-----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, C7bR4azWutSPKuw3/hydOX1xiyVnXOk2GNyzbGynmOFTE5hqm8b/juWA5J+3owKf 7RUFMRCsIld+pCAcuVEQ7A== 0000730255-99-000013.txt : 19990713 0000730255-99-000013.hdr.sgml : 19990713 ACCESSION NUMBER: 0000730255-99-000013 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990529 FILED AS OF DATE: 19990712 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: 99662304 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 FY2000 1ST QUARTER 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: May 29, 1999 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 as 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 May 29, 1999: 11,798,297 PART I - FINANCIAL INFORMATION ITEM 1: Financial Statements CONSOLIDATED CONDENSED BALANCE SHEETS (in thousands, except par value) May 29, 1999 Feb. 27, 1999 ASSETS Current assets: Cash and cash equivalents $6,280 $9,312 Accounts receivable, net 8,376 5,002 Inventories 4,091 3,974 Deferred tax asset 1,505 1,597 Prepaid expenses and other current assets 544 446 - ----------------------------------------------------------------------- Total current assets 20,796 20,331 Property and equipment, at cost, net of accumulated depreciation and amortization 5,649 4,498 Goodwill, net of amortization 3,826 --- Other assets 481 720 - ----------------------------------------------------------------------- $30,752 $25,549 - ------------------------------------------------------------------------ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $4,172 $2,644 Accrued liabilities 2,006 1,613 Current portion of long-term obligations 3,661 597 - ----------------------------------------------------------------------- Total current liabilities 9,839 4,854 Long-term obligations 403 516 Minority interest share in net assets of Micro Pulse, Inc. 112 114 Stockholders' equity: Preferred stock, 3,000 shares authorized; no shares outstanding --- --- Common stock, $.01 par value; 30,000 shares authorized; 11,798 shares outstanding in May 1999 and 11,785 shares outstanding in February 1999 118 118 Additional paid-in capital 14,093 14,050 Accumulated other comprehensive income (238) (170) Retained earnings 6,425 6,067 - ----------------------------------------------------------------------- Total stockholders' equity 20,398 20,065 - ----------------------------------------------------------------------- $30,752 $25,549 - ------------------------------------------------------------------------ CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited; in thousands, except per share data) Three Months Ended May 29, May 30, 1999 1998 - ---------------------------------------------------------------------- Sales $13,093 $ 9,060 Cost of sales 9,180 6,267 - ----------------------------------------------------------------------- Gross profit 3,913 2,793 Research and development 1,199 1,216 Selling 1,120 1,246 General and administrative 1,067 1,071 - ----------------------------------------------------------------------- Income (loss) from operations 527 (740) Interest and other income (expense), net 31 (6) Minority interest share in income (loss) of Micro Pulse 2 (12) - ----------------------------------------------------------------------- Income (loss) before tax 560 (758) (Provision for) benefit from income taxes (202) 273 - ----------------------------------------------------------------------- Net income (loss) $ 358 $ (485) - ------------------------------------------------------------------------ Net income (loss) per share Basic $ 0.03 $ (0.04) Diluted $ 0.03 $ (0.04) - ------------------------------------------------------------------------ Shares used in per share calculations Basic 11,791 11,780 Diluted 12,346 11,780 - ------------------------------------------------------------------------ CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited; in thousands) Three Months Ended May 29, May 30, 1999 1998 - ------------------------------------------------------------------------ Cash flows from operating activities: Net income (loss) $ 358 $ (485) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 639 787 Minority interest share in net (income) loss of Micro Pulse (2) 12 (Increase) decrease in: Accounts receivable (3,374) 582 Inventories (117) 490 Deferred tax asset 92 (27) Prepaid expenses and other assets 141 151 Goodwill (3,895) --- Increase (decrease) in: Accounts payable 1,528 18 Accrued liabilities 393 (290) - ------------------------------------------------------------------------ Cash provided by (used in) operating activities: (4,237) 1,238 - ------------------------------------------------------------------------ Cash flows from investing activities: Purchases of property and equipment (1,791) (272) Retirements of property and equipment 2 6 - ------------------------------------------------------------------------ Cash used in investing activities: (1,789) (266) - ------------------------------------------------------------------------ Cash flows from financing activities: Debt repayments (149) (292) Debt borrowings 3,100 --- Issuances of common stock, net of retirements 43 17 - ------------------------------------------------------------------------ Cash provided by (used in) financing activities: 2,994 (275) - ------------------------------------------------------------------------ Net increase (decrese) in cash and cash equivalents (3,032) 697 Cash and cash equivalents at the beginning of period 9,312 4,422 - ------------------------------------------------------------------------ Cash and cash equivalents at end of period $6,280 $ 5,119 - ------------------------------------------------------------------------ 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 27, 1999. 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 thousands): May 29, 1999 May 30, 1998 Raw materials $2,439 $3,038 Work in process 49 71 Finished goods 1,603 3,252 ------ ----- $4,091 $6,361 ====== ====== 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 for the three months ended May 29, 1999 and May 30, 1998 (in thousands): Quarter Ended Quarter Ended May 29, May 30, 1999 1998 ---------------------------- Net income (loss) $ 358 $(485) Foreign currency translation adjustment, net of tax (68) (24) --------- -------- Comprehensive income (loss) $ 290 $(509) ========= ======== 4. SEGMENTS In June 1997, the FASB introduced SFAS No. 131 "Disclosures About Segments of an Enterprise and Related Information." In conjunction with the Company's reorganization into business units in January 1998, the Company has adopted SFAS No. 131 in fiscal year 1999, and will be applied on a limited basis to interim periods thereafter. The adoption of this standard had no effect on the Company's financial position or results of operations, but did change the presentation of segment information as presented below (in thousands): Three Months Ended May 29, 1999 ------------------------------------------------- Satellite Wireless Antenna Corporate Total ------------------------------------------------- Sales $7,031 $4,969 $1,093 $ --- $13,093 Gross Profit 1,872 1,575 466 --- 3,913 Income (Loss) from Operations 1,113 348 (5) (929) 527 - ----------------------------------------------------------------------------- Three Months Ended May 30, 1998 ------------------------------------------------- Satellite Wireless Antenna Corporate Total ------------------------------------------------- Sales $2,202 $5,552 $1,306 $ --- $9,060 Gross Profit 704 1,549 540 --- 2,793 Income (Loss) from Operations 32 150 (22) (900) (740) - ----------------------------------------------------------------------------- 5. PRO FORMA On April 19, 1999, the Company acquired the technology and product rights to substantially all of Gardiner Communications Corp.'s ("Gardiner") products, and manufacturing and development related equipment and inventory from Gardiner to support these product lines. The total purchase price, including related costs, was approximately $9.1 million, of which $3.5 million relates to the acquisition of product and technology rights. The Company paid approximately $2.8 million in cash on closing and will pay approximately $3.2 million in cash on or about August 30, 1999 for additional inventory and equipment. Gardiner received a $3.1 million, 8% one year promissory note due April 19, 2000. A portion of the debt can be converted into 525,000 shares of the Company's common stock at the lower per share conversion price equal to $4.25 or the average closing sales price of the Company's common stock for the immediate twenty trading days prior to conversion. The following pro forma combines the operations of the Company and Gardiner as if the acquisition had occurred at the beginning of each of the respective periods: 3 Months 3 Months May 29, 1999 May 30, 1998 As Reported Pro forma As Reported Pro forma ----------------------------------------------- Sales $13,093 $15,093 $9,060 $13,248 Net Income (Loss) $ 358 $ 518 $ (485) $ (229) Net Income (Loss) Per Share $ .03 $ .04 $ (.04) $ (.02) ----------------------------------------------- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS THREE MONTHS ENDED MAY 29, 1999 AND MAY 30, 1998 SALES Sales increased by $4.0 million, or 44.5%, to $13.1 million for the three months ended May 29, 1999 from $9.1 million for the three months ended May 30, 1998. Sales of Satellite products increased $4.8 million, or 219%, to $7.0 million from $2.2 million. Sales of Wireless products decreased $583,000, or 10.5%, to approximately $5.0 million. Sales of Antenna products by Micro Pulse decreased $213,000, or 16.3%, to $1.1 million. The increase in Satellite product sales resulted from increased sales of Ku DBS products as the Company has continued to emphasize its shift from C-band products, as well as sales of the U.S. DBS products, which were acquired from Gardiner Communications and included in shipments since April 19, 1999. The decrease in Wireless product sales resulted primarily from continued softness in the Worldwide Wireless Cable market, primarily in Latin America. The decrease in Antenna product sales resulted from continued competition in GPS related markets. GROSS PROFITS AND GROSS MARGINS Gross profits increased by $1.1 million, or 40.1%, to $3.9 million from $2.8 million. Gross margins decreased to 29.9% from 30.8%. The decrease in gross profits resulted from the 44.5% increase in sales, offset slightly by lower gross margins. The .9% decline in gross margin resulted primarily from higher sales of Satellite products at lower gross margins, offset by improvements in gross margins due to cost reductions since the first quarter of the prior year. OPERATING EXPENSES Research and development expenses decreased by $17,000 from $1,216,000 to $1,199,000. Selling expenses decreased by $126,000 from $1,246,000 to $1,120,000. General and administrative expenses decreased by $4,000 from $1,071,000 to $1,067,000. During the prior year, the Company focused on reducing operating costs more in line with the then current sales levels. Accordingly, the organizational infrastructure was downsized in the later part of fiscal year 1999 resulting in lower operating costs. Total operating costs in the first quarter of fiscal year 2000 increased approximately $400,000, compared to the aggregate operating costs in the fourth quarter of fiscal year 1999, which is primarily attributable to increased operating costs associated with the acquisition of Gardiner in April 1999. INCOME (LOSS) FROM OPERATIONS Income from operations, for the reasons noted above, increased by $1.3 million, to income of $527,000 from a loss of $740,000. See also Note 4. Segments, included in Notes to unaudited Consolidated Financial Statements included elsewhere herein. MINORITY INTEREST SHARE IN INCOME (LOSS) OF MICRO PULSE The Company consolidates 100% of the sales and expenses of Micro Pulse. The minority interest share in income of Micro Pulse eliminates the 49.5% of the income (loss) of Micro Pulse. (PROVISION FOR) BENEFIT FROM INCOME TAXES The provision for taxes for the first quarter of fiscal 2000 is based upon an annualized tax rate of 36%, the same tax rate as fiscal year 1999. This tax rate assumes savings from benefits allowed for export sales through a foreign sales corporation and research and development tax credits. NET INCOME (LOSS) Net income, for reasons outlined above, increased by $843,000, to net income of $358,000 from a loss of $485,000. LIQUIDITY AND CAPITAL RESOURCES The Company has a $6.0 million credit facility with Santa Monica Bank at the bank's prime rate (8.0% at July 1, 1999). As of May 29, 1999, there were no amounts were outstanding under this arrangement. The Company believes that cash flow from operations, together with the funds available under its credit facility, 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 COMPANY PRODUCTS The Company's satellite, wireless cable, voice and data, and antenna microwave reception and transceiver products do not contain time or date code applications and are therefore, not impacted by the Year 2000 century change. The Company's wireless cable scrambling and conditional access system, MultiCipher, does have date and time characteristics in microprocessor embedded software and in its software interface applications. The Company has identified programming issues that may impact how certain information must be input by MultiCipher customers, for example, the scheduling of future pay-per-view events. Upgrades to address such issues are now available to customers on a fee basis. All current shipments of MultiCipher system head-ends are year 2000 compliant. INTERNAL OPERATIONS GENERAL. The computer system issues relating to dates beyond 1999 are the result of many computer programs being written to use and store dates with only the last two digits of the applicable year. As a result, these programs may assume that all two digit dates are twentieth century dates. This could result in system failure, anomalous system behavior or incorrect system reporting. System failure could, in turn, temporarily affect the Company's ability to process customer transactions, interface with vendors and engage in similar normal business activities. The Company has assessed how it may be impacted. The Company has formulated and begun implementation of a plan to address all known aspects of the