-----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, N+hf8BUEAXKdAweyeT3Di6bjXGkGtVtfKCx4i+CeSUCg4W5de5w/VBjgo7mOo1j0 JHhZUNtM3IGXhyqDf2P4kg== 0000912057-00-006683.txt : 20000215 0000912057-00-006683.hdr.sgml : 20000215 ACCESSION NUMBER: 0000912057-00-006683 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000214 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TCI INTERNATIONAL INC CENTRAL INDEX KEY: 0000357064 STANDARD INDUSTRIAL CLASSIFICATION: RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT [3663] IRS NUMBER: 943026925 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-10877 FILM NUMBER: 542588 BUSINESS ADDRESS: STREET 1: 222 CASPIAN DR CITY: SUNNYVALE STATE: CA ZIP: 94089 BUSINESS PHONE: 4087476100 MAIL ADDRESS: STREET 1: 222 CASPIN DRIVE CITY: SUNNYVALE STATE: CA ZIP: 94089 FORMER COMPANY: FORMER CONFORMED NAME: TECHNOLOGY FOR COMMUNICATIONS INTERNATIONAL INC DATE OF NAME CHANGE: 19880606 10-Q 1 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF --- THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1999 * ----------------- OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF --- THE SECURITIES EXCHANGE ACT OF 1934 For the transition period N/A Commission file number: 0-10877 TCI INTERNATIONAL, INC. (Exact name of registrant as specified in its charter) DELAWARE 94-3026925 (State of other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 222 CASPIAN DRIVE, SUNNYVALE, CALIFORNIA 94089-1014 (Address of principal executive offices) (Zip Code) (408)747-6100 (Registrant's telephone number, including area code) 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 --- --- As of December 31, 1999, 3,386,675 shares of Common Stock were outstanding. 1 TCI INTERNATIONAL, INC. TABLE OF CONTENTS
Part I - Financial Information Page - ------------------------------ ---- Item 1. Condensed Consolidated Financial Statements Condensed Consolidated Statements of Operations and Comprehensive Loss 3 Condensed Consolidated Balance Sheets 4 Condensed Consolidated Statements of Cash Flows 5 Notes to Condensed Consolidated Financial Statements 6-8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9-11 Item 3. Market Rate Sensitive Instruments 12 Part II - Other Information - --------------------------- Item 6. Exhibits and Reports on Form 8-K 20 Signatures 20
2 TCI INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (In thousands, except per share amounts)
Three Months Ended December 31, ------------ 1999 1998 ---- ---- Revenues $ 7,117 $ 4,775 -------- -------- Operating costs and expenses: Cost of revenues 4,617 3,243 Marketing, general and administrative 2,455 2,559 -------- -------- 7,072 5,802 -------- -------- Income (loss) from operations 45 (1,027) Interest income, net 180 169 -------- -------- Income (loss) before provision for income taxes 225 (858) Provision for income taxes 15 0 -------- -------- Net income (loss) $ 210 $ (858) -------- -------- -------- -------- Other comprehensive income (loss): Unrealized loss on investments (6) 8 -------- -------- Net comprehensive income (loss) $ 204 $ (850) -------- -------- -------- -------- Basic earnings per share: Net income (loss) per share $ .06 $ (.27) -------- -------- -------- -------- Shares used in per share computations 3,256 3,212 -------- -------- -------- -------- Dilutive earnings per share: Net income (loss) per share $ .06 $ (.27) -------- -------- -------- -------- Shares used in per share computations 3,389 3,212 -------- -------- -------- --------
See accompanying Notes to Condensed Consolidated Financial Statements. 3 TCI INTERNATIONAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands except per share amounts)
December 31, September 30, 1999 1999 ------------ ------------- ASSETS Current assets Cash and cash equivalents $ 4,392 $ 11,310 (Includes restricted cash of $2,600 on Dec. 31, 1999, $3,846 on Sept 30, 1999) Short-term investments 7,551 3,360 Accounts receivable Billed 737 2,434 Unbilled 6,678 3,416 Inventories 1,878 1,704 Prepaid taxes 1,706 1,724 Prepaid expenses 699 427 -------- -------- Total current assets 23,641 24,375 Property and equipment, net 1,912 2,033 Other assets 324 321 -------- -------- Total assets $ 25,877 $ 26,729 -------- -------- -------- -------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 2,811 $ 1,830 Customer