-----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, OGbk5AFbHCjyg00j2QS9g/PtN6qBdSwpmtkTYkE/kw7dwwmWnUQjQcjT859z+qnC 2zo3PiAeR7/CYVXTockqLQ== 0000912057-96-025847.txt : 19961115 0000912057-96-025847.hdr.sgml : 19961115 ACCESSION NUMBER: 0000912057-96-025847 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961113 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: NORTECH SYSTEMS INC CENTRAL INDEX KEY: 0000722313 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPONENTS, NEC [3679] IRS NUMBER: 411681094 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-13257 FILM NUMBER: 96660393 BUSINESS ADDRESS: STREET 1: 641 EAST LAKE ST STREET 2: SUITE 234 CITY: WAYZATA STATE: MN ZIP: 55391 BUSINESS PHONE: 6124734102 FORMER COMPANY: FORMER CONFORMED NAME: DSC NORTECH INC DATE OF NAME CHANGE: 19901217 FORMER COMPANY: FORMER CONFORMED NAME: DIGIGRAPHIC SYSTEMS CORP DATE OF NAME CHANGE: 19881113 10-Q 1 10-Q 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 September 30, 1996. ( ) 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 0-13257. NORTECH SYSTEMS INCORPORATED ----------------------------- (Exact name of registrant as specified in its chapter) MINNESOTA 41-1681094 - --------------------------------- -------------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification Number) Incorporation or organization) 641 East Lake Street - Suite 234 - Wayzata, MN 55391 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Codes) (612) 473-4102 - -------------------------------- (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: None - ------------------------------------------------------------------------------- Securities registered pursuant to Section 12(b) of the Act: Common Stock, $.01 per share per value. 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 ------- ------- Page 1 APPLICABLE ONLY TO CORPORATE REGISTRANTS; Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of latest practicable data. As of October 31, 1996, there were 2,362,263 shares of the Company's $.01 per share par value common stock outstanding. (The remainder of this page was intentionally left blank.) Page 2 NORTECH SYSTEMS INCORPORATED FORM 10-Q QUARTER ENDED SEPTEMBER 30, 1996 INDEX PAGE PART I - FINANCIAL INFORMATION Item 1 - Financial Statements ....................................... 4-8 Item 2 - Management's Discussion, Analysis of Financial Condition and Results of Operations ............................. 9 PART II - OTHER INFORMATION Item 2 - Exhibits and Reports on Form 8-K ........................... 10 SIGNATURES ................................................................ 11 Page 3 NORTECH SYSTEMS INCORPORATED BALANCE SHEETS SEPTEMBER 30, 1996 and DECEMBER 31, 1995 SEPT. 30 DECEMBER 31 ASSETS 1996 1995 (UNAUDITED) (AUDITED) ------------- ------------ Current Assets Cash and cash equivalents $ 589,937 $ 924,590 Accounts receivable, net 2,816,629 1,856,219 Inventories: Finished goods 140,514 205,879 Work in process 1,694,446 1,676,949 Raw materials 3,142,126 1,972,384 ------------- ------------ Total inventories $ 4,977,086 $ 3,855,212 Prepaid expenses and other 532,478 561,701 ------------- ------------ Total current assets $ 8,916,130 $ 7,197,722 ------------- ------------ PLANT, Property, and Equipment (at Cost) Land and Building/leaseholds $ 2,129,647 $ 2,005,859 Manufacturing equipment 2,908,700 2,389,201 Office and other equipment 1,677,886 1,701,640 ------------- ------------ $ 6,716,233 $ 6,096,700 Less accumulated depreciation and amortization (2,663,651) (2,256,862) ------------- ------------ $ 4,052,582 $ 3,839,838 ------------- ------------ Other Assets Goodwill and other intangible assets 826,660 998,254 Deferred tax asset 1,130,000 1,130,000 Other assets 57,250 57,250 ------------- ------------ Total Other Assets $ 2,013,910 2,185,504 ------------- ------------ Total Assets $ 14,982,622 $ 13,223,064 ------------- ------------ ------------- ------------ Page 4 NORTECH SYSTEMS INCORPORATED BALANCE SHEETS SEPTEMBER 30, 1996 and DECEMBER 31, 1995 