-----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, TbV6yu2PvFkhB+93N0mkkZ893TG63cLKlIK3Hgtu/52t0F1w2Re26TbRalBY5CYQ s8Q7zdaGXioLqqHPi5i3hQ== 0000912057-97-024220.txt : 19970716 0000912057-97-024220.hdr.sgml : 19970716 ACCESSION NUMBER: 0000912057-97-024220 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970531 FILED AS OF DATE: 19970715 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: 1934 Act SEC FILE NUMBER: 000-12182 FILM NUMBER: 97640608 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 FORM 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: May 31, 1997 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 May 31, 1997: 11,717,000 Number of pages in this Form 10-Q: 8 PART I - FINANCIAL INFORMATION ITEM 1: FINANCIAL STATEMENTS CONSOLIDATED CONDENSED BALANCE SHEETS (in thousands, except par value) - ------------------------------------------------------------------------------- May 31, Mar. 1, 1997 1997 --------- -------- (Unaudited) (Audited) - ------------------------------------------------------------------------------- ASSETS Current assets: Cash and cash equivalents $ 3,200 $ 3,165 Accounts receivable 8,265 7,316 Inventories 9,861 8,200 Prepaid expenses and other current assets 1,092 1,183 - ------------------------------------------------------------------------------- Total current assets 22,418 19,864 Property and equipment -- at cost, net of accumulated depreciation and amortization 7,152 7,407 Other assets 1,134 2,265 - ------------------------------------------------------------------------------- $ 30,704 $ 29,536 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 2,780 $ 2,136 Accrued liabilities 2,327 1,928 Current portion of long-term debt 722 799 - ------------------------------------------------------------------------------- Total current liabilities 5,829 4,863 Long-term debt 405 525 Minority interest share in net assets of Micro Pulse 179 --- Stockholders' equity: Preferred stock, 3,000 shares authorized; no shares outstanding --- --- Common stock, $.01 par value; 30,000 shares authorized; 11,717 shares outstanding in May 1997 and 11,713 in March 1997 117 117 Additional paid-in capital 13,999 13,990 Foreign currency translation adjustment (123) (127) Retained earnings 10,298 10,168 - ------------------------------------------------------------------------------- Total stockholders' equity 24,291 24,148 - ------------------------------------------------------------------------------- $ 30,704 $ 29,536 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- 2 CONSOLIDATED STATEMENTS OF INCOME (Unaudited; in thousands, except per share data) Three Months Ended - ------------------------------------------------------------------------------- May 31, June 1, 1997 1996 - ------------------------------------------------------------------------------- Sales $ 12,013 $ 17,275 Cost of sales 8,342 11,232 - ------------------------------------------------------------------------------- Gross profit 3,671 6,043 Research and development 1,086 1,473 Selling 1,307 1,333 General and administrative 978 884 - ------------------------------------------------------------------------------- Income from operations 300 2,353 Interest and other income (expense), net (5) 139 Minority interest share in income of Micro Pulse (83) --- - ------------------------------------------------------------------------------- Income before tax 212 2,492 Provision for income taxes 82 869 - ------------------------------------------------------------------------------- Net income $ 130 $ 1,623 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Net income per share $ .01 $ .13 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Weighted average number of shares outstanding 11,981 12,742 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- 3 CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited, in thousands) Three Months Ended - ------------------------------------------------------------------------------- May 31, June 1, 1997 1996 - ------------------------------------------------------------------------------- Cash flows from operating activities: Net income $ 130 $1,623 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 766 712 (Increase) decrease in: Accounts receivable (843) (3,362) Income tax receivable 666 --- Inventories (1,027) (1,336) Prepaid expenses and other assets 370 (253) Increase (decrease) in: Accounts payable 154 383 Accrued liabilities (199) (389) - ------------------------------------------------------------------------------- Cash provided (used) by operating activities: 17 (2,622) - ------------------------------------------------------------------------------- Cash flows provided by (used in) investing activities: Purchases of property and equipment (270) (2,295) Purchase of controlling interest in Micro Pulse 327 --- Minority interest share in net assets of Micro Pulse 179 --- Advance to Micro Pulse --- (45) - ------------------------------------------------------------------------------- Cash provided by (used in) investing activities: 236 (2,340) - ------------------------------------------------------------------------------- Cash flows from financing activities: Repayment of term debt (228) (258) Issuances of common stock 10 108 - ------------------------------------------------------------------------------- Cash used by financing activities: (218) (150) - ------------------------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents 35 (5,112) Cash and cash equivalents at the beginning of period 3,165 11,637 - ------------------------------------------------------------------------------- Cash and cash equivalents at end of period $3,200 $6,525 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- 4 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 March 1, 1997. 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): May 31,1997 March 1, 1997 ----------- ------------- Raw material $2,691 $2,510 Work in process 1,131 1,568 Finished goods 6,039 4,122 ------ ------ $9,861 $8,200 ------ ------ 3. NET INCOME PER SHARE - Net income per share is based upon the weighted average number of shares outstanding during each of the respective years, including the dilutive effects of stock options and warrants using the treasury stock method. The weighted average number of shares used in the computation of net income per share for the three months ended May 31, 1997 and June 1, 1996 were increased by 515,000 and 1,208,000, respectively, for the dilutive effects of stock options and warrants. 