deposits and billings on uncompleted contracts in excess of revenue recognized 1,270 3,310 Accrued liabilities 5,353 5,967 -------- -------- Total current liabilities 9,434 11,107 -------- -------- Stockholders' equity: Common stock, par value $.01; authorized 5,000 shares; issued and outstanding 3,396 shares 12,158 11,780 Retained earnings 4,333 4,176 Accumulated other comprehensive loss (14) (8) Treasury shares at cost; 10 and 76 shares as of Dec. 31, 1999 and Sept 30, 1999 (34) (326) -------- -------- Total stockholders' equity 16,443 15,622 -------- -------- Total liabilities and stockholders' equity $ 25,877 $ 26,729 -------- -------- -------- --------
See accompanying Notes to Condensed Consolidated Financial Statements. 4 TCI INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS THREE MONTHS ENDED DECEMBER 31, (In thousands)
1999 1998 ---- ---- Cash provided by (used in): Operations: Net income (loss) $ 210 $ (858) Reconciliation to cash provided by operations: Depreciation 166 134 Changes in assets and liabilities: Accounts receivable (1,565) (1,105) Inventories (174) (44) Prepaid taxes 18 28 Prepaid expenses and other assets (275) (290) Accounts payable 981 348 Customer deposits/billing in excess of revenue (2,040) (455) Accrued liabilities (613) (90) -------- --------- Cash provided by (used in) operations (3,292) (2,332) -------- --------- Investing activities: Purchases of property and equipment (45) (28) Purchases of short-term investments (4,289) 0 Proceeds from sale of short-term investments 91 4,626 -------- --------- Cash provided by (used in) investing activities (4,243) 4,598 -------- --------- Financing activities: Stock options exercised 617 25 Treasury stock purchases 0 0 -------- --------- Cash provided by (used in) financing activities 617 25 Net increase in cash and cash equivalents (6,918) 2,266 Cash and cash equivalents at beginning of period 11,310 8,782 -------- --------- Cash and cash equivalents at end of period $ 4,392 $ 11,048 -------- --------- -------- ---------
See accompanying Notes to Condensed Consolidated Financial Statements 5 TCI INTERNATIONAL, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 Basis of Presentation The unaudited condensed consolidated financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The Company believes the information included herein, when read in conjunction with the financial statements and related notes included in the Company's Annual Report on Form 10-K for the year ended September 30, 1999, filed with the Securities and Exchange Commission, to be not misleading. Further, the accompanying financial statements reflect, in the opinion of management, all adjustments necessary (consisting of normal recurring entries) to present fairly the financial position and results of operations as of and for the periods indicated. The results of operations for the three months ended December 31, 1999, are not necessarily indicative of results to be expected for the entire year ending September 30, 2000. NOTE 2 Inventories consist of the following (in thousands):
December 31, September 30, 1999 1999 ---- ---- Material and component parts $1,373 $1,326 Work in process 505 378 ------ ------ $1,878 $1,704 ------ ------ ------ ------
NOTE 3 At December 31, 1999 there were outstanding standby letters of credit of approximately $2,600,000 serving as performance and payment bonds. The standby letters of credit expire at various dates through 2001; however, certain performance bonds are automatically renewable until canceled by the beneficiary. These outstanding standby letters of credit are fully secured by the Company's cash or short term investment portfolio. NOTE 4 Net Income Per Share Basic per share amounts are computed using the weighted average number of common shares outstanding during the period. Dilutive per share amounts are computed using the weighted average number of common and dilutive common equivalent shares outstanding during the period. Dilutive common equivalent shares consist of common stock issuable upon the exercise of stock options using the treasury stock method. 6 TCI INTERNATIONAL, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The following schedule reconciles, in thousands, the shares used in the Company's basic and diluted net income (loss) per share calculation.
