-----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, SHZRE2YX9a0tlTUYhj9jaZY5y9NzDkmRwsgD0+YDu+k2E9j0LfYJtcq0XjRAM/BC 3V9FeTfn7Wu4d1gu8EVj4g== 0000950135-96-003421.txt : 19960812 0000950135-96-003421.hdr.sgml : 19960812 ACCESSION NUMBER: 0000950135-96-003421 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960809 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: DYNATECH CORP CENTRAL INDEX KEY: 0000030841 STANDARD INDUSTRIAL CLASSIFICATION: INSTRUMENTS FOR MEAS & TESTING OF ELECTRICITY & ELEC SIGNALS [3825] IRS NUMBER: 042258582 STATE OF INCORPORATION: MA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-07438 FILM NUMBER: 96606613 BUSINESS ADDRESS: STREET 1: 3 NEW ENGLAND EXECUTIVE PARK CITY: BURLINGTON STATE: MA ZIP: 01803-5087 BUSINESS PHONE: 6172726100 MAIL ADDRESS: STREET 1: 3 NEW ENGLAND EXECUTIVE PARK CITY: BURLINGTON STATE: MA ZIP: 01803-5087 10-Q 1 DYNATECH CORPORATION 1 U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1996 Commission file number 0-7438 DYNATECH CORPORATION (Exact name of registrant as specified in its charter) MASSACHUSETTS 04-2258582 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 3 New England Executive Park Burlington, Massachusetts 01803-5087 (Address of principal executive offices)(Zip code) Registrant's telephone number, including area code: (617) 272-6100 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 . --- --- At July 15, 1996 there were 17,072,264 shares of common stock of the registrant outstanding. 2 2 PART I. FINANCIAL INFORMATION ----------------------------- Item 1. Financial Statements DYNATECH CORPORATION CONSOLIDATED STATEMENTS OF INCOME (In thousands except per share data) (Unaudited)
Three Months Ended June 30 ------------------ 1996 1995 ------- ------- Sales $81,122 $66,758 Cost of sales 30,248 25,249 ------- ------- Gross profit 50,874 41,509 Selling, general and administrative expense 26,059 22,861 Product development expense 9,646 9,195 Amortization of intangibles 1,566 1,089 ------- ------- Operating income 13,603 8,364 Interest expense (106) (549) Interest income 643 561 Other income 117 106 ------- ------- Income from continuing operations 14,257 8,482 Provision for income taxes 5,845 3,435 ------- ------- Net income from continuing operations 8,412 5,047 Loss from discontinued operations, net of tax benefit -- 422 ------- ------- Net income $ 8,412 $ 4,625 ======= ======= Income per common share: Continuing operations $ 0.46 $ 0.28 Discontinued operations -- $ (0.02) ------- ------- $ 0.46 $ 0.26 ======= ======= Weighted average number of common shares 18,301 17,594 ======= =======
See notes to condensed consolidated financial statements. 3 3 DYNATECH CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)
June 30 March 31 1996 1996 -------- -------- ASSETS (Unaudited) Current assets: Cash and cash equivalents $ 51,298 $ 46,094 Accounts receivable, net 47,661 45,367 Inventories: Raw materials 9,640 10,210 Work in process 8,728 9,381 Finished goods 7,131 7,325 -------- -------- 25,499 26,916 Other current assets 6,437 5,981 Net assets of discontinued operations held for sale 16,274 22,824 -------- -------- Total current assets 147,169 147,182 Property and equipment, net 18,409 18,551 Intangible assets, net 26,845 28,406 Other assets 11,108 11,050 -------- -------- $203,531 $205,189 ======== ======== LIABILITIES Current liabilities: Notes payable and current portion of long-term debt $ 339 $ 655 Accounts payable 9,226 9,849 Other accrued expenses 29,140 29,878 Accrued income taxes 3,199 939 -------- -------- Total current liabilities 41,904 41,321 Long-term debt -- 1,800 Deferred income taxes 411 531 Deferred compensation 907 818 SHAREHOLDERS' EQUITY Common stock 3,721 3,721 Additional paid-in capital 10,090 12,102 Retained earnings 174,069 165,657 Cumulative translation adjustments 258 342 Treasury stock (27,829) (21,103) -------- -------- Total shareholders' equity 160,309 160,719 -------- -------- $203,531 $205,189 ======== ========
See notes to condensed consolidated financial statements. 4 4 DYNATECH CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)
Three Months Ended June 30 -------- ------- 1996 1995 -------- ------- Operating activities: Net income $ 8,412 $ 5,047 Adjustments for noncash items included in net income: Depreciation 2,156 2,060 Amortization of intangibles 1,566 1,089 Increase in deferred taxes 110 584 Other 121 61 Change in operating assets and liabilities, net of effects of business acquisitions and divestitures (12,264) (9,278) -------- ------- Net cash flows provided by (used in) continuing operations 101 (437) Net cash flows provided by (used in) discontinued operations 8,205 (5,766) Net cash flows provided by (used in) operating activities 8,306 (6,203) -------- ------- Investing activities: Purchases of property and equipment (1,862) (2,256) Disposals of property and equipment 30 11 Proceeds from sale of businesses 10,267 1,668 Other 17 425 -------- ------- Net cash flows provided by (used in) continuing operations 8,452 (152) Net cash flows (used in) discontinuing operations (526) (263) -------- ------- Net cash flows provided by (used in) investing activities 7,926 (415) -------- ------- Financing activities: Debt borrowings -- 8,588 Repayment of debt (2,125) (426) Proceeds from exercise of stock options 638 170 Purchases of treasury stock (9,469) -- -------- ------- Net cash flows provided by (used in) financing activities (10,956) 8,332 -------- ------- Effect of exchange rate on cash (72) 860 -------- ------- Increase in cash and cash equivalents 5,204 2,574 Cash and cash equivalents at beginning of year 46,094 27,795 -------- ------- Cash and cash equivalents at end of period $ 51,298 $30,369 ======== ======= Supplemental data: Cash paid during the period for interest $ 154 $ 486 Cash paid during the period for income taxes $ 2,041 $ 195 Tax benefit of disqualifying dispositions of stock options -- $ 107
