-----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, JaWugYRA2Eqbrr0t/YeyGZKojcxtbhd0X06NrISh2gk7fiEBfDTj9hhm4xP+F+kL NkwneDnJAihWkPyrqMEDyw== 0000032312-98-000004.txt : 19980210 0000032312-98-000004.hdr.sgml : 19980210 ACCESSION NUMBER: 0000032312-98-000004 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980209 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: EMCEE BROADCAST PRODUCTS INC CENTRAL INDEX KEY: 0000032312 STANDARD INDUSTRIAL CLASSIFICATION: RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT [3663] IRS NUMBER: 131926296 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 001-06299 FILM NUMBER: 98525888 BUSINESS ADDRESS: STREET 1: P O BOX 68 STREET 2: SUSQUEHANNA STREET EXTENSION WEST CITY: WHITE HAVEN STATE: PA ZIP: 18661-0068 BUSINESS PHONE: 7174439575 MAIL ADDRESS: STREET 1: P O BOX 68 STREET 2: SUSQUEHANNA STREET EXTENSION CITY: WHITE HAVEN STATE: PA ZIP: 18661 FORMER COMPANY: FORMER CONFORMED NAME: ELECTRONICS MISSILES & COMMUNICATIONS INC DATE OF NAME CHANGE: 19920703 10QSB 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-QSB Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended December 31, 1997 Commission file number 1-6299 EMCEE Broadcast Products, Inc.* (Exact name of registrant as specified in its charter) Delaware 13-1926296 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) Registrant's telephone number, including area code: 717-443-9575 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 practical date: Common stock, $ .01-2/3 par value - 4,078,138 shares as of February 9, 1998. *formerly Electronics, Missiles & Communications, Inc. EMCEE BROADCAST PRODUCTS, INC. AND SUBSIDIARIES I N D E X PAGE(S) PART I. FINANCIAL INFORMATION: CONSOLIDATED BALANCE SHEETS - December 31, 1997 and March 31, 1997 3 CONSOLIDATED STATEMENTS OF INCOME - Nine Months and three months ended December 31, 1997 and 1996 4 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY - Nine Months ended December 31, 1997 5 CONSOLIDATED STATEMENTS OF CASH FLOWS - Nine Months ended December 31, 1997 and 1996 6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 7 - 8 MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS 9 - 12 PART II. OTHER INFORMATION: SIGNATURES 13 NOTE: Any questions concerning this report should be addressed to Mr. Allan J. Harding, Vice President-Finance. ================================ DEC 31, 1997 MARCH 31,1997 (Unaudited) ================================ ASSETS CURRENT ASSETS: Cash and cash equivalents $3,216,946 $681,335 U. S. Treasury Bills 1,672,886 1,679,164 Accounts receivable, net of allowance for doubtful accts. Dec -$50,000/March-$100,000 1,601,662 933,535 Inventories 3,328,386 3,627,803 Prepaid expenses & deferred taxes 191,101 379,358 Note receivable 2,500,000 -------------------------- TOTAL CURRENT ASSETS 10,010,981 9,801,195 -------------------------- PROPERTY, PLANT & EQUIPMENT: Land & land improvements 246,841 246,841 Building 618,685 629,212 Machinery & equipment 2,006,143 2,019,717 ------------------------- 2,871,669 2,895,770 Less accumulated depreciation 1,992,455 1,836,630 ------------------------- NET PROPERTY, PLANT & EQUIPMENT 879,214 1,059,140 ------------------------- OTHER ASSETS 1,712 108,173 ------------------------- NOTE RECEIVABLE 500,000 500,000 Less deferred portion (500,000) (500,000) ------------------------- 0 0 ========================= TOTAL ASSETS $10,891,907 $10,968,508 ========================= LIABILITIES & SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Current portion of long-term deb $125,000 $108,000 Accounts payable 355,670 355,401 Accrued expenses 294,914 336,784 Deposits from customers 353,757 121,195 Accrued federal income taxes 119,085 554,000 ------------------------- TOTAL CURRENT LIABILITIES 1,248,426 1,475,380 ------------------------- LONG-TERM DEBT, net of current portion 770,438 807,189 ------------------------- SHAREHOLDERS' EQUITY: Common stock issued, $.01-2/3 par; authorized 9,000,000 shares 73,084 72,987 Additional paid-in capital 3,502,092 3,562,523 Retained earnings 6,871,662 6,412,703 ------------------------ 10,446,838 10,048,213 Less shares held in treasury at cost: 295,923 shares Dec '97; 212,763 shares Mar '97 1,573,795 1,362,274 ------------------------ TOTAL SHAREHOLDERS' EQUITY 8,873,043 8,685,939 TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $10,891,907 $10,968,508 ======================== SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
PART I. FINANCIAL INFORMATION EMCEE BROADCAST PRODUCTS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS - DECEMBER 31, 1997 and MARCH 31, 1997 -