Quarter Ended December 31, December 31, 1999 1998 Basic earnings per share weighted 3,256 3,212 average shares outstanding Effect of dilutive securities options outstanding 134 0 Denominator for diluted earnings per share - adjusted weighted average shares 3,389 3,212
Common stock equivalent of 34,769 shares were excluded from the net loss share calculation for the quarter ended December 31, 1998, due to their antidilutive effect. As of December 31, 1999 and 1998, there were options outstanding to purchase 707,333 and 870,700, respectively, shares of the Company's common stock which could potentially dilute future basic earnings per share. NOTE 5 Accounting Pronouncements In June 1998, the Financial Accounting Standards Board issued SFAS No. 133 "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133 establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, (collectively referred to as derivatives) and for hedging activities. It requires that an entity recognizes all derivatives as either assets or liabilities in the statement of financial position and measures those instruments at fair value. If certain conditions are met, a derivative may be specifically designated and accounted for as (a) a hedge of the exposure to changes in the fair value of a recognized asset or liability or an unrecognized firm commitment, (b) a hedge of the exposure to variable cash flows of a forecasted transaction, or (c) a hedge of the foreign currency exposure of a net investment in a foreign operation, an unrecognized firm commitment, an available-for-sale security, or a foreign-currency-denominated forecasted transaction. For a derivative not designated as hedging instrument, changes in the fair value of the derivative are recognized in earnings in the period of change. This statement will be effective for all annual and interim periods beginning after June 15, 2000, and management does not believe the adoption of SFAS No. 133 will have a material effect on the financial position of the Company. 7 NOTE 6 Financial Information about Business Segments
Quarter Ended December 31, December 31, 1999 1998 Revenue Broadcast Products 2,099 1,558 Signal Processing Products 5,018 3,217 Operating income (loss) Broadcast Products 8 (181) Signal Processing Products 37 (846)
8 TCI INTERNATIONAL, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS First Fiscal Quarter of 2000 Compared to First Fiscal Quarter of 1999 Except for historical information contain herein, the matters discussed in this report contain forward-looking statements that involve risks and uncertainties which could cause future results to differ materially. The results of operations for the first three months in fiscal year 2000 are not necessarily indicative of future quarterly or annual performance expectations. Total revenue for the first quarter of fiscal year 2000 was $7,117,000, an increase of approximately 49% over revenue of $4,775,000 for the same period a year ago. Total operating income in the first quarter was $45,000 compared to a net loss of $1,027,000 a year ago. The Company has two distinct product groups: the Broadcast Products Group and the Signal Processing Products Group. The Company's product offerings are managed and directed by separate management teams. While the two businesses segments currently share facilities and certain manufacturing resources, the customers who routinely purchase these products are distinct. Segment revenue and operating income for the two product groups were as follows (in thousands):
Quarter Ended December 31, December 31, 1999 1998 Revenue Broadcast Products 2,099 1,558 Signal Processing Products 5,018 3,217 Operating income (loss) Broadcast Products 8 (181) Signal Processing Products 37 (846)
Revenue for the Broadcast Products group in the first quarter ended December 30, 1999, increased 35% over revenue a year ago. Higher backlog going into fiscal year 2000, together with the timing of the execution of these contracts, were the main reasons for this increase in revenue. As a result of the increase in revenue, the Broadcast Products group recorded an income of $8,000 in the current quarter compared to a net loss of $181,000 a year ago, a significant improvement. 9 TCI INTERNATIONAL, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS First Fiscal Quarter of 2000 Compared to First Fiscal Quarter of 1999 Revenue for the Signal Processing Products group in the first quarter ended December 30, 1999, increased 56% over revenue a year ago. Significant orders received in the last quarter of fiscal year 1999 for Spectrum Management Systems contributed significantly to the increase in revenue for the current fiscal quarter, thus improving the operating results from this segment. In comparison, the operating loss for the first quarter of fiscal year 1998 was negatively affected by an unplanned delay in contract completion of one major contract for Spectrum Management equipment. Fluctuations in revenue from one quarter to the next are inherent in the nature of the Company's business due to the project-oriented nature of the business. Future growth is always dependent on the Company continuing to secure adequate new business. Based upon the strength to its existing backlog and subject to unanticipated future delays, the Company is optimistic about its future growth. Total gross margins for the Company expressed as a percentage of revenue increased from 32% to 35% when compared to the same period in fiscal 1999. This increase is primarily due to improved execution of existing contracts. Marketing, general and administrative expenses for the first quarter of fiscal 2000 remained approximately constant with those of fiscal 1999. However, expressed as a percentage of revenue, marketing, general and administrative expenses for the first quarter of fiscal 2000 were 35% compared to 54% a year ago. This change was due to a higher revenue base in the first quarter of fiscal 2000. The Company's total backlog as of December 30, 1999 was $20 million compared to $28 million as of September 30, 1999. The total funded portion of the Company's backlog, which excludes unfunded and unexercised options (on U.S. Government contracts) the Company believes are likely to be exercised, was $15 million and $14 million, respectively. 