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Environmental Tectonics Corporation (ETCC)

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ETCC was incorporated in 1969 in Pennsylvania and last year we celebrated our 40th anniversary. Our core technologies include the design, manufacture and sale of Training Services (TSG) which includes (1) software driven products and services used to create and monitor the physiological effects of flight; (2) high performance jet tactical flight simulation, and; (3) driving and disaster simulation systems, and Control Systems (CSG) which includes: (1) steam and gas sterilization; (2) testing and simulation devices for the automotive industry, and; (3) hyperbaric and hypobaric chambers. Product categories included in TSG are Aircrew Training Systems (ATS) and flight simulators, disaster management systems and entertainment applications. CSG includes sterilizers, environmental control devices and hyperbaric chambers along with parts and service support.

Contact: Duane D. Deaner, CFO
Tel: 215-355-9100 (ext. 1203)
Fax: 215-357-4000

Environmental Tectonics Corporation
Condensed Consolidated Income Statements
(unaudited)
(in thousands, except share and per share information)
                 
    Thirteen week  
    periods ended  
    May 28,     May 29,  
    2010     2009  
Net sales
  $ 12,121     $ 9,581  
Cost of goods sold
    6,991       5,154  
 
           
Gross profit
    5,130       4,427  
 
           
 
               
Operating expenses:
               
Selling and marketing
    1,102       1,254  
General and administrative
    1,463       1,602  
Research and development
    324       228  
 
           
 
    2,889       3,084  
 
           
 
               
Operating income
    2,241       1,343  
 
           
 
               
Other expenses:
               
Interest expense
    228       516  
Other, net
    72       55  
 
           
 
    300       571  
 
           
 
               
Income before income taxes
    1,941       772  
Provision for income taxes
           
 
           
 
               
Income before noncontrolling interest
    1,941       772  
Income attributable to noncontrolling interest
    5       2  
 
           
 
               
Net income
    1,936       770  
 
               
Preferred stock dividend
    (577 )     (235 )
 
           
Income applicable to common shareholders
  $ 1,359     $ 535  
 
           
 
               
Per share information:
               
 
               
Earnings per common share:
               
Basic
  $ 0.15     $ 0.06  
 
           
Diluted
  $ 0.09     $ 0.06  
 
           
Weighted average common shares:
               
Basic
    9,085,000       9,054,000  
 
           
Diluted
    20,967,000       9,054,000  
 
           
The accompanying notes are an integral part of the condensed consolidated financial statements.

3

 


 

Table of Contents

 

Environmental Tectonics Corporation
Condensed Consolidated Balance Sheets
(in thousands, except share information)
                 
    May 28,        
    2010     February 26,  
    (unaudited)     2010   
ASSETS
               
Cash and cash equivalents
  $ 874     $ 2,408  
Restricted cash
    5,476       2,751  
Accounts receivable, net
    4,087       17,356  
Costs and estimated earnings in excess of billings on uncompleted long-term contracts
    3,666       3,576  
Inventories, net
    4,788       5,114  
Deferred tax assets, current
    5,391       4,983  
Prepaid expenses and other current assets
    1,602       545  
 
           
Total current assets
    25,884       36,733  
 
               
Property, plant and equipment, at cost, net
    13,606       13,643  
Construction in progress
    440       316  
Software development costs, net
    837       691  
Other assets
    291       346  
 
           
Total assets
  $ 41,058     $ 51,729  
 
           
 
               
LIABILITIES
               
Current portion of long-term debt
  $ 213     $ 285  
Accounts payable — trade
    1,710       1,783  
Billings in excess of costs and estimated earnings on uncompleted long-term contracts
    8,105       13,944  
Customer deposits
    1,683       1,799  
Accrued interest and dividends
    833       782  
Other accrued liabilities
    2,400       2,814  
 
           
Total current liabilities
    14,944       21,407  
 
           
 
               
Long-term obligations, less current portion:
               
Credit facility payable to bank
    4,508       9,808  
Other long-term debt
          12  
 
           
 
    4,508       9,820  
 
           
Deferred tax liabilities
    3,298       3,066  
 
           
Unearned interest
    19       22  
 
           
Total liabilities
    22,769       34,315  
 
           
 
               
Commitments and contingencies
           
 
               
STOCKHOLDERS’ EQUITY
               
Cumulative convertible participating preferred stock, Series D, $.05 par value, 11,000 shares authorized; 155 shares outstanding
    155       155  
Cumulative convertible participating preferred stock, Series E, $.05 par value, 25,000 shares authorized; 22,741 and 23,741 shares outstanding at May 28, 2010 and February 26, 2010, respectively
    22,741       23,741  
Common stock, $.05 par value, 20,000,000 shares authorized; 9,086,999 and 9,083,573 shares issued and outstanding at May 28, 2010 and February 26, 2010, respectively
    454       454  
Additional paid-in capital
    13,508       14,050  
Accumulated other comprehensive income (loss)
    45       (431 )
Accumulated deficit
    (18,657 )     (20,593 )
 
           
Total stockholders’ equity before noncontrolling interest
    18,246       17,376  
 
           
Noncontrolling interest
    43       38  
 
           
Total stockholders’ equity
    18,289       17,414  
 
           
Total liabilities and stockholders’ equity
  $ 41,058     $ 51,729  
 
           
The accompanying notes are an integral part of the condensed consolidated financial statements.

