-----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, UXFMvKUSIzHN7KvemURas828RumcvZfe9SYzVFaVzvYzVqemWwwnzwGPoKRLvUM2 TnGMsAu94cmlmFFM7Wm4cQ== 0000912057-95-009337.txt : 19951107 0000912057-95-009337.hdr.sgml : 19951107 ACCESSION NUMBER: 0000912057-95-009337 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951106 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: IFR SYSTEMS INC CENTRAL INDEX KEY: 0000785546 STANDARD INDUSTRIAL CLASSIFICATION: INSTRUMENTS FOR MEAS & TESTING OF ELECTRICITY & ELEC SIGNALS [3825] IRS NUMBER: 480777904 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-14224 FILM NUMBER: 95587320 BUSINESS ADDRESS: STREET 1: 10200 W YORK ST CITY: WICHITA STATE: KS ZIP: 67215 BUSINESS PHONE: 3165224981 MAIL ADDRESS: STREET 1: 10200 WEST YORK STREET CITY: WICHITA STATE: KS ZIP: 67215 10-Q 1 FORM 10-Q 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 September 30, 1995 OR / / TRANSITION REPORT PURSANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to --------------- --------------- Commission file number 0-14224 IFR SYSTEMS, INC. (Exact name of registrant as specified in its charter) DELAWARE 48-0777904 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 10200 WEST YORK STREET, WICHITA, KANSAS 67215 (Address and zip code of principal executive offices) (316) 522-4981 (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 periods 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 . ----- ----- There were 5,491,635 shares of common stock, par value $.01 per share, of the Registrant outstanding as of October 31, 1995. IFR SYSTEMS, INC. FORM 10-Q INDEX PART I -- FINANCIAL INFORMATION PAGE Item 1. Condensed Consolidated Financial Statements Condensed Consolidated Balance Sheets at June 30, 1995 and September 30, 1995 3 Condensed Consolidated Statements of Income for the three months ended September 30, 1995 5 Condensed Consolidated Statements of Cash Flow for the three months ended September 30, 1995 and 1994 6 Notes to Condensed Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 PART II -- OTHER INFORMATION Item 6. Exhibits and reports on Form 8-K 9 SIGNATURES 10 2 PART 1 -- FINANCIAL INFORMATION ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS IFR SYSTEMS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, JUNE 30, 1995 1995 ------------ ------------ (UNAUDITED) (NOTE) (000'S OMITTED) ASSETS CURRENT ASSETS Cash and cash equivalents $ 140 $ 662 Accounts receivable, less $452 and $472 allowance for doubtful accounts, respectively 14,276 11,819 Inventories: Finished products 8,191 8,579 Work in progress 8,273 8,692 Materials 7,185 6,790 ----------- ----------- 23,649 24,061 Prepaid expenses and sundry 405 296 Deferred income taxes 822 822 ----------- ----------- TOTAL CURRENT ASSETS 39,292 37,660 PROPERTY AND EQUIPMENT Property and equipment 14,092 13,680 Allowance for depreciation (deduction) (6,660) (6,204) ----------- ----------- 7,432 7,476 PROPERTY UNDER CAPITAL LEASE Building and machinery 3,436 3,436 Amortization (deduction) (1,176) (1,124) ----------- ----------- 2,260 2,312 OTHER ASSETS Cost in excess of net assets acquired, less amortization of $1,394 and $1,271, respectively 9,723 9,843 Patents, trademarks and other intangibles, less amortization of $1,275 and $1,202, respectively 532 605 Loan proceeds appropriated for debt service and other 611 506 ----------- ----------- 10,766 10,954 ----------- ----------- $ 59,750 $ 58,402 ----------- ----------- ----------- -----------
Note: The balance at June 30, 1995 has been derived from the audited financial Statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. 3
SEPTEMBER 30, JUNE 30, 1995 1995 ------------ ------------ (UNAUDITED) (NOTE) (000'S OMITTED) LIABILITY AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Short-term bank borrowings (Note 2) $ 7,970 $ 5,545 Accounts payable 2,512 3,500 Accrued compensation and payroll taxes 2,031 2,187 Other liabilities and accrued expenses 2,277 2,807 Current maturity of capital lease obligations 231 251 Current maturity of long-term debt 88 88 Federal and state income taxes and local taxes 597 334 ----------- ----------- TOTAL CURRENT LIABILITIES 15,706 14,712 CAPITAL LEASE OBLIGATIONS 2,287 2,346 LONG-TERM DEBT 2,621 2,635 DEFERRED INCOME TAXES 73 73 SHAREHOLDERS' EQUITY Preferred stock, $.01 par value---authorized 1,000,000 shares, none issued --- --- Common Stock, $.01 par value---authorized 50,000,000 shares, issued 6,177,500 shares 62 62 Additional paid in capital 6,172 6,187 Cost of common stock in treasury---685,865 and 689,784 shares, respectively (deduction) (5,846) (5,880) Retained earnings 38,675 38,267 ----------- ----------- 39,063 38,636 ----------- ----------- $ 59,750 $ 58,402 ----------- ----------- ----------- -----------