NET SALES $6,862,949 $10,641,090 $2,793,857 $3,019,433 COST OF PRODUCTS SOLD 4,511,260 6,500,101 1,758,847 1,826,364 ---------------------------------------------- GROSS PROFIT 2,351,689 4,140,989 1,035,010 1,193,069 ---------------------------------------------- OPERATING EXPENSES: Selling 1,106,492 1,208,294 333,366 390,626 General and administrative 847,175 981,413 285,040 307,386 Research and development 265,139 322,023 76,630 141,231 ---------------------------------------------- TOTAL OPERATING EXPENSES 2,218,806 2,511,730 695,036 839,243 ---------------------------------------------- INCOME FROM OPERATIONS 132,883 1,629,259 339,974 353,826 ---------------------------------------------- OTHER INCOME, NET: Interest expense (64,927) (71,292) (21,203) (23,670) Interest income 186,099 76,172 62,547 28,139 Gain of sale of investment Securities 277,324 106,181 Other 17,580 21,589 5,777 16,163 ---------------------------------------------- TOTAL OTHER INCOME, NET 416,076 132,650 47,121 20,632 ---------------------------------------------- NET INCOME BEFORE INCOME TAXES 548,959 1,761,909 387,095 374,458 INCOME TAXES 90,000 436,400 82,600 91,400 ---------------------------------------------- NET INCOME $458,959 $1,325,509 $304,495 $283,058 ============================================== COMMON SHARE AND COMMON SHARE EQUIVALENT OUTSTANDING 4,152,867 4,249,679 4,120,888 4,204,487 ============================================== EARNINGS PER COMMON AND COMMON SHARE EQUIVALEN $0.11 $0.31 $0.07 $0.07 ============================================== SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
EMCEE BROADCAST PRODUCTS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME THREE MONTHS AND NINE MONTHS ENDED DECEMBER 31, 1997 AND 1996 (Unaudited) ============================================== NINE (9) MONTHS THREE (3) MONTHS 12/31/97 12/31/96 12/31/97 12/31/96 ==============================================
BALANCE-MARCH 31, 1997 4,378,364 $72,987 $3,562,523 $6,412,703 COMMON STOCK ISSUED 5,797 97 (60,431) TREASURY STOCK PURCHASED NET INCOME FOR THE PERIOD 458,959 -------------------------------------------------- BALANCE-DECEMBER 31,1997 4,384,161 $73,084 $3,502,092 $6,871,662 ==================================================
EMCEE BROADCAST PRODUCTS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY NINE MONTHS ENDED DECEMBER 31, 1997 (Unaudited) ============================================== COMMON STOCK ADDITIONAL ------------- PAID-IN RETAINED SHARES AMOUNT CAPITAL EARNINGS ==============================================
BALANCE-MARCH 31, 1997 212,763 $(1,362,274) $8,685,939 COMMON STOCK ISSUED (12,763) 99,774 39,440 TREASURY STOCK PURCHASED 95,923 ( 311,295) ( 311,295) NET INCOME FOR THE PERIOD 458,959 ----------------------------------------- BALANCE-DECEMBER 31,1997 295,923 $(1,573,795) $8,873,043 ========================================= SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
======================================== TREASURY STOCK ---------------------- SHARES AMOUNT TOTAL ========================================
============================= CASH FLOWS FROM OPERATING ACTIVITIES: Net income $458,959 $1,325,509 Adjustments: Depreciation 202,770 177,556 Provision for doubtful accounts 40,244 45,000 Stock award issued 39,440 (Increase) decrease in: Accounts receivable (708,371) 523,429 Inventories 299,417 (475,132) Prepaid expenses and deferred taxes 188,257 (156,203) Other assets 106,461 60,952 Note receivable 2,500,000 Increase (decrease) in: Accounts payable 269 (596,670) Accrued expenses (41,870) 9,583 Deposits from customers 232,562 ( 83,667) Accrued income taxes (434,915) -------------------------------- NET CASH PROVIDED BY OPERATING ACTIVITIES 2,883,223 830,357 -------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of property,plant &equip (22,844) (278,993) Purchase of U. S. Treasury Bills (3,093,722) (1,655,557) Proceeds from maturities of U.S. Treasury Bills 3,100,000 1,551,575 -------------------------------- NET CASH USED IN INVESTING ACTIVITIES (16,566) (382,975) -------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Long Term Debt: New borrowings 70,000 Payments (89,751) (156,670) Stock sold under option plans 22,456 Acquisition of company stock (311,295) (1,294,240) -------------------------------- NET CASH USED IN FINANCING ACTIVITIES(331,046) (1,428,454) -------------------------------- NET INCREASE (DECREASE) IN CASH 2,535,611 (981,072) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 681,335 1,537,759 -------------------------------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $3,216,946 $556,687 ================================ SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period: Interest Expense $49,490 $75,239 ================================ Income Taxes $490,000 $614,146 ================================ SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
