
straight-line basis by charges to earnings over a twenty year period which
ended June 30, 1994.
5. Income taxes
On July 1, 1993 the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 109, "Accounting for Income Taxes". This statement
supersedes SFAS No. 96, "Accounting for Income Taxes" which was adopted by the
Company in 1988. The Company has reported the cumulative effect of the change
in accounting method as of the beginning of the 1994 fiscal year.
17
6. Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits in banks and U.S.
Treasury Securities with a maturity date not in excess of three months. The
carrying amount of cash and cash equivalents approximates fair value due to the
short maturity of such investments.
7. Fair value of financial instruments
Due to the short term nature of accounts receivable and accounts payable
their carrying value is a reasonable estimate of fair value.
8. Use of Estimates
The process of preparing financial statements in conformity with Generally
Accepted Accounting Principles requires the use of estimates and assumptions
regarding certain types of assets, liabilities, revenues and expenses. Such
estimates primarily relate to unsettled transactions and events as of the date
of the financial statements. Accordingly, upon settlement, actual results
may differ from estimated amounts.
B. Inventories
Inventories consist of:
June 30,
1996 1995
Finished goods $546,731 $445,001
Work in progress 376,103 373,967
Raw materials 493,329 531,435
$1,416,163 $1,350,403
C. Costs and Estimated Earnings on Uncompleted Contracts
June 30,
1996 1995
Costs incurred on contracts in progress $63,685,233 $62,735,358
Estimated contract profit 9,082,983 8,095,440
72,768,216 70,830,798
Less: billings to date 72,357,857 70,687,823
$410,359 $ 142,975
18
Included in the accompanying balance sheets under the following captions:
June 30,
1996 1995
Contract costs and related estimated
profits in excess of applicable billings $1,111,967 $1,188,189
Billings in excess of contract costs and
related estimated profits (701,608) (1,045,214)
$ 410,359 $ 142,975
D. Stock Option Plan
The Company's stock option plan, which expires in 1998, authorizes the granting
of options to various executives and key employees to purchase shares of common
stock. Such options are granted at fair market value of the stock on the date
of grant and are exercisable over a five-year period. At June 30, 1996, options
for a maximum of 90,000 shares are authorized and 74,650 shares are available
for grant. Shares granted are exercisable at $.9375 and from various dates
during the period June 3, 1994 to June 3, 1998.
The changes in the number of shares under option are as follows:
Shares Granted
and Reserved
Balance, June 30, 1993 45,000
Cancelled (5,000)
Balance, June 30, 1994 and 1995 40,000
Cancelled/Expired (25,000)
Balance, June 30, 1996 15,000
Exercisable at June 30, 1996 15,000
In June 1996 the Financial Accounting Standards Board issued Statement No. 123
Accounting for Stock-Based Compensation. The Company has not determined what
methodology will be used for adoption of this statement.
19
E. Commitments and Contingencies
The Company has leased under operating leases certain machinery, equipment and
warehouse facilities. Future minimum rental commitments as of June 30, 1996
are as follows:
1997 $26,918
1998 5,862
1999 3,231
$36,011
Total rent expense was $97,572, $194,869 and $247,796, for each of the years
ended June 30, 1996, 1995 and 1994, respectively.
The Company is currently renegotiating its lease for its warehouse facility.
The current lease had an expiration date of August 31, 1996.
F. Long-Term Debt
Long-term debt at June 30, consists of:
1996 1995
9% mortgage note payable to New Jersey
Economic Development Authority, due
through 2000, due in monthly installments
of $12,461 including interest, collateralized
by the Company's office building and plant. $474,405 $576,212
9% Term loan payable to Fleet National Bank
due in monthly installments of $18,400 plus
interest. 1,947,230 2,159,960
2,421,635 2,736,172
Less current portion 332,158 322,608
$2,089,477 $2,413,564
On November 15, 1994, the Companys term loan agreement with a predecessor in
interest of Fleet National Bank (the Bank) was amended to extend the term to
October 31, 2000. Due to this recent amendment, the carrying amount of all of
the Companys long-term debt is a reasonable estimate of fair value.
