-----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, ssl6g5YseQ3HoA4oEsuiKIhWc5R5qhd5UNcXZXfcQ2UMOl9tRedRIm56xxiazFgG SGSUFSUOicVFZn4CV7+xaA== 0000950134-95-001689.txt : 19950727 0000950134-95-001689.hdr.sgml : 19950727 ACCESSION NUMBER: 0000950134-95-001689 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950726 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: 1934 Act SEC FILE NUMBER: 000-15277 FILM NUMBER: 95556061 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 June 30, 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 June 30, 1995, there were 4,422,856 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 June 30, 1995
Part I - FINANCIAL INFORMATION PAGE - ------------------------------ ---- Condensed Consolidated Balance Sheets - June 30, 1995 and September 30, 1994.................................... 1 Condensed Consolidated Statements of Income Three months ended June 30, 1995 and July 1, 1994.............................................. 2 Condensed Consolidated Statements of Income Nine months ended June 30, 1995 and July 1, 1994.............................................. 3 Condensed Consolidated Statements of Cash Flows Nine months ended June 30, 1995 and July 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 6 - Exhibits and reports on Form 8-K..................... 8 Signature..................................................... 9
3 PART I-FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS Vertex Communications Corporation and Subsidiaries CONDENSED CONSOLIDATED BALANCE SHEETS
June 30 September 30 (In thousands, except share amounts) 1995 1994 ----------- ------------ (Unaudited) * ASSETS - ------ Current assets: Cash and cash equivalents $12,806 $20,527 Accounts receivable, net 16,779 16,371 Inventories (Note B) 14,950 8,940 Prepaid income taxes 110 668 ------- ------- 44,645 46,506 Property and equipment, at cost 20,373 18,063 Less accumulated depreciation (8,397) (6,967) ------- ------- 11,976 11,096 Goodwill, less amortization of $180 5,160 --- Other assets 882 855 ------- ------- TOTAL ASSETS $62,663 $58,457 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------ Current liabilities: Accounts payable $ 3,409 $ 2,396 Accrued compensation 1,421 2,381 Other accrued liabilities 3,727 3,875 Customers' advances 3,217 1,186 Deferred income taxes 756 633 ------- ------- 12,530 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 24,738 25,212 Retained earnings 25,301 21,563 Treasury stock, 238,546 shares in June and 37,746 shares in September (2,670) (109) Translation adjustment 185 53 ------- ------- 48,020 47,185 ------ ------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $62,663 $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) June 30 July 1 1995 1994 ----------- ----------- Net Sales $ 15,934 $ 12,404 Costs and Expenses: Cost of sales 11,586 8,967 Research and development 595 710 Marketing 1,045 750 General and administrative 1,086 720 ---------- ---------- 14,312 11,147 ---------- ---------- Operating income 1,622 1,257 Other income (expense): Income from investments 138 147 Interest expense (36) --- ---------- ---------- Income before income taxes and effect of accounting change 1,724 1,404 Provision for income taxes 479 423 ---------- ---------- Income before accounting change 1,245 981 Cumulative effect of change in accounting --- --- ---------- ---------- Net income $ 1,245 $ 981 ========== ========== Earnings per share: Earnings before effect of accounting change $ .28 $ .21 Cumulative effect of change in accounting --- --- ---------- ---------- $ .28 $ .21 ========== ========== Average shares and equivalent shares outstanding 4,512,000 4,705,000 ========== ==========
2 5 Vertex Communications Corporation and Subsidiaries CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Nine Months Ended ---------------------- (In thousands, except share amounts) June 30 July 1 1995 1994 ---------- ---------- Net Sales $ 46,899 $ 40,449 Costs and Expenses: Cost of sales 34,343 29,696 Research and development 1,681 2,089 Marketing 2,824 2,100 General and administrative 3,209 2,392 ---------- ---------- 42,057 36,277 ---------- ---------- Operating income 4,842 4,172 Other income (expense): Income from investments 457 453 Interest expense (61) --- ---------- ---------- Income before income taxes and effect of accounting change 5,238 4,625 Provision for income taxes 1,500 1,388 ---------- ---------- Income before accounting change 3,738 3,237 Cumulative effect of change in accounting --- 65 ---------- ---------- Net income $ 3,738 $ 3,302 ========== ========== Earnings per share: Earnings before effect of accounting change $ .82 $ .69 Cumulative effect of change in accounting --- .01 ---------- ---------- $ .82 $ .70 ========== ========== Average shares and equivalent shares outstanding 4,572,000 4,697,000 ========== ==========
