-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, M51/+i8QQ+UB+ryFzlYCLT1uvKObMyiU5skW/BxI94RnYIdhiDx+Qw4fx9ONkrfJ kB08OKWgBYyNWqZ3v2YotA== 0000950134-95-000911.txt : 19950531 0000950134-95-000911.hdr.sgml : 19950531 ACCESSION NUMBER: 0000950134-95-000911 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950505 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: VERTEX COMMUNICATIONS CORP /TX/ CENTRAL INDEX KEY: 0000780416 STANDARD INDUSTRIAL CLASSIFICATION: 3663 IRS NUMBER: 751982974 STATE OF INCORPORATION: TX FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-15277 FILM NUMBER: 95534774 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 1 ================================================================================ 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 March 31,1995 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) (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 30 days. YES X NO --- --- ______________________ As of March 31, 1995, there were 4,404,456 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 March 31, 1995
Part I - FINANCIAL INFORMATION PAGE - - ------------------------------ ---- Condensed Consolidated Balance Sheets - March 31, 1995 and September 30, 1994.................................... 1 Condensed Consolidated Statements of Income Three months ended March 31, 1995 and April 1, 1994............................................. 2 Condensed Consolidated Statements of Income Six months ended March 31, 1995 and April 1, 1994............................................. 3 Condensed Consolidated Statements of Cash Flows Six months ended March 31, 1995 and April 1, 1994............................................. 4 Notes to Condensed Consolidated Financial Statements........5 & 6 Management's Discussion and Analysis of Results of Operations and Financial Condition....................... 7 Part II - OTHER INFORMATION - - --------------------------- Item 4 - Submission of matters to a vote of security holders..................................... 8 Item 6 - Exhibits and reports on Form 8-K..................... 9 Signature..................................................... 10
3 PART I-FINANCIAL INFORMATION ---------------------------- Item l. FINANCIAL STATEMENTS Vertex Communications Corporation and Subsidiaries CONDENSED CONSOLIDATED BALANCE SHEETS
March 31 September 30 (In thousands, except share amounts) 1995 1994 ----------- ------------ (Unaudited) * ASSETS - - ------ Current assets: Cash and cash equivalents $12,867 $20,527 Accounts receivable, net 16,448 16,371 Inventories (Note B) 12,320 8,940 Prepaid income taxes 148 668 ------- ------- 41,783 46,506 Property and equipment, at cost 19,914 18,063 Less accumulated depreciation (7,915) (6,967) ------- ------- 11,999 11,096 Goodwill, less amortization of $90 5,322 --- Other assets 891 855 ------- ------- TOTAL ASSETS $59,995 $58,457 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY - - ------------------------------------ Current liabilities: Accounts payable $ 3,016 $ 2,396 Accrued compensation 1,682 2,381 Other accrued liabilities 3,445 3,875 Customers' advances 2,558 1,186 Deferred income taxes 474 633 ------- ------- 11,175 10,471 Deferred income taxes 801 801 Other liabilities 1,312 --- Commitments and contingencies --- --- Shareholders' equity: Common stock, $.10 par value, 20,000,000 shares authorized, 4,661,402 shares issued 466 466 Capital in excess of par value 24,910 25,212 Retained earnings 24,056 21,563 Treasury stock, 256,946 shares in March and 37,746 shares in September (2,917) (109) Translation adjustment 192 53 ------- ------- 46,707 47,185 ------- ------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $59,995 $58,457 ======= =======
* The balance sheet at September 30, 1994, 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)
Three Months Ended ------------------------- (In thousands, except share amounts) March 31 April 1 1995 1994 ----------- ----------- Net Sales $ 16,258 $ 14,160 Costs and Expenses: Cost of sales 11,729 10,310 Research and development 679 695 Marketing 1,065 724 General and administrative 1,144 899 ---------- ---------- 14,617 12,628 ---------- ---------- Operating income 1,641 1,532 Other income (expense): Income from investments 173 150 Interest expense (25) --- ---------- ---------- Income before income taxes and effect of accounting change 1,789 1,682 Provision for income taxes 521 489 ---------- ---------- Income before accounting change 1,268 1,193 Cumulative effect of change in accounting --- --- ---------- ---------- Net income $ 1,268 $ 1,193 ========== ========== Earnings per share: Earnings before effect of accounting change $ .28 $ .25 Cumulative effect of change in accounting --- --- ---------- ---------- $ .28 $ .25 ========== ========== Average shares and equivalent shares outstanding 4,538,000 4,700,000 ========== ==========
