-----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, CbXUmlDWoJccBYwrtaUuEt12TSZAkLP84J+V/evlZfP0gINqnsFM+S3bdBZ3CB9R c1QNndTkj4h6nqmP8BV7CA== 0000032312-99-000011.txt : 19991111 0000032312-99-000011.hdr.sgml : 19991111 ACCESSION NUMBER: 0000032312-99-000011 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991110 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: 99746162 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 September 30, 1999 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: 570-443-9575 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 - 3,982,397 shares as of November 9, 1999. EMCEE BROADCAST PRODUCTS, INC. AND SUBSIDIARIES I N D E X PAGE(S) PART I. FINANCIAL INFORMATION: CONSOLIDATED BALANCE SHEETS - September 30, 1999 and March 31, 1999 3 CONSOLIDATED STATEMENTS OF INCOME - Six months and three months ended September 30, 1999 and 1998 4 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY - Six months ended September 30, 1999 5 CONSOLIDATED STATEMENTS OF CASH FLOWS - Six months ended September 30, 1999 and 1998 6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS 8 - 11 PART II. OTHER INFORMATION: SIGNATURES 12 NOTE: Any questions concerning this report should be addressed to Mr. Allan J. Harding, Vice President-Finance.
PART I. FINANCIAL INFORMATION EMCEE BROADCAST PRODUCTS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS - SEPTEMBER 30, 1999 and MARCH 31, 1999 - SEPT 30, 1999 MARCH 31,1999 Unaudited ======================================== ASSETS CURRENT ASSETS: Cash and cash equivalents $1,319,689 $1,572,423 U. S. Treasury Bills 1,761,346 1,775,933 Accounts receivable, net of allowance for doubtful accts. Sept-$53,000/March-$35,000 645,203 603,248 Inventories 3,352,992 3,522,579 Prepaid expenses 332,702 660,842 Deferred taxes 148,000 132,000 --------------------------------- TOTAL CURRENT ASSETS 7,559,932 8,267,025 --------------------------------- PROPERTY, PLANT & EQUIPMENT: Land & land improvements 246,841 246,841 Building 617,474 617,670 Machinery & equipment 1,917,304 2,017,084 ---------------------------------- 2,781,619 2,881,595 Less accumulated depreciation 2,156,865 2,150,315 ---------------------------------- NET PROPERTY, PLANT & EQUIPMENT 624,754 731,280 ---------------------------------- OTHER ASSETS 518,675 492,149 ---------------------------------- NOTE RECEIVABLE 518,750 510,000 Less deferred portion (518,750) (510,000) ---------------------------------- 0 0 ---------------------------------- TOTAL ASSETS $8,703,361 $9,490,454 =================================== LIABILITIES & SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Current portion of long-term debt $119,000 $119,000 Accounts payable 114,627 288,029 Accrued expenses 279,431 297,754 Deposits from customers 126,585 76,745 --------------------------------- TOTAL CURRENT LIABILITIES 639,643 781,528 --------------------------------- LONG-TERM DEBT, net of current portion 592,697 649,287 --------------------------------- SHAREHOLDERS' EQUITY: Common stock, $.01-2/3 par; authorized 9,000,000 shares; issued 4,384,161 73,084 73,084 Additional paid-in capital 3,502,092 3,502,092 Retained earnings 5,756,496 6,345,114 ----------------------------------- 9,331,672 9,920,290 Less shares held in treasury at cost: 401,764 shares Sept '99 and Mar '99 1,860,651 1,860,651 ----------------------------------- TOTAL SHAREHOLDERS' EQUITY 7,471,021 8,059,639 ----------------------------------- TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $8,703,361 $9,490,454 =================================== SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
EMCEE BROADCAST PRODUCTS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS THREE MONTHS AND SIX MONTHS ENDED SEPTEMBER 30, 1999 AND 1998 (Unaudited) SIX (6) MONTHS THREE (3) MONTHS 9/30/99 9/30/98 9/30/99 09/30/98 ========================================== NET SALES $1,787,641 $4,364,794 $975,216 $2,166,029 COST OF PRODUCTS SOLD 1,498,037 2,995,766 793,025 1,453,429 --------------------------------------------- GROSS PROFIT 289,604 1,369,028 182,191 712,600 --------------------------------------------- OPERATING EXPENSES: Selling 493,976 621,880 264,084 298,664 General and administrative 530,914 559,758 305,237 297,250 Research and development 173,507 207,208 97,022 106,929 -------------------------------------------- TOTAL OPERATING EXPENSES 1,198,397 1,388,846 666,343 702,843 -------------------------------------------- INCOME (LOSS) FROM OPERATIONS (908,793) (19,818)(484,152) 9,757 -------------------------------------------- OTHER INCOME (EXPENSE), NET: Interest expense (26,754) (41,567) (7,890) (24,060) Interest income 84,140 127,931 43,805 66,496 Other 14,389 5,542 9,696 (2,079) --------------------------------------------- TOTAL OTHER INCOME (LOSS), NET 71,775 91,906 45,611 40,357 --------------------------------------------- NET INCOME (LOSS)BEFORE INCOME TAXES(BENEFIT) (837,018) 72,088 (438,541) 50,114 INCOME TAXES (BENEFIT) (248,400) 16,000 (150,250) 10,500 --------------------------------------------- NET INCOME (LOSS) ($588,618) $56,088($288,291) $39,614 ============================================= COMMON SHARE AND COMMON SHARE EQUIVALENT OUTSTANDING Basic 3,982,397 4,025,394 3,982,397 4,005,299 ============================================= Diluted 3,982,397 4,025,394 3,982,397 4,005,299 ============================================= EARNINGS (LOSS) PER COMMON AND COMMON SHARE EQUIVALENT Basic $(.15) $.01 $(.07) $.01 ============================================= Diluted $(.15) $.01 $(.07) $.01 ============================================= SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
