-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, P6WcbgUV4zFOdyTx7ZeTNAornXxylg/lQkn+Yh+g9vzoaJqebk2HtcPnkTaGkT+d TvZnvpGqGEcXG498lKVEnQ== 0000950115-98-000955.txt : 19980515 0000950115-98-000955.hdr.sgml : 19980515 ACCESSION NUMBER: 0000950115-98-000955 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980514 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: RELM WIRELESS CORP CENTRAL INDEX KEY: 0000002186 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC & OTHER ELECTRICAL EQUIPMENT (NO COMPUTER EQUIP) [3600] IRS NUMBER: 042225121 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-07336 FILM NUMBER: 98620875 BUSINESS ADDRESS: STREET 1: 7505 TECHNOLOGY DRIVE CITY: WEST MELBOURNE STATE: FL ZIP: 32904 BUSINESS PHONE: 2154303900 MAIL ADDRESS: STREET 1: 750 TECHNOLOGY DRIVE CITY: WEST MELBOURNE STATE: FL ZIP: 32904 FORMER COMPANY: FORMER CONFORMED NAME: ADAGE INC DATE OF NAME CHANGE: 19920703 10-Q 1 QUARTERLY REPORT FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarter Ended March 31, 1998 ----------------------------------------- Commission file number 33-31797 ------------------------------------ RELM WIRELESS CORPORATION --------------------------------------------------------- (Exchange name of registrant as specified in its charter) Nevada 04-2225121 - ------------------------------- ------------------------------ (State or other jurisdiction of I.R.S. Employer Identification Incorporation or organization) Number 7505 Technology Drive, West Melbourne, Florida 32904 ----------------------------------------------------------- (Address of principal executive officers) (Zip Codes) (407) 984-1414 ---------------------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date of March 31, 1998. 5,043,604 shares of Common Stock, par value $.60 per M 10-Q ----------------------------------------------------------- PART I- FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS RELM WIRELESS CORPORATION Condensed Consolidated Balance Sheets (In thousands except share data)
March 31, 1998 December 31, 1997 -------------- ----------------- (Unaudited) ASSETS Current Assets: Cash and cash equivalents $ 541 $ 213 Accounts receivable, net 5,406 5,379 Inventories 11,530 11,504 Investment securities-trading 987 881 Notes receivable 400 400 Real estate investments held for sale 1,707 1,833 Prepaid expenses and other current 214 288 ------- ------- Total Current Assets 20,785 20,498 Property, Plant and Equipment, net 8,950 8,805 Notes Receivable 2,200 2,200 Other Assets 81 162 ------- ------- Total Assets $32,016 $31,665 ======= =======
See notes to condensed consolidated financial statements. 2 ITEM 1 - FINANCIAL STATEMENTS - Continued RELM WIRELESS CORPORATION Condensed Consolidated Balance Sheets (In thousands except share data)
March 31, 1998 December 31, 1997 -------------- ----------------- (Unaudited) LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Current maturities of long-term liabilities: $ 1,195 $ 1,584 Accounts payable 2,437 1,935 Accrued expenses 3,686 3,773 Accrued restructing liability 1,182 1,872 Accrued research costs 599 1,027 -------- -------- Total Current Liabilities 9,099 10,191 -------- -------- Long-Term Liabilities: Loans, notes and mortgages 7,239 5,405 Capital lease obligations 1,814 2,035 -------- -------- Total Long-Term Liabilities 9,053 7,440 -------- -------- Stockholder's equity: Common stock; $.60 par value: 10,000,000 authorized shares: issued and outstanding shares 5,043,604 at March 31, 1998 and 5,035,779 at December 31, 1997 3,026 3,021 Additional paid-in capital 20,211 20,185 Retained earnings (deficit) (9,373) (9,172) -------- -------- Total stockholder's equity 13,864 14,034 -------- -------- Total Liabilities and Stockholders Equity $ 32,016 $ 31,665 ======== ========
See notes to condensed consolidated financial statements. 3 ITEM 1 - FINANCIAL STATEMENTS - continued RELM WIRELESS CORPORATION Condensed Consolidated Statements of Operations (In thousands except share data) FOR THE THREE MONTHS ENDED -------------------------- MARCH 31, 1998 1997 ---- ---- (Unaudited) (Unauditied) Income Sales $ 7,715 $ 9,949 Investment income (loss) 106 (51) Other 7 95 -------- -------- 7,828 9,993 Costs and expenses Cost of sales 6,134 7,486 Selling, general & administrative 1,694 2,660 Interest 201 321 -------- -------- 8,029 10,467 Loss from continuing operations before income taxes (201) (474) Income tax benefit -- (161) -------- -------- Net loss from continuing operations (201) (313) Loss from discontinued operations net of taxes -- (16) Net loss $ (201) $ (329) ======== ======== Earnings (loss) per share-basic and diluted: Continuing operations $ (.04) $ (.05) Discontinued operations -- (.01) -------- -------- Net income (loss) $ (.04) $ (.06) ======== ======== See notes to condensed consolidated financial statements. 4 ITEM 1 - FINANCIAL STATEMENTS - continued RELM WIRELESS CORPORATION Condensed Consolidated Statements of Cash Flow (In thousands)
FOR THE THREE MONTHS ENDED -------------------------- MARCH 31 1998 1997 ---- ---- (Unaudited) (Unaudited) Cash (used) provided by operations $ (513) $ 304 Investing activities: Property, plant and equipment purchases (414) (675) Investing activities of discontinued segment -- (25) ------- ------- Cash used by investing activities (414) (700) Financing activities: Proceeds from debt -- 2,132 Repayment of debt and capital lease obligations (402) -- Changes in lines of credit 1,626 (142) Purchase of stock 31 (1,120) ------- ------- Cash provided by financing activities 1,255 870 ------- ------- Increase in cash 328 474 Cash at beginning of period 213 502 ------- ------- Cash at end of period $ 541 $ 976 ======= ======= Supplemental disclosure Interest paid $ 201 $ 321
