-----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, BeJj15eZJODQqLSN/+x24Ca7+7xPpgD2S9Jeq8G8oQqErMaaJ7wbiXsSeEi5Fig3 GcYZHcP2GZwyWwcCdVPsYg== 0000950005-97-000086.txt : 19970220 0000950005-97-000086.hdr.sgml : 19970220 ACCESSION NUMBER: 0000950005-97-000086 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970203 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: STANFORD TELECOMMUNICATIONS INC CENTRAL INDEX KEY: 0000725727 STANDARD INDUSTRIAL CLASSIFICATION: RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT [3663] IRS NUMBER: 942207636 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-11473 FILM NUMBER: 97516737 BUSINESS ADDRESS: STREET 1: 1221 CROSSMAN AVENUE CITY: SUNNYVALE STATE: CA ZIP: 94089 BUSINESS PHONE: 4087450818 MAIL ADDRESS: STREET 1: 221 CROSSMAN AVENUE CITY: SUNNYVALE STATE: CA ZIP: 94088-3733 10-Q 1 QUARTERLY REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1996 OR [ ] 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 0-12734 Stanford Telecommunications, Inc. --------------------------------- (Exact name of registrant as specified in its charter) Delaware 94-2207636 -------- ---------- (State or other jurisdiction of incorporation (I.R.S. Employer or organization) Identification No.) 1221 Crossman Avenue, Sunnyvale, CA 94089 ----------------------------------------- (Address of principal executives offices) (Zip Code) 408/745-0818 ------------ (Registrant's telephone number, including area code) ------------ (Former name, former address and former fiscal year, if changed since last report) 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 --- --- APPLICABLE ONLY TO CORPORATE USERS: Indicate the number of outstanding shares of each of the issuer's classes of common stock, as of the latest practical date. 6,404,577 as of January 21, 1997 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS STANFORD TELECOMMUNICATIONS, INC. CONDENSED FINANCIAL STATEMENTS (Unaudited) The condensed financial statements included herein have been prepared by the Company, without audit, 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, although the Company believes the disclosures which are made are adequate to make the information presented not misleading. Further, the condensed financial statements have been prepared in all material respects in conformity with the standards of accounting measurement set forth in Accounting Principles Board Opinion No. 28 and reflect, in the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position and results of operations as of and for the periods indicated. It is suggested that these condensed financial statements be read in conjunction with the financial statements and the notes thereto included in the Stanford Telecommunications, Inc. 1996 Annual Report. The results of operations for the first nine months of fiscal year 1997 ended December 31, 1996 are not necessarily indicative of results to be expected for the entire year ending March 31, 1997. STANFORD TELECOMMUNICATIONS, INC. CONDENSED STATEMENTS OF INCOME (UNAUDITED) (in thousands, except per share amount)
Three Months Ended Nine Months Ended December 31, December 31, ---------------------- ---------------------- 1996 1995 1996 1995 ---- ---- ---- ---- Revenues $ 42,028 $ 36,384 $ 123,929 $ 107,933 Cost of revenues 32,305 28,922 95,187 87,013 --------- --------- --------- --------- Gross profit 9,723 7,462 28,742 20,920 Expenses Research and development 2,903 2,046 8,576 5,889 Marketing and administrative 4,170 3,104 12,297 9,002 --------- --------- --------- --------- Total expenses 7,073 5,150 20,873 14,891 Operating income 2,650 2,312 7,869 6,029 Interest income, net 342 164 924 494 --------- --------- --------- --------- Income before income taxes 2,992 2,476 8,793 6,523 Provision for income taxes (1,032) (863) (3,034) (2,381) --------- --------- --------- --------- Net income $ 1,960 $ 1,613 $ 5,759 $ 4,142 ========= ========= ========= ========= Weighted average common 6,521 6,361 6,534 6,328 shares and equivalents Net income per share $ 0.30 $ 0.25 $ 0.88 $ 0.65 ========= ========= ========= ========= See accompanying notes