LIABILITIES AND SHAREHOLDERS' EQUITY SEPT. 30 DECEMBER 31 1996 1995 (UNAUDITED) (AUDITED) ----------- ------------ Current Liabilities: Current maturities of long-term debt $ 200,984 $ 283,100 Line of credit 0 0 Accounts payable 1,286,653 1,054,880 Accured payrolls and commissions 615,201 407,016 Other 387,711 173,217 ---------- ------------ Total Current Liabilities $2,490,549 $ 1,918,213 ---------- ------------ Long-Term Debt Notes Payable (net of current maturities shown above) $4,813,556 $ 3,768,685 ---------- ------------ Redeemable Stock $ 968,400 $ 1,500,000 Shareholders' Equity: preferred stock, $1 par value; 1,000,000 shares authorized; 250,000 shares issued and outstanding $ 250,000 250,000 common stock - $.01 par value; 9,000,000 shares authorized; 2,200,863 and 2,194,305 shares issued and outstanding, net of redeemable shares reported above,at September 30, 1996 and December 31, 1995, Respectively 22,009 22,009 additional paid-in capital 11,242,672 11,242,672 accumulated deficit (4,804,564) (5,478,515) ---------- ------------ Total Shareholders' Equity $6,710,117 $ 6,036,166 ---------- ------------ Total Liabilities, Redeemable Stock and Shareholders' Equity $14,982,622 $ 13,223,064 ---------- ------------ ---------- ------------ Page 5 NORTECH SYSTEMS INCORPORATED STATEMENTS OF INCOME (LOSS) FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AND SEPTEMBER 30, 1995 SEPT 30 SEPT 30 1996 1995 (UNAUDITED) (UNAUDITED) ----------- ----------- SALES $ 6,143,457 $ 5,449,175 Cost of Sales 5,047,285 4,482,206 ----------- ----------- Gross Profit $ 1,096,172 $ 966,969 Selling, General and Admin. 672,247 530,032 Engineering/Reseach & Development 88,188 52,679 Misc. (Income) Expense, net (10,894) (27,609) Interest Expense 88,463 92,797 ----------- ----------- Net Income Before Tax Provision $ 258,168 $ 319,070 Tax Provision 54,542 106,482 ----------- ----------- Net Income $ 203,626 $ 212,588 ----------- ----------- ----------- ----------- Income (Loss) per Share of Common Stock Net income per Share of Common Stock $ 0.09 $ 0.09 ----------- ----------- ----------- ----------- Weighted Average Number of Shares Outstanding 2,362,263 2,384,431 ----------- ----------- ----------- ----------- Page 6 NORTECH SYSTEMS INCORPORATED STATEMENTS OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND SEPTEMBER 30, 1995 SEPT 30 SEPT 30 1996 1995 (UNAUDITED) (UNAUDITED) ------------- ------------- SALES $ 18,341,346 $ 13,449,338 ------------- ------------- Cost of Sales 15,024,544 10,843,664 ------------- ------------- Gross Profit $ 3,316,802 $ 2,605,674 Selling, General and Admin. 1,895,551 1,515,357 Engineering/Reseach & Development 280,771 125,139 Misc. (Income) Expense, net (7,283) (83,699) Interest Expense 251,649 141,852 ------------- ------------- Net Income Before Tax Provision $ 896,114 $ 907,025 Tax Provision 215,710 206,387 ------------- ------------- Net Income $ 680,404 $ 700,638 ------------- ------------- ------------- ------------- Income per Share of Common Stock Net income per share of Common Stock $ 0.29 $ 0.30 ------------- ------------- ------------- ------------- Weighted Average Number of Shares Outstanding 2,362,263 2,333,506 Page 7 NORTECH SYSTEMS INCORPORATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND SEPTEMBER 30, 1995 SEPT 30 SEPT 30 1996 1995 (UNAUDITED) (UNAUDITED) ---------- ---------- Cash Flows from Operating Activities Net Income $ 680,404 $ 700,638 Adjustments to reconcile net income to net cash used by operating activities: Depreciation and amortization 406,789 247,170 Changes in Operating Assets and Liabilities: Accounts receivable (960,410) (1,554,367) Inventories (1,121,874) (2,353,587) Prepaid expenses 29,223 78,525 Other assets 171,594 (849,940) Accounts payable 231,773 941,222 Accured payrolls 208,185 115,233 Other accruals 214,494 221,506 ---------- ---------- Net cash used by operating act. (139,822) (2,453,600) Cash Flows from Investing Activities: Acquistion of equipment (619,533) (2,472,728) Acquistion of Comp. assets 