-----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, DSGmzuTiFQ8jeKn3jF4H+GTmZ3vGFtvfWjq0aUg2i7grQ2CEapWa/nCmwdJFyzuE 7BNDGXMLcxMVT6o52jXl9Q== 0001047469-98-019977.txt : 19980515 0001047469-98-019977.hdr.sgml : 19980515 ACCESSION NUMBER: 0001047469-98-019977 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980514 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: 98619376 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 March 31, 1998. ( ) 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 of other jurisdiction (I.R.S. Employer of Incorporation or organization) Identification No.) 641 East Lake St. 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 April 30, 1998, there were 2,345,262 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 MARCH 31, 1998 INDEX PAGE PART I - FINANCIAL INFORMATION Item 1 - Financial Statements 4-7 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations 8 PART II - OTHER INFORMATION Item 2 - Exhibits and Reports on Form 8-K 9 SIGNATURES 10 PAGE 3 NORTECH SYSTEMS INCORPORATED BALANCE SHEETS MARCH 31, 1998 AND DECEMBER 31, 1997
MARCH 31 DECEMBER 31 ASSETS 1998 1997 (UNAUDITED) (AUDITED) ----------- ----------- Current Assets Cash and cash equivalents $ 126,587 $ 714,169 Accounts receivable, net 5,529,548 5,008,689 Inventories: Finished goods 747,296 1,457,330 Work in process 1,564,618 1,262,361 Raw materials 7,856,191 6,522,775 ----------- ----------- Total inventories $ 10,168,105 $ 9,242,466 Prepaid expenses and other 947,774 897,388 ----------- ----------- Total current assets $ 16,772,014 $ 15,862,712 ----------- ----------- PLANT, Property, and Equipment (at Cost) Land and Building/leaseholds $ 3,817,489 $ 3,901,461 Manufacturing equipment 5,291,415 4,444,401 Office and other equipment 2,095,032 2,805,557 ----------- ----------- $ 11,203,936 $ 11,151,419 Less accumulated depreciation and amortization (4,056,972) (3,851,810) ----------- ----------- $ 7,146,964 $ 7,299,609 ----------- ----------- Other Assets Goodwill and other intangible assets 790,210 905,359 Deferred tax asset 570,000 570,000 Other assets 57,250 57,250 ----------- ----------- Total Other Assets $ 1,417,460 1,532,609 ----------- ----------- Total Assets $ 25,336,438 $ 24,694,930 ----------- ----------- ----------- -----------
NORTECH SYSTEMS INCORPORATED BALANCE SHEETS MARCH 31, 1998 AND DECEMBER 31, 1997
LIABILITIES AND SHAREHOLDERS' EQUITY MARCH 31 DECEMBER 31 1998 1997 (UNAUDITED) (AUDITED) ----------- ----------- Current Lialilities: Current maturities of long-term debt $ 1,075,404 $ 1,038,397 Line of credit 500,000 500,000 Accounts payable 2,939,683 3,013,131 Accured payrolls and commissions 836,528 1,082,293 Other 685,082 558,666 ----------- ----------- Total Current Liabilities $ 6,036,697 $ 6,192,487 ----------- ----------- Long-Term Debt Notes Payable (net of current maturities shown above) $ 11,041,490 $ 10,388,620 ----------- ----------- Redeemable Stock $ 0 $ 300,000 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; 2,345,262 and 2,312,362 shares issued and outstanding, net of redeemable shares reported above,at March 31, 1998 and December 31, 1997, respectively 23,454 23,124 additional paid-in capital 12,108,224 11,910,554 accumulated deficit (4,123,427) (4,369,855) ----------- ----------- Total Shareholders' Equity $ 8,258,251 $ 7,813,823 ----------- ----------- Total Liabilities, Redeemable Stock and Shareholders' Equity $ 25,336,438 $ 24,694,930 ----------- ----------- ----------- -----------
NORTECH SYSTEMS INCORPORATED STATEMENTS OF INCOME (LOSS) FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND MARCH 31, 1997
MARCH 31 MARCH 31 1998 1997 (UNAUDITED) (UNAUDITED) ----------- ----------- Sales $ 10,491,792 $ 8,564,846 Cost of Sales 8,741,376 7,044,357 ----------- ----------- Gross Profit $ 1,750,416 $ 1,520,489 16.7% 17.8% Selling, General and Admin. 1,044,518 1,014,805 Engineering/Reseach & Development 68,093 112,495 Misc. (Income) Expense, net (20,845) 8,763 Interest Expense 249,932 183,671 ----------- ----------- Net Income (Loss) Before Tax Provision $ 408,718 $ 200,755 Tax Provision 162,288 68,000 ----------- ----------- Net Income $ 246,430 $ 132,755 ----------- ----------- ----------- ----------- Income (Loss) per Share of Common Stock Net income $ 0.11 $ 0.06 ----------- ----------- ----------- ----------- Weighted Average Number of Shares Outstanding 2,345,262 2,362,262 ----------- ----------- ----------- -----------
