-----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, TLHzWM0DP0reV/BGhtaX9tgmKLTWRa14R75LK/H8xhCmZ2rbbSvlZUnzlDVx4Dfr sN5t+uZaGdKF3MZrl89Ydw== 0000910650-96-000001.txt : 19960603 0000910650-96-000001.hdr.sgml : 19960603 ACCESSION NUMBER: 0000910650-96-000001 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960208 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: EMCEE BROADCAST PRODUCTS INC CENTRAL INDEX KEY: 0000032312 STANDARD INDUSTRIAL CLASSIFICATION: 3663 IRS NUMBER: 131926296 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-06299 FILM NUMBER: 96513329 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 FORMER COMPANY: FORMER CONFORMED NAME: ELECTRONICS MISSILES & COMMUNICATIONS INC DATE OF NAME CHANGE: 19920703 10-Q 1 3RD QTR 10-Q 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, 1995 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 - 4,351,390 shares as of February 12, 1996. *formerly Electronics, Missiles & Communications, Inc. EMCEE BROADCAST PRODUCTS, INC. AND SUBSIDIARIES (formerly ELECTRONICS, MISSILES & COMMUNICATIONS, INC.) I N D E X PAGE(S) PART I. FINANCIAL INFORMATION: CONSOLIDATED BALANCE SHEETS - December 31, 1995 and March 31, 1995 . . . . . . . . . . . 3 CONSOLIDATED STATEMENTS OF INCOME - NINE months and three months ended December 31, 1995 and 1994 . . . . . . . . . . . . . . . . 4 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY - Nine months ended December 31, 1995 . . . . . . . . . . . 5 CONSOLIDATED STATEMENTS OF CASH FLOWS - Nine months ended December 31, 1995 and 1994 . . . . . . 6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS . . . . . . . . . . 7 - 8 MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS . . . . . . . 9 - 11 PART II. OTHER INFORMATION: ITEM 6. EXHIBITS AND REPORTS ON FORM 8-KSB . . . . . . . . . . 12 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 (formerly Electronics, Missiles & Communications, Inc.) CONSOLIDATED BALANCE SHEETS - DECEMBER 31, 1995 and MARCH 31, 1995 - DEC 31, 1995 MARCH 31, 1995 Unaudited ASSETS CURRENT ASSETS: Cash and cash equivalents $317,833 $1,440,080 U. S. Treasury Bills 1,567,220 580,528 Accounts Receivable, net of allowance for doubtful accounts -- Dec - $128,000 / March - $120,000 1,753,951 1,667,495 Note Receivable 2,100,000 Less Deferred Portion (2,100,000) 0 Inventories 4,017,433 4,047,946 Prepaid expenses and deferred taxes 841,315 276,047 TOTAL CURRENT ASSETS 8,497,752 8,012,096 NOTE RECEIVABLE 2,100,000 Less Deferred portion (2,100,000) 0 PROPERTY, PLANT & EQUIPMENT: Land & Land Improvements 246,841 246,841 Building 621,215 621,215 Machinery & equipment 2,108,564 1,972,808 2,976,620 2,840,864 Less accumulated depreciation 2,023,443 1,896,040 NET PROPERTY, PLANT & EQUIPMENT 953,177 944,824 OTHER ASSETS 215,700 215,200 TOTAL ASSETS $9,666,629 $9,172,120 LIABILITIES & SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Current Portion of Long-Term Debt $200,000 $150,500 Accounts Payable 820,456 632,052 Accrued Expenses 363,839 415,598 Deposits from Customers 554,711 564,203 Accrued income taxes 469,638 1,041,000 TOTAL CURRENT LIABILITIES 2,408,644 2,803,353 LONG-TERM DEBT, net of current portion 969,871 1,044,243 OTHER LIABILITIES 37,827 SHAREHOLDERS' EQUITY: Common stock issued, $.01-2/3 par; authorized 9,000,000 shares 72,563 71,670 Additional paid-in capital 3,503,703 3,472,200 Retained earnings 2,710,756 1,801,715 6,287,022 5,345,585 Less shares held in treasury at cost: 5,313 shares Dec. 95; 3,221 shares Mar. 95 36,735 21,061 TOTAL SHAREHOLDERS' EQUITY 6,250,287 5,324,524 TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $9,666,629 $9,172,120 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. EMCEE BROADCAST PRODUCTS, INC. AND SUBSIDIARIES (formerly Electronics, Missiles & Communications, Inc.) CONSOLIDATED STATEMENTS OF INCOME NINE MONTHS AND THREE MONTHS ENDED DECEMBER 31, 1995 AND 1994 (Unaudited) NINE(9) MONTHS THREE (3) MONTHS 12/31/95 12/31/94 12/31/95 12/31/94 NET SALES $9,523,529 $13,667,177 $3,831,978 $4,410,356 COST OF PRODUCTS SOLD 5,978,048 8,175,851 2,459,075 2,479,044 GROSS PROFIT 3,545,481 5,491,326 1,372,903 1,931,312 OPERATING EXPENSES: Selling 1,094,625 1,123,564 381,241 344,820 General & administrative 897,969 854,716 317,970 284,940 Research and development 340,112 271,593 142,134 96,569 TOTAL OPERATING EXPENSES 2,332,706 2,249,873 841,345 726,329 INCOME FROM OPERATIONS 1,212,775 3,241,453 531,558 1,204,983 OTHER INCOME (EXPENSE), NET: Interest expense (112,094) (87,109) (29,891) (28,419) Interest income 73,266 36,736 29,513 19,077 Other 15,094 18,880 (15,078) 13,676 TOTAL OTHER EXPENSE, NET (23,734) (31,493) (15,456) 4,334 Net income before federal and state income taxes 1,189,041 3,209,960 516,102 1,209,317 INCOME TAXES: Federal 280,000 450,000 115,000 172,000 State 344,000 124,000 TOTAL INCOME TAXES 280,000 794,000 115,000 296,000 NET INCOME $909,041 $2,415,960 $401,102 $913,317 COMMON SHARES OUTSTANDING 4,394,930 4,452,419 4,406,594 4,494,810 NET INCOME PER COMMON SHARE OUTSTANDING $0.21 $0.54 $0.09 $0.20 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