0 0 Net Proceeds Under Line of Credit 0 500,000 Proceeds from Sale of Stock 0 1,201,531 Redemption of Stock/other (531,600) 0 Payment of Pref. Stock Dividend 0 (14,181) ---------- ---------- Net cash used by investing act. (1,151,133) (785,378) Cash Flows from Financing Activities: Net borrowing of Long Term debt 1,125,000 3,120,000 Payments of long term debt (80,128) (122,882) Change in current debt (88,570) 186,030 ---------- ---------- Net cash provided by financing activities 956,302 3,183,148 ---------- ---------- Net (Decrease) in Cash (334,653) (55,830) Cash at Beginning of Period 924,590 841,702 ---------- ---------- Cash at End of Period $ 589,937 $ 785,872 ---------- ---------- ---------- ---------- Page 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. RESULTS OF OPERATIONS FOR PERIOD ENDED SEPTEMBER 30, 1996 For the quarter ended September 30, 1996, the Company had revenues of $6,143,458 compared to revenues of $5,449,175 for the quarter ended September 30, 1995. The increase in revenues resulted primarily from the additional revenues generated by the recently acquired Aerospace Division. The Company previously completed this acquisition in August, 1995. The net income for the three months ended September 30, 1996 was $203,626 or $.09 per share, compared to a net income of $212,588 or $.09 per share, for the three months ended September 30, 1995. For the nine month period ended September 30, 1996, the Company had revenue of $18,341,346 compared to revenue of $13,449,338 for the nine months ended September 30, 1995. The net income for the nine months ended September 30, 1996 was $680,404 or $ .29 per share compared to a net income of $700,638 or $.30 per share, for the nine months ended September 30, 1995. The 1996 net income reflects an income after recording a tax expense of $159,500 compared to tax expense of $206,387 recorded in 1995 and continuing to expend funds on Company-sponsored research and development of large-screen, high resolution video monitors for the Imaging Division. The Company's 90 day order backlog was $6,147,564 as of September 30, 1996, compared to $5,972,900 at the beginning of the quarter. Based on the current conditions, the Company anticipates revenue levels in the fourth quarter of 1996 to be about the same as the third quarter of 1996 from the current operations. LIQUIDITY AND CAPITAL RESOURCES. The Company's working capital increased to $6,425,582 during the third quarter of 1996, compared to $5,279,509 as of December 31, 1995. The Company believes that its financial stability will continue to improve during 1996 and would expect that its operating cash flow and available credit facilities will be sufficient to fund the expected growth from the current operations in the near term. ACQUISITION On November 4, 1996 the company completed the acquisition of the assets of Zercom Corporation, a division of Communication System, Inc. EQUITY During April 1996, 88,600 shares of the Company's common stock was placed back to the Company under the terms of the final agreement in the acquisition of Monitor Technology Corporation. Under the terms of this agreement, the stock had a repurchase price of $6.00 per share. Page 9 PART II - OTHER INFORMATION ITEM 2. EXHIBITS AND REPORTS ON FORM 8-K. None (The remainder of this page was intentionally left blank.) Page 10 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. Dated: November 11, 1996 NORTECH SYSTEMS INCORPORATED ------------------- By: /s/Quentin E. Finkelson ------------------------------------ Quentin E. Finkelson President & Chief Executive Officer By: /s/Garry M. Anderly ------------------------------------ Garry M. Anderly Principal Financial & Accounting Officer Page 11 EX-27 2 EXHIBIT 27
5 3-MOS DEC-31-1996 JUL-01-1996 SEP-30-1996 589937 0 2816629 0 4977086 8916130 6716233 2663651 14982622 2490549 0 0 250000 22009 7406508 14982622 6143457 6143457 5047285 5047285 749541 0 88463 258168 54542 203626 0 0 0 203626 .09 .09
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