STANFORD TELECOMMUNICATIONS, INC. CONDENSED BALANCE SHEETS (in thousands, except per share amount) ASSETS December 31, March 31, 1996 1996 --------- --------- Current assets: (Unaudited) Cash and cash equivalents $ 6,706 $ 4,409 Short-term investments 18,579 14,127 Accounts receivable 27,382 22,018 Unbilled receivables 17,929 11,993 Inventories, net of related progress billings 10,542 18,702 Prepaid expenses 4,125 4,903 --------- --------- Total current assets 85,263 76,152 --------- --------- Property and equipment at cost: Electronic test equipment 42,779 39,541 Furniture and fixtures 3,434 2,967 Leasehold improvements 3,715 3,657 --------- --------- 49,928 46,165 Less: Accumulated depreciation and amortization (35,259) (31,665) --------- --------- Net property and equipment 14,669 14,500 --------- --------- Other assets 392 296 --------- --------- $ 100,324 $ 90,948 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current maturities of long-term obligations $ 74 $ 80 Accounts payable 8,231 6,097 Advance payments from customers 1,051 515 Accrued liabilities 9,523 10,044 Accrued and current deferred income taxes 3,099 2,921 --------- --------- Total current liabilities 21,978 19,657 --------- --------- Long-term obligations, less current maturities 37 85 --------- --------- Other long-term liabilities 929 986 --------- --------- Deferred income taxes 231 631 --------- --------- Shareholders' equity: Common shares - par value $.01; 15,000 shares authorized Outstanding - 6,403 shares at December 31, 1996 64 63 - 6,328 shares at March 31, 1996 Paid-in capital 40,169 38,369 Retained earnings 36,916 31,157 --------- --------- Total shareholders' equity 77,149 69,589 --------- --------- $ 100,324 $ 90,948 ========= ========= See accompanying notes. STANFORD TELECOMMUNICATIONS, INC. CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands)
Nine Months Ended December 31, ----------------- Cash flows from operating activities: 1996 1995 ---- ---- Net income $ 5,759 $ 4,142 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 3,875 3,779 Issuances of stock to employees under bonus and award plans 85 65 Provision for losses on receivables and contracts 1,298 654 Loss on retirements of property and equipment 3 (7) (Increase) decrease in assets: Receivables billed and unbilled (11,512) 2,707 Inventories 7,574 (6,434) Prepaid expenses and other assets 682 (3,171) Increase (decrease) in liabilities: Accounts payable, advance payments, and accrued expenses 2,149 (1,588) Other long-term liabilities (57) 34 Accrued and deferred income taxes 93 1,265 -------- -------- Net cash provided by operating activities 9,949 1,446 -------- -------- Cash flows (used in) provided by investing activities: Purchase of short-term investments (25,950) (5,848) Proceeds from maturities of short-term investments 21,498 8,888 Purchase of property and equipment (4,547) (3,669) Proceeds from sale of property and equipment -- 210 -------- -------- Net cash used in investing activities (8,999) (419) -------- -------- Cash flows from financing activities: Payments on capital lease obligations (54) (103) Proceeds from transactions under stock plans 1,401 758 -------- -------- Net cash provided by financing activities 1,347 655 -------- -------- Net increase in cash and cash equivalents 2,297 1,682 Cash and cash equivalents at beginning of period 4,409 2,910 -------- -------- Cash and cash equivalents at end of period $ 6,706 $ 4,592 ======== ======== See accompanying notes.