The term loan agreement amendment requires monthly principal payments of
$18,400 plus accrued interest. Prior to this amendment, the Company had been
required to make principal payments of $75,000 in July of each year plus
$20,000 per month plus accrued interest. The interest rate was changed from
two (2) percentage points over the Banks prime rate to nine (9) percent per
annum and working capital requirements have been reduced to $1,500,000.
The amendment also requires that the Company maintain net worth (excluding
subordinated shareholder loans, characterized as due to related party on
the balance sheet) of at least $750,000. The Company is also required to have
earnings before interest, taxes, depreciation and amortization of intangibles
(EBITDA) for each fiscal year which shall exceed the current principal payments
due plus all interest payments due during such fiscal year and EBITDA shall not
be less than twice the aggregate amount of all interest payments due for the
same fiscal year.
20
Under provisions of the Company's term loan agreement with Fleet National Bank,
the Company cannot, during the term of the loan, without the Bank's written
consent, declare any dividend on any of its stock (other than one solely in
shares of its capital stock) in excess of 110% of the total cash dividend
declared in the preceding fiscal year in which a dividend was declared or
authorize any other distribution on any of its stock (other than one payable
solely in shares of its capital stock) or redeem any shares of its stock for
cash.
The Company is in compliance with the provisions of the term loan agreement.
The amended agreement also provided for a release of the Banks lien on Company
assets except for real property when the principal balance of the loan is
less than $1,500,000.
Aggregate annual principal payments applicable to long-term debt for the years
subsequent to June 30, 1996, based on the amended term loan agreements in place
at June 30, 1996 are:
1997 $332,158
1998 342,604
1999 354,030
2000 328,812
2001 1,064,031
$2,421,635
G. Taxes on Income
During the first quarter of fiscal year 1994, and effective July 1, 1993,
the Company adopted SFAS No. 109, "Accounting for Income Taxes". This Statement
supersedes SFAS No. 96, "Accounting for Income Taxes", which was adopted by the
Company in 1988.
The cumulative effect of adopting SFAS No. 109 on the Company's financial
statements was to recognize as a balance sheet asset, previously unrecorded
deferred tax benefits from net operating loss carryforwards in the amount of
$702,934 (computed at an anticipated effective tax rate of 40%), and to increase
income in that year by such amount.
The Company believes that it is more likely than not that the NOL carryforwards
will be utilized prior to their expiration. This belief is based upon the
expectation that the Company's real property, or a portion thereof, will
generate income prior to the expiration of the loss carryforwards in an amount
at least sufficient to realize the deferred tax benefit. The Company's net
operating loss carryforwards for tax purposes
were $1,335,000 at June 30, 1996 and are scheduled to expire in year 2006.
The provision for income taxes is summarized as follows:
21
Years Ended June 30,
1996 1995 1994
Deferred
Federal $125,772 $55,056 $61,073
State 38,718 16,949 18,802
$164,490 $72,005 $79,875
The following is a reconciliation of income taxes at the federal statutory rate
and the Company's effective income tax rate:
Years ended June 30,
1996 1995 1994
Statutory federal income tax rate 34% 34% 34%
State taxes, net of federal income
tax benefit 6 6 6
Benefit of operating loss
carryforwards -- -- --
Effective income tax rate 40% 40% 40%
Deferred tax assets and liabilities as of June 30, 1996 and June 30, 1995
consisted of the following:
Deferred tax assets: 1996 1995
Net operating loss carryforward $510,629 $667,701
Deferred financing fees 64,719 63,906
Vacation accrual 32,130 31,577
$607,478 $763,184
Deferred tax liabilities:
Depreciation $153,053 $144,270
Deferred contract income 67,860 67,860
$220,913 $212,130
H. Pension Plan
The Company has a non-contributory defined benefit retirement plan covering all
its employees. The plan is qualified under the Internal Revenue Code.
The method of determining the accrued benefit of an employee is the amount equal
to .8% of an employee's average monthly salary times the number of years
employed by the Corporation, to a maximum of 35 years. The Company's policy is
to contribute the amounts allowable under Internal Revenue Service regulations.