See notes to condensed consolidated financial statements. 4 IFR SYSTEMS, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS ENDED SEPTEMBER 30, ------------------------------------- 1995 1994 (000'S OMITTED, EXCEPT PER SHARE DATA) SALES $ 19,857 $ 17,196 COST OF PRODUCTS SOLD 12,783 11,227 ----------- ----------- GROSS PROFIT 7,074 5,969 OPERATING EXPENSES Selling 2,385 1,984 Administrative 1,494 1,293 Engineering 2,372 2,327 ----------- ----------- 6,251 5,604 ----------- ----------- OPERATING INCOME 823 365 OTHER INCOME (EXPENSE) (150) (51) ----------- ----------- INCOME BEFORE INCOME TAXES 673 314 INCOME TAXES 265 130 ----------- ----------- NET INCOME $ 408 $ 184 ----------- ----------- ----------- ----------- Net Income Per Common Share $ 0.07 $ 0.03 ----------- ----------- ----------- ----------- Average Common Shares Outstanding 5,490 5,257 ----------- ----------- ----------- -----------
See notes to condensed consolidated financial statements. 5 IFR SYSTEMS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED SEPTEMBER 30, 1995 1994 ------------ ------------ (000's OMITTED) OPERATING ACTIVITIES Net income $ 408 $ 184 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization of property and equipment 508 547 Amortization of intangibles 193 198 Changes in operating assets and liabilities: Accounts receivable (2,457) 1,454 Inventories 412 485 Other current assets (109) (44) Accounts payable and accrued liabilities (1,674) (1,096) Other current liabilities 263 (197) ----------- ----------- NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (2,456) 1,531 INVESTING ACTIVITIES Purchases of property and equipment (412) (342) Sundry (5) 1 ----------- ----------- NET CASH USED IN INVESTING ACTIVITIES (417) (341) FINANCING ACTIVITIES Principal payment on capital lease obligations (79) (57) Principal payment on long-term debt (14) - Proceeds from issuance of common stock 19 1 Proceeds from short-term bank borrowings 6,230 6,770 Principal payments on short-term bank borrowings (3,805) (7,960) ----------- ----------- Net Cash Provided by (Used in) Financing Activities 2,351 (1,246) ----------- ----------- DECREASE IN CASH AND CASH EQUIVALENTS (522) (56) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 662 64 ----------- ----------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 140 $ 8 ----------- ----------- ----------- -----------
See notes to condensed consolidated financial statements. 6 IFR SYSTEMS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) SEPTEMBER 30, 1995 NOTE 1 -- BASIS OF PRESENTATION The accompanying unaudited 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 adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended September 30, 1995 are not necessarily indicative of the results that may be expected for the year ending June 30, 1996. 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 June 30, 1995. NOTE 2 -- SHORT TERM BANK BORROWINGS The Company has unsecured lines of credit with a bank whereby it could borrow in the aggregate up to $10,000,000 at interest rates approximating the prime rate charged by major banks. At September 30, 1995 the Company had unused lines of credit aggregating $2,030,000. NOTE 3 -- ACQUISITION On June 21, 1995, the Company acquired substantially all of the assets of York Technology Limited, a company incorporated in England, and York Technology, Inc., a New Jersey Corporation, as well as the real estate and building previously leased by York Tech Ltd. The acquisition has been accounted for as a purchase. On an unaudited pro forma basis, sales, net income and net income per share for the quarter ended September 30,1994 were $19,464,000, $291,000 and $.06 respectively. This pro forma data presents the consolidated results of operations as if the acquisition had occurred on July 1, 1994, after giving effect to certain adjustments, including amortization of intangibles, increased interest expense and related income tax expense. The pro forma results have been prepared for comparative purposes only and do not purport to indicate the results of operations which would have actually occurred had the acquisition been in effect on the date indicated, or which may occur in the future. 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Sales increased 15 percent in the first quarter ended September 30, 1995 to $19,857,000, up $2,661,000 over the first quarter of the prior year. Sales of fiber optics test equipment and commercial communications service monitors accounted for the increase. The increase in sales of fiber optics test equipment is due primarily to the acquisition of York Technology Companies. Sales to the U.S. Army were down $1,962,000 for the current quarter as compared to the previous year quarter. This was due to unusually strong shipments in the prior year quarter. Gross margins increased to 36 percent for the current year quarter as compared to 35 percent in the previous year quarter. This increase is primarily due to a higher mix of fiber optics test equipment sales. Operating expenses decreased as a percent of sales from 33 percent for the prior year quarter to 32 percent for the current year quarter. This increase is due in part to higher commission expenses related to the increase in sales and higher administrative expenses related to the