-----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, L3KWK3sCjMIFr1Jz7OAvxjDvz0Q0Efi3roE7jJZRAzIT/m6RrHLFJkahS0xVrKcC JDhGZfJsvtTCmDNpKA7a2A== 0000950134-98-000635.txt : 19980130 0000950134-98-000635.hdr.sgml : 19980130 ACCESSION NUMBER: 0000950134-98-000635 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980102 FILED AS OF DATE: 19980129 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: 98516757 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 JANUARY 2,1998 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 January 2, 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 JANUARY 2, 1998, THERE WERE 5,100,138 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 JANUARY 2, 1998 PART I - FINANCIAL INFORMATION Item 1. Financial Statements - (Unaudited) Condensed Consolidated Balance Sheets - January 2, 1998 and September 30, 1997 Condensed Consolidated Statements of Income - Three months ended January 2, 1998 and December 27, 1996 Condensed Consolidated Statements of Cash Flows - Three months ended January 2, 1998 and December 27, 1996 Notes to Condensed Consolidated Financial Statements - January 2, 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)
January 2 September 30 1998 1997 ------------- ------------- ASSETS (Unaudited) * CURRENT ASSETS: Cash and equivalents $ 7,065 $ 5,407 Accounts receivable, net 40,354 35,977 Inventories 27,427 27,198 Income tax receivable -- 1,130 Deferred income taxes 884 784 --------- --------- 75,730 70,496 PROPERTY AND EQUIPMENT, at cost 29,903 29,231 Less accumulated depreciation (13,860) (13,004) --------- --------- 16,043 16,227 GOODWILL, less accumulated amortization of $1,365 and $1,134 12,563 12,794 OTHER ASSETS 938 976 --------- --------- TOTAL ASSETS $ 105,274 $ 100,493 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 5,604 $ 7,413 Accrued liabilities 15,282 13,278 Customers' advances 6,116 3,139 Current portion of long-term debt 974 1,082 --------- --------- 27,976 24,912 LONG-TERM DEBT - less current portion 209 988 DEFERRED INCOME TAXES 1,167 1,103 COMMITMENTS AND CONTINGENCIES -- -- SHAREHOLDERS' EQUITY: Common stock, $.10 par value, 20,000,000 shares authorized, 5,235,751 shares issued 524 524 Capital in excess of par value 35,072 35,107 Retained earnings 42,386 40,033 Treasury stock, at cost, 135,613 shares and 148,813 shares . (1,705) (1,828) Translation adjustment (355) (346) --------- --------- 75,922 73,490 --------- --------- TOTAL LIABILITIES AND EQUITY $ 105,274 $ 100,493 ========= =========
* 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)
Three Months Ended January 2 December 27 1998 1996 ------------ ------------- SALES $ 30,779 $ 19,680 COSTS AND EXPENSES: Cost of sales 21,660 14,289 Research and development 1,440 765 Marketing 1,669 1,088 General and administrative 2,588 1,540 -------- -------- 27,357 17,682 -------- -------- OPERATING INCOME 3,422 1,998 OTHER INCOME (EXPENSE): Income from investments 77 208 Interest expense (31) (20) -------- -------- INCOME BEFORE INCOME TAXES 3,468 2,186 Provision for income taxes 1,115 661 -------- -------- NET INCOME $ 2,353 $ 1,525 ======== ======== BASIC EARNINGS PER SHARE $ .46 $ .34 ======== ======== DILUTED EARNINGS PER SHARE $ .44 $ .33 ======== ========
2 5 VERTEX COMMUNICATIONS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands)
Three Months Ended January 2 December 27 1998 1996 --------------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES $ 3,129 $ 2,046 CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment (672) (1,074) CASH FLOWS FROM FINANCING ACTIVITIES: Payment for business purchased in fiscal 1995 (302) (437) Proceeds from long-term debt -- 1,285 Repayment of debt (585) -- Proceeds from exercise of stock options 88 30 -------- -------- (799) 878 INCREASE IN CASH AND EQUIVALENTS 1,658 1,850 CASH AND EQUIVALENTS: At beginning of period 5,407 17,396 -------- -------- AT END OF PERIOD $ 7,065 $ 19,246 ======== ========
3 6 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:
January 2 September 30 1998 1997 --------- ------------ Raw Materials $ 8,148 $ 8,844 Work-In-Process 14,941 13,626 Finished Goods 4,338 4,728 --------- -------- $ 27,427 $ 27,198 ======== ========
