-----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, HNKzm6AMYxoETzUt/CbP4Mj5vg7RL5bxfFtCyOgN0Jixbyg9/Gu/8eYwigo+477L R3+39dG4Lh10liPzFgkUmA== 0001047469-98-030035.txt : 19980812 0001047469-98-030035.hdr.sgml : 19980812 ACCESSION NUMBER: 0001047469-98-030035 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980810 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: 98680436 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 June 30, 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 July 31, 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 JUNE 30, 1998 INDEX PAGE PART I - FINANCIAL INFORMATION Item 1 - Financial Statements 4-8 Item 2 - Management's Discussion and 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 ASSETS FOR THE SIX MONTHS ENDED JUNE 30, 1998 and DECEMBER 31, 1997
JUNE 30 DECEMBER 31 ASSETS 1998 1997 (UNAUDITED) (AUDITED) ------------- ------------- Current Assets Cash and cash equivalents $ 109,131 $ 714,169 Accounts receivable, net 5,255,009 5,008,689 Inventories: Finished goods 649,226 1,457,330 Work in process 1,292,902 1,262,361 Raw materials 8,819,879 6,522,775 ------------- ------------- Total inventories $ 10,762,007 $ 9,242,466 Prepaid expenses and other 927,666 897,388 ------------- ------------- Total current assets $ 17,053,813 $ 15,862,712 ------------- ------------- ------------- ------------- PLANT, Property, and Equipment (at Cost) Land and Building/leaseholds $ 3,883,296 $ 3,901,461 Manufacturing equipment 5,330,285 4,444,401 Office and other equipment 2,060,392 2,805,557 ------------- ------------- $ 11,273,973 $ 11,151,419 Less accumulated depreciation and amortization (4,292,940) (3,851,810) ------------- ------------- $ 6,981,033 $ 7,299,609 ------------- ------------- Other Assets Goodwill and other intangible assets 756,713 905,359 Deferred tax asset 570,000 570,000 Other assets 57,250 57,250 ------------- ------------- Total Other Assets $ 1,383,963 1,532,609 ------------- ------------- Total Assets $ 25,418,809 $ 24,694,930 ------------- ------------- ------------- -------------
PAGE 4 NORTECH SYSTEMS INCORPORATED BALANCE SHEETS LIABILITIES FOR THE SIX MONTHS ENDED JUNE 30, 1998 and DECEMBER 31, 1997
JUNE 30 DECEMBER 31 1998 1997 LIABILITIES AND SHAREHOLDERS' EQUITY (UNAUDITED) (AUDITED) ----------- ------------- Current Liabilities: Current maturities of long-term debt $ 1,062,558 $ 1,038,397 Line of credit 500,000 500,000 Accounts payable 2,960,570 3,013,131 Accrued payrolls and commissions 920,815 1,082,293 Other 620,651 558,666 ----------- ----------- Total Current Liabilities $ 6,064,594 $ 6,192,487 ----------- ----------- Long-Term Debt Notes Payable (net of current maturities shown above) $10,903,636 $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; 2,312,262 and 2,312,262 shares issued and outstanding, net of redeemable shares reported above, at June 30, 1998 December 31, 1997, respectively 23,454 23,124 Additional paid-in capital 12,108,224 11,910,554 Accumulated deficit (3,931,099) (4,369,855) ----------- ----------- Total Shareholders' Equity $ 8,450,579 $ 7,813,823 ----------- ----------- Total Liabilities, Redeemable Stock & Shareholders' Equity $25,418,809 $24,694,930 ----------- ----------- ----------- -----------
PAGE 5 NORTECH SYSTEMS INCORPORATED STATEMENTS OF INCOME (LOSS) FOR THE THREE MONTHS ENDED JUNE 30, 1998 AND JUNE 30, 1997
JUNE 30 JUNE 30 1998 1997 (UNAUDITED) (UNAUDITED) ---------- ---------- Sales $9,582,777 $9,039,176 Cost of Sales 7,803,952 7,383,860 ---------- ---------- Gross Profit $1,778,825 $1,655,316 Selling, General and Admin. 1,138,807 1,043,756 Engineering/Reseach & Development 115,418 93,458 Misc. (Income) Expense, net 7,527 (1,493) Interest Expense 204,231 260,264 ---------- ---------- Net Income Before Tax Provision $ 312,842 $ 259,331 Tax Provision 125,002 92,079 ---------- ---------- Net Income $ 187,840 $ 167,252 ---------- ---------- ---------- ---------- Income (Loss) per Share of Common Stock Net income per Share of Common Stock $ 0.08 $ 0.07 ---------- ---------- ---------- ---------- Weighted Average Number of Shares Outstanding 2,345,262 2,362,263 ---------- ---------- ---------- ----------