acquisition of York Technology Companies. The estimated effective income tax rate was 39 percent compared to 41 percent for the prior year quarter. This decrease is due to an increase in the estimated annual pre-tax income relative to the amount of nondeductible goodwill amortization. LIQUIDITY AND CAPITAL RESOURCES Cash flows used in operations were $2,456,000 for the three month period ended September 30, 1995. This compares to cash flows provided by operations of $1,531,000 in the prior year quarter. This decrease was primarily due to an increase in accounts receivable of $2,180,000 for the current quarter as compared to a decrease of $1,454,000 in the prior year quarter. Funding for the company pension plan of $1,035,000 also contributed to the decrease. Working capital increased from $22,948,000 at June 30, 1995 to $23,586,000 at September 30, 1995. The Company has available unsecured lines of credit for $10,000,000 which expire on June 30, 1996. At September 30, 1995, $2,030,000 was outstanding under the lines of credit. The Company anticipates that available lines of credit and funds generated from operations will be adequate to meet capital asset expenditures and working capital needs for the current fiscal year ending June 30, 1996. 8 PART II -- OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 2.1 Acquisition Agreement for York Technology, Inc. dated June 21, 1995 (Incorporated by reference to Exhibit 2.1 to the Company's Form 8-K dated July 6, 1995, File No. 0-14224) 2.2 Acquisition Agreement for York Technology, Ltd. dated June 21, 1995 (Incorporated by reference to Exhibit 2.2 to the Company's Form 8-K dated July 6, 1995, File No. 0-14224) 2.3 Building transfer agreement with TKM Group Pension Trust Limited dated June 21, 1995. (Incorporated by reference to Exhibit 2.3 to the Company's Form 8-K dated July 6, 1995, File No. 0-14224) 2.4 Supplemental Agreement dated June 29, 1995. (Incorporated by reference to Exhibit 2.4 to the Company's Form 8-K dated July 6, 1995, File No. 0-14224) 11.0 Statement Re: Computation of Earnings Per Share 27.0 Financial Data Schedule (b) During the quarter for which this report is filed, the Registrant filed a Form 8-K dated June 21, 1995 reporting the acquisition of substantially all of the assets of York Technology Limited, a company incorporated in England, and York Technology, Inc., a New Jersey corporation, as well as the real estate and building previously leased by York Technology Limited. The Registrant subsequently filed a Form 8-K/A, Amendment No. 1 to the Form 8-K described above, which included financial statements of York Technology Limited and pro forma financial statements of the Registrant after giving effect to the acquisition transaction described above. 9 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. IFR SYSTEMS, INC. Date: October 31, 1995 /s/ Alfred H. Hunt ---------------- ------------------------------ Alfred H. Hunt, III, President and CEO (Duly authorized officer) /s/ Bruce Bingham ------------------------------ Bruce C. Bingham, Chief Financial Officer and Treasurer (Principal financial and chief accounting officer) 10 EX-11 2 EXH-11 IFR SYSTEMS, INC. EXHIBIT (11.0) - STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
THREE MONTHS ENDED SEPTEMBER 30, 1995 1994 -------- -------- (000's OMITTED, EXCEPT PER SHARE DATA) PRIMARY: Average shares outstanding 5,490 5,257 Net effect of dilutive stock options-based on the treasury stock method using average market price 153 (41) -------- --------- Totals 5,643 5,216 -------- --------- -------- --------- Net Income $ 408 $ 184 -------- --------- -------- --------- Per Share Amount $ 0.07 $ 0.04 -------- --------- -------- --------- FULLY DILUTED: Average shares outstanding 5,490 5,257 Net effect of dilutive stock options-based on the treasury stock method using the period- end market price, if greater than average market price 153 17 Assumed conversion of 10% convertible notes 16 153 -------- --------- Totals 5,659 5,427 -------- --------- -------- --------- Net Income $ 408 $ 184 Add 10% convertible note interest, net of federal income tax effect 2 19 -------- --------- Totals $ 410 $ 203 -------- --------- -------- --------- Per Share Amount $ 0.07 $ 0.04 -------- --------- -------- ---------
Note: Average shares outstanding used for Net Income Per Share included in the Company's financial statements do not reflect the effect of the stock options granted or convertible notes since their aggregate effect is less than 3%. EX-27 3 FDS EX-27
5 This schedule contains summary financial information extracted from the consolidated balance sheets and consolidated statement of income from Form 10-Q for September 30, 1995 and is qualified in its entirety by reference to such financial statements. 3-MOS JUN-30-1996 JUL-01-1995 SEP-30-1995 140 0 14,728 452 23,649 39,292 17,528 7,836 59,750 15,706 4,981 62 0 0 38,613 59,750 19,857 19,857 12,783 19,034 16 0 229 673 265 408 0 0 0 408 .07 .07
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