-----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, TQf3da15RfKi4A+mn5/8dh9TN8ivbMp3sQU0yRSbHnRijK2IREJ0GvgMmBmkH2Ww odbUDd7YkE8b9dhlkfUh1A== 0000950134-98-006346.txt : 19980806 0000950134-98-006346.hdr.sgml : 19980806 ACCESSION NUMBER: 0000950134-98-006346 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 19980703 FILED AS OF DATE: 19980805 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: VERTEX COMMUNICATIONS CORP /TX/ CENTRAL INDEX KEY: 0000780416 STANDARD INDUSTRIAL CLASSIFICATION: RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT [3663] IRS NUMBER: 751982974 STATE OF INCORPORATION: TX FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-15277 FILM NUMBER: 98677399 BUSINESS ADDRESS: STREET 1: 2600 N LONGVIEW ST STREET 2: PO BOX 1277 CITY: KILGORE STATE: TX ZIP: 75662 BUSINESS PHONE: 9039840555 10-Q 1 FORM 10-Q FOR QUARTER ENDED JULY 3, 1998 1 ================================================================================ 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 July 3, 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: 0-15277 VERTEX COMMUNICATIONS CORPORATION (Exact name of Registrant as specified in its charter) TEXAS 75-1982974 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2600 N. LONGVIEW STREET, KILGORE, TEXAS 75662 (Address of principal executive offices and zip code) (903) 984-0555 (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 latest practicable date. AS OF JULY 3, 1998, THERE WERE 5,111,888 SHARES OUTSTANDING OF THE REGISTRANT'S COMMON STOCK $.10 PAR VALUE. ================================================================================ 2 VERTEX COMMUNICATIONS CORPORATION TABLE OF CONTENTS TO FORM 10-Q FOR THE THREE MONTHS ENDED JULY 3, 1998 PART I - FINANCIAL INFORMATION Item 1. Financial Statements - (Unaudited) Condensed Consolidated Balance Sheets - July 3, 1998 and September 30, 1997 Condensed Consolidated Statements of Income - Three months ended July 3, 1998 and June 27, 1997 Condensed Consolidated Statements of Income - Nine months ended July 3, 1998 and June 27, 1997 Condensed Consolidated Statements of Cash Flows - Nine months ended July 3, 1998 and June 27, 1997 Notes to Condensed Consolidated Financial Statements - July 3, 1998 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K SIGNATURE 3 VERTEX COMMUNICATIONS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share amounts)

* The balance sheet at September 30, 1997 has been taken from audited financial statements at that date and condensed. 1 4 VERTEX COMMUNICATIONS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (In thousands, except per share amounts)

2 5 VERTEX COMMUNICATIONS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (In thousands, except per share amounts)

3 6 VERTEX COMMUNICATIONS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands)

4 7 VERTEX COMMUNICATIONS CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE A - BASIS OF PRESENTATION The accompanying condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all the adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended September 30, 1997. NOTE B - INVENTORIES (IN THOUSANDS) The components of inventory consist of the following:

NOTE C - EARNINGS PER SHARE Effective October 1, 1997, the Company adopted SFAS No. 128, "Earnings Per Share". Basic earnings per share were computed by dividing net income by the weighted average number of shares outstanding during the period. The weighted average number of shares outstanding during the third quarter and first nine months of fiscal 1998 were 5,106,000 and 5,100,000, respectively, and during the third quarter and first nine months of fiscal 1997 were 4,595,000 and 4,504,000, respectively. Diluted earnings per share were computed by dividing net income by the sum of the weighted average number of shares and the number of equivalent shares assumed outstanding under the Company's stock-based compensation plans as follows: 5 8

NOTE D - ACQUISITION Effective June 11, 1997, the Company acquired all of the outstanding common stock of TIW Systems, Inc. headquartered in Santa Clara, California by purchase. The following unaudited pro forma information presents the consolidated results of operations as if the acquisition had occurred on October 1, 1996.