STANFORD TELECOMMUNICATIONS, INC. Notes to Condensed Interim Financial Statements (Unaudited) December 31, 1996 1. Net income per share Net income per share is computed using the weighted average number of shares of common stock and common stock equivalents outstanding during the periods. Common stock equivalents consist of the dilutive effect of outstanding options to purchase common stock. Fully diluted net income per share is substantially the same as reported net income per share. 2. Inventories Inventories are stated at the lower of cost (first-in, first-out) or market. Cost includes materials, labor and related indirect expenses. General and administrative costs are only included in inventory for government contracts, as such costs are reimbursed by the government. The components of inventory are (in thousands): December 31, 1996 March 31, 1996 ----------------- -------------- Work-in-progress $ 8,277 18,773 Finished goods 2,700 1,850 Allocated general and administrative costs 294 808 Less: progress billings (729) (2,729) ------- ------- $10,542 $18,702 ======= ======= 3. Capital Stock On June 26, 1996, the Company's stockholders approved an amendment to Article 4 of the Company's Certificate of Incorporation to increase the number of authorized shares of common stock par value $0.01 per share ("common stock"), from 15,000,000 to 25,000,000. Approval of the amendment gives the Company the power to cause a Certificate of Amendment to be filed with the Delaware Secretary of State on or prior to June 30, 1997. However, the Company shall not be obligated to file a Certificate of Amendment with respect to the increase in the number of authorized shares at any specified time or at all. As of December 31, 1996 a Certificate of Amendment to increase the number of authorized shares has not been filed. 4. Credit Agreement On December 5, 1996 the Company amended and restated its credit line agreement to expire on December 18, 1997. The bank credit commitment of $15 million requires the Company to maintain certain financial covenants. At December 31, 1996, the Company was in compliance with all such financial covenants. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview Since the Company's inception in 1973, revenues have been generated primarily from sales to agencies of the U.S. Government, including the DoD, the U.S. Air Force, Army and Navy, NASA and the FAA, or their prime contractors. Such revenues are generated from many contracts including programs requiring multi-year hardware and software development and limited production of products and systems. The Company's contracts often require the design, production, operation and maintenance of sophisticated equipment and systems and provision of system integration services in the digital telecommunications and satellite communications fields. A substantial portion of the digital telecommunications and satellite communications research and development performed by the Company since its inception has been funded by its customers and recorded as revenues by the Company. Accordingly, the cost of performing this customer-funded research and development is included in "Cost of Revenues" in the Company's financial statements. The Company's government contracts are generally cost-reimbursement plus profit or fixed-price contracts. The Company generally recognizes revenues from its long-term government contracts on a percentage-of-completion basis, or a unit shipped basis for production contracts. Commencing in the late 1980's, the Company began to pursue commercial opportunities utilizing its digital telecommunications technology developed and enhanced by the Company since its inception. Commercial revenues have risen from less than 6% of total revenues in fiscal year 1989 to approximately 46% of total revenues in fiscal year 1996. Commercial revenues totaled $66.3 million during fiscal year 1996. During the first nine months of fiscal 1997, commercial revenues amounted to approximately $53.6 million or 44% of total revenues reported. The Company includes in commercial revenues sales of standard or off-the-shelf products such as the digital interfaces for secure voice transmissions or GPS simulators to any customers, including government customers. The Company's operating results have from time to time been adversely affected by non-recoverable cost overruns on certain fixed-price contracts, primarily fixed-price development contracts which have included significant software and hardware development. The Company has instituted additional management controls to more closely monitor its bidding process and costs incurred on fixed-price development contracts, however, no assurance can be given that the Company will not incur losses on future fixed-price contracts or additional losses on existing contracts. The Company believes that development contracts are an important element in maintaining its technological leadership position in digital telecommunications. The Company plans to selectively bid on programs where it would be the sole provider or its technology leadership provides a competitive advantage. In addition, in order to position itself in the commercial marketplace, the Company may selectively enter into contracts with customers to deliver products where the Company will be funding a portion of the development costs. As a result, the Company may incur losses on certain fixed-price contracts. Such losses will be charged against results of operations in the period when