See notes to condensed consolidated financial statements. 5 Notes to Condensed Consolidated Financial Statements (Unaudited) (In thousands except share data) 1. Condensed Consolidated Financial Statements The condensed consolidated balance sheet as of March 31, 1998, the condensed consolidated statements of operations for the three months ended March 31, 1998 and 1997 and the condensed consolidated statements of cash flows for the three months ended March 31, 1998 and 1997 have been prepared by the Company, without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and changes in cash flows at March 31, 1998 and for all periods presented have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested that these condensed consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Company's December 31, 1997 Annual Report to Shareholders. The results of operations for the period ended March 31, 1998 are not necessarily indicative of the operating results for a full year. As of January 1, 1998, the company adopted Statement 130, Reporting Comprehensive income. Statement 130 establishes new rules for the reporting and display of comprehensive income and its components: however, the adoption of this Statement had no impact on the Company's net loss or shareholders' equity for 1998, or 1997. 2. Inventories March 31, December 31, 1998 1997 --------- ------------ Inventories consisted of: Raw Material $ 5,173 $ 4,139 Work in Process 2,023 2,245 Finished goods 4,334 5,120 ------- ------- $11,530 $11,504 ======= ======= 6 3. Stockholders' Equity The consolidated changes in stockholders' equity for the three months ended March 31, 1998 are as follows:
Common Stock Additional Retained -------------------- paid-in Earnings Shares Amount Capital (Deficit) Total ------ ------ ---------- -------- ----- Balance at January 1, 1998 5,035,779 $ 3,021 $ 20,185 $ (9,172) $ 14,034 Exercise of stock options 7,825 5 26 -- 31 Net loss -- -- -- (201) (201) --------- --------- --------- --------- --------- Balance March 31, 1998 5,043,604 $ 3,026 $ 20,211 $ (9,373) $ 13,864 ========= ========= ========= ========= =========
4. Earnings (Loss) Per Share In 1997, the FASB issued SFAS No. 128, Earnings per Share. This statement replaced the calculation of primary and fully diluted earnings per share with basic and diluted earnings per share. Unlike primary earnings per share, basic earnings per share excludes any dilutive effects of options, warrants and convertible securities. Diluted earnings per share are very similar to the previously reported fully diluted earnings per share. All earnings (loss) per share amounts for all periods have been presented, and where appropriate, restated to conform to the Statement 128 requirements. The following table sets the computation of basic and diluted earnings (loss) per share from continuing operations:
FOR THE THREE MONTHS ENDED MARCH 31 -------------------------- 1998 1997 ---- ---- Numerator: Net loss (numerator for basic and diluted earnings (loss) per share) $ (201) $ (329) ----------- ----------- Denominator: Denominator for basic earnings per share- weighted average shares 5,081,693 5,117,227 Effect of dilutive securities: Options -- -- Dilutive potential shares -- -- ----------- ----------- Denominator for diluted earnings (loss) per share-adjusted weighted average shares 5,081,693 5,117,227 =========== =========== Basic earnings (loss) per share $ (.04) $ (.05) =========== =========== Diluted earnings (loss) per share $ (.04) $ (.05) =========== ===========
Shares related to options are not included in the computation of earnings (loss) per share because to do so would have been anti-dilutive for the periods presented. 7 6. Reclassification In accordance with Staff Accounting Bulletin No. 93, the Company's real estate operations have been classified in continuing operations for all periods presented as the real estate business has not been completely disposed of. The real estate operations were previously reported in discontinued operations. Management anticipates selling the remaining real estate assets and exiting the business in 1998. The summarized results of operations of the real estate business are as follows: FOR THE THREE MONTHS ENDED MARCH 31 -------------------------- 1998 1997 ---- ---- Sales $ 358 $ 489 Cost of sales 352 454 Selling, general and administrative expenses 60 115 ----- ----- Operating loss $ (54) $ (80) ===== ===== ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITIONS Results of Operations As an aid to understanding the Company's operating results, the following table shows each item from the consolidated statement of operations expressed as a percentage of net sales: Percentage of Sales Quarter Ended March 31, ------------------- 1998 1997 ---- ---- Sales 100.0% 100.0% Cost of sales 79.5 75.2 ----- ----- Gross margin 20.5 24.8 Selling, general and administrative (22.0) (26.7) Interest expense (2.6) (3.2) Other income 1.5 .4 Loss from continuing operations before income taxes (2.6) (4.7) Income taxes (1.6) ----- ----- Net loss from continuing operations (2.6) (3.1) Discontinued operations (.2) ----- ----- Net loss (2.6%) (3.3%) ===== ===== 8 Net Sales Net sales for the three months ended March 31, 1998 decreased $2,234,000 or 22.5% compared to sales for