EMCEE BROADCAST PRODUCTS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS NINE (9) MONTHS ENDED DECEMBER 31, 1997 AND 1996 (Unaudited) ============================= NINE (9) MONTHS 12/31/97 12/31/96
EMCEE BROADCAST PRODUCTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. The financial information presented as of any date other than March 31, has been prepared from the books and records of the Company without audit. Financial information as of March 31 has been derived from the audited financial statements of the Company, but does not include all disclosures required by generally accepted accounting principles. In the opinion of management, the accompanying unaudited consolidated condensed financial statements contain all adjustments, consisting only of normal recurring adjustments, necessary to present fairly EMCEE Broadcast Products, Inc. and Subsidiaries' financial position, and the results of their operations and changes in cash flow for the periods presented. 2. The results of operations for the three month and nine month periods ended December 31, 1997 and 1996 are not necessarily indicative of the results to be expected for the full year. 3. At December 31, 1997, cash equivalents included $2,245,196 invested in a money market portfolio. 4. INVENTORIES consisted of the following: December 31,1997 March 31, 1997 (UNAUDITED) ==================================== FINISHED GOODS $ 250,000 $ 399,000 WORK-IN-PROCESS $ 651,000 $ 738,000 RAW MATERIALS $ 1,662,000 $ 1,574,000 MANUFACTURED COMPONENTS $ 765,326 $ 916,803 ----------------------------------- $ 3,328,326 $ 3,627,803 Inventories are stated at the lower of standard cost, which approximates current actual cost (on a first-in, first-out basis) or market (net realizable value). 5. EARNINGS PER SHARE. Primary earnings per common and common share equivalent are computed using the weighted average number of shares outstanding adjusted for the incremental shares attributed to outstanding options to purchase common stock, if dilutive. The outstanding stock options for the periods presented are not dilutive. 6. OTHER ASSETS for March 31, 1997 include the balance of stock received in exchange for an account receivable. In June, 1997 this investment was sold for a net profit of $277,324. The remainder of other assets of $1,712 are organizational costs of subsidiaries. 7. During fiscal 1992, a rural cellular license was sold for $3,100,000. The initial payment was $845,000, net of closing costs of $155,000 with the balance plus interest at seven (7%) percent payable December 16, 1996. An agreement between the parties was executed at the end of March 1997 in which the Company received a payment in April 1997 of $2,500,000 and a note of $500,000 to be paid if the license is resold or a material change occurs in the ownership of the license holder. The remaining $500,000 receivable is recorded on the balance sheet and is fully reserved because there is no reasonable basis to evaluate the likelihood of collection. 8. For the three months and nine months ended December 31, 1997, the federal tax provision is less than the federal statutory because the Company has reduced its estimated federal tax rate used for interim reporting to recognize the benefit of its Foreign Sales Corporation (FSC) subsidiary. 9. On May 28, 1996, the Corporation purchased 200,000 shares of EMCEE Broadcast Products, Inc. stock from the estate of a former director. This stock has been recorded as Treasury Stock. In consideration of this Agreement, the Company has issued a Non-Negotiable, Non- Transferable Stock Warrant to the beneficiary of the estate which expires on May 22, 2001, for 200,000 shares of the Company stock at an exercise price of $9.46875 per share. In the nine month period ended December 31, 1997, the Corporation purchased 94,400 shares of EMCEE stock on the open market ranging in price (including fees) of $2.9975 to $4.061. As of February 9, 1998, an additional 10,100 shares were purchased at an average price of $3.05 per share. EMCEE BROADCAST PRODUCTS, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS Sales for the quarter ended December 31, 1997 totaled $2,794,000 or 7.5% less than the like quarter one year ago. Sales for the nine months ending December 31, 1997 equaled $6,863,000 or 35.5% less than the nine months ended December 31, 1996. The decrease in shipments year-to-date compared to the previous year is the result of less demand in the domestic market as the larger wireless cable operators analyze alternatives in constructing systems for video digital compression, data transmission or for the use of the wireless cable spectrum for telephony. Domestic shipments accounted for $767,000 for the quarter and $2,495,000 for the nine months ended December 31, 1997 compared to $1,287,000 and $4,905,000 for the same periods one year ago. The Registrant believes that when the technology of digital compression is tested and proven viable, the demand will increase for the Company's product in North America sometime within 1998. The Registrant further believes that the existing analog product manufactured by the Company will continue to be in demand worldwide for the next four to five years. However, the financial problems in the Far East are expected to have a detrimental effect on sales; but as to the extent and duration of this effect, management can not predict with certainty. The high percent of export sales (73%) for the quarter ended December 31,1997, for which prices are generally higher, and the additional volume (compared to the prior two quarters), increased gross profit to $1,035,000 or 37% of net sales and increased gross profit to $2,352,000 (34% of net sales) for the nine months ended December 31, 1997, compared to gross profit of $1,193,000 (39.5% of net sales) and $4,141,000 (38.9% of net sales) for the quarter and nine months ended December 31, 1996. The higher gross profit margin and higher margin as a percent to net sales for the nine months ended December 31, 1996 were due, in addition to the higher volume, to lower content of original equipment manufactured by others, which totaled 20% for the quarter ended December 31, 1996 compared to 23% for the other periods under discussion. Margins are lower for O.E.M. than for equipment manufactured by the Company. Total Operating expenses amounted to $695,000 for the quarter ended December 31, 1997 and $2,219,000 for the nine months ended December 31, 1997 compared to $839,000 and $2,512,000 for the quarter and year-to-dates, respectively, for the same periods one year ago. Selling expense of $333,000 for the quarter ended December 31, 1997 decreased almost 15% from the quarter ended December 31, 1996 while the year to date amount of $1,106,000 deceased 8.5% from the nine month period one year ago. Reductions occurred in commissions, which are sales volume related. Management also reduced salary and salary related expense and travel expense. Increase in expense for the nine months ended December 31, 1997 did occur in shows and conventions and advertising as most of the costs were related or were connected to the previous fiscal year. Also, selling expense related to foreign sales (including the aforementioned shows and advertising) did increase approximately 10% as management believes that near-term sales increases will come from offshore. General and administrative expense decreased 7% for the quarter and 14% year-to-date ending December 31, 1997 compared to the quarter and year-to- date ended one year ago. The majority of the decrease was in salary and salary related expense. Additional reductions occurred in legal costs and public relations while the Board of Directors expense increased due to an additional meeting in the second quarter of the current fiscal year. Research and development expense totaled $265,000 for the nine months ended December 31, 1997 or $57,000 less than the amount for the first nine months ended December 31, 1996. Both periods included credits for non-recurring engineering billed to a customer; $20,000 for the current fiscal year and $61,000 for the prior year. The Company is committed to increasing its research and development expense in order to maintain technology in the expanding multichannel multipoint distribution service (MMDS) industry for television and Internet transmitters. Income from operations netted $340,000 for the quarter ended December 31, 1997 compared to $354,000 for the quarter ended December 31, 1996 and turned a loss from operations sustained for the six months ended September 30, 1997, to an income from operations for the nine months ending December 31, 1997 of $133,000. The latter amount compares to income from operations of $1,629,000 for the first three quarters of fiscal 1997. Aided by investments in U.S. Treasury bills and a money market account, interest income of $63,000 for the quarter ending December 31, 1997 and $186,000 for the first nine months ending December 31, 1997 exceeded interest expense of $21,000 and $65,000 for the same periods. A gain on the sale of stock of an investment held by the Registrant of $277,000 and net other income of $18,000 due primarily to short-term rentals of equipment, coupled with the abovementioned interest income in excess of interest expense, resulted in other income (net) for the nine months ended December 31, 1997 of $416,000, compared to $133,000 for the same period one year ago, and which increased net income before income taxes to $549,000, compared to $1,762,000 for the first nine months of fiscal 1997. Net income before federal