EMCEE BROADCAST PRODUCTS, INC. AND SUBSIDIARIES (formerly Electronics, Missiles & Communications, Inc.) CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY NINE MONTHS ENDED DECEMBER 31, 1995 (Unaudited) ADDITIONAL COMMON STOCK PAID-IN RETAINED TREASURY STOCK SHARES AMOUNT CAPITAL EARNINGS SHARES AMOUNT TOTAL BALANCE - MARCH 31, 1995 4,300,155 $71,670 $3,472,200 $1,801,715 3,221 ($21,061) $5,324,524 COMMON STOCK ISSUED UNDER STOCK OPTION PLAN 53,610 893 31,503 32,396 TREASURY STOCK PURCHASED 2,092 (15,674) (15,674) NET INCOME FOR THE PERIOD 909,041 909,041 BALANCE - DECEMBER 31, 1995 4,353,765 $72,563 $3,503,703 $2,710,756 5,313 ($36,735) $6,250,287 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
EMCEE BROADCAST PRODUCTS, INC. AND SUBSIDIARIES (formerly Electronics, Missiles & Communications, Inc.) CONSOLIDATED STATEMENT OF CASH FLOWS NINE (9) MONTHS ENDED DECEMBER 31, 1995 AND 1994 (Unaudited) NINE (9) MONTHS 12/31/95 12/31/94 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $909,041 $2,415,960 Adjustments: Depreciation 142,515 115,953 Provision for doubtful accounts 8,000 41,100 (Increase) decrease in: Accounts receivable (94,456) (565,544) Inventory 30,513 (759,623) Prepaid expenses and deferred taxes (565,268) (15,284) Other assets (500) Increase (decrease) in: Accounts payable 188,404 (349,742) Accrued expenses (51,759) 151,581 Deposits from customers (9,492) (787,581) Accrued income taxes (571,362) 818,000 Other liabilities 37,827 NET CASH PROVIDED BY OPERATING ACTIVITIES 23,463 1,064,820 CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of property, plant and equipment (150,868) (286,948) Increase in U. S. Treasury Bills (986,692) NET CASH USED IN INVESTING ACTIVITIES (1,137,560) (286,948) CASH FLOWS FROM FINANCING ACTIVITIES: Increase (Reduction) in Long-term Debt: New borrowings 115,000 150,000 Payments (139,872) (116,411) Notes payable, related parties (150,000) Stock sold under option plans 32,396 14,191 Purchase of company stock (15,674) (17,128) NET CASH USED IN FINANCING ACTIVITIES (8,150) (119,348) NET INCREASE (DECREASE) IN CASH (1,122,247) 658,524 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,440,080 1,583,929 CASH AND CASH EQUIVALENTS AT END OF PERIOD $317,833 $2,242,453 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the period: Interest Expense 96,134 $75,676 Income Taxes 1,353,280 $8,888 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
EMCEE BROADCAST PRODUCTS, INC. AND SUBSIDIARIES (formerly Electronics, Missiles & Communications, Inc.) 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, 1995 and 1994 are not necessarily indicative of the results to be expected for the full year. 3. At December 31,1995, cash held at a financial institution is in excess of the Federal Deposit Insurance Coverage by $4,116. An additional $198,000 of cash equivalents is invested in U.S. Treasury Bills. 4. INVENTORIES consisted of the following: Dec 31, 1995 March 31, 1995 (UNAUDITED) FINISHED GOODS............. $591,000 $533,000 WORK-IN-PROCESS............ $897,000 $1,111,000 RAW MATERIALS.............. $1,981,000 $1,589,000 MANUFACTURED COMPONENTS.... $548,433 $814,946 $4,017,433 $4,047,946
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 equivalent share and earnings per common and common equivalent share assuming full dilution 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. At December 31, 1994 and December 31, 1995 it was not material. 6. OTHER ASSETS consists of stock received in exchange for an account receivable and organizational costs of a subsidiary (see MD&A for discussion). 7. During 1992, a rural cellular license was sold for $3,100,000. The initial payment was $845,000, net of closing costs of $155,000. The balance, which bears interest at 7% payable at maturity, is due December 1996. Security for the note consists of the personal guarantee of an individual. The deferred payment and the related interest income was not recognized because of its extended collection period and because there is no reasonable basis to evaluate the likelihood of collection. Revenue will be recognized upon receipt. 8. Other liabilities consist of deferred payment portion of a capital asset purchased in fiscal 1996. 9. At March 31, 1995, the Company had outstanding Letters of Credit totaling $184,000 and $119,000. All obligations under the Letters of Credit were satisfied as of December 31, 1995. 10. For the nine months ended December 31,1995 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. 