EMCEE BROADCAST PRODUCTS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY SIX MONTHS ENDED SEPTEMBER 30, 1999 (Unaudited) ADDITIONAL COMMON STOCK PAID-IN RETAINED TREASURY STOCK SHARES AMOUNT CAPITAL EARNINGS SHARES AMOUNT TOTAL =================================================================== BALANCE- 3/31/1999 4,384,161 $73,084 $3,502,092 $6,345,114 401,764($1,860,651)$8,059,639 NET LOSS FOR THE PERIOD (588,618) (588,618) BALANCE- 9/30/99 ----------------------------------------------------------------------- 4,384,161 $73,084 $3,502,092 $5,756,496 401,764($1,860,651)$7,471,021 ======================================================================= SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
EMCEE BROADCAST PRODUCTS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS SIX (6) MONTHS ENDED SEPTEMBER 30, 1999 AND 1998 (Unaudited) SIX (6) MONTHS 09/30/99 9/30/98 ========================= CASH FLOWS FROM OPERATING ACTIVITIES: Net income (Loss) ($588,618) $56,088 Adjustments: Depreciation 133,398 145,020 Provision for doubtful accounts 18,000 26,775 (Increase) decrease in: Accounts receivable (59,955) (139,660) Inventory 169,587 (269,495) Prepaid expenses 328,140 (105,494) Deferred taxes (16,000) (39,000) Other assets (26,526) (79,213) Increase (decrease) in: Accounts payable (173,402) (194,568) Accrued expenses (18,323) (72,842) Deposits from customers 49,840 (149,229) Accrued income taxes (61,857) ----------------------- NET CASH USED IN OPERATING ACTIVITIES (183,859) (883,475) ----------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of property, plant and equipment (26,872) (89,944) Purchase of US Treasury Bills (2,185,413) (2,285,746) Proceeds from maturities of US Treasury Bills 2,200,000 2,300,000 ----------------------- NET CASH USED IN INVESTING ACTIVITIES (12,285) (75,690) ----------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Payments on long term debt (56,590) (47,619) Acquisition of company stock (185,952) ------------------------ NET CASH USED IN FINANCING ACTIVITIES (56,590) (233,571) ------------------------ NET DECREASE IN CASH (252,734) (1,192,736) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,572,423 2,529,594 ------------------------ CASH AND CASH EQUIVALENTS AT END OF PERIOD $1,319,689 $1,336,858 ======================== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period: Interest Expense $21,375 $41,514 ======================== Income Taxes $0 $242,560 ======================== SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
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 six month periods ended September 30,1999 and 1998 are not necessarily indicative of the results to be expected for the full year. 3. At September 30, 1999, cash equivalents included $1,156,650 invested in a money market portfolio. 4. INVENTORIES consisted of the following: Sept. 30,1999 March 31, 1999 ---------------------------------- (UNAUDITED) FINISHED GOODS $227,000 $266,000 WORK-IN-PROCESS 698,000 686,000 RAW MATERIALS 1,029,000 1,008,000 MANUFACTURED COMPONENTS 1,398,992 1,562,579 ------------------------------------ $3,352,992 $3,522,579 ==================================== 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. Basic income per share is computed by dividing earnings applicable to common shareholders by the weighted average number of common shares outstanding. Diluted income per share is similar to basic income per share except that the weighted average of common shares outstanding is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued. There were no dilutive potential common shares in the period ended September 30, 1999 and 1998 because the assumed exercise of the options would be anti- dilutive. The number of options and warrants that could potentially dilute basic earnings (loss) per share that have been excluded from the computation of diluted earnings (loss) per share were 315,200 at September 30, 1999 and 1998. EMCEE BROADCAST PRODUCTS, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION Although net sales for the second quarter ended September 30, 1999 of $975,000 were 20% higher than the previous quarter, net sales of $1,788,000 for the first six months of fiscal 2000 were down 59% compared to the first six months one year ago. While domestic shipments totaled $609,000 for the quarter and $970,000 for the six months ended September 30, 1999 representing 63% and 54% of total shipments, respectively, management anticipates an increase in foreign sales both in actual volume and as a percent of total sales as the foreign currency problems have abated and a demand for Multichannel Multipoint Distribution Systems (MMDS) has increased as indicated by the increase in requests for quotes in the past three months. A comparison of export shipments by region is as follows:
Quarter Six Months ending ending September 30 September 30 Region 1999* 1998* 1999* 1998* ====== (000's omitted) ======================================== Asia/Pacific Rim 134 471 275 857 Middle East 43 333 200 352 South America 107 76 142 155 North America 27 44 27 187 Central America 3 46 19 85 Caribbean 19 44 91 85 Europe -- 71 23 222 Africa - 5 Other 33 64 41 74 ========================================= 366 1149 818 2022 *Based on customers with $2,500 or more of sales
The domestic market for television transmitters for MMDS service, which historically was the Registrant's principal market, has been almost non-existent for the last twelve months. Partially replacing this market is a growing demand for MMDS Internet and telephony applications. The Company shipped its initial high definition television (HDTV) transmitters in the quarter ended September 30, 1999 and is confident this segment will continue to grow in the next two quarters. Also, the Company has continued its efforts to become involved in high speed Internet service by integrating developed technology with the installation and operation of the service. The Company is involved in raising capital to secure Federal Communications Commission ("FCC") licenses for the domestic areas to develop 40-50 additional high speed Internet sites. The low volume of shipments for the quarter ended September 30, 1999 produced a gross profit of $182,000 or 19% of net sales and increased the gross profit to $290,000 or 16% of net sales for the six month period ended September 30, 1999. This latter amount compared to a gross profit of $1,369,000 (31% of net sales) for the six months ended September 30, 1998. Total operating expenses of $666,000 for the second quarter of fiscal 2000 was 5% less than the comparable quarter one year ago. Total operating expenses for the six months ended September 30, 1999 accumulated $1,198,000 compared to $1,389,000 for the like period one year ago. Selling expenses for the quarter of $264,000 was $35,000 less than the comparative quarter one year ago while expenses totaled $494,000 for the first two quarters of the current fiscal year compared to $622,000 for the comparable first half of the previous year. Reductions were shown in all categories for the periods under discussion except for the travel expense as additional expense was incurred as foreign contracts were pursued. General and administrative expense for the second quarter ended September 30, 1999 at $305,000 was 3% higher than the second quarter ended September 30, 1998 due to expenses relating to the Registrant's continuing involvement with new potential revenue sources. General and administrative expense for the six months ended September 30, 1999 totaled $531,000 or 5% less than the like period one year ago. Research and development expenses totaled $97,000 and $174,000 for the second quarter and first half of fiscal 2000. These costs were 9% and 16% less, respectively, compared to the same periods for fiscal 1999. The Company is committed to research and development in order to remain competitive in the MMDS and HDTV industries, including digital applications for television and high speed Internet service. The low sales volume for the quarter and six months ended September 30, 1999 resulted in a loss from operations of $484,000 and $909,000, respectively, compared to income from operations of $10,000 for the quarter and a loss from operations of $20,000 for the six months ended September 30, 1998. Interest expense for the quarter of $8,000 increased the amount for the first six months of fiscal 2000 to $27,000 compared to $42,000 for the same period one year ago. The reduction of interest for the current year is due primarily to the reduction of debt. Payment of interest to the Internal Revenue Service ("IRS") of approximately $8,000 is included in the previous years' quarter and six months. Interest income for the quarter ended September 30, 1999 of $44,000 increased interest income for the first two quarters of fiscal 2000 to $84,000 , a reduction of $23,000 and $44,000 compared to the same periods, respectively, one year ago. These reduction were due to the reduction of funds available for investment. Also, approximately $18,000 was earned on financing sales in the prior year. Other income was $10,000 for the quarter and $14,000 for the first six months ended September 30, 1999 compared to other income of $6,000 for the first six months for the previous fiscal year. A total of $13,000 was earned in the six month period of fiscal 2000 for rental of equipment. Net loss