-----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, WBVlW8MP+Bf7FScWpW4qRU6fCImXBbEvb8NW/Zutuyj+m0rgJLv9QfdAIIlem1zv 84Cah3FC0tcHruyOLG7yTA== 0001017062-96-000141.txt : 19960816 0001017062-96-000141.hdr.sgml : 19960816 ACCESSION NUMBER: 0001017062-96-000141 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ODETICS INC CENTRAL INDEX KEY: 0000350868 STANDARD INDUSTRIAL CLASSIFICATION: RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT [3663] IRS NUMBER: 952588496 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08762 FILM NUMBER: 96613060 BUSINESS ADDRESS: STREET 1: 1515 S MANCHESTER AVE CITY: ANAHEIM STATE: CA ZIP: 92802 BUSINESS PHONE: 7147745000 10-Q 1 QUARTERLY REPORT FOR PERIOD ENDING 06/30/96 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 (Mark One) [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1996 ------------------------------------------------ OR [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ---------------------- ---------------------- Commission file number 0-10605 --------------------------------------------------------- ODETICS, INC. --------------------------------------------------------- (Exact name of registrant as specified in its charter) DELAWARE 95-2588496 - ----------------------------------- --------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1515 SOUTH MANCHESTER AVE., ANAHEIM, CA 92802 - ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (714) 774-5000 - ------------------------------------------------------------------------------- (Registrant's telephone number, including area code) - -------------------------------------------------------------------------------- (Former name, former addressed and former fiscal year, if changed since last report) 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. Number of shares of Common Stock outstanding as of July 30, 1996 Class A Common Stock - 5,144,208 shares. Class B Common Stock - 1,129,431 shares. 1 INDEX -----
PART I FINANCIAL INFORMATION Page - -------------------------------- ---- ITEM 1. CONSOLIDATED STATEMENTS OF OPERATIONS FOR 3 THE THREE MONTHS ENDED JUNE 30, 1995 AND 1996 (UNAUDITED) CONSOLIDATED BALANCE SHEETS AT MARCH 31, 1996 4 AND JUNE 30, 1996 (UNAUDITED) CONSOLIDATED STATEMENTS OF CASH FLOWS FOR 6 THE THREE MONTHS ENDED JUNE 30, 1995 AND 1996 (UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS 8 OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS PART II OTHER INFORMATION - ---------------------------- ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K 10 SIGNATURES 11
2 PART I ITEM 1 FINANCIAL INFORMATION ODETICS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) (Unaudited)
THREE MONTHS ENDED JUNE 30, --------------------- 1995 1996 --------- --------- Net sales and contract revenues: Net sales $ 19,167 $ 28,304 Contract revenues 2,270 2,499 --------- --------- 21,437 30,803 Costs and expenses: Cost of sales 12,185 18,206 Cost of contract revenues 1,359 1,272 Selling, general and administrative expenses 5,143 6,893 Research and development expenses 1,730 2,288 Interest expense 680 493 --------- --------- 21,097 29,152 --------- --------- Income before income taxes 340 1,651 Income taxes 129 644 --------- --------- Net Income $ 211 $ 1,007 ========= ========= Weighted average number of shares outstanding 5,965 6,477 ========= ========= Net income per share of common stock $ 0.04 $ 0.16 ========= =========
See notes to consolidated financial statements. 3 ODETICS, INC. CONSOLIDATED BALANCE SHEETS (in thousands)
MARCH 31, JUNE 30, 1996 1996 ASSETS (UNAUDITED) ----------- ----------- Current Assets Cash $ 1,142 $ 512 Trade accounts receivable, net 24,772 22,259 Costs and estimated earnings in excess of billings on uncompleted contracts 3,428 3,733 Inventories: Finished goods 3,717 2,914 Work in process 2,927 2,959 Materials and supplies 16,076 17,880 ----------- ----------- Total inventories 22,720 23,753 Prepaid expenses 1,122 1,070 Deferred income taxes 2,516 2,516 ----------- ----------- Total Current Assets 55,700 53,843 Property, plant and equipment Land 2,090 2,090 Buildings and improvements 17,553 17,585 Equipment, furniture and fixtures 24,914 25,745 ----------- ----------- 44,557 45,420 Less accumulated depreciation (22,950) (23,543) ----------- ----------- Net property, plant and equipment 21,607 21,877 Other Assets 1,504 2,130 ----------- ----------- Total Assets $ 78,811 $ 77,850 =========== ===========
See notes to consolidated financial statements. 4 ODETICS, INC. CONSOLIDATED BALANCE SHEETS (cont'd) (in thousands)