income taxes for the quarter of $387,000 exceeded the amount for the quarter one year ago of $374,000. Federal income tax provisions for the third quarter and nine months ending December 31, 1997 of $83,000 and $90,000, respectively, reduced net income to $304,000 ($0.07 per share) for the quarter and $459,000 ($0.11 per share) for the first nine months of fiscal 1998, compared to $283,000 ($0.07 per share) and $1,326,000 ($0.31 per share) for the corresponding periods last year. The federal tax provision for the above periods are less than statutory as the Company has reduced the estimated federal tax rate to recognize the benefit of its foreign sales corporation (FSC) subsidiary. There are no state tax liabilities for the reported periods since all profitable companies in the consolidated group are domiciled in states which do not impose income taxes. In April of the current fiscal year, the Registrant collected $2,500,000 for a note receivable and interest. This amount, along with the available cash balance, has been invested in U.S. Treasury Bills of $2,255,000 and a money market account of $2,537,000 as of December 31, 1997 compared to total cash and investment of $2,360,000 as of March 31, 1997. Accounts receivable increased from $933,000 as of March 31, 1997 to $1,602,000 as of December 31, 1997. This increase is due to the increase in sales volume for the quarter ended December 31, 1997 compared to the fourth quarter of fiscal 1997 and a shipment to Brazil of $319,000 financed for one year. Also included in this balance at December 31, 1997 is an amount of $100,000 advanced through a subsidiary which has been subsequently transferred to an investment. (See paragraph below.) Accounts and note receivable of approximately $90,000 was written-off against the reserve in the first nine months ended December 31, 1997. The balance of $50,000 for reserve for bad debts is believed to be adequate by the Registrant as of December 31, 1997. Deposits on orders from customers increased from $121,000 as of March 31, 1997 to $354,000 as of December 31, 1997, indicating that order demand is stronger. Inventories were reduced by $300,000 as of December 31, 1997 compared to March 31, 1997, again, due to the increase in sales. Prepaid expense and deferred taxes totaled $191,000 as of December 31, 1997 compared to $379,000 as of March 31, 1997. Approximately one-half of this decrease was due to a temporary timing difference in the federal income tax calculations. The remaining reduction of approximately $90,000 was primarily for write-offs of prepaid expenses including costs associated with the National Association of Broadcasters Show of April, 1997, expensed in the present fiscal year. Conversely, accrued federal income taxes decreased from $554,000 as of March 31, 1997 to $119,000 as of December 31, 1997 due to the timing difference mentioned in the above paragraph and quarterly payments of $490,000 made in this fiscal year, less accruals for the current fiscal year liability. Expenditures for capital equipment totaled $23,000 for the nine month period ended December 31, 1997. As depreciation for the same period equaled $203,000, net property, plant and equipment decreased $180,000 at December 31, 1997 compared to March 31, 1997. In addition, fixed assets with original value of $48,000 which were fully depreciated were deleted. Other assets, which totaled $108,000 as of March 31, 1997 included an investment in a wireless cable operator at a cost of $106,000 which was sold in the first quarter of the present fiscal year. The remaining balance consists of organizational costs of subsidiaries. As part of the Registrant's efforts to expand through acquisitions and investments, the Company has committed to an investment in a new enterprise that will invest in Internet operating companies. The arrangement in which the investment will be less than $500,000, will increase the Registrant's visibility and provide experience in the operation of this new and growing market. The Note Receivable of $500,000 shown on the balance sheet for both periods under review represents the balance owed the Company in the sale of a cellular license in which $2,500,000 was received in April of 1997. As there is no reasonable basis to evaluate the likelihood of collection, the amount is fully reserved. The long-term debt-current portion, increased from $108,000 as of March 31, 1997 to $125,000 as of December 31, 1997 to recognize additional borrowing in April of 1997 of $70,000 and maturity changes at December 31, 1997. Long-term debt balances decreased $37,000 during the same period due to principal payments, the additional borrowing, and maturity changes. The accounts payable balance of $356,000 as of December 31, 1997 was almost the