-----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, IvCA7YRCMOluLmGQ+U+ytJ7urFX3Ie3URw5Wqu3lWvlnIUtM4U5tSDDdxb9j8QxQ kUq9f7J05RHpdX9E3kmA5w== 0000730255-98-000011.txt : 19981012 0000730255-98-000011.hdr.sgml : 19981012 ACCESSION NUMBER: 0000730255-98-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980829 FILED AS OF DATE: 19981009 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CALIFORNIA AMPLIFIER INC CENTRAL INDEX KEY: 0000730255 STANDARD INDUSTRIAL CLASSIFICATION: RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT [3663] IRS NUMBER: 953647070 STATE OF INCORPORATION: DE FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-12182 FILM NUMBER: 98723703 BUSINESS ADDRESS: STREET 1: 460 CALLE SAN PABLO CITY: CAMARILLO STATE: CA ZIP: 93012 BUSINESS PHONE: 8059879000 MAIL ADDRESS: STREET 1: 460 CALLE SAN PABLO CITY: CAMARILLO STATE: CA ZIP: 93012 10-Q 1 FY99 2ND QTR 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 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: August 29, 1998 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: 012182 CALIFORNIA AMPLIFIER, INC. (Exact name of registrant's specified in its charter) Delaware 95-3647070 (State or Other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 460 Calle San Pablo Camarillo, California 93012 (Address of principal executive offices) (Zip Code) (805) 987-9000 (Registrant's telephone number including area code) 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 Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the close of the period covered by this report. Common Stock Outstanding as of August 29, 1998: 11,784,572 Number of pages in this Form 10-Q: 12 PART I - FINANCIAL INFORMATION ITEM 1: FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEETS (in thousands, except par value) Aug. 29, Feb.28, 1998 1998 (Unaudited) (Audited) ----------------------- ASSETS Current assets: Cash and cash equivalents $ 5,912 $4,422 Accounts receivable 5,219 5,745 Income tax receivable 886 407 Inventories 5,276 6,851 Deferred tax asset 1,777 2,000 Prepaid expenses and other current assets 794 462 - ----------------------------------------------------------------------- Total current assets 19,864 19,887 Property and equipment -- at cost, net of accumulated depreciation and amortization 5,222 7,116 Other assets 799 828 - ----------------------------------------------------------------------- $25,885 $27,831 - ------------------------------------------------------------------------ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 2,405 $1,861 Accrued liabilities 1,787 2,399 Current portion of long-term debt 613 741 - ----------------------------------------------------------------------- Total current liabilities 4,805 5,001 Long-term debt 806 1,112 Minority interest share in net assets of Micro Pulse, Inc. 186 321 Stockholders' equity: Preferred stock, 3,000 shares authorized; no shares outstanding --- --- Common stock, $.01 par value; 30,000 shares authorized; 11,785 shares outstanding in August 1998 and 11,771 shares outstanding in February 1998 118 118 Additional paid-in capital 14,050 14,025 Foreign currency translation adjustment (261) (249) Retained earnings 6,181 7,503 - ----------------------------------------------------------------------- Total stockholders' equity 20,088 21,397 - ----------------------------------------------------------------------- $25,885 $27,831 - ------------------------------------------------------------------------ CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited; in thousands, except per share data)
Three Months Ended Six Months Ended ----------------------------------------- Aug. 29, Aug. 30, Aug. 29, Aug. 30, 1998 1997 1998 1997 - ------------------------------------------------------------------------ Sales $8,322 $13,091 $17,382 $25,104 Cost of sales 6,383 9,135 12,650 17,477 - ------------------------------------------------------------------------ Gross profit 1,939 3,956 4,732 7,627 Research and development 1,271 1,051 2,487 2,137 Selling 1,155 1,405 2,401 2,712 General and administrative 957 1,105 2,028 2,083 - ------------------------------------------------------------------------ Income (loss) from operations (1,444) 395 (2,184) 695 Interest and other, net (11) (8) (17) (13) Minority interest share in (income)loss of Micro Pulse 147 (65) 135 (148) - ------------------------------------------------------------------------ Income (loss) before taxes (1,308) 322 (2,066) 534 Benefit from (provision for) income taxes 471 (118) 744 (200) - ------------------------------------------------------------------------ - ------------------------------------------------------------------------ Net income (loss) $(837) $204 $(1,322) $ 334 - ------------------------------------------------------------------------ Net income (loss) per share Basic $(.07) $ .02 $ (.11) $ .03 Diluted $(.07) $ .02 $ (.11) $ .03 - ------------------------------------------------------------------------ Shares used in per share calculations Basic 11,785 11,763 11,782 11,688 Diluted 11,785 12,034 11,782 12,009 - ------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited, in thousands) Six Months Ended - ----------------------------------------------------------------------- Aug. 