2 5 Vertex Communications Corporation and Subsidiaries CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Six Months Ended ---------------------- (In thousands, except share amounts) March 31 April 1 1995 1994 ---------- ---------- Net Sales $ 30,965 $ 28,045 Costs and Expenses: Cost of sales 22,757 20,729 Research and development 1,086 1,379 Marketing 1,779 1,350 General and administrative 2,123 1,672 ---------- ---------- 27,745 25,130 ---------- ---------- Operating income 3,220 2,915 Other income (expense): Income from investments 319 306 Interest expense (25) --- ---------- ---------- Income before income taxes and effect of accounting change 3,514 3,221 Provision for income taxes 1,021 965 ---------- ---------- Income before accounting change 2,493 2,256 Cumulative effect of change in accounting --- 65 ---------- ---------- Net income $ 2,493 $ 2,321 ========== ========== Earnings per share: Earnings before effect of accounting change $ .54 $ .48 Cumulative effect of change in accounting --- .01 ---------- ---------- $ .54 $ .49 ========== ========== Average shares and equivalent shares outstanding 4,607,000 4,710,000 ========== ==========
3 6 Vertex Communications Corporation and Subsidiaries CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended ------------------------- (In thousands) March 31 April 1 1995 1994 ----------- ----------- Cash flows from operating activities: Net Income $ 2,493 $ 2,321 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,198 808 Cumulative effect of change in accounting for income taxes --- (65) Change in accounts receivable, inventories, prepaid taxes, and other assets (453) (2,288) Change in current liabilities (993) 472 ------- ------- 2,245 1,248 Cash flows from investing activities: Purchase of property and equipment (1,247) (2,305) Purchase of Maxtech, Inc. (5,669) --- ------- ------- (6,916) (2,305) Cash flows from financing activities: Proceeds from exercise of stock options 76 183 Purchase of treasury stock (3,186) --- ------- ------- (3,110) 183 Effect of exchange rate changes on cash 121 --- ------- ------- Net increase (decrease) in cash (7,660) (874) Cash and cash equivalents at beginning of period 20,527 23,537 ------- ------- Cash and cash equivalents at end of period $12,867 $22,663 ======= =======
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 instruc- tions 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 state- ments and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended September 30, 1994. Note B - Inventories (In thousands) The components of inventory consist of the following:
March 31 September 30 1995 1994 ----------- ------------ Raw materials $ 4,638 $ 3,364 Work-in-process 7,119 5,070 Finished goods 563 506 ------- ------- $12,320 $ 8,940 ======= =======
5 8 Vertex Communications Corporation and Subsidiaries NOTES TO CONDENSED CONSOLIDATION FINANCIAL STATEMENTS (Unaudited) Note C - Acquisition On January 25, 1995 (effective January 1, 1995) the Company acquired all of the outstanding common stock of Maxtech, Inc. (Maxtech) for cash paid at closing of $4,049,000, four-year unsecured promissory notes in the aggregate principal sum of $1,750,000, certain contingent consideration based on future net pre-tax income of Maxtech, and direct acquisition costs incurred of approximately $150,000. An additional sum of $1,650,000 was paid at closing to pay-off certain promissory notes of Maxtech. The Maxtech acquisition was accounted for under the purchase method and, accordingly, the assets acquired and liabilities assumed were recorded at their fair values on the acquisition date. The excess of the purchase price over the assets acquired of approximately $5,412,000 is being amortized over fifteen years using the straight line method. In connection with the purchase of Maxtech, contingent consider- ation will be due in an amount equal to 50 percent of the net pre-tax income above $1,750,000 that Maxtech earns for the cumulative period of three years and nine months ending September 30, 1998, not to exceed $2,250,000. The contingent consideration, if any, will be recorded when determinable as additional goodwill and amortized over the remaining life of the intangible asset as discussed above. Maxtech's results of operations have been included in the Company's consolidated financial statements from the effective date of the acquisition. Below are the unaudited pro forma results of operations as if Maxtech had been acquired on October 1, 1993.