they first become known, typically near the initiation of the contract and may have a material adverse effect on the Company's results of operations. Cautionary Statements In the interest of providing the Company's shareholders and potential investors with certain Company information, including management's assessment of the Company's future potential, certain statements set forth herein contain or are based on projections of revenue, income, earnings per share and other financial items or relate to management's future plans and objectives or to the Company's future economic performance. Such statements are "forward-looking statements" within the meaning of Section 27A(i) of the Securities Act of 1933, as amended, and in Section 21E(i) of the Securities Exchange Act of 1934, as amended. Although any forward-looking statements contained herein or otherwise expressed by or on behalf of the Company are to the knowledge and in the judgment of the officers and directors of the Company, expected to prove true and to come to pass, management is not able to predict the future with absolute certainty. Accordingly, shareholders and potential investors are hereby cautioned that certain events or circumstances could cause actual results to differ materially from those projected or predicted herein. In addition, the forward-looking statements herein are based on management's knowledge and judgment as of the date hereof, and the Company does not intend to update any forward-looking statements to reflect events occurring or circumstances existing hereafter. For further information on the foregoing, reference is made to the Company's Securities and Exchange Commission report on Form 10-K. Quarterly Results The following table presents the Company's financial results by quarter for fiscal 1996 and the first three quarters of fiscal 1997. These quarterly financial results are unaudited. In the opinion of management, however, they have been prepared on the same basis as the audited financial information and include all adjustments necessary for a fair presentation of the information set forth therein. The operating results for any quarter are not necessarily indicative of the results that may be expected for any future period. Quarter Ended Statement of Operations Data (in thousands, except per share data)
Fiscal 1996 Fiscal 1997 -------------------------------------------- -------------------------------- June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 -------- -------- -------- -------- -------- -------- -------- Revenues $ 35,952 $ 35,597 $ 36,384 $ 37,168 $ 40,843 $ 41,058 $ 42,028 Cost of revenues 29,876 28,215 28,922 29,001 31,993 30,889 32,305 -------- -------- -------- -------- -------- -------- -------- Gross profit 6,076 7,382 7,462 8,167 8,850 10,169 9,723 -------- -------- -------- -------- -------- -------- -------- Expenses: Research and development 1,793 2,050 2,046 2,541 2,229 3,444 2,903 Marketing and administrative 2,659 3,239 3,104 3,211 4,022 4,105 4,170 -------- -------- -------- -------- -------- -------- -------- Total expenses 4,452 5,289 5,150 5,752 6,251 7,549 7,073 Operating income 1,624 2,093 2,312 2,415 2,599 2,620 2,650 Interest income, net 178 152 164 345 284 298 342 -------- -------- -------- -------- -------- -------- -------- Income before provision for 1,802 2,245 2,476 2,760 2,883 2,918 2,992 income taxes Provision for income taxes (676) (842) (863) (729) (995) (1,007) (1,032) -------- -------- -------- -------- -------- -------- -------- Net income $ 1,126 $ 1,403 $ 1,613 $ 2,031 $ 1,888 $ 1,911 $ 1,960 ======== ======== ======== ======== ======== ======== ======== Net income per share $ 0.18 $ 0.22 $ 0.25 $ 0.32 $ 0.29 $ 0.29 $ 0.30 ======== ======== ======== ======== ======== ======== ======== Weighted average common shares and equivalents 6,272 6,346 6,361 6,409 6,524 6,549 6,521
The Company's revenues and results of operations are subject to fluctuation from period to period. Factors that could cause the Company's revenues and operating results to vary from period to period include: underestimating costs on fixed-price contracts particularly for software and hardware development; timing, bidding activity and delivery of significant contracts and orders; termination of contracts; mix of products and systems sold, and services provided; reduced levels of operation during the holidays which occur primarily in the Company's third fiscal quarter; disruptions in delivery of components or subsystems; regulatory developments; and general economic conditions. Revenues have generally increased on a quarterly basis since fiscal year 1994 as a result of increasing commercial activities during the past three years. Research and development expenses include both research and development costs as well as bid and proposal expenses. Bid and proposal expenses vary significantly from period to period based on the number of proposals being prepared at any time. These requests for proposals are not received evenly during the year or in any predictable pattern. Comparison of the Third Quarter Ended December 31, 1996 and 1995 Revenues. Revenues were $42.0 million and $36.4 million for the third quarter of fiscal years 1997 and 1996, respectively, representing an increase of approximately 15.0%. Government revenues grew from $19.1 million during the third quarter of fiscal 1996 to $27.7 million for the third quarter of fiscal 1997. Commercial revenues during the third quarter of fiscal 1997 totaled $14.3 million, a