-----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, LpsYRZ6axoHOhk+ugOu6PFfAPGdd57CnoDzPNJ+aYo2B2bvY9bC62IhJMvRbMnPo QDWNGcnv4l0N3SP8Bu0XYQ== /in/edgar/work/20000803/0000912057-00-034340/0000912057-00-034340.txt : 20000921 0000912057-00-034340.hdr.sgml : 20000921 ACCESSION NUMBER: 0000912057-00-034340 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000803 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TCI INTERNATIONAL INC CENTRAL INDEX KEY: 0000357064 STANDARD INDUSTRIAL CLASSIFICATION: [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: 684841 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 a10-q.txt FORM 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 JUNE 30, 2000 -------------- 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 Identification Number) incorporation or organization) 47300 KATO ROAD, FREMONT, CALIFORNIA 94538-7334 (Address of principal executive offices) (Zip Code) (510) 687-6100 (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 July 19, 2000, 3,459,510 shares of Common Stock were outstanding. TCI INTERNATIONAL, INC. Table of Contents
PART I - FINANCIAL INFORMATION PAGE Item 1. Unaudited Condensed Consolidated Financial Statements Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income 3 Unaudited Condensed Consolidated Balance Sheets 4 Unaudited Condensed Consolidated Statements of Cash Flows 5 Unaudited Notes to Condensed Consolidated Financial Statements 6-8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9-13 Item 3. Quantitative and Qualitative Disclosure about Market Risk Derivatives and Financial Instruments 14 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 15 Signatures 15
2 TCI INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME (In thousands, except per share amounts) (Unaudited)
Three Months Ended Nine Months Ended June 30, June 30 200 1999 2000 1999 Revenues $ 7,369 $ 6,507 $ 21,694 $ 17,825 -------- -------- --------- --------- Operating costs and expenses: Cost of revenues 4,871 4,203 14,395 12,097 Marketing, general and administrative 2,356 2,405 7,258 7,549 ------- --------- -------- -------- 7,227 6,608 21,653 19,646 ------- -------- ------ --------- Income (loss) from operations 142 (101) 41 (1,821) Interest income, net 168 109 502 411 ------- -------- -------- -------- Income (loss) before provision 310 8 543 (1,410) for income taxes Provision for income taxes 11 - (152) - -------- -------- --------- --------- Net income (loss) $ 299 $ 8 $ 695 $ (1,410) ======== ======== ========= ========= Other comprehensive income: Unrealized gain on investments - - 5 8 -------- -------- --------- --------- Net comprehensive income (loss) $ 299 $ 8 $ 700 $ (1,402) ======== ======== ========= ========= Basic earnings per share: Net income (loss) per share $ .09 $ - $ .21 $ (.44) ======== ========= ========= ========= Shares used in per share computations 3,456 3,205 3,382 3,210 ======== ========= ========= ========= Dilutive earnings per share: Net income (loss) per share $ .08 $ - $ .20 $ (.44) ======== ========== ======== ========= Shares used in per share computations 3,694 3,256 3,554 3,210 ======== =========== ========= =========
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements. 3 TCI INTERNATIONAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands except per share amounts) (Unaudited)
June 30, September 30, 2000 1999 -------- -------- ASSETS Current assets Cash and cash equivalents $ 3,630 $ 11,310 (Includes restricted cash of $131 and $3,846 on June 30, 2000, and Sept 30, 1999, respectively) Short-term investments 6,167 3,360 Accounts receivable, net Billed 1,846 2,434 Unbilled 9,637 3,416 Inventories 1,522 1,704 Prepaid taxes 188 1,724 Prepaid expenses 620 427 -------- -------- Total current assets 23,610 24,375 Property and equipment, net 1,764 2,033 Other assets 326 321 -------- -------- Total assets $ 25,700 $ 26,729 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 2,089 $ 1,830 Customer deposits and billings on uncompleted contracts in excess of revenue recognized 1,580 3,310 Accrued liabilities 4,758 5,967 -------- -------- Total current liabilities 8,427 11,107 -------- -------- Stockholders' equity: Common stock, par value $.01; authorized 5,000 shares; issued 3,468 and 3,281 shares on June 30,2000, and Sept. 30, 1999, respectively 12,491 11,780 Retained earnings 4,818 4,176 Accumulated other comprehensive loss (3) (8) Treasury shares at cost; 10 and 76 shares on June 30, 2000, and Sept 30, 1999, respectively (33) (326) -------- -------- Total stockholders' equity 17,273 15,622 -------- -------- Total liabilities and stockholders' equity $ 25,700 $ 26,729 ======== ========
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements 4 TCI INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS NINE MONTHS ENDED JUNE 30, (In thousands) (Unaudited)