The plan assets are invested primarily in a fixed income investment account.
22
Net pension expense consists of the following:
Years ended June 30,
1996 1995 1994
Service cost $29,721 $33,259 $37,709
Interest cost on projected benefit
obligations 47,195 46,726 67,027
Actual return on assets (28,913) (28,391) (38,681)
Net amortization and deferrals 20,489 19,025 15,220
Net pension expense $68,492 $70,619 $81,275
In both 1996 and 1995, the Company recorded its minimum pension liability as an
other long term liability and a corresponding intangible asset included in other
non-current assets. The funded status of the plan and the amount recognized on
the balance sheet are as follows:
June 30,
1996 1995
Actuarial present value of benefit obligations:
Accumulated benefit obligation (including
vested benefits of $663,052 and $634,401
as of June 30, 1996 and 1995 respectively) $674,366 $645,079
Projected benefit obligation $771,662 $732,221
Plan assets at fair value, consisting of
investments held in a fixed income
investment account 479,337 474,771
Projected benefit obligation in excess of
plan assets 292,325 257,450
Unrecognized net gain/(loss) (10,804) 15,380
Unrecognized net obligation (86,759) (101,219)
Prior service cost not yet recognized in net
periodic pension cost (51,293) (58,621)
Adjustment required to recognize minimum
liability - intangible asset 51,560 57,318
Accrued pension cost $195,029 $170,308
1996 1995
Expected long-term rate of return on
plan assets 8.0% 8.0%
per annum per annum
Discount rate 7.5% 7.5%
compounded compounded
annually annually
Salary increase 3.0% 3.0%
per annum per annum
I. Earnings Per Share
Earnings per share for the years ended June 30, 1996, 1995 and 1994 are based
upon the weighted average number of shares outstanding. Stock options have not
been considered in 1996, 1995 and 1994, as the effect would not be dilutive.
The number of shares used in the computation of earnings per share was 1,339,531
in each of the years ended June 30, 1996, 1995 and 1994.
23
J. Information About the Company's Operations in Different Industries
Year ended June 30, 1996
Leisure
and Total
Electronics Recreation Company
(in thousands)
Total revenue $3,925 $ 670 $4,595
Operating profit/(loss) $ 883 $(234) $ 649
Interest expense and other income-net (240)
Earnings before income taxes $409
Identifiable assets at June 30, 1996 $2,949 $1,901 $4,850
Corporate assets 522
Total assets at June 30, 1996 $5,372
Year ended June 30, 1995
Leisure
and Total
Electronics Recreation Company
(in thousands)
Total revenue $5,866 $826 $6,692
Operating profit/(loss) $ 603 $ (105) $498
Interest expense and other income-net (319)
Earnings before income taxes $179
Identifiable assets at June 30, 1995 $2,420 $1,873 $4,293
Corporate assets 1,262
Total assets at June 30, 1995 $5,555
Year ended June 30, 1994
Leisure
and Total
Electronics Recreation Company
(in thousands)
Total revenue $7,485 $ 988 $8,473
Operating profit(loss) $ 959 $ (212) $ 747
Interest expense and other income - net (549)
Earnings before income taxes $198
Identifiable assets at June 30, 1994 $3,500 $1,840 $5,340
Corporate assets 1,077
Total assets at June 30, 1994 $6,417
The Company operates in two industries: electronics, and leisure and
recreation. Operations in the electronics industry involve primarily supplying
electronics and electrical products and systems for the United States
Government as a prime contractor or subcontractor. Operations in the leisure
and recreation industry involve the production and sale of snowmaking
machinery and servicing of such machinery at the purchaser's expense beyond
the warranty period. Total revenue by industry represents
sales to unaffiliated customers, as reported in the Company statement of
earnings. There are no inter-segment sales.