decrease of 17% from commercial revenues of $17.3 recorded during the third quarter of fiscal 1996. During the third quarter of fiscal 1997, revenues from the Company's commercial contract manufacturing services totaled $6.7 million, down from $7.4 million recorded for the third quarter of fiscal 1996. Revenues from the sale of commercial telecommunication chip and board level products totaled $4.0 million for the third quarter of fiscal 1997, up from $3.4 million achieved during the third quarter of the previous fiscal year. During the third quarter of fiscal 1996 the Company recognized revenues of $2.8 million and $1.0 million associated with the completion of contract milestones for its commercial Intelsat and DSC development contracts. These contracts were successfully completed and all revenues recognized prior to the beginning of the third quarter of fiscal 1997. Cost of Revenues. Cost of revenues were $32.3 million and $28.9 million for the third quarter of fiscal 1997 and 1996, respectively, representing a 12% increase. The gross margin increased from 21% to 23% for the third quarter of fiscal 1996 and 1997, respectively, due to increased sales of commercial telecommunication chip and board level products and an increase in contracts in which the company is realizing higher margins. Research and Development. During recent quarters, the Company has focused its available research and development funds on the development of commercial products. Research and development expenses, including bid and proposal expenses were $2.9 million and $2.1 million during the third quarter of fiscal 1997 and 1996, respectively. Excluding bid and proposal expenses, the Company's research and development expenses applied to the development of its products were $2.3 million and $.9 million during the third quarter of fiscal 1997 and 1996, respectively. Bid and proposal expenses are largely the initial advanced technology development efforts directed toward a specific product or technical task for which the Company must show technical viability. The Company expects research and development expenses to increase in the future as it pursues additional commercial activities. Marketing and Administrative. Marketing and Administrative expenses were $4.2 million and $3.2 million for the third quarter of fiscal 1997 and 1996, respectively. This increase is primarily a result of personnel additions to its technical marketing staff, its executive staff as well as increased marketing expenses in pursuit of commercial opportunities. Operating Income. Operating income was $2.6 million and $2.3 million for the third quarter of fiscal 1997 and 1996, respectively. The increase in operating income during the third quarter of fiscal 1997 was primarily attributable to higher gross margins on an expanded revenue base. Interest Income. Interest income for the third quarter of fiscal 1997 was $342 thousand versus $164 thousand for the third quarter of the previous fiscal year. The increase in interest income is primarily a result of the Company increasing its net cash provided by operating activities and investing that cash in short-term investments. Provision for Income Taxes. Provision for income taxes was $1.0 million and $0.9 million for the third quarter of fiscal years 1997 and 1996, respectively. This represents a provisional tax rate of 34.5% and 34.9% for the third quarter of fiscal 1997 and 1996, respectively. Comparison of Nine Months Ended December 31, 1996 and 1995 Revenues. Revenues were $123.9 million and $107.9 million for the nine months ended December 31, 1996 and 1995, respectively, representing an increase of 15.0%. Government revenues grew from $58.3 million during the first nine months of fiscal 1996 to $70.2 million for the nine month period ending December 31, 1996. Commercial revenues during the first nine months of fiscal 1997 totaled $53.6 million, an increase of 8% from commercial revenues of $49.2 recorded during the first nine months of fiscal 1996. During the first nine months of fiscal 1997, revenues from the Company's commercial contract manufacturing services totaled $28.3 million up from $20.8 million recorded for the nine months of fiscal 1996. Revenues from the sale of commercial telecommunication chip and board level products totaled $13.5 million for the first nine months of fiscal 1997, up from $9.9 million achieved during the nine months of the previous fiscal year. Cost of Revenues. Cost of revenues were $95.2 million and $87.0 million for the nine months of fiscal 1997 and 1996, respectively, representing an 9% increase. The increase during the nine months of fiscal 1997 was a result of the recognition of costs on a higher revenue base. The gross margin increased from 19% to 23% for the first nine months of fiscal years 1996 and 1997, respectively, due to increased sales of commercial products and an increase in contracts in which the company is realizing higher margins. Research and Development. Research and development expenses, including bid and proposal expenses were $8.6 million and $5.9 million for the first nine months of fiscal 1997 and 1996, respectively, representing an increase of approximately 46%. Excluding bid and proposal expenses, the Company's research and development expenses applied to the development of products such as satellite telephony systems, wireless broadband communications, cable high speed modems and wireless telephony were $6.8 million and $2.7 million for the first nine months of fiscal 