2000 1999 ---------- ---------- Cash flows from operating activities: Net income (loss) $ 695 $ (1,410) Adjustments to reconcile net income to net cash used in operating activities: Depreciation 495 377 Changes in assets and liabilities: Accounts receivable (5,633) (2,891) Inventories 182 (624) Prepaid taxes 1,536 28 Prepaid expenses and other assets (198) (70) Accounts payable 259 807 Customer deposits/billing in excess of revenue (1,730) (361) Accrued liabilities (1,208) 141 ---------- --------- Net cash used in operating activities (5,602) (4,003) ---------- ---------- Cash flows from investing activities: Purchases of property and equipment (226) (1,159) Purchases of short-term investments (14,754) (7,344) Proceeds from sale of short-term investments 11,951 10,835 --------- --------- Net cash provided by (used in) investing activities (3,029) 2,332 ---------- --------- Cash flows from financing activities: Stock options exercised 951 5 Treasury stock purchases - (26) v --------- --------- Net cash provided by (used in) financing activities 951 (21) Net decrease in cash and cash equivalents (7,680) (1,692) Cash and cash equivalents, at beginning of period 11,310 8,782 --------- --------- Cash and cash equivalents, at end of period $ 3,630 $ 7,090 ========= =========
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements 5 TCI INTERNATIONAL, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 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. These condensed consolidated financial statements should be 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. 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 nine months ended June 30, 2000, are not necessarily indicative of results to be expected for the entire year ending September 30, 2000. NOTE 2. Inventories Inventories consist of the following (in thousands):
June 30, September 30, 2000 1999 ------- ------------ Material and component parts $817 $1,326 Work in process 705 378 ------- ------ $1,522 $1,704 ======= ======
NOTE 3. Standby Letters of Credit At June 30, 2000 there were outstanding standby letters of credit of approximately $3,044,000 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 (Unaudited) The following schedule reconciles, in thousands, the shares used in the Company's basic and diluted net income (loss) per share calculation.
Three Months Ended Nine Months Ended June 30, June 30, ------------------ ----------------- 2000 1999 2000 1999 -------- -------- ------- ------- Basic earnings per share weighted 3,456 3,205 3,382 3,210 average shares outstanding Effect of dilutive securities options outstanding 238 51 172 0 -------- -------- ------- ------- Denominator for diluted earnings per share - adjusted weighted average shares 3,694 3,256 3,554 3,210
49,171 shares of common stock issuable upon exercise of options were excluded from the diluted earning per share calculation for the nine months ended June 30, 1999, due to their antidilutive effect. As of June 30, 2000 and 1999, there were options outstanding to purchase 629,666 and 841,900 respectively, shares of the Company's common stock. NOTE 5. RECENT 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. This statement as amended 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. In December 1999, the Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial Statements". SAB 101 summarizes the SEC's views in applying generally accepted accounting principles to revenue recognition in financial statements. In March 2000, the SEC issued SAB No. 101A that delayed the implementation date of SAB No. 101. In June 2000, the SEC issued SAB No. 101B that further delayed the implementation date of SAB No. 101. The Company must adopt SAB No. 101 no later than in the fourth quarter of fiscal 2001. The Company does not expect the adoption of SAB No. 101 to have a material impact on its financial position or results of operations. 7 TCI INTERNATIONAL, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 5. RECENT ACCOUNTING PRONOUNCEMENTS In March 2000, the FASB issued Interpretation No. 44, "accounting for Certain Transactions Involving Stock Compensation --- an Interpretation of APB No. 25" (FIN No. 44"). FIN No. 44 clarifies the application of Opinion No. 25 for certain issues including: (a) the definition of employee for purposes of applying Opinion No. 25, (b) the criteria for determining whether a plan qualifies as noncompensatory plan, (c) the accounting consequence of various modifications to the terms of a previously fixed stock option or award, and (d) the accounting for an exchange of stock compensation awards in a business combination. In general, FIN No. 44 is effective July 1, 2000. The Company does not expect the adoption of FIN No. 44 to have a material impact on its financial position or results of operations. 8 TCI INTERNATIONAL, INC. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Third Fiscal Quarter of 2000 Compared to Third Fiscal Quarter of 1999 Except for historical information contained 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 third three months of fiscal year 2000 are not necessarily indicative of future quarterly or annual performance expectations. Total revenue for the third quarter of fiscal year 2000 was $7,369,000, an increase of 13% over revenue of $6,507,000 for the same period a year ago. Total revenue for the first nine months of fiscal year 2000 was $21,694,000 compared to $17,825,000 a year ago, an increase of 22%. Total net income for the third quarter of fiscal year 2000 was $299,000 compared to a net income of $8,000 in the prior year. Net income for the first nine months of fiscal year 2000 was $695,000 compared to a net loss of $1,410,000 a year ago. The increase in revenue for the current fiscal year reflects growth in both product groups as discussed in more detail below. 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 business 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):