same as the balances of $355,000 as of March 31, 1997. Accrued expenses totaled $295,000 as of December 31, 1997 compared to $337,000 as of March 31, 1997. The difference is attributed to timing differences in payroll, payroll taxes and other accruals. As of March 31, 1997, there were 48,050 shares of stock options exercisable at $3.4375 per share. There were no options exercised in the nine months ended December 31, 1997. The Company did award an employee 18,560 shares of Company stock. The stock was issued primarily from stock held as Treasury stock. Also, 1,523 shares of stock was purchased from a former employee under the provisions of the employees stock option plan. The Registrant, through a subsidiary, purchased a total of 94,400 shares of Company stock on the open market at a total cost of $306,000. Subsequent to December 31, 1997, and up to the date of this report, an additional 10,100 shares have been purchased at a total cost of $30,800. Management has been authorized to continue to purchase additional stock on the open market at management's discretion. The Registrant believes that its existing working capital coupled with cash flows from operations will be sufficient to fund working capital and debt payment requirements for fiscal 1998. The backlog as of December 31, 1997 totaled $1,886,000, all of which is expected to ship by March 31, 1998. Orders for the nine months ended December 31, 1997 totaled $8,550,000. Total employment, which includes 2 part-time employees, totaled 67 as of December 31, 1997 compared to 69 as of March 31, 1997. As indicated by the last two quarters, the Registrant believes that the market for MMDS transmitters will continue to grow especially in the digital compression segment and transmitters for Internet use. The Registrant is optimistic that the new technology that the Company has been testing will be received by the industry within 1998 calendar year. SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 Any statements contained in this report which are not historical facts are forward looking statements; and, therefore, many important factors could cause actual results to differ materially from those in the forward looking statements. Such factors include, but are not limited to, changes (legislative, regulatory and otherwise) in the MMDS or LPTV industry, demand for the Company's products (both domestically and internationally), the development of competitive products, competitive pricing, the timing of foreign shipments, market acceptance of new product introductions (including, but not limited to, the Company's digital products), technological changes, economic conditions (bot domestic and international), litigation and other factors, risks and uncertainties identified in the Company's Securities and Exchange Commission filings. PART II. OTHER INFORMATION ITEM 1 LEGAL PROCEEDINGS In prior years an individual who was an officer, director and shareholder and the Company were named as defendants in various lawsuits instituted by certain shareholders based on incidents alleged to have occurred in the early-to-mid 1980's. Of these lawsuits, all were either settled or were dismissed with prejudice and the appeal periods have expired. On July 7, 1995, one of the prior litigants initiated another claim against the Company and another individual who is a shareholder seeking actual damages of $700,000. In September 1995, the presiding judge in the Circuit Court of Cook County, Illinois ruled in favor of the Company to dismiss plaintiff's complaint with prejudice. It is unknown at this time whether an appeal will be taken. On January 16, 1997 the Registrant initiated a claim against a partnership and an individual seeking judgment in the principal amount of $2,100,000 plus interest and attorneys fees. On March 27, 1997, the parties agreed to a settlement of $2,500,000 to be paid (and which was paid) on April 3, 1997 and an additional $500,000 to be paid to the Company upon the occurrence of certain events, including a sale or material change in ownership of the obligor. 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 thereto duly authorized. EMCEE BROADCAST PRODUCTS, INC. Date: February 9,1998 /s/ JAMES L. DeSTEFANO ----------------------- JAMES L. DeSTEFANO President/CEO Date: February 9, 1998 /s/ ALLAN J. HARDING ----------------------- ALLAN J. HARDING Vice President-Finance EX-27 2
5 0000032312 EMCEE BROADCAST PRODUCTS, INC. 9-MOS MAR-31-1998 APR-01-1997 DEC-31-1997 3,216,946 1,672,886 1,651,662 50,000 3,328,386 10,010,981 2,871,669 1,992,455 879,214 1,248,426 0 73,084 0 0 8,799,959 10,891,907 6,862,949 6,862,949 4,511,260 6,730,066 (416,076) 40,244 64,927 548,959 90,000 458,959 0 0 0 458,959 .11 .11
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