1997 and 1996, respectively. Marketing and Administrative. Marketing and administrative expenses were $12.3 million and $9.0 million for the first nine months of fiscal 1997 and 1996, respectively, representing an increase of approximately 37%. This increase is primarily a result of personnel additions to its technical marketing staff, its executive staff, increased marketing expenses in pursuit of commercial opportunities and increased commissions paid resulting from growth in its commercial sales. Operating Income. Operating income was $7.9 million and $6.0 million for the nine months of fiscal 1997 and 1996, respectively. The 32% increase in operating income during the first nine months of fiscal 1997 was primarily attributable to higher gross margins on an expanded revenue base. Interest Income. Interest income for the first nine months of fiscal 1997 was $924 thousand versus $494 thousand for the first nine months of the previous fiscal year. The increase in interest income is primarily a result of the Company increasing its net cash provided by operating activities and investing that cash in interest bearing short-term investments. Provision for Income Taxes. Provision for income taxes was $3.0 million and $2.4 million for the first nine months of fiscal 1997 and 1996, respectively. This represents a provisional tax rate of 34.5% and 36.5% for the first nine months of fiscal 1997 and 1996, respectively. The decrease in the effective tax rate results primarily from increased Research and Development (R&D) tax credits and other state income tax credits. Booking and Backlog Funded bookings were $42.1 million and $33.5 million for the third quarter of fiscal 1997 and 1996, respectively, and $121.0 million and $113.3 million for the nine months ended December 31, 1996 and 1995, respectively. Bookings were derived from both the Company's commercial operations as well as its government business sectors. At the end of the third quarter of fiscal 1997 and 1996, backlog stood at $79.9 million and $77.9 million, respectively. Liquidity and Capital Resources Working capital increased from $53.0 million to $63.3 million at December 31, 1995 and 1996, respectively, and increased by $6.8 million from the end of fiscal 1996. Net cash provided by operating activities for the nine months of fiscal 1997 ended December 31, 1996 was $9.9 million. During the three quarters of fiscal 1997, the Company realized net income of $5.7 million, decreased its inventories by $7.6 million, increased its billed and unbilled receivables by $11.5 million, and increased its accounts payable, advance payments, and accrued expenses by $2.1 million. Net cash provided by operating activities for the nine months of fiscal 1996 ended December 31, 1995 was $1.4 million. During the nine months of fiscal 1996, the Company realized net income of $4.1 million, decreased its receivables, billed and unbilled, by $2.7 million, increased its inventories by $6.4 million, and decreased its accounts payable, advance payments, and accrued expenses by $1.6 million. The Company utilized its cash for the purchase of property and equipment totaling $4.5 million and $3.7 million during the first nine months of fiscal 1997 and 1996, respectively. The Company has a bank credit commitment of $15.0 million which it can utilize to augment cash flow need and to secure standby letters of credit. Available borrowings under this line at December 31, 1996 were $15.0 million. Under this line of credit the Company must maintain certain financial covenants. The Company was in compliance with all covenants as of December 31, 1996. The credit agreement expires on December 18, 1997. At December 31, 1996, the Company's long-term obligations (including current maturities) and other long-term liabilities totaled approximately $1.0 million. At December 31, 1996, cash and cash equivalents of $6.7 million were substantially held in money market accounts, and short term investments of $18.6 million were held in U.S. treasury instruments with maturities not exceeding 365 days. The Company believes that its current cash position, funds generated from operations and funds available from its existing bank credit agreement, will be adequate to meet the Company's requirements for working capital, capital expenditures and debt service for the next several fiscal quarters. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K No current Reports on Form 8-K were filed with the Securities and Exchange Commission during the period covered by this Form 10-Q. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Stanford Telecommunications, Inc. (Registrant) /s/ Jerry Klajbor - -------------------------------------------- Jerry Klajbor Vice-President and Chief Financial Officer (Principal Financial and Accounting Officer) January 30, 1997 EX-27 2 FINANCIAL DATA SCHEDULE
5 STANFORD TELECOMMUNICATIONS, INC. EDGAR FINANCIAL DATA SCHEDULE (EXHIBIT 27) Appendix A to item 601(c) of Regulation S-X Commercial and Industrial Companies Article 5 of Regulation S-X Nine month period ending December 31, 1996 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED STATEMENT OF INCOME AND THE CONSOLIDATED BALANCE SHEET AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 9-MOS MAR-31-1997 APR-01-1996 DEC-31-1996 6,706 18,579 45,311 0 10,542 85,263 49,928 35,259 100,324 21,978 0 64 0 0 77,149 100,324 123,929 123,929 95,187 116,060 0 0 0 8,793 3,034 0 0 0 0 5,759 0.00 0.88
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