29, Aug. 30, 1998 1997 - ----------------------------------------------------------------------- Cash flows from operating activities: Net income (loss) $(1,322) $ 334 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,612 1,562 Minority interest (135) 217 Gain on sale of equipment (4) --- (Increase) decrease in: Accounts receivable 526 (1,370) Inventories 1,575 (1,990) Prepaid expenses and other assets (559) 380 Increase (decrease) in: Accounts payable 544 1,465 Accrued liabilities (612) (232) - ----------------------------------------------------------------------- Cash provided by operating activities: 1,625 366 - ----------------------------------------------------------------------- Cash flows from investing activities: Purchases of property and equipment (611) (1,784) Proceeds from sale of property and equipment 885 --- Purchase of controlling interest in Micro Pulse --- 327 - ----------------------------------------------------------------------- Cash provided by (used in) investing activities: 274 (1,457) - ----------------------------------------------------------------------- Cash flows from financing activities: Addition (repayment) of term debt (434) 384 Issuances of common stock 25 19 - ----------------------------------------------------------------------- Cash provided by (used in) financing activities: (409) 403 - ----------------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents 1,490 (688) Cash and cash equivalents at end of period 4,422 3,165 - ----------------------------------------------------------------------- Cash and cash equivalents at end of period $5,912 $2,477 ======================================================================= CALIFORNIA AMPLIFIER, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 1. Basis of Presentation - The accompanying unaudited consolidated financial statements have been prepared in accordance with the requirements of Form 10-Q and, therefore, do not include all information and footnotes which would be presented were such financial statements prepared in accordance with generally accepted accounting principles. These statements should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended February 28, 1998. In the opinion of management, these interim financial statements reflect all adjustments necessary for a fair presentation of the financial position and results of operations for each of the periods presented. The results of operations and cash flows for such periods are not necessarily indicative of results to be expected for the full fiscal year. 2. Inventories - Inventories include the cost of material, labor and manufacturing overhead and are stated at the lower of cost (first-in, first-out) or market and consist of the following (in 000's): Aug. 29, Feb. 28, 1998 1998 - ------------------------------------------------------------------------ Raw materials $2,480 $2,694 Work in process 19 66 Finished goods 2,777 4,091 - ------------------------------------------------------------------------ $5,276 $6,851 - ------------------------------------------------------------------------ 3. Comprehensive Income (Loss) - Effective March 1, 1998 the Company adopted the provisions of SFAS No. 130, "Reporting Comprehensive Income" which establishes standards for reporting and display of comprehensive income and its components in a full set of general-purpose financial statements. Comprehensive income is defined as the total of net income and all non-owner changes in equity. The following table details the components of comprehensive income (loss) for the three and six months ended August 29, 1998 and August 30, 1997 (000's): Quarter Ended Aug. 29, Aug. 30, 1998 1997 --------- --------- Net income (loss) $(837) $ 204 Foreign currency translation adjustment 12 3 --------- --------- Comprehensive income (loss) $(825) $ 207 ========= ========= Six Months Ended Aug. 29, Aug. 30, 1998 1997 --------- --------- Net income (loss) $(1,322) $ 334 Foreign currency translation adjustment (12) (56) --------- --------- Comprehensive income (loss) $(1,334) $ 278 ========= ========= ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Three Months Ended August 29, 1998 and August 30, 1997 Sales Sales decreased by $4.8 million from $13.1 million for the three months ended August 30, 1997, to $8.3 million for the three months ended August 29, 1998. Sales of Wireless Cable products decreased $3.6 million from $7.8 million to $4.2 million. Sales of Satellite Television products decreased $703,000 from $3.8 million to $3.1 million. Sales of Antenna products by Micro Pulse decreased $462,000 from $1.5 million to $1.0 million. The decrease in the sale of Wireless Cable products resulted from the significant downturn in the worldwide Wireless Cable television market, which began in the second half of fiscal year 1998 and has continued into fiscal year 1999. The sales decrease can be attributed to reductions in the shipments of both reception equipment, and MultiCipher, the Company's conditional access system. Reception product sales were adversely affected by curtailed purchases by existing systems, as well as a lack of new system expansion. MultiCipher sales were adversely impacted primarily by