6 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION RESULTS OF OPERATIONS Sales increased by 53 percent and 54 percent in the quarter and nine months ended July 3, 1998, respectively, compared to the same periods one year earlier. The increased sales volume is largely attributable to the acquisition of TIW (i.e. TIW's operating results are included in fiscal 1997 from June 11, 1997 forward). Research and development expenditures increased to $1.4 million for a 46 percent increase over the prior year's third quarter and to $4.4 million for an 84 percent increase over the first nine months of fiscal 1997, mainly due to the acquisition of TIW. The total of general & administrative and marketing expenses incurred during fiscal 1998's third quarter of $4.8 million, increased $1.7 million or 54 percent from the comparable period and were $13.5 million during the first nine months of fiscal 1998 which was $4.9 million or 56 percent more than the same period one year ago principally due to the acquisition of TIW. When expressed as a percentage of sales, however, these expenses remained essentially constant. Income from investments declined by $91,000 or 44 percent and $290,000 or 47 percent in the third quarter and first nine months of fiscal 1998, respectively, compared to the same periods last year as the average cash balances available for investment purposes in fiscal 1998 were significantly lower than fiscal 1997's cash balances. The effective tax rate for fiscal 1998 is lower than the prescribed statutory rates mainly due to tax incentives available from export shipments. FACTORS THAT MAY AFFECT FUTURE RESULTS AND FINANCIAL CONDITION GENERAL The Company's future operating results and financial condition may be affected by various trends and factors including general economic conditions, technology changes, product demand, product development, volume and mix of products sold, size and timing of individual orders booked, competition, market acceptance, availability of certain raw materials, rising costs for or unavailability of selected components, domestic and foreign government regulations and spending, or fluctuation in certain foreign currency exchange rates as related to the U.S. dollar. Due to the factors noted above, the Company's future earnings and stock price may be subject to fluctuation, particularly on a quarterly basis. Past business trends should not be used to anticipate future trends and historical performance should not be considered as a reliable indicator of future performance. 7 10 Additionally, any shortfall in revenue or earnings from levels anticipated by securities analysts could have an immediate and significant adverse effect on the trading price of the Company's common stock. FORWARD-LOOKING STATEMENTS With the exception of historical information, certain matters discussed in this quarterly report are forward-looking statements that involve risks and uncertainties, including but not limited to, economic conditions, trends in the telecommunications industry, product acceptance and demand, competitive products and pricing, new product development, availability of competitive components and other risks indicated in this filing and prior filings of the Company with the Securities and Exchange Commission. FINANCIAL CONDITION Since September 30, 1997, operating activities generated $6.1 million of cash mainly due to record high net income. During this period the Company invested $1.9 million in property and equipment additions. Financing activities consumed $.9 million during the first nine months of fiscal 1998 as the Company repaid the $.5 million bank note which was scheduled to mature in November 2000. Management believes that forecasted cash flows combined with the Company's favorable financial condition and available credit lines, will be sufficient to fund operations over the foreseeable future. The Company is not aware of any demands which are likely to affect liquidity in an adverse manner. 8 11 PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: 27.1 Financial Data Schedule July 3, 1998 27.2 Restated Financial Data Schedule September 30, 1997 27.3 Restated Financial Data Schedule June 27, 1997 27.4 Restated Financial Data Schedule March 28, 1997 27.5 Restated Financial Data Schedule December 27, 1996 27.6 Restated Financial Data Schedule September 30, 1996 27.7 Restated Financial Data Schedule June 28, 1996 27.8 Restated Financial Data Schedule March 29, 1996 27.9 Restated Financial Data Schedule December 29, 1995 (b) Form 8-K: The Company filed no reports on Form 8-K and none were required to be filed during the three months ended July 3, 1998. 9 12 SIGNATURE 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. VERTEX COMMUNICATIONS CORPORATION (Registrant) Date: August 5, 1998 /s/ James D. Carter ---------------------- ----------------------------------- James D. Carter Vice President and Chief Financial Officer (Duly Authorized Officer and Principal Financial and Accounting Officer) 10 13 INDEX TO EXHIBITS

EX-27.1 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED JULY 3, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS SEP-30-1998 JUL-03-1998 8,739 0 39,856 0 30,997 80,468 31,105 15,622 109,561 26,854 0 0 0 524 80,734 109,561 97,882 97,882 69,783 87,454 0 0 65 10,687 3,280 7,407 0 0 0 7,407 1.45 1.39

EX-27.2 3 RESTATED FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 YEAR SEP-30-1997 SEP-30-1997 5,407 0 37,231 1,254 27,198 70,496 29,231 13,004 100,493 24,912 0 0 0 524 72,966 100,493 92,433 92,433 65,785 82,602 0 0 167 10,350 3,175 7,175 0 0 0 7,175 1.54 1.47 ALL EARNINGS PER SHARE AMOUNTS HAVE BEEN RESTATED TO REFLECT THE ADOPTION OF SFAS NO. 128 "EARNINGS PER SHARE".