11. LITIGATION 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 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, a judge in the Circuit Court of Cook County, Illinois ruled in favor of the Registrant. The Company has no knowledge that the litigant will re-file or file new charges against the Company. No provision for any liability has been included in the consolidated financial statements. EMCEE BROADCAST PRODUCTS, INC. AND SUBSIDIARIES (formerly Electronics, Missiles & Communications, Inc.) MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION Net sales of $3,832,000 for the third quarter of fiscal 1996 (ended December 31, 1995) showed an increase of $933,000 (32%) over the previous quarter and brought sales for the first nine months of fiscal year 1996 to $9,524,000 or 70% of the total of $13,667,000 for the first nine months of fiscal 1995. Export shipments were $2,224,000 (58% of total sales) for the quarter and $4,946,000 (52%) for the nine months ended December 31, 1995 compared to $3,019,000 (69% of total sales) and $6,323,000 (46% of total sales) for the quarter and first nine months, respectively, for fiscal 1995. The high export sales for the third quarter one year ago was unusual as export orders for the entire year ended March 31, 1995 equaled 42%. Management believes that the high export sales for the quarter is an indication of the strength of international demand for the registrants products in the Multichannel Multipoint Distribution Service (MMDS or "wireless cable") industry. Gross profit for the nine months ended December 31, 1995 totaled $3,545,000 compared to $5,491,000 for the same period for the prior year. The reduction of gross profit percent from 40.2% for the first nine months of fiscal 1995 to 37.2% for the first nine months of fiscal 1996 was due to reduction in sales volume and the higher content of O.E.M (original equipment manufactured by others) of 23% of total sales for fiscal 1996 compared to 15% for (the first nine months) 1995. These items carry less of a mark-up than EMCEE manufactured products. Total operating expenses amounted to $841,000 for the quarter ended December 31, 1995 compared to $726,000 for the quarter ended December 31, 1994. Total operating expenses for the nine months ended December 31, 1995 totaled $2,333,000 compared to $2,250,000 for the same period one year ago. While selling expense was less in fiscal 1996 compared to fiscal 1995 due to volume sensitive costs such as commissions, other categories showed increases in expenditures, especially research and development which, at $340,000 for the nine month period of fiscal 1996 exceeded the same period of fiscal 1995 by 25%. Management believes that these expenses are necessary to maintain the Company's presence in this high technology market and to react quickly to the renewed demand, especially worldwide, that management believes is imminent. Income from operations for the quarter ended December 31, 1995 was $532,000 and increased the year to date amount to $1,213,000 compared to $1,205,000 and $3,241,000 for the quarter and nine months ended December 31, 1994. Interest expense for the nine month period ended December 31, 1995 amounted to $112,000 compared to $87,000 for the same period one year ago due to expense for a large export receivable on a term letter of credit discounted, and higher expense on interest tied to prime (see further discussions in the paragraph describing the prime lending institution). Interest income, aided by cash infusions from profits and invested in U.S. Treasury Bills, increased from $37,000 for the first three quarters ended December 31, 1994 to $73,000 for the three quarters ended December 31, 1995. Other expenses totaled $15,000 for the year to date for fiscal 1996 compared to $19,000 for the same period for fiscal 1995. The estimated income tax liability was accrued at $280,000 for the first nine months ended December 31, 1995 compared to $794,000 for the first nine months of the prior year due primarily to the reduced pre-tax income and no state income tax liability for the nine months ended December 31, 1995. Federal tax liability was less than the "expected percent" due to the net operating loss carry forward and tax credits for fiscal year 1995 and formation of a Foreign Sales Corporation (FSC) on March 27, 1995 for the fiscal year 1996. There is no state income tax liability for the nine months ended December 31, 1995 since all profitable companies in the consolidated group are domiciled in states which do not impose income taxes. The backlog of unsold orders was $2,473,000 as of December 31, 1995 compared to $3,793,000 at September 30, 1995 and $3,162,000 at March 31, 1995. The Company booked $2,259,000 of new orders in January 1996 which included a contract of approximately $1,700,000 of EMCEE transmitters and associated hardware for a twenty seven (27) city MMDS system in a foreign