24
Some operating expenses, including general corporate expenses, have been
allocated by specific identification or based on direct labor for items which
are not specifically identifiable. In computing operating profit, none of
the following items have been added or deducted: interest expense, income
taxes, and non-operating income. Depreciation for the electronics industry
and the leisure and recreation industry, respectively, was approximately
$93,000 and $30,000 in 1996, $91,000 and $32,000 in 1995, and $86,000 and
$35,000 in 1994. Capital expenditures for the electronics industry were
approximately $125,000 in 1996, $79,000 in 1995, and $157,000 in 1994.
There were no capital expenditures for the leisure and recreation industry.
Identifiable assets by industry are those assets that are used in the Company's
operations in each industry. Corporate assets are principally cash, prepaid
expenses, and other current assets.
This year, 74% of electronic product revenues were from the production efforts
under the Navys MK48 ADCAP Torpedo Program. Of this amount, the Fleet
Exercise Section (FES) project provided 60%, the MK21 Exploder Assembly Upgrade
project provided 9% and the remaining 5% was the result of efforts under the
original award of the ADCAP Torpedo program. The other 26% of electronic
product revenues were derived from various orders which were more limited in
scope and duration. These orders were generally for replacement parts for
previously supplied Department of Defense equipment and other projects
performed as a subcontractor. A large part of such other revenues is
attributable to the Companys Pitometer Log Division, which
manufactures speed and distance measuring instrumentation for the Navy.
This years fourth quarter revenues were favorably affected by approximately
$343,000 of revenues attributable to operations in prior years, recognized
in this quarter upon receipt of advice from the Government following contract
review, amounting to approximately $.15 net earnings per share.
Last year, 68% of electronic product revenues were the result of production
efforts under the Navys MK48 ADCAP Torpedo Program, of which the Fleet Exercise
Section (FES) project provided 42%, the MK21 Exploder Assembly upgrade project
provided 24%, and the original award under the ADCAP Torpedo program provided
2%. The other 32% of electronic product revenues were derived from various
orders, limited in scope and duration that were generally for replacement parts
for previously supplied Department of Defense equipment and other projects.
In 1994, 73% of the revenues from electronic products were from production
efforts under the Navy's MK48 ADCAP Torpedo Program, of which the Fleet Exercise
Section (FES) project provided 45%, the original ADCAP Torpedo project provided
24% and the MK21 Exploder Assembly project provided 4%. Other electronic
product revenues, comprising the remaining 27%, were derived from various
orders, limited in scope and duration, for Department of Defense and other
replacement equipment.
25
In the leisure and recreation industry segment, revenues for 1996, 1995 and 1994
amounted to approximately $670,000, $826,000 and $988,000 respectively.
Included in these revenues are export sales amounting to approximately $92,000,
$121,000 and $321,000 respectively.
K. Related Party Transaction
Due to related party represents notes payable to an officer (stockholder) of
the Company. The notes are due upon demand and are subordinate to the term
loan payable to Fleet National Bank. The officer (stockholder) has agreed not
to seek repayment of the notes until the term loan has been repaid.
Accordingly, the notes have been classified as long-term obligations. The
notes bear interest at the fixed rate of 9% (which is the same interest rate
payable on secured indebtedness to the Company's principal commercial bank
lender, Fleet National Bank).
L. Other Income/(Expense) - Net
Other Income/(expense) consists of the following for the year ended June 30:
1996 1995 1994
Scrap and miscellaneous sales (net) $20,376 $4,399 $(9,138)
Interest income $ 8,679 15,398 3,289
Gain on equipment sold 1,425 -- 696
Bank financing fees (8,072) (59,535) (59,535)
$22,408 $(39,738) $(64,688)
26
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information concerning Directors and Executive Officers of the Registrant is
incorporated herein by reference from the Companys definitive proxy
statement for the 1996 Annual Meeting of Stockholders.
Item 11. EXECUTIVE COMPENSATION
Executive compensation information is incorporated herein by reference from the
Company's definitive proxy statement for the 1996 Annual Meeting of
Stockholders.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Information concerning security ownership of certain beneficial owners and
management is incorporated herein by reference from the Company's definitive
proxy statement for the 1996 Annual Meeting of Stockholders.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1988, Gordon C. Dewey, the Company's Chief Executive Officer and
principal stockholder, lent the Company a total of $200,000 ($100,000 on each of
November 23, 1988 and December 8, 1988, respectively). The loans, which are
unsecured, provide for the payment of interest to Mr. Dewey at the fixed rate of
9% (which is the same interest rate payable on secured indebtedness to the
Company's principal commercial bank lender, Fleet National Bank). Repayment of
these loans is subordinated to the Companys term loan with the Bank.