MARCH 31, JUNE 30, 1996 1996 LIABILITIES AND STOCKHOLDERS' EQUITY (UNAUDITED) ----------- ----------- Current Liabilities Trade accounts payable $ 11,519 $ 10,880 Accrued expenses 2,441 5,797 Accrued incentive programs 1,229 786 Accrued vacation 1,504 1,516 Income taxes payable 1,412 1,176 Billings in excess of costs and estimated earnings on uncompleted contracts 5,414 4,821 Current portion of long-term debt 1,791 1,653 ----------- ----------- Total current liabilities 25,310 26,629 Long-term debt - Less current portion 22,019 17,566 Deferred income taxes 497 495 Stockholders' equity Preferred stock, authorized 2,000,000 shares; none issued - - Common stock, authorized 10,000,000 shares of class A and 2,600,000 shares of class B; 5,132,323 shares of class A and 1,139,431 shares of class B issued and outstanding at June 30, 1996 - $.10 par value 610 627 Paid-in capital 21,905 22,997 Foreign currency translation (10) 49 Retained earnings 8,480 9,487 ----------- ----------- Total stockholders' equity 30,985 33,160 ----------- ----------- Total liabilities and stockholders' equity $ 78,811 $ 77,850 =========== ===========
See notes to consolidated financial statements. 5 ODETICS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited)
THREE MONTHS ENDED JUNE 30, --------------------- 1995 1996 --------- --------- OPERATING ACTIVITIES Net income $ 211 $ 1,007 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 563 853 Provision for inventory reserves 152 572 Provision for losses on accounts receivable 43 41 Provision (Benefit) for deferred income taxes 11 (238) Net proceeds from settlement of litigation 0 5,860 Gain on sale of assets 0 (200) Foreign currency translation gain 4 59 Changes in operating assets and liabilities: (Increase) Decrease in accounts receivable (1,139) 752 (Increase) in costs and estimated earnings in excess of billings on uncompleted contracts (356) (305) (Increase) Decrease in inventories and prepaid expenses 1,544 (3,083) (Increase) in other assets (236) (687) Increase (Decrease) in accounts payable and accrued expenses (2,020) (301) Increase (Decrease) in billings in excess of cost and estimated earnings on uncompleted contracts 425 (593) --------- --------- Net cash provided by (used in) operating activities (798) 3,737 INVESTING ACTIVITIES Purchases of property, plant, and equipment (233) (884) --------- --------- Net cash used in investing activities (233) (884) FINANCING ACTIVITIES Proceeds from revolving line of credit and long-term borrowings 10,750 12,100 Principal payments on line of credit, long-term debt and capital lease obligations (9,769) (16,691) Proceeds from sale of common stock 1 1,108 --------- --------- Net cash provided by (used in) financing activities 982 (3,483) --------- --------- Increase (decrease) in cash (49) (630) Cash at beginning of year 378 1,142 --------- --------- Cash at June 30 $ 329 $ 512 ========= =========
See notes to consolidated financial statements. 6 ODETICS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 1 - In the opinion of management, the accompanying unaudited - ------ consolidated financial statements contain all adjustments consisting of normal recurring accruals necessary to present fairly the Company's consolidated financial position as of June 30, 1996 and the consolidated results of operations and cash flows for the three-month periods ended June 30, 1995 and 1996. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. The results of operations for the three-month period ended June 30, 1996 are not necessarily indicative of those to be expected for the entire year. Note 2 - Income tax expense for the three-month periods ended June 30, - ------ 1995 and 1996 have been provided at the estimated annualized effective tax rates based on the estimated income tax liability or asset and change in deferred taxes for their respective fiscal years. Deferred taxes result primarily from temporary differences in the reporting of income for financial statement and income tax purposes. These differences relate principally to the use of accelerated cost recovery depreciation methods for tax purposes, capitalization of interest and taxes for tax purposes, capitalization of computer software costs for financial statement purposes, deferred compensation, other payroll accruals, and reserves for inventory and accounts receivable for financial statement purposes and general business tax credit and alternative minimum tax credit carryforwards for tax purposes. Note 3 - Long-term Debt - ------
(in thousands) March 31, June 30, 1996 1996 ------- ------- Line of credit $10,700 $ 6,600 Mortgage note 11,040 10,830 Contracts payable 2,070 1,789 ------- ------- 23,810 19,219 Less current portion 1,791 1,653 ------- ------- $22,019 $17,566 ======= =======