market. On February 7th, 1996 the company announced that a contract has been signed for supplying transmitters and O.E.M. equipment for a forty (40) city MMDS system in the international market for approximately $10,000,000. This contract, which will provide the registrant with a strong core business for approximately eighteen months, is a confirmation of the strong demand for new orders in the MMDS market, especially the foreign market. Positive cash flow from operations for the nine months ended December 31, 1995 was generated by net income of $909,000, depreciation of $143,000, and increases in accounts payable of $188,000 and other of $76,000 for a total of $1,316,000. In addition, the cash balance of $1,440,000 as of March 31, 1995 was reduced by $1,122,000 and new long term borrowings totaled $115,000. These funds were used to pay federal and state income taxes (both due and pre-payments) of $1,353,000, $986,000 was transferred to a U.S. Treasury Bills investment account, and $151,000 was used for capital equipment. Inventories totaled $4,017,000 as of December 31, 1995, approximately the same as the March 31, 1995 balance of $4,048,000. Other assets as of December 31, 1995 totaled $215,700 compared to $215,200 at March 31, 1995. Of these amounts, $212,000 represented the registrants investment in a wireless cable operator which has a market value in excess of $350,000. The primary lending institution used by Company has agreed to increase the registrants line of credit to $2,000,000 with a reduced interest rate of one- half percent under prime rate. This source of funding has not been utilized since December, 1993. This financial institution has also agreed to reduce the lending rates for long term loans to prime plus one-quarter percent for equipment loans and prime plus three-eighths percent for mortgage based loans. The agreements for these loans will be finalized by February 29, 1996 and will be retroactive to October 26, 1995. The Company believes that its working capital fundings (including deposits on orders) and financing provided by its primary lending institution and others will be sufficient to fund its anticipated working capital, new equipment and debt payment requirements for fiscal year 1996 and fiscal 1997. In December 1992, March 1994 and June 1994, the Board of Directors granted options to officers, directors and key employees to purchase up to 350,000 shares of common stock at option prices ranging from thirty-four cents to $3.4375 per share. At the beginning of fiscal 1996, 92,754 shares were exercisable. During the first nine months of fiscal year 1996, options for 53,610 shares were exercised which increased common stock issued by $893 and additional paid-in capital by $31,503. Subsequent to the end of the third quarter and up to the date of this report, an additional 4,950 shares of common stock was issued under these options for a total proceeds amount of $13,293. The Company sponsors an ESOP plan in which the Company will purchase stock issued to employees from the plan upon termination of employment. Two thousand ninety-two (2,092) shares were purchased and held as treasury stock during the first nine months ended December 31, 1995 at a cost of $15,674. An additional 2,012 shares were purchased, at a cost of $15,329, between December 31, 1995 and the date of this report. Total employment, including eight part-time employees, amounted to 88 as of December 31, 1995 compared to 89 as of March 31, 1995 and the Company's recent high of 95 at December 31, 1994. The Company anticipates total employment, including part-time employees, will approach 100 by the fiscal 1996 year end of March 31. 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. ITEM 6 REPORTS ON FORM 8-KSB A Form 8-K dated November 22, 1995 was filed with the Securities & Exchange Commission to announce the election of Richard J. Nardone, on November 13, 1995, by unanimous vote, by the Registrants' Board of Directors consisting of a quorum, as a member of the Registrants' Board of Directors until the next annual meeting of stockholders and until his successor is elected and qualified. 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 8, 1996 /s/ JAMES L. DeSTEFANO JAMES L. DeSTEFANO President/CEO Date: February 8, 1996 /s/ ALLAN J. HARDING ALLAN J. HARDING Vice President-Finance EX-27 2 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from 3rd Quarter 10-Q for EMCEE Broadcast Products, Inc. for 1995 and is qualified in its entirety by reference to such 10-Q. 9-MOS MAR-31-1996 DEC-31-1995 317,833 1,567,220 1,881,951 128,000 4,017,433 8,497,752 2,976,620 2,023,443 9,666,629 2,408,644 0 0 0 72,563 6,177,724 9,666,629 9,523,529 9,523,529 5,978,048 8,310,754 15,094 8,000 112,094 1,189,041 280,000 0 0 0 0 909,041 .21 0
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