-----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, KTNyBawCJfDBBEpekso3qR0Q8Qzr3/rSA31KicGU04wGljHmFSe8xKNklONNHCYx xucS8mb3VP1k+rR80VX3Yg== 0001047469-97-003988.txt : 19971114 0001047469-97-003988.hdr.sgml : 19971114 ACCESSION NUMBER: 0001047469-97-003988 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971112 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: SEC FILE NUMBER: 000-13257 FILM NUMBER: 97714019 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 FORM 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, 1997. ( ) 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 Incorporation or organization) Identification Number) 641 East Lake Street - Suite 244 - 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, 1997, 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, 1997 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, 1997 AND DECEMBER 31, 1996 SEPT. 30 DECEMBER 31 ASSETS 1997 1996 (UNAUDITED) (AUDITED) ---------- ------------ Current Assets Cash and cash equivalents $ 279,511 $ 1,235,127 Accounts receivable, net 4,644,933 3,695,763 Inventories: Finished goods 1,169,360 1,265,588 Work in process 1,698,947 1,837,247 Raw materials 5,784,115 3,626,665 Total inventories $ 8,652,422 $ 6,729,500 Prepaid expenses and other 665,762 628,821 ---------- ------------ Total current assets $ 14,242,628 $ 12,289,211 ---------- ------------ PLANT, Property, and Equipment (at Cost) Land and Building/leaseholds $ 3,860,506 $ 3,695,455 Manufacturing equipment 5,515,760 4,588,955 Office and other equipment 2,111,613 2,461,997 ---------- ------------ $ 11,487,879 $ 10,746,407 Less accumulated depreciation and amortization (3,692,774) (2,875,702) ---------- ------------ $ 7,795,105 $ 7,870,705 ---------- ------------ Other Assets Goodwill and other intangible assets 778,669 1,025,463 Deferred tax asset 910,000 910,000 Other assets 57,250 57,250 ---------- ------------ Total Other Assets $ 1,745,919 1,992,713 ---------- ------------ Total Assets $ 23,783,652 $ 22,152,629 ---------- ------------ ---------- ------------ NORTECH SYSTEMS INCORPORATED BALANCE SHEETS SEPTEMBER 30, 1997 AND DECEMBER 31, 1996 LIABILITIES AND SHAREHOLDERS' EQUITY SEPT. 30 DECEMBER 31 1996 1995 (UNAUDITED) (AUDITED) ---------- ------------ Current Liabilities: Current maturities of long-term debt $ 234,848 $ 731,080 Line of credit 500,000 500,000 Accounts payable 2,524,762 1,596,326 Accured payrolls and commissions 699,543 673,303 Other 517,982 289,971 ---------- ------------ Total Current Liabilities $ 4,477,135 $ 3,790,680 ---------- ------------ Long-Term Debt Notes Payable (net of current maturities shown above) $ 11,429,970 $ 10,910,757 ---------- ------------ Redeemable Stock $ 300,000 $ 300,000 Shareholders' Equity: preferred stock, $1 par value; 1,000,000 shares authorized; 250,000 share; 30,000,000 shares shares issued and outstanding $ 250,000 $ 250,000 common stock - $.01 par value; 9,000,000 shares authorized; 2,312,262 and 2,312,262 shares issued and outstanding, net of redeemable shares reported above,at September 30, 1997 and December 31, 1996, Respectively 23,124 23,124 additional paid-in capital 11,910,554 11,910,554 accumulated deficit (4,607,131) (5,032,486) ---------- ------------ Total Shareholders' Equity $ 7,576,547 $ 7,151,192 ---------- ------------ Total Liabilities, Redeemable Stock and Shareholders' Equity $ 23,783,652 $ 22,152,629 ---------- ------------ ---------- ------------ NORTECH SYSTEMS INCORPORATED STATEMENTS OF INCOME (LOSS) FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997 AND SEPTEMBER 30, 1996 SEPT 30 SEPT 30 1997 1996 (UNAUDITED) (UNAUDITED) ---------- ------------ Sales $ 8,693,449 $ 6,143,457 Cost of Sales 7,128,714 5,047,285 ---------- ------------ Gross Profit $ 1,564,735 $ 1,096,172 Selling, General and Admin. 1,071,529 672,247 Engineering/Reseach & Development 69,677 88,188 Misc. (Income) Expense, net (29,168) (10,894) Interest Expense 236,459 88,463 ---------- ------------ Net Income Before Tax Provision $ 216,238 $ 258,168 Tax Provision 75,683 54,542 ---------- ------------ Net Income $ 140,555 $ 203,626 ---------- ------------ ---------- ------------ Income (Loss) per Share of Common Stock Net income per Share of Common Stock $ 0.06 $ 0.09 ---------- ------------ ---------- ------------ Weighted Average Number of Shares Outstanding 2,362,263 2,362,263 ---------- ------------ ---------- ------------ NORTECH SYSTEMS INCORPORATED STATEMENTS OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND SEPTEMBER 30, 1996 SEPT 30 SEPT 30 1997 1996 (UNAUDITED) (UNAUDITED) ------------ ----------- Sales $ 26,297,471 $ 18,341,346 Cost of Sales 21,556,931 15,024,544 ------------ ----------- Gross Profit $ 4,740,540 $ 3,316,802 Selling, General and Admin. 