10 TCI INTERNATIONAL, INC. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK DERIVATIVES AND FINANCIAL INSTRUMENTS FOREIGN CURRENCY HEDGING INSTRUMENTS The Company transacts business in various foreign currencies. Accordingly, the Company is subject to exposure from adverse movements in foreign currency exchange rates. This exposure is primarily related to pesos denominated payments in Colombia, a contract denominated in British pounds sterling and local currency denominated operating expenses in the U. K. where the Company sells primarily in U. S. dollars. However, as of December 31, 1999, the Company had no hedging contracts outstanding. The Company's U.K. operating expenses are in sterling, which mitigates a portion of the exposure related to the contract denominated in sterling. The Company currently does not use financial instruments to hedge local currency denominated operating expenses in the U.K. Instead, the Company believes that a natural hedge exists, in that local currency revenues will substantially offset the local currency denominated operating expenses. The Company assesses the need to utilize financial instruments to hedge currency exposures on an ongoing basis. The Company does not use derivative financial instruments for speculative trading purposes, nor does the Company hedge its foreign currency exposure in a manner that entirely offsets the effects of changes in foreign exchange rates. The Company regularly reviews its hedging program and may as part of this review determine at any time to change its hedging program. No sensitivity analysis was performed on the Company's hedging portfolio as of December 31, 1999 as there was no hedging contracts outstanding as of December 31, 1999. FIXED INCOME INVESTMENTS The Company's investments in U.S. corporate securities include commercial paper. Foreign securities include certificates of deposit with financial institutions, most of which are denominated in U.S. dollars. The Company's cash equivalents and short-term investments have generally been held until maturity. Gross unrealized gains and losses were negligible as of December 31, 1999. The Company's exposure to market risk for changes in interest rates relate primarily to the Company's investments. The Company places its investments with high credit quality issuers and, by policy, limits the amount of credit exposure to any one issuer. The Company's general policy is to limit the risk of principal loss and ensure the safety of invested funds by limiting market and credit risk. All highly liquid investments with a maturity of three months or less at the date of purchase are considered to be cash equivalents; investments with maturities between three and twelve months are considered to be short-term investments. The average interest rate on the investment portfolio is 5.87%. As of December 31, 1999, there are no investments with maturities greater than 12 months. The Company does not expect any material loss with respect to its investment portfolio. 11 TCI INTERNATIONAL, INC. FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS The Company operates in a highly competitive environment that involves a number of risks, some of which are beyond the Company's control. The following discussion highlights some of these risks. FLUCTUATIONS IN OPERATING RESULTS The Company's operating results may fluctuate from quarter to quarter and year to year for a number of reasons. While there is no seasonality to the Company's business, because of the Company's relatively small size, combined with the extended delivery cycles of its long-term project-oriented business, revenue and accompanying gross margins are inherently difficult to predict. Since the Company records revenue on a percentage of completion basis, unexpected changes in project budgets during the course of execution can cause revenue and accompanying gross margins to vary from quarter to quarter. Because the Company plans its operating expenses, many of which are relatively fixed in the short term, based on the assumption of stable performance, a relatively small revenue shortfall may cause profitability from operations to suffer. Historically, the Company has endured periods of volatility in its revenue results due to a number of factors, including shortfalls in new orders, delays in the availability of new products, delays in subcontractor provided materials and services, and delays associated with foreign construction activities. Gross margins are strongly influenced by several factors, including pressures to be the low price supplier in competitive bid solicitations, the mix of contract material and non-recurring engineering services, and the mix of newly developed and existing product