issue. The Company has already completed a substantial portion of this plan and is on schedule to fully complete the plan by August of 1999, except for some desktop personal computers which may extend into the last quarter of calendar 1999. SOFTWARE INFORMATION SYSTEMS. The Company's software information systems consist primarily of a financial and manufacturing system (Computer Associates KBM), and other smaller scale software applications, and other programs developed internally. In January 1999, the Computer Associates KBM financial and manufacturing software upgrade was completed and is now year 2000 compliant. Telemagic and Sales Tracker, two software applications, are not year 2000 compliant and will be upgraded or discontinued prior to July 1999. In addition, software on networks and desktop computers are currently being tested for year 2000 compliance. The Company does not expect any major issues related to upgrading these software applications, at a cost of less than $60,000. COMPUTER HARDWARE AND OPERATING SYSTEMS. Computer hardware and operating systems includes all data center equipment (IBM AS400 system) and networks (Novell and Microsoft NT). In January 1999, the Company purchased a new IBM AS400 in conjunction with the Computer Associates software upgrades and is now year 2000 compliant. The current NT networks are year 2000 compliant, but the Novell Network is not. This network will be upgraded or converted to NT by August 1999 with an estimated cost of less than $20,000. COMMUNICATIONS SYSTEMS. Communications systems includes all data center equipment (fax machines, telephone systems, and related software systems) used to support external communications with customers, employees, and suppliers, business partners and all corporate equipment and software systems used to support internal business management communications. Each significant component of these communications systems has been upgraded. SUPPLIERS AND OTHER BUSINESS PARTNERS. This area of the plan called for all significant suppliers and other business partners to be surveyed for year 2000 readiness. Most of the significant trade vendors have already been contacted. The Company anticipates that these activities will continue into the third quarter of calendar 1999. The Company is not currently aware of any single vendor or business partner with year 2000 compliance issues that could have a material impact on the Company. The Company can provide no assurance that year 2000 compliance will be successfully implemented by all of its suppliers. CONTINGENCY PLANNING. The Company has not yet developed a comprehensive contingency plan to address the risk of operational problems and costs likely to result from a failure by the Company or by a supplier or business partner to address year 2000 readiness. This plan will be developed by the end of August 1999. It will list specific action plans for failure in any of the identified areas of the year 2000 compliance plan. The Company believes that failure to complete any of the remaining work to be done will not alone adversely affect the continuity of the core business. The Company believes its current state of readiness is on schedule with a conservative plan to be fully year 2000 compliant by August of 1999 and that business risks have been minimized. However, there can be no guarantee that year 2000 compliance issues not yet identified or fully addressed will not materially affect the Company's operations or expose it to third party liability. 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 (BM (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. 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. ITEM 2. CHANGES IN SECURITIES None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. ITEM 5. OTHER INFORMATION None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K Current report on Form 8-K dated May 3, 1999 (date of event April 19, 1999) reporting Item 2 "Acquisition or Disposition of Assets" and Item 7 " Financial Statements, Proforma Financial Information and Exhibits." 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) July 9, 1999 /s/ Michael R. Ferron ---------------------------- Michael R. Ferron Vice President, Finance and Chief Accounting Officer EX-27 2 FDS --
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED CONDENSED BALANCE SHEETS ON PAGE 2 AND THE CONSOLIDATED STATEMENTS OF OPERATIONS ON PAGE 3 ON THE COMPANY'S 10-Q FOR THE QUARTER ENDED MAY 29, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH. 0000730255 California Amplifier, Inc. 1,000 3-MOS FEB-26-2000 FEB-28-1999 MAY-29-1999 6280 0 8925 549 4091 20796 21185 15536 30752 9839 0 0 0 0 20398 30752 13093 13093 9180 3386 (2) 0 (31) 560 202 358 0 0 0 358 .03 .03
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