3,130,090 1,895,551 Engineering/Reseach & Development 275,630 280,771 Misc. (Income) Expense, net (21,898) (7,283) Interest Expense 680,394 251,649 ------------ ----------- Net Income Before Tax Provision $ 676,324 $ 896,114 Tax Provision 235,761 215,710 ------------ ----------- Net Income $ 440,563 $ 680,404 ------------ ----------- ------------ ----------- Income per Share of Common Stock Net income per share of Common Stock $ 0.19 $ 0.29 ------------ ----------- ------------ ----------- Weighted Average Number of Shares Outstanding 2,362,263 2,362,263 NORTECH SYSTEMS INCORPORATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND SEPTEMBER 30, 1996 SEPT 30 SEPT 30 1996 1995 (UNAUDITED) (UNAUDITED) ------------ ----------- Cash Flows from Operating Activities Net Income $ 440,563 $ 680,404 Adjustments to reconcile net income to net cash used by operating activities: Depreciation and amortization 817,072 406,789 Changes in Operating Assets and Liabilities: Accounts receivable (949,170) (960,410) Inventories (1,922,922) (1,121,874) Prepaid expenses (36,941) 29,223 Other assets 246,794 171,594 Accounts payable 928,436 231,773 Accured payrolls 26,240 208,185 Other accruals 228,011 214,494 ------------ ----------- Net cash used by operating act. (221,917) (139,822) Cash Flows from Investing Activities: Acquistion of equipment (741,472) (619,533) Redemption of Stock/other 0 (531,600) Payment of Pref. Stock Dividend (14,946) 0 ------------ ----------- Net cash used by investing act. (756,418) (1,151,133) Cash Flows from Financing Activities: Net borrowing of Long Term debt 600,000 1,125,000 Payments of long term debt (580,787) (80,128) Change in current debt 3,506 (88,570) Net cash provided by financing -- -- activities 22,719 956,302 ------------ ----------- Net (Decrease) in Cash (955,616) (334,653) Cash at Beginning of Period 1,235,127 924,590 ------------ ----------- Cash at End of Period $ 279,511 $ 589,937 ------------ ----------- ------------ ----------- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. RESULTS OF OPERATIONS FOR PERIOD ENDED SEPTEMBER 30, 1997 For the quarter ended September 30, 1997, the Company had revenues of $8,693,449 compared to revenues of $6,143,457 for the quarter ended September 30, 1997. The increase in revenues resulted primarily from the additional revenues generated by the recently acquired Zercom Division. The Company previously completed this acquisition in November,1996. The net income for the three months ended September 30, 1997 was $140,555 or $.06 per share, compared to a net income of $203,626 or $.09 per share, for the three months ended September 30, 1997. The net income for the quarter ended September 30, 1997 was primarily impacted by the continuing expending funds on Company-sponsored research and development of large-screen, high resolution video monitors for the Imaging Division and lower Revenue and Profit in the Cable & Harness Business. For the nine month period ended September 30, 1997, the Company had revenue of $26,297,471 compared to revenue of $18,341,346 for the nine months ended September 30, 1997. The net income for the nine months ended September 30, 1997 was $440,563 of $ .19 per share compared to a net income of $680,404 or $.29 per share, for the nine months ended September 30, 1997. The 1997 net income reflects an income after recording a tax expense of $235,761 or 35% compared to tax expense of $215,710 or 24% recorded in 1996. The Company's 90 day order backlog was $8,647,000 as of September 30, 1997, compared to $6,995,000 at the beginning of the quarter. Based on the current conditions, the Company anticipates revenue levels in the fourth quarter of 1997 to be higher than the third quarter of 1997. LIQUIDITY AND CAPITAL RESOURCES. The Company's working capital increased to $9,765,493 during the third quarter of 1997, compared to $8,498,531 as of December 31, 1996. The Company believes that its financial stability will continue to improve during 1997 and would expect that its operating cash flow and available credit facilities will be sufficient to fund the expected growth in the near term. 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 10, 1997 NORTECH SYSTEMS INCORPORATED ------------------- By: Quentin E. Finkelson ----------------------------------- Quentin E. Finkelson President & Chief Executive Officer By: Garry M. Anderly ---------------------------------- Garry M. Anderly Principal Financial & Accounting Officer Page 11 EX-27 2 FINANCIAL DATA SCHEDULE
5 9-MOS DEC-31-1997 JUN-30-1997 SEP-30-1997 279,511 0 4,644,933 0 8,652,422 14,242,628 11,487,879 3,692,774 23,783,652 4,477,135 0 0 250,000 23,124 7,603,423 23,783,652 8,693,449 8,693,449 7,128,714 7,128,714 1,112,038 0 236,459 216,238 75,683 140,555 0 0 0 140,555 .06 .06
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