the lack of new system expansion. The softness in the Wireless Cable market affected unit shipments, as well as unit average sale prices as competition lowered unit sales prices in an attempt to attract customers. The Company reduced its unit sales prices to maintain market share, however, demand for product was significantly less than in prior periods. The decrease in sales of Satellite Television products resulted from the continued decrease in sales of C-Band products internationally because current unit pricing prohibits the Company from competing in these markets at acceptable gross margins. These sales decreases were offset by sales of Ku-DBS products domestically as the Company expands its presence in the Ku-DBS marketplace. The decrease in the sale of Antenna products by Micro Pulse resulted primarily from increased competition, reductions in buying patterns by certain customers as compared to the prior year, and unit price declines. The Company's objective is to achieve sequential quarterly sales increases. This is dependent upon the Company maintaining its Wireless Cable market share internationally, a successful Wireless Cable digital rollout in the United States in which the Company must participate as a key supplier, and the timely introduction of certain Ku-DBS and commercial satellite products. Gross Profit and Gross Margin Gross profit for the three months ended August 29, 1998 decreased by $2.1 million from $4.0 million for the three months ended August 30, 1997, to $1.9 million. Gross margin decreased 23.8% from 30.2% to 23.3%. The decrease in gross profit resulted from lower sales volumes and reduced gross margins. The gross margin decrease is primarily a result of product sales mix and under-utilization of factory overhead because of the decreased sales volumes. There will be continued pressure on gross margins primarily because of competitive pricing pressures. As a result, the Company will concentrate on product cost reductions and product differentiation in an attempt to maintain or increase gross margins. Operating Expenses Research and development expenses increased by $220,000 from $1.1 million to $1.3 million. The 20% increase resulted primarily from increased engineering personnel, as well as increased salaries to remain competitive with industry salary requirements. Selling expenses decreased by $250,000, or 12.8%, from $1.4 million to $1.2 million. The decrease in selling expense relates primarily to a reduction in discretionary marketing expenses, and reductions in variable selling expenses because of lower sales. General and administrative expenses decreased by $148,000 from $1.1 million to $957,000. The decrease relates primarily to reductions in certain administrative expenses, offset by increases in legal expenses relating to the stockholder class action litigation. Income (Loss) from Operations Income (loss) from operations, for the reasons noted above, decreased by $1.8 million, from operating income of $395,000 for the three months ended August 30, 1997, to an operating loss of $1.4 million for the three months ended August 29, 1998. Minority Interest Share in (Income) Loss of Micro Pulse The minority interest share in (income) loss of Micro Pulse represents 50.5% of the (income) loss before tax of Micro Pulse. The current year amount represents 50.5% of Micro Pulse's loss before tax, while the prior year period represents 49.5% of Micro Pulse's operating income. Benefit from (Provision for) Income Taxes The benefit from income taxes the second quarter of fiscal 1999 is based upon an annualized tax rate of 36%. This tax rate assumes savings from benefits allowed for export sales through a foreign sales corporation and research and development tax credits. The Company believes it will return to profitability in future periods. Accordingly, the tax benefit recorded during the current period, and recorded as a deferred tax asset in the accompanying consolidated balance sheet is expected to be utilized. Net Income (Loss) Net income (loss), for reasons outlined above, decreased by $1.0 million, from net income of $204,000 to a net loss of $837,000 for the three months ended August 29, 1998. Six Months Ended August 29, 1998 and August 30, 1997 Sales Sales decreased by $7.7 million, or 31%, from $25.1 million for the six months ended August 30, 1997, to $17.4 million for the six months ended August 29, 1998. Sales of Wireless Cable products decreased $5.1 million from $14.9 million to $9.8 million. Sales of Satellite Television products decreased $1.8 million from $7.1 million to $5.3 million. Sales of Antenna products by Micro Pulse decreased $843,000 from $3.2 million to $2.3 million. The decreases in Wireless Cable sales resulted primarily from the significant downturn in the worldwide Wireless Cable television market, which began in the second half of fiscal year 1998 and has continued during into fiscal year 1999. The decrease can be attributed to reductions in the shipments of both reception equipment, and MultiCipher the Company's conditional access system. Reception product sales were adversely affected by curtailed purchases by existing systems, as well as a lack of new system expansion. MultiCipher sales were adversely