-----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, R65Jpjq1QUOhvwOhosHY+UV4l6DV5lC+DIRfNrfw/ajzKiaxqxNqIWj4eN52iwRS 9b0Sdmc6/pFl4IEL8x6ToA== 0000950005-94-000044.txt : 19940817 0000950005-94-000044.hdr.sgml : 19940817 ACCESSION NUMBER: 0000950005-94-000044 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940701 FILED AS OF DATE: 19940805 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WATKINS JOHNSON CO CENTRAL INDEX KEY: 0000105006 STANDARD INDUSTRIAL CLASSIFICATION: 3812 IRS NUMBER: 941402710 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-05631 FILM NUMBER: 94541933 BUSINESS ADDRESS: STREET 1: 3333 HILLVIEW AVE CITY: PALO ALTO STATE: CA ZIP: 94304 BUSINESS PHONE: 4154934141 MAIL ADDRESS: STREET 1: 3333 HILLVIEW AVENUE CITY: PALO ALTO STATE: CA ZIP: 94304-1223 10-Q 1 FORM 10-Q FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 1, 1994 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________________ to ___________________ Commission file number 1-5631 WATKINS-JOHNSON COMPANY ______________________________________________________ (Exact name of registrant as specified in its charter) CALIFORNIA 94-1402710 ______________________________________________________________________________ (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 3333 Hillview Avenue, Palo Alto, California 94304-1223 ______________________________________________________________________________ (Address of principal executive offices) (Zip Code) (415) 493-4141 ____________________________________________________ (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes X . No . ___ ___ Common stock, no par value, outstanding as of July 1, 1994 7,426,428 shares PART I - FINANCIAL INFORMATION Item 1. Financial Statements The interim financial statements are unaudited; however, Watkins-Johnson Company believes that all adjustments necessary to a fair statement of results for such interim periods have been included. The results for the six months ended July 1, 1994, are not necessarily indicative of the results for the full year 1994. Supplementary information to the financial statements: A dividend of twelve cents per share was declared and paid during the second quarter of 1994 and 1993. Net income per share is computed based on the weighted average number of common and common equivalent shares (dilutive stock options) outstanding during the period. The difference between fully diluted earnings per share and primary earnings per share is not significant, see Exhibit 11. The consolidated financial statements required by Rule 10-01 of Regulation S-X are included in this report beginning on the next page. WATKINS-JOHNSON COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS* For the periods ended July 1, 1994 and July 2, 1993 Three Months Ended Six Months Ended _____________________________________________________________________________ (Dollars in thousands, except per share amounts) 1994 1993 1994 1993 _____________________________________________________________________________ Sales $87,840 $68,216 $168,898 $135,299 _____________________________________________________________________________ Costs and expenses: Cost of goods sold 50,344 44,966 101,792 89,902 Selling and administrative 20,054 14,046 35,607 28,047 Research and development 8,600 5,516 17,424 11,557 _____________________________________________________________________________ 78,998 64,528 154,823 129,506 _____________________________________________________________________________ Income from operations 8,842 3,688 14,075 5,793 Interest and other income (expense) -net 190 467 583 654 Interest expense (306) (312) (603) (618) _____________________________________________________________________________ Income before Federal and foreign income taxes 8,726 3,843 14,055 5,829 Federal and foreign income taxes (2,792) (1,191) (4,497) (1,807) _____________________________________________________________________________ Net income $5,934 $2,652 $9,558 $4,022 ============================================================================= Net income per share $.73 $.33 $1.18 $.51 (Average number of common and common equivalent shares outstanding: 1994 - 8,124,000 shares, 1993 - 7,898,000 shares) *Unaudited WATKINS-JOHNSON COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS As of July 1, 1994 and December 31, 1993 _____________________________________________________________________________ (Thousands of dollars) 1994* 1993 _____________________________________________________________________________ ASSETS Current assets: Cash and equivalents $35,695 $45,040 Receivables 72,947 73,971 Inventories: Raw materials and parts 10,688 7,327 Work in process 34,799 28,014 Finished goods 1,540 1,805 Other 11,401 12,617 _____________________________________________________________________________ Total current assets 167,070 168,774 _____________________________________________________________________________ Property, plant and equipment 170,173 167,857 Accumulated depreciation and amortization (122,729) (121,028) _____________________________________________________________________________ Property, plant and equipment - net 47,444 46,829 _____________________________________________________________________________ Other assets 4,807 5,025 _____________________________________________________________________________ $219,321 $220,628 ============================================================================= LIABILITIES AND SHAREOWNERS' EQUITY Current liabilities: Payables $13,784 $13,243 Accrued liabilities 45,038 47,034 _____________________________________________________________________________ Total current liabilities 58,822 60,277 _____________________________________________________________________________ Long-term obligations 24,909 26,463 _____________________________________________________________________________ Shareowners' equity: Common stock 15,840 9,106 Retained earning 119,750 124,782 _____________________________________________________________________________ Total shareowners' equity 135,590 133,888 _____________________________________________________________________________ $219,321 $220,628 ============================================================================= * Unaudited WATKINS-JOHNSON COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS* For the Periods Ended July 1,1994 and July 2, 1993 Six Months Ended _____________________________________________________________________________ (Dollars in thousands) 1994 1993 _____________________________________________________________________________ OPERATING ACTIVITIES: Net Income $9,558 $4,022 Reconciliation of net income to cash flows Depreciation and amortization 4,648 5,180 Net changes in: Receivables 1,024 (6,510) Inventories (9,881) (2,520) Other assets 1,391 40 Accruals and payables (2,429) 4,748 _____________________________________________________________________________ Net cash provided by operating activities 4,311 4,960 _____________________________________________________________________________ INVESTING ACTIVITIES: Additions of property, plant and equipment (5,278) (4,100) Other 58 757 _____________________________________________________________________________ Net cash used in investing activities (5,220) (3,343) _____________________________________________________________________________ FINANCING ACTIVITIES: Proceeds from issuance of stock 7,706 7 Repurchase of common stock (13,805) (426) Dividends paid (1,756) (1,809) Other (581) (989) _____________________________________________________________________________ Net cash used in financing activities (8,436) (3,217) _____________________________________________________________________________ Net decrease in cash and equivalents (9,345) (1,600) Cash and equivalents at beginning of period 45,040 49,081 _____________________________________________________________________________ Cash and equivalents at end of period $35,695 $47,481 ============================================================================= *Unaudited PART I - FINANCIAL INFORMATION ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FINANCIAL CONDITION: The company continues to be in excellent financial condition. Cash and equivalents decreased $9.3 million from $45.0 to $35.7 million mostly due to cash used for stock repurchases exceeded cash generated by stock issuances from stock option exercises. For the second half of 1994, the company expects sufficient cash will be generated internally to fund its operations. In addition, the company has the ability to augment its cash needs with readily available external financing. At the end of the first half the company had no material commitments or planned investments which would require external financing. CURRENT OPERATIONS: Sales and profit for semiconductor-manufacturing equipment continue to exceed planned levels. Long-term prospects appear positive as industry analysts predict that the semiconductor-equipment market will remain healthy. However, it must be recognized that the semiconductor equipment business is cyclical and can change rapidly. Uncertainty increases significantly when projecting demand for semiconductor equipment products more than six months in the future. The first-half Electronics Group sales are on plan, and profit is above plan. Efforts to streamline the group's organization continue to contribute to profits. In May, the group consolidated three divisions into two. Operations of the Electronic Systems Division were merged into the Microwave Products Division and the Electronic Equipment Division, previously named the Communication Electronics Technology Division. During the second quarter, the Electronics Group initiated negotiations on a key order in a new business area-- cellular base-station equipment. BACKLOG: The firm order backlog on July 1, 1994 was $181,527,000, compared to the $188,851,000 recorded on July 2, 1993. The portion of the current backlog shippable within twelve months is 91 percent, compared to 91 percent one year ago. SECOND QUARTER AND SECOND QUARTER YEAR-TO-DATE 1994 COMPARED TO SECOND QUARTER AND SECOND QUARTER YEAR-TO-DATE 1993: Company sales increased more than 25% and were virtually all attributable to the increased volume in the semiconductor-equipment segment. Gross margins improved to above 40% mostly due to the higher volume in the Semiconductor Equipment Group and improved profitability in the Electronics Group. Selling and administrative expenses were within planned levels as higher commissions were paid on increased international sales volume. Research and development expenses were higher as Semiconductor Equipment Group incurred certain nonrecurring charges associated with the high-density plasma initiative. R&D expenses are expected to be above plan for the year although the pace of spending will slow in the second half. Unfavorable foreign exchange rates were the primary reason for the decrease in "Interest and other income (expense) - net". Estimated effective tax rate increased slightly to 32% as a result of the 1993 Omnibus Budget Reconciliation Act. Due to the above combined factors, net income for the second quarter and first half of 1994 more than doubled the 1993 amounts. PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a) A list of the exhibits required to be filed as part of this report is set forth in the Exhibit Index, which immediately precedes such exhibits. The exhibits are number according to Item 601 of Regulation S-K b) No reports on Form 8-K were required to be filed during the quarter. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. WATKINS-JOHNSON COMPANY __________________________ (Registrant) Date: August 1, 1994 By: /s/ Richard G. Bell for -------------------------- ---------------------------- W. Keith Kennedy, Jr. President and Chief Executive Officer Date: July 29, 1994 By: /s/ Scott G. Buchanan -------------------------- ----------------------------- Scott G. Buchanan Vice President and Chief Financial Officer EXHIBIT INDEX The Exhibits below are numbered according to Item 601 of Regulation S-K. Exhibit Number Exhibit ------- ------- 11 Statement re Computation of Per Share Earnings.
WATKINS-JOHNSON COMPANY AND SUBSIDIARIES COMPUTATION OF NET INCOME PER COMMON SHARE The following table illustrates the potential dilution of outstanding stock options on net income per share computations: Three Months Ended Six Months Ended ____________________________________________________________________________________________________ July 1, 1994 July 2, 1993 July 1, 1994 July 2, 1993 ____________________________________________________________________________________________________ FOR PRIMARY NET INCOME PER SHARE: Weighted average shares outstanding 7,345,965 7,531,442 7,350,806 7,543,217 Equivalent shares -- dilutive stock options -- based on treasury stock method using average market price 688,971 261,860 675,883 198,211 ____________________________________________________________________________________________________ Total 8,034,936 7,793,302 8,026,689 7,741,428 ==================================================================================================== FOR FULLY DILUTED NET INCOME PER SHARE: Weighted average shares outstanding 7,345,965 7,531,442 7,350,806 7,543,217 Equivalent shares -- dilutive stock options -- based on treasury stock method using greater of closing market price or average price 777,634 366,746 755,798 335,238 ____________________________________________________________________________________________________ Total 8,123,599 7,898,188 8,106,604 7,878,455 ==================================================================================================== Net Income $5,934,000 $2,652,000 $9,558,000 $4,022,000 ==================================================================================================== Primary net income per share $.74 $.34 $1.19 $.52 ==================================================================================================== Fully diluted net income per share $.73 $.33 $1.18 $.51 ==================================================================================================== This calculation is submitted in accordance with Regulation S-K, Item 601(b)(11).
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