EX-27.3 4 RESTATED FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED JUNE 27, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS SEP-30-1997 JUN-27-1997 1,847 0 41,199 0 24,160 67,206 28,626 12,304 97,515 23,578 0 0 0 524 70,923 97,515 63,382 63,382 45,431 56,521 0 0 85 7,390 2,310 5,080 0 0 0 5,080 1.13 1.07 ALL EARNINGS PER SHARE AMOUNTS HAVE BEEN RESTATED TO REFLECT THE ADOPTION OF SFAS NO. 128 "EARNINGS PER SHARE".

EX-27.4 5 RESTATED FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 28, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS SEP-30-1997 MAR-28-1997 18,388 0 20,352 0 16,326 55,066 25,423 11,686 73,838 13,144 0 0 0 466 58,524 73,838 40,116 40,116 28,791 35,807 0 0 49 4,666 1,447 3,219 0 0 0 3,219 .72 .69 ALL EARNINGS PER SHARE AMOUNTS HAVE BEEN RESTATED TO REFLECT THE ADOPTION OF SFAS NO. 128 "EARNINGS PER SHARE".

EX-27.5 6 RESTATED FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED DECEMBER 27, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS SEP-30-1997 DEC-27-1996 19,246 0 19,640 0 15,783 54,669 24,021 11,162 72,719 13,523 0 0 0 466 56,538 72,719 19,680 19,680 14,289 17,682 0 0 20 2,186 661 1,525 0 0 0 1,525 .34 .33 ALL EARNINGS PER SHARE AMOUNTS HAVE BEEN RESTATED TO REFLECT THE ADOPTION OF SFAS NO. 128 "EARNINGS PER SHARE".

EX-27.6 7 RESTATED FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 YEAR SEP-30-1996 SEP-30-1996 17,396 0 21,404 268 15,626 54,158 22,947 10,520 71,974 14,674 0 0 0 466 55,008 71,974 77,525 77,525 56,911 69,491 0 0 115 8,551 2,451 6,100 0 0 0 6,100 1.38 1.32 ALL EARNINGS PER SHARE AMOUNTS HAVE BEEN RESTATED TO REFLECT THE ADOPTION OF SFAS NO. 128 "EARNINGS PER SHARE".

EX-27.7 8 RESTATED FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED JUNE 28, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS SEP-30-1996 JUN-28-1996 12,892 0 20,623 0 15,379 48,894 22,908 9,960 67,347 12,076 0 0 0 466 53,167 67,347 57,306 57,306 41,898 51,475 0 0 78 6,247 1,810 4,437 0 0 0 4,437 .99 .96 ALL EARNINGS PER SHARE AMOUNTS HAVE BEEN RESTATED TO REFLECT THE ADOPTION OF SFAS NO. 128 "EARNINGS PER SHARE".

EX-27.8 9 RESTATED FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 29, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS SEP-30-1996 MAR-29-1996 11,000 0 17,001 0 18,549 46,550 22,569 9,401 65,419 11,370 0 0 0 466 51,945 65,419 38,197 38,197 27,901 34,402 0 0 52 4,077 1,224 2,853 0 0 0 2,853 .65 .62 ALL EARNINGS PER SHARE AMOUNTS HAVE BEEN RESTATED TO REFLECT THE ADOPTION OF SFAS NO. 128 "EARNINGS PER SHARE".

EX-27.9 10 RESTATED FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED DECEMBER 29, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS SEP-30-1996 DEC-29-1995 11,848 0 17,746 0 16,602 46,196 21,475 8,891 64,677 12,109 0 0 0 466 50,464 64,677 18,964 18,964 13,983 17,079 0 0 26 1,993 600 1,393 0 0 0 1,393 .32 .30 ALL EARNINGS PER SHARE AMOUNTS HAVE BEEN RESTATED TO REFLECT THE ADOPTION OF SFAS NO. 128 "EARNINGS PER SHARE".

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