impacted particularly by the lack of new system expansion. The softness in the Wireless Cable market affected unit shipments, as well as unit average sale prices as competition lowered unit sales prices in an attempt to attract customers. The Company reduced its unit sales prices to maintain market share, however, demand for product was significantly less than in prior periods. The decrease in sales of Satellite Television products resulted from the continued decrease in sales of C-Band products internationally because current unit pricing prohibits the Company from competing in these markets at acceptable gross margins. These sales decreases were offset by sales of Ku-DBS products domestically as the Company expands its presence in the Ku-DBS marketplace. The decrease in the sale of Antenna products by Micro Pulse resulted primarily from increased competition, reductions in buying patterns by certain customers as compared to the prior year, and unit price declines. The Company's objective is to achieve sequential quarterly sales increases. This is dependent upon the Company maintaining its Wireless Cable market share internationally, a successful Wireless Cable digital rollout in the United States in which the Company must participate as a key supplier, and the timely introduction of certain Ku-DBS, and commercial satellite products. Gross Profit and Gross Margin Gross profit for the six months ended August 29, 1998 decreased by $2.9 million from $7.6 million for the six months ended August 30, 1997, to $4.7 million. Gross margin decreased from 30.3% to 27.2%. The decrease in gross profit resulted from lower sales volumes and reduced gross margins. The gross margin decline is primarily a result of lower sales volumes, pricing competition in Wireless Cable reception and Ku-DBS products, product sales mix resulting in lower unit sales prices year-to-year, decreases in unit sale prices because of reduced pricing for most products, and under-utilization of factory overhead because of the decreased sales volumes. There will be continued pressure on gross margins primarily because of competitive pricing pressures. As a result, the Company will concentrate on product cost reductions and product differentiation in an attempt to maintain or increase gross margins. Operating Expenses Research and development expenses increased $350,000 from $2.1 million to $2.5 million. The increase resulted primarily from increased engineering personnel, as well as increased salaries to remain competitive with industry salary requirements. Selling expenses decreased $311,000 from $2.7 million to $2.4 million. The decrease in selling expense relates primarily to a reduction in discretionary marketing expenses, and reductions in variable selling expenses because of lower sales. General and Administrative expense decreased $55,000 from $2.1 million to $2.0 million. The decrease relates primarily to reductions in certain administrative expenses, offset, by increases in legal expenses relating to the stockholder class action litigation. Income (Loss) from Operations Income (loss) from operations, for the reasons outlined above, decreased $2.9 million, from operating income of $695,000 to an operating loss of $2.2 million. Minority Interest Share in (Income) Loss of Micro Pulse The minority interest share in (income) loss of Micro Pulse represents 50.5% of the (income) loss before tax of Micro Pulse. The current year amount represents 50.5% of Micro Pulse's loss before tax, while the prior year period represents 49.5% of Micro Pulse's operating income. Benefit from (Provision for) Income Taxes The benefit from income taxes for the six months ended August 29, 1998, is based upon an annualized tax rate of 36%. This tax rate assumes savings from benefits allowed for export sales through a foreign sales corporation and research and development tax credits. The Company believes it will return to profitability in future periods. Accordingly, the tax benefit recorded during the current period, and recorded as a deferred tax asset in the accompanying consolidated balance sheet is expected to be utilized. Net Income (Loss) Net income (loss), for reasons outlined above, decreased by $1.65 million from net income of $334,000, to a net loss of $1,322,000. LIQUIDITY AND CAPITAL RESOURCES The Company has a $6.0 million working capital facility with California United Bank at the bank's prime rate (8.5% at August 29, 1998). In addition, California Amplifier s.a.r.l., its foreign subsidiary, has an informal arrangement with a French bank to borrow up to $600,000. As of August 29, 1998, no amounts were outstanding under any of these arrangements. The $6.0 million credit facility with California United Bank expires in November 1998. The Company believes the Bank will renew the credit facility at a lower amount because of the Company's current sales volumes. The Company believes that cash flow from operations, together with the funds available under its credit facilities, are sufficient to support operations and capital equipment requirements over the next twelve months. The Company believes that inflation has not had a material effect on its operations. YEAR 2000 COMPLIANCE The Company has a plan to ensure