4

 


 

Table of Contents

 

Environmental Tectonics Corporation
Condensed Consolidated Statements of Cash Flows
(unaudited)
(in thousands)
                 
    Thirteen week periods  
    ended  
    May 28,     May 29,  
    2010     2009  
Cash flows from operating activities:
               
Net income
  $ 1,936     $ 770  
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
               
Depreciation and amortization
    346       567  
Decrease in valuation allowance for deferred tax assets
    (867 )      
Accretion of debt discount
    55       95  
Increase in allowances for accounts receivable and inventories, net
    110       316  
Income attributable to noncontrolling interest
    5       2  
Stock compensation expense
    24        
Changes in operating assets and liabilities:
               
Accounts receivable
    13,259       (791 )
Costs and estimated earnings in excess of billings on uncompleted long-term contracts
    (90 )     (319 )
Inventories
    226       (432 )
Prepaid expenses and other assets
    (1,057 )     214  
Deferred tax assets, net
    691        
Accounts payable
    (73 )     320  
Billings in excess of costs and estimated earnings on uncompleted long-term contracts
    (5,839 )     (1,337 )
Customer deposits
    (116 )     (966 )
Accrued interest and dividends
    51       329  
Other accrued liabilities
    (417 )     76  
 
           
Net cash provided by (used in) operating activities
    8,244       (1,156 )
 
           
 
               
Cash flows from investing activities:
               
Acquisition of equipment
    (359 )     (289 )
Capitalized software development costs
    (220 )     (104 )
 
           
Net cash used in investing activities
    (579 )     (393 )
 
           
 
               
Cash flows from financing activities:
               
(Repayment) borrowings under line of credit
    (5,300 )     1,400  
(Repurchase) issuance of preferred stock
    (1,000 )     55  
Issuance of common stock
    10       1  
Payment of preferred stock dividends
    (576 )      
Payments of other debt obligations
    (84 )     (2 )
Increase in restricted cash for performance guarantee
    (2,725 )     (7 )
 
           
Net cash (used in) provided by financing activities
    (9,675 )     1,447  
 
           
 
               
Effect of exchange rate changes on cash
    476       (131 )
 
           
Net decrease in cash
    (1,534 )     (233 )
Cash at beginning of period
    2,408       520  
 
           
Cash at end of period
  $ 874     $ 287  
 
           
 
               
Supplemental schedule of cash flow information:
               
Interest paid
  $ 96     $ 103  
Income taxes paid
    182        
 
               
Supplemental information on non-cash operating and investing activities:
               
Accrued dividends on preferred stock
  $ 577     $ 235  
The accompanying notes are an integral part of the condensed consolidated financial statements.

5

 


 

Table of Contents

Environmental Tectonics Corporation
Notes to the Condensed Consolidated Financial Statements
1. Nature of Business:
          Environmental Tectonics Corporation (“ETC” or the “Company”) is principally engaged in the design, manufacture and sale of software driven products and services used to simulate and measure certain environmental conditions and to monitor the physiological effects of motion on humans in certain environmental conditions. These products and services include aircrew training systems (aeromedical, tactical combat and general), disaster management systems, entertainment products, sterilizers (steam and gas), environmental testing products, and hyperbaric chambers and other products that involve similar manufacturing techniques and engineering technologies. ETC focuses on software enhancements, product extensions, new product development and new marketplace applications. Presently, sales of the Company’s products are made principally to U.S. and foreign government agencies. We operate in two primary business segments, the Training Services Group (“TSG”) and the Control Systems Group (“CSG”).
          Training Services Group. This segment includes three primary product groups: aircrew training devices and related services, disaster management training and systems, and entertainment products.
          Control Systems Group. This segment includes three primary product lines: sterilizers, environmental control systems, and hyperbaric chambers, along with parts and service support.
          The Company’s fiscal year is the 52-or 53-week annual accounting period ending the last Friday in February. Certain amounts from prior consolidated financial statements have been reclassified to conform to the presentation in fiscal 2011.
Environmental Tectonics Corporation
Consolidated Balance Sheets
(amounts in thousands, except share information)
                 
    February 26,     February 27,  
    2010     2009    
ASSETS
               
Cash and cash equivalents
  $ 2,408     $ 520  
Restricted cash
    2,751       4,454  
Accounts receivable, net
    17,356       5,100  
Costs and estimated earnings in excess of billings on uncompleted long-term contracts
    3,576       2,460  
Inventories, net
    5,114       4,435  
Deferred tax assets, current
    4,983       2,350  
Prepaid expenses and other current assets
    545       479  
 
           
 
               
Total current assets
    36,733       19,798  
 
Property, plant and equipment, at cost, net
    13,643       15,786  
Construction in progress
    316       275  
Software development costs, net
    691       1,013  
Other assets
    346       406  
 