See notes to condensed consolidated financial statements. 5 5 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS A. Condensed Consolidated Financial Statements In the opinion of management, the unaudited condensed consolidated balance sheet at June 30, 1996, and the unaudited consolidated statements of income and unaudited consolidated condensed statements of cash flows for the interim periods ended June 30, 1996 and 1995 include all adjustments (including normal recurring adjustments) necessary to present fairly these financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. The year-end balance sheet data was derived from audited financial statements, but does not include disclosures required by generally accepted accounting principles. It is suggested that these condensed statements be read in conjunction with the Company's most recent Annual Report on Form 10K for the fiscal year ended March 31, 1996. This Form 10-Q contains forward-looking statements which involve risks and uncertainties. The Company's actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, product demand and market acceptance risks, the effect of economic conditions, the impact of competitive products and pricing, product development, commercialization and technological difficulties, capacity and supply constraints or difficulties, availability of capital resources, general business and economic conditions, the effect of the company's accounting policies, and other risks detailed in the Company's Annual Report and 10K for the fiscal year ended March 31, 1996. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make certain estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Significant estimates in these financial statements include allowances for accounts receivable, net realizable value of inventories, tax valuation reserves, and the net realizable value of assets from discounted operations held for sale. Actual results could differ from those estimates. B. Divestments During the quarter ended June 30, 1996, the Company sold two businesses for approximately $10.3 million in cash. The effects of these transactions were reflected in the net assets held for sale and did not effect fiscal 1997 earnings. 6 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations - --------------------- Consolidated sales from continuing operations for the three months ended June 30, 1996 were $81,122,000 compared to $66,758,000 in the prior fiscal year's first quarter. Communication test sales rose 27% for the three months ended in fiscal 1997. The increase was due in part to acquired businesses in the last half of fiscal year 1996. Sales for the Industrial and Scientific communications and non-Broadcast Video Technology segments were up 17% and 11%, respectively over the corresponding quarter ending June 30, 1995. Backlog from ongoing operations was $55.6 million at June 30, 1996 compared with $57.3 million at March 31, 1996. The decrease was due to shipments from backlog generated by large incoming orders in the March quarter in the Communications Test division. Consolidated gross profit from continuing operations was 62.7% for the current quarter compared to 62.2% in the prior fiscal year quarter. The increase in rate is a result of strong sales of certain higher margin communication test products and industrial and scientific communications products. Product development expense increased 4.9% for the quarter ended June 30, 1996 versus the three months ended June 30, 1995. As a percentage of sales, product development decreased to 11.9% as compared to 13.8% in the comparable quarter a year ago. Amortization of intangible assets was $1.6 million in the first quarter of fiscal 1997 and $1.1 million in the first quarter of the prior year. The increase year over year is due to Communication Test acquisitions made during the second half of fiscal 1996. Selling, General and Administrative expense as a percentage of sales declined to 32.1% for the first quarter of fiscal 1997 as compared to 34.2% in the corresponding quarter a year ago. The decrease was due to greater efficiencies in selling communications products and leverage in sales costs for industrial and scientific communications products. Interest income increased due to earnings on cash received from proceeds of assets held for sale. The effective tax rate was 41% for the first quarter of fiscal 1997 compared to 40.5% in the prior year quarter resulting from higher nondeductible amortization charges. Net income from continuing operations increased 67% to $8,412,000 for the quarter ended June 30, 1996 from $5,047,000 for the first quarter of this prior year, reflecting increased sales of 22%, higher gross margins, lower general, administrative and selling costs, and higher interest income, partially offset by higher product development and increased amortization cost. Earnings per share for the quarter ended June 30, 1996 were $.46 representing a 64% increase as compared to the prior year period. Capital Resources and Liquidity - ------------------------------- The Company's funded debt was .2% of total capital at June 30, 1996, a decrease from 1.5% at March 31, 1996. The working capital rate decreased slightly to 3.5 to 1 at June 30, 1996 from 3.6 to 1 at March 31, 1996. Cash inflows from proceeds of business assets held for sale approximated $10.3 million in the first quarter. Cash outflows of approximately $9.5 million were used to purchase treasury stock. Dynatech believes it has sufficient resources to finance its 7 7 cash requirements over the next year. The current capital structure provides sufficient financial flexibility to pursue business opportunities. PART I. OTHER INFORMATION ------------------------- Item 6. (a) Exhibits Exhibit 27 Financial Data Schedule PART II. OTHER INFORMATION -------------------------- Item 6. Reports on Form 8-K (b) No current reports on Form 8-K were filed by the Registrant during the quarter ended June 30, 1996. 8 8 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. DYNATECH CORPORATION ---------------------------------------- Date August 9, 1996 ALLAN M. KLINE ------------------------- ---------------------------------------- Vice President, Chief Financial Officer and Treasurer Date August 9, 1996 ROBERT W. WOODBURY, JR. ------------------------- ---------------------------------------- Corporate Controller, Principal Accounting Officer EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 U.S. DOLLARS 3-MOS MAR-31-1997 APR-01-1996 JUN-30-1996 1 51,298 0 48,619 958 25,499 6,437 50,543 32,134 203,531 41,904 0 3,721 0 0 156,588 203,531 81,122 81,122 30,248 37,271 (117) 0 (537) 14,257 5,845 8,412 0 0 0 8,412 .46 .46
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