all software and equipment are Year 2000 compliant. The plan includes, among other things, updating its current integrated financial and manufacturing software. As such, management believes that after January 1, 2000, the Company will be able to continue to accurately accumulate and summarize data relating to its business operations. The total estimated cost associated with Year 2000 compliance is less than $100,000. As of August 29, 1998 the Company remained on target to ensure Y2K compliance by January 1, 2000. SAFE HARBOR STATEMENT Forward looking statements in this Form 10-Q which include, without limitation, statements relating to the Company's plans, strategies, objectives, expectations, intentions, projections and other information regarding future performance, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The words "believes," "anticipates," "expects," and similar expressions are intended to identify forward-looking statements. These forward-looking statements reflect the Company's current views with respect to future events and financial performance and are subject to certain risks and uncertainties, including, without limitation, product demand, competitive market growth, timing and market acceptance of new product introductions, competition, pricing and other risks and uncertainties that are detailed from time to time in the Company's periodic reports filed with the Securities and Exchange Commission, copies of which may be obtained from the Company upon request. Such risks and uncertainties could cause actual results to differ materially from historical results or those anticipated. Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be attained. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. PART II - OTHER INFORMATION ITEM 1. Legal Proceedings. On June 11, 1997, the Company and certain of its directors and officers had two legal actions filed against them, one in the United States District Court, Central District of California, entitled Yourish v. California Amplifier, Inc., et al., Case No. 97-4293 CBM (Mcx), and the other in the Superior Court for the State of California, County of Ventura, entitled Yourish v. California Amplifier, Inc. et al., Case No. CIV 173569. On June 30, 1997, another legal action was filed against the same defendants in the Superior Court for the State of California, County of Ventura, entitled Burns, et al., v. California Amplifier, Inc., et al., Case No. CIV 173981. All three actions are purported class actions on behalf of purchasers of the common stock of the Company between September 12, 1995 and August 8, 1996. The actions claim that the defendants engaged in a scheme to make false and misleading statements and omit to disclose material adverse facts to the public concerning the Company, allegedly causing the Company's stock price to artificially rise, and thereby allegedly allowing the individual defendants to sell stock at inflated prices. Plaintiffs claim that the purported stockholder class was damaged when the price of the stock declined upon disclosure of the alleged adverse facts. On September 21, 1998, the Federal legal action was dismissed in the United States District Court, but the State legal action remains in the Superior Court for the State of California. The Company and its legal counsel are currently evaluating the claims. Based upon the analysis performed to date, the Company, its directors and officers, plan to vigorously defend themselves against these claims in State court. ITEM 2.Changes in Securities None ITEM 3.Defaults upon Senior Securities None ITEM 4.Submission of Matters to a Vote of Security Holders The annual meeting of stockholders of California Amplifier, Inc. was held July 17, 1998. At the annual meeting of stockholders a proposal was considered for the election of Ira Coron, Fred Sturm, Arthur H. Hausman, William E. McKenna and Thomas L. Ringer as directors to serve until the 1999 annual meeting of stockholders. All of the five director-nominees were elected. The voting results are summarized below: Proposal 1)Election of Directors: For Withheld Against Ira Coron 10,785,642 282,622 0 Fred Sturm 10,856,136 212,128 0 Arthur H. Hausman 10,821,493 246,771 0 William E. McKenna 10,808,337 259,927 0 Thomas L. Ringer 10,800,356 267,908 0 ITEM 5. Other Information None ITEM 6. Exhibits and Reports on Form 8-K (a) No reports on Form 8-K were filed during the quarter ended August 29, 1998. 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. California Amplifier, Inc. (Registrant) October 9, 1998 /s/ Michael R. Ferron ------------------------- Michael R. Ferron Vice President, Finance and Chief Accounting Officer EX-27 2 FDS -- FY99 2ND QTR 10-Q
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET ON PAGE 2 AND THE CONSOLIDATED STATEMENTS OF OPERATIONS ON PAGE 3 OF THE COMPANY'S FORM 10-Q FOR THE THREE AND SIX MONTHS ENDED AUGUST 29, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000730255 CALIFORNIA AMPLIFIER, INC. 1,000 6-MOS FEB-27-1999 AUG-29-1998 5,912 0 5,787 568 5,276 19,864 20,350 15,128 25,885 4,805 0 0 0 14,168 5,920 25,885 17,382 17,382 12,650 6,916 135 0 (17) (2,066) (744) 0 0 0 0 (1,322) (0.11) (0.11)
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