before income tax benefit was $439,000 for the quarter and $837,000 for the six months ended September 30, 1999. Tax benefits reduced the net loss to $288,000 for the quarter (equal to $(.07) cents per common share outstanding ) and $589,000 for the six months ended September 30, 1999 (equal to $(.15) per share of common stock outstanding). The comparative amounts for fiscal 1999 were net income of $40,000 for the second quarter and net income of $56,000 for the first six months. Both amounts were equal to $.01 cent per share of common stock outstanding. There are no state tax liabilities for any of the periods under discussion since all profitable companies in the consolidated reporting groups are domiciled in jurisdictions that do not impose income taxes. Cash and cash equivalents (primarily money market funds) totaled $1,320,000 as of September 30, 1999, a reduction of $253,000 from the balance as of March 31, 1999 due primarily to the loss sustained for the first half of fiscal 2000. United States Treasury Bills decreased $15,000 during this same period as interest was transferred to the cash account. Accounts receivable increased from $603,000 as of March 31, 1999 to $645,000 due to the timing of payments. Inventories decreased $170,000 for the six months ended September 30, 1999 as internal restrictions on purchasing inventories has been maintained. Prepaid expense totaled $333,000 as of September 30, 1999 compared to $661,000 as of March 31,1999 due primarily to the Registrant receiving $367,000 of tax refunds. Deferred income taxes increased from $132,000 as of March 31, 1999 to $148,000 in recognition of timing differences between current and future tax liabilities. An amount of $27,000 of new equipment purchased during the six month period ended September 30, 1999 was offset by depreciation of $133,000 resulting in a net decrease of $106,000 for property, plant and equipment at September 30, 1999 compared to March 31, 1999. Other assets increased by $27,000 from March 31, 1999 to September 30, 1999 as an additional investment in the Company's high speed Internet service was made. Accounts payable balance of $288,000 as of March 31, 1999 was reduced to $115,000 as normal payments to vendors were made and the Company maintained its internally imposed restrictions on purchasing inventories. Accrued expense decreased a modest $18,000 during the same period due to timing of accruals and payments. Long term debt, including the current portion, was reduced from $768,000 as of March 31, 1999 to $712,000 as scheduled payments were processed. Deposits from customers increased from $77,000 as of March 31, 1999 to $127,000 as of September 30, 1999 indicating a modest upturn in orders. The backlog of unsold orders totaled $454,000 as of September 30, 1999 compared to a backlog of $239,000 as of March 31, 1999. A large export order booked in October increased the backlog to $869,000 at October 31, 1999. The Company had a total of 45 persons (including 2 part time) as of September 30, 1999, the same as of March 31, 1999. The Company does not anticipate any sizable increase in the next three months. The Registrant has now entered into its third quarter of fiscal 2000 and encountered minimal software problems, all of which have been resolved. Contingency plans for the year 2000 have been completed with the exception of a potential failure of a power grid or public telecommunication systems which is still in the planning stage. Management believes that its working capital coupled with cash flow from operations will be sufficient to fund anticipated working capital and debt payment requirements for fiscal 2000. The Company plans to operate high speed Internet systems which will entail outside funding. Large corporations such as MCI WorldComm and Sprint have been acquiring MMDS spectrum (licenses) in the past nine months. These companies will utilize equipment currently manufactured by the Company. While this will have a favorable effect on future sales, the improvement is not expected until the first quarter of calendar year 2000. 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, high speed Internet, telephony and HDTV products), technological changes, economic conditions, 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 There is no information relevant to the Registrant which must be disclosed under this item. EMCEE BROADCAST PRODUCTS, INC. Date: November 10, 1999 /s/ James L. DeStefano ========================== JAMES L. DeSTEFANO President/CEO Date: November 10, 1999 /s/ Allan J. Harding =========================== ALLAN J. HARDING Vice President-Finance EX-27 2
5 0000032312 EMCEE BROADCAST PRODUCTS, INC. 6-MOS MAR-31-1999 APR-01-1999 SEP-30-1999 1,319,689 1,761,346 698,203 53,000 352,992 7,559,932 2,781,610 2,156,865 8,703,361 639,643 0 73,084 0 0 7,397,937 8,703,361 1,787,641 1,787,641 1,498,037 2,696,434 (71,775) 18,000 26,741 (837,018) (248,400) (588,618) 0 0 0 (588,618) (.15) (.15)
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