Three Months Ended Nine Months Ended June 30, June 30, 2000 1999 2000 1999 ---- ---- ---- ---- Revenue Broadcast Products 2,491 2,282 6,607 5,781 Signal Processing Products 4,878 4,225 15,087 12,044 Operating income (loss) Broadcast Products (165) (364) (824) (754) Signal Processing Products 307 263 865 (1,067)
9 TCI INTERNATIONAL, INC. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Third Fiscal Quarter of 2000 Compared to Third Fiscal Quarter of 1999 Revenue for the Broadcast Products group in the third quarter ended June 30, 2000, increased 9% over revenue a year ago. The net loss for the current quarter was significantly less than last year due to improved gross margins and lower operating expenses. These lower operating expenses were a result of restructuring in the marketing department whereby a remote marketing office was closed earlier in the fiscal year and corresponding reductions in expense are now being realized.. Fluctuations in revenue from one quarter to the next are inherent in the Company's business due to the project-oriented nature of the business. The Broadcast Products group continued to make substantial investment in research and development associated with the design efforts on the Digital TV products in the current quarter. Revenue for the Signal Processing Products group for the third quarter ended June 30, 2000, increased 15% over a year ago. Net operating income was $307,000 compared to $263,000 in the third quarter of fiscal year 1999, an increase of 17%. Orders received in the last quarter of fiscal year 1999 for Spectrum Management Systems contributed significantly to the increase in revenue and profitability for the current fiscal quarter. Total gross margins for the Company expressed as a percentage of revenue for the current quarter were approximately the same when compared to the same period in fiscal year 1999. Gross margins were $2,498,000 in the current quarter compared to $2,304,000 for the same period in fiscal 1999. For the nine months ending June 30, 2000, gross margins expressed as a percentage of revenue were 34% compared to 32% for the nine months ending June 30, 1999. Marketing, general and administrative expenses for the third quarter of fiscal year 2000 remained constant with those of fiscal 1999 and decreased as a percentage of revenue to 32% as compared to 37% a year ago. Marketing, general and administrative expenses for the nine months ending June 30, 2000, were $7,258,000 compared to $7,549,000 a year ago. The Company's total backlog as of June 30, 2000 was $20,000,000 compared to $25,000,000 as of June 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 $20,000,000 and $15,000,000, respectively. 10 TCI INTERNATIONAL, INC. LIQUIDITY AND CAPITAL RESOURCES June 30, 2000 Compared to September 30, 1999 Consolidated cash, cash equivalents and short-term investments totaled $9,797,000 on June 30, 2000, compared to $14,670,000 on 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 2001. Cash used in operations for the first three quarters of fiscal year 2000 was $5,206,000 compared to $4,003,000 for the same quarters in fiscal 1999. Cash used in the first three quarters of fiscal year 2000 resulted primarily from the increase in accounts receivables of $5,633,000 and the decrease in customer deposits and billing in excess of revenue of $1,730,000 and accrued liabilities of $1,208,000. The increase in accounts receivables was due to revenue recognition timing differences and varying payment milestones on large, long-term contracts. Cash used in the first three quarters of fiscal year 1999 was primarily due to the net loss of $1,410,000 and an increase in accounts receivable of $2,891,000. Cash used in investing activities in the first three quarters of fiscal year 2000 was $3,029,000 compared to cash provided by investing activities of $2,332,000 in fiscal year 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 June 30, 2000, the Company has standby letters of credit outstanding of approximately $3,044,000. The standby letters of credit are collateralized by the Company's cash or short-term investments. 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. 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. 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. ITEM 3. 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. As of June 30, 2000, the Company had no hedging contracts outstanding. 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 process, determine at any time to change its hedging program. No sensitivity analysis was performed on the Company's hedging portfolio as of June 30, 2000, as there were no hedging contracts outstanding as of June 30, 2000. 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 June 30, 2000. 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 6.2%. As of June 30, 2000, there are no investments with maturities greater than 12 months. 14 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: August 3, 2000 15 EX-27 2 ex-27.txt EXHIBIT 27
5 1,000 9-MOS SEP-30-2000 OCT-01-1999 JUN-30-2000 3,630 6,167 11,483 0 1,522 23,610 7,396 5,632 25,700 8,427 0 0 0 12,491 4,782 25,700 21,694 21,694 14,395 14,395 7,258 0 0 41 (154) 697 0 0 0 697 0.21 0.20
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