sold to various customers. The Company believes these historical challenges will continue to affect its future business. In order to address these challenges, the Company intends to pursue a product and market diversification strategy. By leveraging its expertise in RF technology applications, and its ability to conduct business in foreign countries, the Company will pursue outside technology and business acquisitions, which complement various characteristics of its existing core business. Combined with the operating pressures detailed above, the Company expects that the future cost of this product diversification strategy may be significant enough to generate a loss from operations during fiscal year 2000. MANAGING A CHANGING BUSINESS The Company is in the process of adopting a business management plan that includes substantial investments in its sales and marketing organizations, increased funding of existing internal research and development programs, and certain investments in corporate infrastructure that will be required to support the Company's diversification objectives during the next three years. Inherent in this process are a number of risks, including a higher level of operating expenses, the difficulty of competing with companies of larger size for talented technical personnel, and the complexities of managing a changing business. There also exists the risk the Company may inaccurately estimate the viability of any one or all of its diversification efforts and as a result, may experience substantial revenue shortfalls of a size so significant as to generate losses from operations. 12 TCI INTERNATIONAL, INC. FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS RISK ASSOCIATED WITH EXPANSION INTO ADDITIONAL MARKETS AND PRODUCT DEVELOPMENT The Company believes that its future success is substantially dependent on its ability to successfully acquire, develop and commercialize new products and penetrate new markets. In addition to the Company's ongoing efforts to diversify its product offerings within its core businesses such as the spectrum management system business, the Company intends to pursue a diverse, but focused product and market development initiative during the next three years. The Company believes that its general knowledge of RF technology and its related applications combined with its ability to conduct business in overseas markets can be exploited to return the Company to an aggressive growth posture. While not strictly limited to these product areas, the Company is currently pursuing certain product and turnkey project initiatives in the FM and digital TV transmission equipment markets which compliment the Company's antenna expertise. There can be no assurance that the Company can successfully develop these or any other additional products, that any such products will be capable of being produced in commercial quantities at reasonable cost, or that any such products will achieve market acceptance. Should the Company expend funds to acquire outside entities or technology, there can be no assurance that sufficient returns will be realized to offset these investments. The inability of the Company to successfully develop or commercialize new products or failure of such products to achieve market acceptance would have a material adverse effect on the Company's business, financial condition and results of operations. RISKS ASSOCIATED WITH CONDUCTING BUSINESS OVERSEAS A substantial part of the Company's revenue is derived from fixed priced contracts with foreign governmental entities. With increasing frequency, the Company finds a demand for its products in third world countries and developing nations which have an inherently more volatile and uncertain political and credit risk profile than the U.S. Government market with which the Company is accustomed to conducting its business. While the Company seeks to minimize the collection risks on these contracts by normally securing significant advanced payments with the balance secured by irrevocable letters of credit, the Company cannot always be assured of receiving full payment for work that it has performed due to unforeseen credit and political risks. Should such default on payments owed the Company ever occur, a significant effect on earnings, cash flows and cash balances may result. COMPETITION Most of the Company's products are positioned in niche markets, which include strong elements of imbedded proprietary technology. In most of these markets, the Company competes with companies of significantly larger size, many of whom have substantially greater technical, marketing, and financial resources compared to similar resources available within the Company. This type of competition has resulted in, and is expected to continue to result in, significant price competition. 