Six Months Ended Six Months Ended March 31, 1995 April 1, 1994 ---------------- ---------------- Net Sales $32,331,000 $30,802,000 Net Income $ 2,301,000 $ 2,206,000 Earnings Per Share $ .50 $ .47
6 9 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations The Company acquired Maxtech, Inc. of State College, Pennsylvania, at the beginning of the second quarter of fiscal 1995 for a purchase price of approximately $6 million, (excludes any con- tingent consideration). Maxtech is engaged in the design, manufacture, and distribution of precision radio frequency and microwave telecommunications components and subsystems, with particular emphasis on earth station satellite and point-to- point radio applications. Maxtech's products and capabilities further broaden and complement the Company's existing product lines. Management expects that as a result, future operating results will be favorably impacted. (Refer to Note C for additional information). Net sales increased by 14.8 percent and 10.4 percent in the second quarter and six months ended March 31, 1995 when compared to the same periods one year earlier, respectively. This increase in sales volume is largely attributable to the acquisition of Maxtech. Research and development spending decreased by 2.3 percent and 21.2 percent in the second quarter and six-month period of fiscal 1995 over the comparable periods of fiscal 1994, respectively. This was primarily due to absence of certain product development projects which were successfully completed last year. Marketing expenses combined with general and administrative expenses in- creased 36.1 percent and 29.1 percent in three-month period and six-month period ended March 31, 1995 over the comparable periods, respectively, due to stepped-up bid proposal activity and the inclusion of Maxtech's operations at the beginning of January 1995. Financial Condition as of March 31, 1995 Cash provided by operations of $2.2 million was more than offset by the acquisition of Maxtech and purchase of Vertex's common stock pursuant to the Company's stock repurchase plan. The Company also invested $1.2 million in property and equipment additions. As a result of the foregoing significant factors, cash and cash equiva- lents decreased by $7.7 million during the six-month period ended March 31, 1995. Management does not have in place a credit line facility since the Company's financial condition remains very healthy. Management is not aware of any demands which are likely to impact liquidity in an adverse manner. 7 10 PART II OTHER INFORMATION Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Company held its Annual Meeting of Shareholders on January 26, 1995. Of the total 4,567,356 shares entitled to vote, 4,161,239 shares (91.1%) were represented in person or by proxy at the meeting. The following matters were submitted to the meeting and approved by more than the requisite majority of shares outstanding and entitled to vote thereon and required to approve each matter as shown below: (1) Election of the following Directors:
FOR AGAINST --------- ------- J. Rex Vardeman 4,106,605 54,634 A. Don Branum 4,105,605 54,634 James D. Carter 4,106,595 54,644 Bill R. Womble 4,106,505 54,734 Donald E. Heitzman, Sr. 4,106,091 55,148
No votes were abstained on this matter. (2) Approval of the Company's 1995 Stock Compensation Plan for the benefit of certain officers, directors, employees, and advisors of the Company. For: 2,327,143 Against: 910,748 Abstain: 22,068
(3) Ratification of the appointment of Arthur Andersen LLP as independent public accountants of the Company for the fiscal year ending September 30, 1995. For: 4,134,279 Against: 11,760 Abstain: 15,200
8 11 PART II OTHER INFORMATION Item 6. EXHIBITS AND REPORTS ON FORM 8-K. (A) Exhibits. Exhibit 27 - Article 5 financial data schedule. (B) Form 8-K. The Company filed a current report on Form 8-K, dated February 7, 1995, regarding the Company's acquisition of Maxtech, Inc. on January 25, 1995 (effective January 1, 1995) covering Items 2 and 7. This Report on Form 8-K was subsequently amended by an amendment on Form 8-K/A, dated March 20, 1995, amending Item 7 of the current report on Form 8-K and including (1) audited financial statements of Maxtech, Inc. at December 31, 1994, and (2) unaudited pro forma condensed combined financial information in compliance with Article 11 of Regulation S-X, relative to the Company and Maxtech, Inc. 9 12 S I G N A T U R E 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: May 4, 1995 J. D. Carter J. D. Carter V. P. - Finance and Treasurer (Duly Authorized Principal Financial and Accounting Officer) 10 13 INDEX TO EXHIBITS
Exhibit Description - - ------- ----------- 27 Financial Data Schedule
EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 6-MOS SEP-30-1995 DEC-31-1994 MAR-31-1995 12,867 0 16,711 263 12,320 41,783 19,914 7,915 59,995 11,175 0 466 0 0 46,241 59,995 30,965 30,965 22,757 22,757 4,988 0 25 3,514 1,021 1,021 0 0 0 2,493 .54 .54
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