27
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES AND REPORTS
ON FORM 8-K
(a) (1) The following financial statements are included in Part II Item 8:
Page
Independent Auditors Report 13
Balance Sheets, June 30, 1996 and 1995 14
Statements of Earnings, Years Ended June 30,
1996, 1995 and 1994 15
Statements of Stockholders' Equity/(Deficit), Years Ended
June 30, 1996, 1995 and 1994 15
Statements of Cash Flows, Years Ended June 30,
1996, 1995 and 1994 16
Notes to Financial Statements 17
(2) Exhibits 28
A list of the exhibits required to be filed as part
of this report is set forth in the Index to Exhibits,
which immediately precedes such exhibits, and is
incorporated herein by this reference.
(b) Reports on Form 8-K
No reports on Form 8-K have been filed by the Registrant
during the last quarter of the period covered by this
report.
28
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, The Dewey Electronics Corporation has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized:
THE DEWEY ELECTRONICS CORPORATION
_____________________________ ___________________________________
BY: Gordon C. Dewey BY: Thom A. Velto, Treasurer
President, Chief Executive
Officer and Chief Financial
Officer
DATE: September 18, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated:
___________________________________ Date: September 18, 1996
Alexander A. Cameron, Director
___________________________________ Date: September 18, 1996
Frances D. Dewey, Director
___________________________________ Date: September 18, 1996
Gordon C. Dewey, Director
___________________________________ Date: September 18, 1996
Peter Eustis, Director
___________________________________ Date: September 18, 1996
John G. McQuaid, Director
29
THE DEWEY ELECTRONICS CORPORATION
INDEX TO EXHIBITS
The following exhibits are filed as part of this report. For convenience of
reference, exhibits are listed according to the numbers assigned in the Exhibit
table to Regulation S-K.
Number Page No.
3 (a)- Certificate on Incorporation as amended. This item wasfiled as part
of the Registrant's Form 10-K for the year ended June 30, 1988 herein
incorporated by reference. --
3 (b)- By Laws as amended. This was filed as part of the Registrant's Form
10-K for the year ended June 30, 1988 herein incorporated by reference. --
4 (a)- Mortgage note in the original principal amount of $1,385,000 having a
final maturity in the year 2000, issued in connection with the construction
of executive offices and production facilities in Oakland, New Jersey and
the accompanying loan agreement and mortgage securing for such note.
This item was filed as part of the Registrant's Form 10-K for the year
ended June 30, 1981 and is herein incorporated by reference. --
4 (b)- Term loan agreement with Citizens First National Bank of New Jersey in
the amount of $4,000,000 and the accompanying note and mortgage
securing such note. This item was filed as part of the Registrant's Form
10-K for the year ended June 30, 1989 and is herein incorporated by
reference. --
4 (c)- Amendment dated January 24, 1991 to such term loan agreement. This
item was filed as part of the Registrant's Form 10-K for the year ended
June 30, 1989 and are herein incorporated by reference. --
Amendment dated December 16, 1992 to the term loan agreement with
Citizens First National Bank of New Jersey. This item was filed as part of
the Registrant's Form 10-K for the year ended June 30, 1992 and is herein
incorporated by reference. --
Amendment dated November 15, 1994 to the term loan agreement with
National Westminster Bank (successor by merger to Citizens First National
Bank of New Jersey). This item was filed as part of the Registrants Form
10-Q for the period ended December 31, 1994 and is herein incorporated
by reference. --
4 (d)- 1983 Stock Option Plan. This item was filed with the Registrant's
Definitive Proxy Statement for the 1983 annual meeting of stockholders on
December 6, 1983 and is herein incorporated by reference. --
30