13 TCI INTERNATIONAL, INC. LIQUIDITY AND CAPITAL RESOURCES December 31, 1999 Compared to September 30, 1999 Consolidated cash, cash equivalents and marketable securities totaled $11,943,000 at December 31, 1999, compared to $14,670,000 at September 30, 1999. The Company currently believes that its cash, cash equivalents and short-term investments, together with expected revenues from operations, will be sufficient to fund its operations through fiscal year 2000. Cash used in operations for the first quarter of fiscal 2000 was $3.3 million compared to $2.3 million for the first quarter in fiscal 1999. Cash used in the first quarter of fiscal 2000 resulted primarily from the decrease in customer deposits and billing in excess of revenue of $2.0 million and a decrease in accounts receivable of $1.6 million. Cash used in the first quarter of fiscal 1999 was primarily due to the net loss of $ .9 million and an increase in accounts receivable of $1.1 million. Cash used in investing activities in the first quarter of fiscal 2000 was $4.2 million compared to cash provided by investing activities of $4.6 million in fiscal 1999. A significant portion of the Company's sales is associated with long-term contracts and programs in which there are significant inherent risks. These risks include the uncertainty of economic conditions, dependence on future appropriations and administrative allotments of funds, changes in governmental policies, difficulty of forecasting costs and work schedules, product obsolescence, and other factors characteristic of the industry. Contracts with agencies of the U.S. Government or with prime contractors working on U.S. Government contracts contain provisions permitting termination at any time for the convenience of the Government. No assurance can be given regarding future financial results, as such results are dependent upon many factors including economic and competitive conditions, incoming order levels, shipment volume, product margins and foreign exchange rates. The large size of certain of the Company's orders makes it possible that a single contract termination, cancellation, delay, or failure to perform could have a significant adverse effect on revenue, results of operations, and the cash position of the Company. A portion of the Company's revenues is derived from governments in areas of political instability. The Company generally attempts to reduce the risks associated with such instability by requesting advance payment if appropriate, as well as letters of credit or central government guarantees. Most of the Company's overseas contracts provide for payments in U.S. dollars. However, in certain instances, the Company, for competitive reasons, must accept payment in a foreign currency. At December 31, 1999, the Company has standby letters of credit outstanding of approximately $2,600,000. The standby letters of credit are collateralized by the Company's cash or short-term investments. 14 TCI INTERNATIONAL, INC. YEAR 2000 ISSUE The Year 2000 statements set forth below are designated as "Year 2000 Readiness Disclosure" pursuant to the Year 2000 Information and Readiness Disclosure Act. Many currently installed computer systems and software products are designed to accept only two-digit entries in the date field. Beginning January 1, 2000, these date fields must accept four digit entries to distinguish twenty-first century dates from twentieth-century dates. If a computer system or software product is not Year 2000 compliant, it may not operate properly during the transition from December 31, 1999, to January 1, 2000, and may not recognize the year 2000 as a leap year. A non-compliant system or product may suddenly halt, continue operating but interpret or calculate data incorrectly, or otherwise operate improperly, causing disruption to the Company's operations or the operations of others. The Company diligently addressed potential Year 2000 problems by using a four-phase approach was used to determine the Year 2000 readiness of the Company's internal systems, software, equipment, and products. Phase 1, Assessment, included taking an inventory of all systems, software, equipment and products, and the identification of those with year 2000 issues which needed remediation. Phase 1 also called for the preparation of plans needed for remediation. Phase 2, Remediation, included repairing, upgrading, and/or replacing any critically non-compliant equipment or systems identified in Phase 1. Phase 3, Testing, included testing the Company's systems, software, and equipment for year 2000 readiness, or in certain cases, relying on test results or certifications provided to the Company by third parties. Phase 4, Implementation, involved placing compliant systems, software, and equipment into service. The Company completed all these initiatives at the estimated cost of $1 million dollars. Thus, the Company believes it has diligently addressed Year 2000 issues. To date, the Company has not experienced any significant business disruption or system failures as a result of Year 2000 issues. There have been no substantial Year 2000 related issues reported from our major suppliers and customers. Although the Year 2000 event has past there can be no assurance that there will be no problems related to the Year 2000 for a period of time after January 1, 2000. However, the Company does not expect to be adversely impacted by Year 2000 issues. 15 TCI INTERNATIONAL, INC. PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K a. Exhibits: Exhibit 27.1-Financial Data Schedule b. Reports on Form 8-K: None No other applicable items. SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. TCI INTERNATIONAL, INC. ----------------------- (Registrant) /s/ Mary Ann W. Alcon ------------------------- Mary Ann W. Alcon Chief Financial Officer (Duly authorized officer of the registrant and principal financial officer of the registrant) - --------------------------- Date 16 EX-27 2 EX-27
5 1,000 3-MOS SEP-30-2000 OCT-01-1999 DEC-30-1999 4,392 7,551 7,415 0 1,878 23,641 8,669 6,757 25,877 9,434 0 0 0 12,158 4,285 25,877 7,117 7,117 4,617 4,617 2,455 0 0 45 15 210 0 0 0 210 0.06 0.06
-----END PRIVACY-ENHANCED MESSAGE-----