           
Total assets
  $ 51,729     $ 37,278  
 
           
 
               
LIABILITIES
               
Current portion of long-term debt
  $ 285     $ 9  
Accounts payable – trade
    1,783       2,105  
Billings in excess of costs and estimated earnings on uncompleted long-term contracts
    13,944       4,155  
Customer deposits
    1,799       2,397  
Accrued interest and dividends
    782       4,197  
Other accrued liabilities
    2,814       2,251  
 
           
Total current liabilities
    21,407       15,114  
 
           
 
               
Long-term obligations, less current portion:
               
Credit facility payable to bank
    9,808       10,510  
Promissory note payable
          1,891  
Subordinated convertible debt
          9,664  
Other long-term debt
    12       7  
 
           
 
    9,820       22,072  
 
           
Deferred tax liabilities
    3,066       2,350  
 
           
Unearned interest
    22       152  
 
           
Total liabilities
    34,315       39,688  
 
           
 
               
Commitments and contingencies
           
Cumulative convertible participating preferred stock, Series B, $.05 par value, 15,000 shares authorized; 6,000 shares issued and outstanding
          6,000  
 
           
Cumulative convertible participating preferred stock, Series C, $.05 par value, 3,300 shares authorized, issued and outstanding
          3,300  
 
           
 
               
STOCKHOLDERS’ EQUITY (DEFICIENCY)
               
Cumulative convertible participating preferred stock, Series D, $.05 par value, 11,000 shares authorized; 155 shares outstanding
    155        
Cumulative convertible participating preferred stock, Series E, $.05 par value, 25,000 shares authorized; 23,741 shares outstanding
    23,741        
Common stock, $.05 par value, 20,000,000 shares authorized; 9,083,573 and 9,049,351 shares issued and outstanding as February 26, 2010 and February 27, 2009, respectively
    454       452  
Additional paid-in capital
    14,050       15,399  
Accumulated other comprehensive loss
    (431 )     (557 )
Accumulated deficit
    (20,593 )     (27,046 )
 
           
Total stockholders’ equity (deficiency) before noncontrolling interest
    17,376       (11,752 )
 
           
Noncontrolling interest
    38       42  
 
           
Total stockholders’ equity (deficiency)
    17,414       (11,710 )
 
           
Total liabilities and stockholders’ equity (deficiency)
  $ 51,729     $ 37,278  
 
           
The accompanying notes are an integral part of the consolidated financial statements.

14

 


 

 

 

Environmental Tectonics Corporation
Consolidated Statements of Operations
(amounts in thousands, except share and per share information)
                 
    Fiscal Years ended:  
    February 26,
2010
    February 27,
2009
 
Net sales
  $ 42,271     $ 36,687  
Cost of goods sold
    23,447       24,829  
 
           
Gross profit
    18,824       11,858  
 
           
 
               
Operating expenses:
               
Selling and marketing
    5,010       4,670  
General and administrative
    6,405       6,424  
Research and development
    809       1,110  
 
           
 
    12,224       12,204  
 
           
 
               
Operating profit (loss)
    6,600       (346 )
 
           
 
               
Other expenses:
               
Interest expense
    1,308       1,569  
Loss on extinguishment of debt
    315        
Other, net
    347       67  
 
           
 
    1,970       1,636  
 
           
 
               
Income (loss) before income taxes
    4,630       (1,982 )
Income tax benefit
    1,819        
 
           
 
               
Income (loss) before noncontrolling interest
    6,449       (1,982 )
Loss attributable to noncontrolling interest
    (4 )     (8 )
 
           
 
               
Net income (loss)
    6,453       (1,974 )
 
               
Preferred stock dividends
    (1,885 )     (927 )
 
           
 
               
Income (loss) applicable to common shareholders
  $ 4,568     $ (2,901 )
 
           
 
               
Per share information:
               
Earnings (loss) per common share:
               
Basic
  $ 0.50     $ (0.32 )
 
           
Diluted
  $ 0.30     $ (0.32 )
 
           
Weighted average common shares:
               
Basic
    9,069,000       9,037,000  
 
           
Diluted
    21,235,000       9,037,000  
 
           
The accompanying notes are an integral part of the consolidated financial statements.


ETCC - Internet Home Page: http://www.etcusa.com

 
 

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PostSubject
#20   Do you see ETCC being affected at all CPTMatt 04/06/10 10:24:40 AM
#19   ETCC.. $2.60 10 bagger 04/06/10 10:22:51 AM
#18   ETCC..$2.80 Environmental Tectonics Corporation's Simulation Division Receiv 10 bagger 03/15/10 09:16:51 AM
#17   ETCC..$2.89 Environmental Tectonics Corporation Announces Additional Baramed Monoplace Hyperbaric 10 bagger 02/23/10 10:52:28 AM
#16   from AMEX. Was was the AMEX ticker? Stock 02/05/10 11:02:38 AM
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#1   ETCC.. Cross Post.. 10 bagger 02/04/10 11:59:50 PM
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