3 6 Vertex Communications Corporation and Subsidiaries CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended ------------------------- (In thousands) June 30 July 1 1995 1994 ----------- ----------- Cash flows from operating activities: Net Income $ 3,738 $ 3,302 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,826 1,294 Cumulative effect of change in accounting for income taxes --- (65) Change in accounts receivable, inventories, prepaid taxes, and other assets (3,277) (7,509) Change in current liabilities 212 854 ------- ------- 2,499 (2,124) Cash flows from investing activities: Purchase of property and equipment (1,706) (3,135) Purchase of Maxtech, Inc. (5,597) --- ------- ------- (7,303) (3,135) Cash flows from financing activities: Proceeds from exercise of stock options 151 186 Purchase of treasury stock (3,186) --- ------- ------- (3,035) 186 Effect of exchange rate changes on cash 118 --- ------- ------- Net increase (decrease) in cash (7,721) (5,073) Cash and cash equivalents at beginning of period 20,527 23,537 ------- ------- Cash and cash equivalents at end of period $12,806 $18,464 ======= =======
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, 1994. Note B - Inventories (In thousands) The components of inventory consist of the following:
June 30 September 30 1995 1994 ----------- ------------ Raw materials $ 4,558 $ 3,364 Work-in-process 9,685 5,070 Finished goods 707 506 ------- ------- $14,950 $ 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 $5,340,000 is being amortized over fifteen years using the straight line method. In connection with the purchase of Maxtech, contingent consideration 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.
Nine Months Ended Nine Months Ended June 30, 1995 July 1, 1994 ----------------- ----------------- Net Sales $48,265,000 $45,018,000 Net Income $ 3,548,000 $ 3,351,000 Earnings Per Share $ .78 $ .71
6 9 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations The Company acquired Maxtech, Inc. (Maxtech) of State College, Pennsylvania, at the beginning of the second quarter of fiscal 1995 for a purchase price of approximately $6 million, (excludes any contingent 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. (Refer to Note C for additional information). Net sales increased by 28.5 percent and 15.9 percent in the third quarter and nine months ended June 30, 1995, respectively, when compared to the same periods one year earlier. The increased sales volume is attributable to the acquisition of Maxtech and increased foreign product shipments. Research and development spending decreased by 16.2 percent and 19.5 percent in the third quarter and nine-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 increased 45.0 percent and 34.3 percent in three-month period and nine-month period ended June 30, 1995 over the comparable periods, respectively, due to stepped-up bid proposal activity and the inclusion of Maxtech at the beginning of January 1995. Financial Condition as of June 30, 1995 Cash provided by operations of $2.5 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. Inventories increased by $6 million (67.2 percent) since September 30, 1994 as a result of the Maxtech acquisition and delayed product shipments at the customers' direction. The Company also invested $1.7 millon in property and equipment additions. As a result of the foregoing significant factors, cash and cash equivalents decreased by $7.7 million during the nine-month period ended June 30, 1995. Management believes that expected cash flows from operations and current cash balances will be sufficient to fund the Company's operations and planned capital investments for the foreseeable future. Management does not have in place a credit line facility because of the Company's strong financial condition and forecasted growth. Management is not aware of any demands which are likely to impact liquidity in an adverse manner. 7 10 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 no report on Form 8-k, and none were required to be filed during the three months ended June 30, 1995. 8 11 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: July 25, 1995 S/ J. D. Carter --------------------------------- J. D. Carter V. P. - Finance and Treasurer (Duly Authorized Principal Financial and Accounting Officer) 9 12 EXHIBIT INDEX Exhibit 27 - Article 5 financial data schedule. EX-27 2 FIANCIAL DATA SCHEDULE
5 1,000 9-MOS SEP-30-1995 OCT-01-1994 JUN-30-1995 12,806 0 17,042 263 14,950 44,645 20,373 8,397 62,663 12,530 0 466 0 0 47,554 62,663 46,899 46,899 34,343 34,343 7,714 0 61 5,238 1,500 3,738 0 0 0 3,738 .82 .82
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