4. CONSOLIDATION OF INVESTMENT IN MICRO PULSE, INC. - In March 1997, the Company acquired additional shares in Micro Pulse, Inc. ("Micro Pulse"), which resulted in California Amplifier holding a 50.5% controlling interest in Micro Pulse. Effective March 2, 1997, the statements of income, balance sheet, and cash flows of Micro Pulse are consolidated with those of the Company, reduced by the minority interests' share in the net assets and income of Micro Pulse. The 50% investment in Micro Pulse had previously been accounted for using the equity method of accounting. 5 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS THREE MONTHS ENDED MAY 31, 1997 AND JUNE 1, 1996 SALES Sales decreased by $5.3 million, or 31% from $17.3 million for the three months ended June 1, 1996 to $12.0 million for the three months ended May 31, 1997. The sales decrease resulted from decreases in sales of Wireless Cable products and Satellite television products, offset by sales of Antenna products, which represent sales by Micro Pulse, a company which the Company holds a 50.5% controlling interest. Sales of Wireless Cable products decreased $5.9 million, or 46%, to $7.1 million. Sales of Satellite Television products decreased $998,000, or 23%, to $3.3 million. Sales of Antenna products by Micro Pulse were $1.7 million, but were not consolidated in the prior year. The decrease in Wireless Cable sales resulted primarily from decreases in sales of Wireless Reception products and MultiCipher. Domestically, operators continue to delay purchases of equipment as the digital rollout is evaluated. Internationally, market growth continues, but the first quarter of the prior year had sales to new system launches which accounted for a significant percentage of Wireless Cable sales. In the current quarter, there were no major system sales of the same magnitude. Accordingly, year-to-year sales decreased. The decrease in Satellite Television product sales resulted from continued decreases in C-band sales, offset by increased Ku-band sales. The Company has not been successful in booking a major DBS order to completely offset its reduced sales of C-band products. Sales of Antenna products, as noted above, have only been consolidated since March 2, 1997 when the Company acquired a controlling interest. The Company's future sales growth is dependent upon maintaining its Wireless Cable market share internationally, a successful Wireless Cable digital rollout in the United States which the Company must participate, and continued demand for its Ku-DBS product into niche markets. GROSS PROFITS AND GROSS MARGINS Gross profits decreased by $2.4 million, or 39%, from $6.0 million to $3.7 million. Gross margins decreased from 35% to 30.6%. The decrease in gross profits resulted from lower sales volumes and lower gross margins. The gross margin reduction resulted primarily from lower sales, under-utilization of factory overhead, and reduced product gross margins, primarily in Wireless Reception products, as a result of competitive pricing in a soft market environment. OPERATING EXPENSES Research and development expenses decreased by $387,000 from $1.5 million to $1.1 million. The decrease resulted primarily from reduced expenditures in the current quarter as compared to the first quarter of the prior year, relating to the development of MultiCipher Plus, offset by research and development expenses incurred by Micro Pulse, which is now consolidated. Selling expenses decreased by $26,000 from $1.33 million to $1.31 million. The decrease was due primarily to reductions in certain discretionary spending, offset by increases in salaries, personnel additions and an increased level of international selling expenses relating to the increases in sales in various international regions, as well as selling expenses incurred by Micro Pulse, which is now consolidated. General and administrative expenses increased by $94,000 from $884,000 to $978,000. The increase was due to reduced expenses, offset by administrative expenses incurred by Micro Pulse, which is now consolidated. INCOME FROM OPERATIONS Income from operations, for the reasons noted above, decreased by $2.1 million, from $2.4 million to $300,000. 6 INTEREST AND OTHER INCOME (EXPENSE), NET Interest and other income (expense), net, decreased by $144,000 to $5,000 expense, net, from $139,000 income, net. The primary reason for the decrease is reduced interest income because of lower cash balances during the current quarter. MINORITY INTEREST SHARE IN INCOME OF MICRO PULSE The minority interest share in income of Micro Pulse represents 49.5% of the income before tax of Micro Pulse. In the prior year, Micro Pulse was not consolidated, however, no income was booked during the first quarter of the prior year for California Amplifier's then 50% ownership interest which was accounted for using the equity method of accounting. PROVISION FOR TAXES The provision for taxes for the first quarter of fiscal 1998 is based upon an annualized tax rate of 36%, the same tax rate as fiscal year 1997. This tax rate assumes savings from benefits allowed for export sales through a foreign sales corporation and research and development tax credits. NET INCOME Net income, for reasons outlined above, decreased by $1.5 million, from $1.6 million to $130,000. 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 May 31, 1997). 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 May 31, 1997, no amounts were outstanding under any of these arrangements. The $6.0 million credit facility with California United Bank expires on August 4, 1997. The Company is currently in discussions with California United Bank to renew the agreement for an additional year at similar terms. 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. 7 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, 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, ET AL., Case No. CIV 173569. The actions are purported class actions on behalf of purchasers of the common stock of California Amplifier 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. Information applicable to Items 2 through 6 has been reported by the registrant in previous filings or has already been disclosed in the financial information provided in Part I. No reports on Form 8-K were filed during the quarter ended May 31, 1997. 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 14, 1997 /s/ Michael R. Ferron ------------------------------------ Michael R. Ferron Vice President, Finance and Chief Accounting Officer 8 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED CONDENSED BALANCE SHEET ON PAGE 2 AND THE CONSOLIDATED STATEMENTS OF INCOME ON PAGE 3 OF THE COMPANY'S FORM 10-Q FOR THE THREE MONTHS ENDED MAY 31, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS FEB-28-1998 MAR-02-1997 MAY-31-1997 3,200 0 8,934 669 9,861 22,418 19,131 11,979 30,704 5,829 0 0 0 14,116 10,175 30,704 12,013 8,342 3,371 88 0 0 0 212 82 0 0 0 0 130 .01 0
-----END PRIVACY-ENHANCED MESSAGE-----