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 of 5,090,000 and 4,440,000 for the first quarter of fiscal 1998 and 1997, 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. Diluted earnings per share were computed as follows: 4 7
(in thousands, except per share amounts) First Quarter of FY 1998 FY 1997 ------- ------- Net Income $2,353 $1,525 Weighted average number of shares outstanding 5,090 4,440 Effect of options assumed exercised 224 190 ------ ------ Total 5,314 4,630 Diluted earnings per share $ .44 $ .33 ====== ======
Adoption of this new accounting standard affected previously reported earnings per share (EPS) data as follows:
First Quarter Per Share Amounts of FY 1997 ----------------- ------------- Primary EPS $ .33 Effect of SFAS No. 128 .01 --------- Basic EPS as restated $ .34 ======== Fully diluted EPS as previously reported $ .33 Effect of SFAS No. 128 --- ---------- Diluted EPS as restated $ .33 ========
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.
(in thousands, except per share amounts) First Quarter of FY 1997 -------------- Sales $ 27,326 Net Income 977 Basic earnings per share .19 Diluted earnings per share .19
5 8 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION RESULTS OF OPERATIONS Fiscal 1998 first quarter sales increased by $11.1 million or 56 percent when compared to the same period last year. Approximately 75 percent of the increase was caused by the acquisition of TIW and the balance was due to increased demand for standard antenna products. Cost of sales as a percent of sales improved from 72.6 percent in the first quarter of fiscal 1997 to 70.4 percent in the comparable quarter of 1998 mainly due to a more favorable product sales mix. Research and development expenditures increased to $1.4 million, an 88 percent increase over the prior year's first quarter, principally due to the absence of TIW's operating results in the fiscal 1997 quarter. The total of general & administrative and marketing expenses during fiscal 1998's first quarter of $4.3 million, increased $1.6 million or 62 percent from the comparable period largely because of the acquisition of TIW. Income from investments in the first quarter of fiscal 1998 decreased by 63 percent from the comparable quarter to $77,000 as the average cash balances available for investment purposes 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. New orders secured during the first quarter of 1998 were $36.9 million and the Company began the second quarter with a record high unfilled order backlog of $77.8 million. 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. 6 9 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, the balance of cash and equivalents increased by $1.7 million primarily as a result of strong earnings. In the first quarter of fiscal 1998 financing activities consumed $.8 million whereas $.9 million of cash was provided from financing during the comparable period. The net change of $1.7 million between the two reporting periods was caused by the following major contributing factors: (1) the Company repaid the $.5 million bank note which was scheduled to mature in November 2000; and (2) no additional long-term debt was incurred in the first quarter of fiscal 1998. 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. 7 10 PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: Exhibit 27 - Financial Data Schedule (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 January 2, 1998. 8 11 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: January 29, 1998 /s/ J. D. Carter ---------------- ----------------------------------------- J. D. Carter Vice President and Chief Financial Officer (Duly Authorized Officer and Principal Financial and Accounting Officer) 9 12 INDEX TO EXHIBITS
Exhibit Number Description - ------- ----------- 27 Financial Data Schedule
EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S FINANCIAL STATEMENT FOR THE THREE MONTHS ENDED JANUARY 2, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS SEP-30-1998 OCT-01-1997 JAN-02-1998 7,065 0 41,614 1,260 27,427 75,730 29,903 13,860 105,274 27,976 0 0 0 524 75,398 105,274 30,779 30,779 21,660 27,357 0 0 31 3,468 1,115 0 0 0 0 2,353 .46 .44
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