NORTECH SYSTEMS INCORPORATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND MARCH 31, 1998
MARCH 31 MARCH 31 1998 1997 (UNAUDITED) (UNAUDITED) ----------- ----------- Cash Flows from Operating Activities Net Income $ 246,430 $ 132,755 Adjustments to reconcile net loss to net cash used by operating activities: Depreciation and amortization 205,162 284,346 Changes in Operating Assets and Liabilities: Accounts receivable (520,859) (834,906) Inventories (925,639) (271,319) Prepaid expenses (50,386) (106,019) Other assets 115,149 207,207 Accounts payable (73,448) (85,875) Accured payrolls (245,765) 257,753 Other accruals 126,416 677,972 ----------- ----------- Net cash used by operating act. (1,122,940) 261,914 Cash Flows from Investing Activities: Acquistion of equipment (52,517) (328,771) Acquistion of Comp. assets 0 0 Net Proceeds Under L/C 0 0 Proceeds from Sale of Stock 0 0 Other activities Payment of Pref. Stock Dividend 0 0 ----------- ----------- Net cash used by investing act. (52,517) (328,771) Cash Flows from Financing Activities: Net borrowing of L/T debt 760,000 200,000 Payments of long term debt (79,709) (238,415) Change in current debt (92,416) 52,899 ----------- ----------- Net cash provided by financing activities 587,875 14,484 ----------- ----------- Net Increase (Decrease) in Cash (587,582) (52,373) Cash at Beginning of Period 714,169 1,235,127 ----------- ----------- Cash at End of Period $ 126,587 $ 1,182,754 ----------- ----------- ----------- -----------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. RESULTS OF OPERATIONS FOR PERIOD ENDED MARCH 31, 1998 For the quarter ended March 31, 1998, the Company had revenues of $10,491,792 compared to revenues of $8,564,846 for the quarter ended March 31, 1997. The increase in revenues resulted primarily from the additional revenues generated from internal growth. The net income for the three months ended March 31, 1998 was $246,430 or $.11 per share, compared to a net income of $132,755 or $.06 per share, for the three months ended March 31, 1997. The net income for the quarter ended March 31, 1998 was primarily impacted by increased gross margin from the increased revenue. Company's 90 day order backlog was $7,900,000 as of March 31, 1998, compared to $7,687,000 at the beginning of the quarter. Based on the current conditions, the Company anticipates revenue levels in the second quarter of 1998 to be slightly higher than the first quarter of 1998. LIQUIDITY AND CAPITAL RESOURCES. The Company's working capital increased to $10,735,317 during the first quarter of 1998, compared to $9,670,225 as of December 31, 1997. The Company believes that its financial stability will continue to improve during 1998 and would expect that its operating cash flow and available credit faculities will be sufficient to fund the expected growth in the near term. PAGE 8 PART II - OTHER INFORMATION ITEM 2. EXHIBITS AND REPORTS ON FORM 8-K. None (The remainder of this page was intentionally left blank.) PAGE 9 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: May 11, 1998 NORTECH SYSTEMS INCORPORATED By: Quentin E. Finkelson ----------------------------------- Quentin E. Finkelson Its President and Chief Executive Officer By: Garry M. Anderly ----------------------------------- Garry M. Anderly Principal Financial Officer and Principal Accounting Officer PAGE 10 EX-27 2 EXHIBIT 27
5 3-MOS DEC-31-1998 JAN-01-1998 MAR-31-1998 126,587 0 5,715,548 93,000 10,168,105 16,772,014 11,203,936 4,056,972 25,336,438 6,036,697 0 0 250,000 23,454 7,984,797 25,336,438 10,491,792 10,491,792 8,741,376 8,741,376 1,091,766 0 249,932 408,718 162,288 246,430 0 0 0 246,430 .11 .11
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