Note 4 - In November 1994 and February 1995, The Company and E-Systems, - ------ Inc. (E-Systems), respectively filed legal actions related to E- Systems' cancellation of purchase orders for ATL Products' DataLibrary and DataTower products. In May 1996, the parties entered into a settlement agreement under which, among other things, E-Systems agreed to pay the Company $6,160,000, all claims asserted by the parties were released and the litigation dismissed. In addition, the parties agreed to an equitable disposition of disputed inventory and entered into a five year service agreement for Odetics to service units that had been sold to E-Systems at agreed upon prices. The Company does not expect to record any material gain or loss based on the terms of the settlement agreement. 7 ODETICS, INC. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Net sales and contract revenues for Odetics, Inc. (the "Company") in the first quarter of fiscal year 1997 increased approximately $9,366,000 or 43.7% compared to the first quarter of the prior fiscal year. The components of this overall increase consisted of an increase in net sales (commercial products) of approximately $9,137,000, or 47.7% and an increase in contract revenues (government products) of approximately $229,000, or 10.1%. The 47.7% growth in commercial net sales reflects a sharp increase in sales in the Company's wholly owned subsidiary, ATL Products, Inc. ("ATL"). ATL's sales growth resulted from the introduction of new products and expansion of their sales channels for their product offerings. The Company's Communication division also showed strong growth with sales of it's synchronization products for cellular telephone systems. Cost of sales and contract revenues as a percentage of net sales and contract revenues for the first quarter of fiscal 1997 when compared to the same period in the prior fiscal year held constant at 63.2%. Selling, general, and administrative (SG&A) expenses increased approximately $1,750,000, although as a percentage of net sales and contract revenues, SG&A declined to 22.4% in the current year first quarter compared to 24.0% in the prior year first quarter. SG&A expenses increased due to increased selling expenses to support the increased commercial product sales primarily in the areas of commissions, advertising, and labor and related benefits. Research and development (R&D) expenses increased approximately $558,000, although as a percentage of net sales and contract revenues, R&D declined to 7.4% in the current first year quarter compared to 8.1% in the prior year first quarter. The increased R&D expenses reflect prototype material, consulting and labor and related benefits accompanying increased new product development activities. Interest expense decreased approximately $187,000 for the first quarter for fiscal 1997 compared to the same period during the prior fiscal year primarily due to decreased line of credit borrowings. The effective income tax rate was 39% for the first quarter of fiscal 1997 compared to a 38% tax rate for the same period of the prior year. The increase in the effective tax rate projected for fiscal 1997 is due to a reduction in the effect of general business tax credits on total income tax expense. 8 Liquidity and Sources of Capital The Company reported net income of $1,007,000 during the first quarter of fiscal 1997 and cash flow from operating activities of $3,737,000. Cash flow from operating activities included the receipt of net proceeds from the settlement of the litigation with E-Systems (see Note 4 of Notes to Consolidated Financial Statements), which was partially offset by an increase in inventories to support increased commercial product sales, especially in the Company's ATL Products Subsidiary. The Company has a $17,000,000 bank line of credit providing for borrowings generally at or below the bank's prime rate. Borrowings are available for general working capital purposes, and at June 30, 1996, $10,400,000 was available for borrowing under the line. The Company anticipates that net cash flow from operating activities in conjunction with its bank credit arrangements will be sufficient to execute its operating plans and meet its obligations on a timely basis. The Company does not have any material commitments for capital expenditures as of June 30, 1996. 9 ODETICS, INC. PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K (a) Exhibits None (b) Reports on Form 8-K There were no reports on Form 8-K filed for the three-month period ended June 30, 1996.
10 ODETICS, INC. 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. ODETICS, INC. (Registrant) By /s/ GREGORY A. MINER ---------------------------------------- Gregory A. Miner Vice President, Chief Financial Officer By /s/ GARY SMITH ---------------------------------------- Gary Smith Vice President, Controller (Principal Accounting Officer) Date August 14, 1996 ------------------ 11 EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS MAR-31-1997 APR-01-1996 JUN-30-1996 512 0 22,259 0 23,753 53,843 45,420 (23,543) 77,850 26,629 0 0 0 627 32,533 77,850 30,803 30,803 19,478 19,478 9,181 0 493 1,651 644 0 0 0 0 1,007 .16 .16
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