PAGE 6 NORTECH SYSTEMS INCORPORATED STATEMENTS OF INCOME FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND JUNE 30, 1997
JUNE 30 JUNE 30 1998 1997 (UNAUDITED) (UNAUDITED) ----------- ----------- Sales $20,074,569 $17,604,022 Cost of Sales 16,545,328 14,428,217 ----------- ----------- Gross Profit $ 3,529,241 $ 3,175,805 Selling, General and Admin. 2,183,325 2,058,561 Engineering/Reseach & Development 183,511 205,953 Misc. (Income) Expense, net (13,318) 7,270 Interest Expense 454,163 443,935 ----------- ----------- Net Income Before Tax Provision $ 721,560 $ 460,086 Tax Provision 287,290 160,079 ----------- ----------- Net Income $ 434,270 $ 300,007 ----------- ----------- ----------- ----------- Income per Share of Common Stock Net income per share of Common Stock $ 0.19 $ 0.13 ----------- ----------- ----------- ----------- Weighted Average Number of Shares Outstanding 2,345,262 2,362,263 ----------- ----------- ----------- -----------
PAGE 7 NORTECH SYSTEMS INCORPORATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND JUNE 30, 1997
JUNE 30 JUNE 30 1998 1997 (UNAUDITED) (UNAUDITED) ----------- ------------ Cash Flows from Operating Activities Net Income $ 434,270 $ 300,007 Adjustments to reconcile net income to net cash used by operating activities: Depreciation and amortization 441,130 535,575 Changes in Operating Assets and Liabilities: Accounts receivable (246,320) (1,372,451) Inventories (1,519,541) (637,457) Prepaid expenses (30,278) 79,951 Other assets 148,646 227,000 Accounts payable (52,561) 475,034 Accrued payrolls (161,478) 2,073 Other accruals 61,985 (52,017) ----------- ------------ Net cash used by operating activity (924,147) (442,285) Cash Flows from Investing Activities: Acquisition of equipment (122,554) (480,786) Other activities 0 0 ----------- ------------ Net cash used by investing activity (122,554) (480,786) Cash Flows from Financing Activities: Net borrowing of Long Term debt 830,283 500,000 Payments of long term debt (375,774) (373,289) Change in current debt (12,846) 28,034 ----------- ------------ Net cash provided by financing activities 441,663 154,745 ----------- ------------ Net (Decrease) in Cash (605,038) (768,326) Cash at Beginning of Period 714,169 1,235,127 ----------- ------------ Cash at End of Period $ 109,131 $ 466,801 ----------- ------------ ----------- ------------
PAGE 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. RESULTS OF OPERATIONS FOR PERIOD ENDED JUNE 30, 1998 For the quarter ended June 30, 1998, the Company had revenues of $9,582,777 compared to revenues of $9,039,176 for the quarter ended June 30, 1997. The increase in revenues resulted primarily from the additional revenues generated from internal growth. The net income for the three months ended June 30, 1998 was $187,840 or $.08 per share, compared to a net income of $167,252 or $.07 per share, for the three months ended June 30, 1997. The net income for the quarter ended June 30, 1998 was primarily impacted by increased gross profit from the increased revenue. For the six month period ended June 30, 1998, the Company had revenue of $20,074,569 compared to revenue of $17,604,022 for the six months ended June 30, 1997. The net income for the six months ended June 30, 1998 was $434,270 of $.19 per share compared to a net income of 300,007 or $.13 per share, for the six months ended June 30, 1997. Company's 90 day order backlog was $8,159,000 as of June 30, 1998, compared to $7,900,000 at the beginning of the quarter. Based on the current conditions, the Company anticipates revenue levels in the third quarter of 1998 to be slightly higher than the second quarter of 1998. LIQUIDITY AND CAPITAL RESOURCES. The Company's working capital increased to $10,989,219 during the second 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 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: AUGUST 6, 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 11 EX-27 2 EXHIBIT 27
5 3-MOS DEC-31-1998 APR-01-1998 JUN-30-1998 109,131 0 5,358,156 103,147 10,762,007 17,053,813 11,273,973 4,292,940 25,418,809 6,064,594 0 0 250,000 23,454 8,177,125 25,418,809 9,582,777 9,582,777 7,803,952 7,803,952 1,261,752 0 204,231 312,842 125,002 187,840 0 0 0 187,840 .08 .08
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