the same period in 1997. This decrease is the result of reduced radio requirements for the U.S. Army during the current quarter. Shipments on the company's contract with the Army are expected to resume in the third quarter. Conversely, international sales increased $564,000 or 33% from the same period in 1997 due to strong performance in the Brazilian market. Cost of Sales Cost of sales as a percentage of net sales increased 4.3% to 79.5% for the three months ended March 31, 1998 compared to 75.2% for the same period in 1997. Due to the reduced requirements of the U.S. Army, manufacturing volumes were lower in the current quarter resulting in an under-absorption of manufacturing overhead costs. The Company has responded to lower volumes by reducing staff and soft costs. These reductions were implemented in February 1998. Selling, General and Administrative Expenses Selling, general and administrative expenses (SG&A) consist of marketing, sales, commissions, sustaining engineering, product development, management information systems, accounting and headquarters. For the three months ended March 31, 1998, SG&A expenses totaled $1,694,000 or 21.9% compared to $2,660,000 or 26.7% for the same period in 1997. The decrease in SG&A expenses is the result of the company's restructuring plans that were implemented in 1997. Expenses in all SG&A areas were reduced. The most significant reduction, however, was associated with closing the Indiana engineering center and re-establishing its operations in Florida, as the Company concentrates its focus on two key development initiatives. Interest Expense For the three months ended March 31, 1998 interest expense totaled $201,000 or 2.6% compared with $321,000 or 3.2% for the same period in 1997. During the second half of 1997, debt levels were reduced using cash flow from continuing operations and from the sales of discontinued operations. 9 Income Taxes The Company has evaluated its tax position versus the requirements of SFAS No. 109, Accounting for Income Taxes and does not believe that it has met the more-likely-than-not criteria for recognizing a deferred tax asset and has provided valuation allowances against net deferred tax assets. Therefore, an income tax benefit was not provided for the three months ended March 31, 1998. Liquidity and Capital Resources As of March 31, 1998 the Company had working capital of $11,686,000 compared with $10,307,000 as of December 31, 1997. As of March 31, 1998, the Company has available credit of $4 million under a revolving line of credit. Capital expenditures for the three months ended March 31, 1998 were $414,000 compared with $675,000 for the same period in 1997. These expenditures were to replace obsolete manufacturing test equipment. Inflation and Changing Prices Inflation and changing prices for the quarters March 31, 1998 and 1997 have contributed to increases in wages, facilities, and raw material costs. Effects of these inflationary effects were partially offset by increased prices to customers. The Company believes that it will be able to pass on most of its future inflationary increases to its customers. The Company is also subject to changing foreign currency exchange rates in its purchase of some raw materials. The Company employs several methods to protect against increases in cost due to currency fluctuations. It is not always possible to pass on these effects. Competitors in the land-mobile radio markets are subject to similar fluctuations. Forward-Looking Statements This report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended, and is subject to the safe-harbor created by such sections. Such forward-looking statements concern the Company's operations, economic performance and financial condition. Such statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: General economic and business conditions; changes in customer preferences; competition; changes in technology; the integration of any acquisitions; changes in business strategy; the indebtedness of the Company; quality of management, business abilities and 10 judgment of the Company's personnel; the availability, terms and deployment of capital; and various other factors referenced in this Report. The forward-looking statements are made as of the date of this Report, and the Company assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those projected in the forward-looking statements. Discontinued Operations For the three months ended March 31, 1998 there were no discontinued operations. For the same period in 1997 the Company reported a loss from discontinued operations of $16,000. During 1997, the Company's specialty manufacturing and recycled paper manufacturing subsidiaries were sold. These operations have been reported as discontinued operations for the first quarter of the prior year. ITEM 6. Exhibits and Reports of Form 8-K b.) Reports on Form 8-K The Registrant was not required to file reports on Form 8-K during the quarter ended March 31, 1998. 11 Pursuant to the requirements of Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned there unto duly authorized. RELM WIRELESS CORPORATION ------------------------- William P. Kelly Chief Financial Officer and Vice President - Finance Date: May 5, 1998 12 EX-27 2 FDS --
5 1,000 3-MOS DEC-31-1998 JAN-1-1998 MAR-31-1998 541 987 5,533 (127) 11,530 20,785 13,817 (4,867) 32,016 9,099 0 0 0 3,026 10,838 32,016 7,715 7,828 6,134 0 1,694 0 201 (201) 0 0 0 0 0 (201) (.04) (.04)
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