-----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, Sqyw/Oex3BnkG64/PtFUIzKb7GzrM/NwugZuHyObxuyBCZ8fnN49LvgZACqkQ9ns uoTw/8kvt2Q+q/k43k98jw== 0000912057-96-023727.txt : 19961028 0000912057-96-023727.hdr.sgml : 19961028 ACCESSION NUMBER: 0000912057-96-023727 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961025 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: 96647894 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, 1996 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 0-14224 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 5,364,363 shares of common stock, par value $.01 per share, of the Registrant outstanding as of October 21, 1996. IFR SYSTEMS, INC. FORM 10 - Q INDEX PART I -- FINANCIAL INFORMATION PAGE Item 1. Condensed Consolidated Financial Statements Condensed Consolidated Balance Sheets at September 30, 1996 and June 30, 1996 3 Condensed Consolidated Statements of Income for the three months ended September 30, 1996 and 1995. 5 Condensed Consolidated Statements of Cash Flow for the three months ended September 30, 1996 and 1995 6 Notes to Condensed Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 PART II -- OTHER INFORMATION Item 6. Exhibits and reports on Form 8-K 9 SIGNATURES 10 2 PART I -- FINANCIAL INFORMATION ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS IFR SYSTEMS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, JUNE 30, 1996 1996 ------------- -------- (UNAUDITED) (NOTE) ASSETS (000'S OMITTED) CURRENT ASSETS Cash and cash equivalents $ 649 $ 266 Accounts receivable, less $418 and $431 allowance for doubtful accounts, respectively 13,774 16,494 Inventories: Finished products 9,658 9,146 Work in process 8,090 7,167 Materials 7,517 7,513 ------- ------- 25,265 23,826 Prepaid expenses and sundry 243 150 Deferred income taxes 1,032 1,032 ------- ------- TOTAL CURRENT ASSETS 40,963 41,768 PROPERTY AND EQUIPMENT Property and equipment 16,027 15,487 Allowances for depreciation (deduction) (8,609) (8,115) ------- ------- 7,418 7,372 PROPERTY UNDER CAPITAL LEASE Building and machinery 3,435 3,435 Amortization (deduction) (1,375) (1,328) ------- ------- 2,060 2,107 OTHER ASSETS Cost in excess of net assets acquired, less amortization of $1,918 and $1,818, respectively 8,547 8,647 Patents, trademarks and other intangibles, less amortization of $1,579 and $1,492, respectively 243 315 Loan proceeds appropriated for debt service and other 496 504 ------- ------- 9,286 9,466 ------- ------- $59,727 $60,713 ------- ------- ------- -------
Note: The balance sheet at June 30, 1996 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, 1996 1996 ------------- -------- (UNAUDITED) (NOTE) ASSETS (000'S OMITTED) LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Short-term bank borrowings (Note 2) $ 2,780 $ 3,065 Accounts payable 3,631 3,218 Accrued compensation and payroll taxes 3,103 4,207 Other liabilities and accrued expenses 1,818 1,566 Current maturity of capital lease obligations 224 249 Current maturity of long-term debt 1,649 1,649 Federal and state income taxes and local taxes 1,246 541 ------- ------- TOTAL CURRENT LIABILITIES 14,451 14,495 CAPITAL LEASE OBLIGATIONS 2,051 2,110 LONG-TERM DEBT 640 645 DEFERRED INCOME TAXES 95 95 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 6,132 6,135 Cost of common stock in treasury---816,201 and 654,195 shares, respectively (deduction) (7,848) (5,708) Cumulative translation adjustment (94) (149) Retained earnings 44,238 43,028 ------- ------- 42,490 43,368 ------- ------- $59,727 $60,713 ------- ------- ------- -------
See notes to condensed consolidated financial statements. 4 IFR SYSTEMS, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS ENDED SEPTEMBER 30, -------------------- 1996 1995 (000'S OMITTED, EXCEPT PER SHARE DATA) SALES $23,258 $19,857 COST OF PRODUCTS SOLD 14,394 12,783 ------- ------- GROSS PROFIT 8,864 7,074 OPERATING EXPENSES Selling 2,532 2,385 Administrative 1,954 1,494 Engineering 2,371 2,372 ------- ------- 6,857 6,251 ------- ------- OPERATING INCOME 2,007 823 OTHER INCOME (EXPENSE) (5) (150) ------- ------- INCOME BEFORE INCOME TAXES 2,002 673 INCOME TAXES 792 265 ------- ------- NET INCOME $ 1,210 $ 408 ------- ------- ------- ------- Net Income Per Common Share $ 0.21 $ 0.07 ------- ------- ------- ------- Average Common Shares Outstanding 5,633 5,643 ------- ------- ------- -------
See notes to condensed consolidated financial statements. 5 IFR SYSTEMS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED SEPTEMBER 30, 1996 1995 ------- ------ (000'S OMITTED) OPERATING ACTIVITIES Net income $ 1,210 $ 408 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization of property and equipment 541 508 Amortization of intangibles 187 193 Changes in operating assets and liabilities: Accounts receivable 2,720 (2,457) Inventories (1,439) 412 Other current assets (93) (109) Accounts payable and accrued liabilities (439) (1,674) Other current liabilities 705 263 ------- ------- NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 3,392 (2,456) INVESTING ACTIVITIES Purchases of property and equipment (540) (412) Sundry 8 (5) ------- ------- NET CASH USED IN INVESTING ACTIVITIES (532) (417) FINANCING ACTIVITIES Purchases of capital stock for treasury (2,157) -- Principal payment on capital lease obligations (84) (79) Principal payment on long-term debt (5) (14) Principal payments on short-term bank borrowings (7,930) (3,805) Proceeds from short-term bank borrowings 7,645 6,230 Proceeds from exercise of common stock options 14 19 ------- ------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (2,517) 2,351 Effect of exchange rate changes on cash 40 -- ------- ------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 383 (522) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 266 662 ------- ------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 649 $ 140 ------- ------- ------- -------
See notes to condensed consolidated financial statements. 6 IFR SYSTEMS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) SEPTEMBER 30, 1996 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, 1996 are not necessarily indicative of the results that may be expected for the year ending June 30, 1997. 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, 1996. 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 $15,000,000 at interest rates approximating the prime rate charged by major banks. At September 30, 1996 the Company had unused lines of credit aggregating $12,220,000. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Sales increased 17 percent in the first quarter ended September 30, 1996 to $23,258,000, up $3,401,000 over the first quarter of the prior year. This increase is primarily due to increased sales of commercial communications test equipment, avionics test equipment and fiber optics test equipment. Test and measurement sales remained flat compared to the prior year period while sales of government communications test equipment were down $947,000 from a year ago. 7 Gross margins increased to 38 percent for the current year quarter as compared to 36 percent in the previous year quarter. This increase is related to a higher mix of avionics test equipment and fiber optics test equipment. Operating expenses decreased as a percent of sales from 31 percent for the prior year quarter to 29 percent for the current quarter. Selling expenses decreased one percent as a percent of sales and engineering expenses decreased two percent as a percent of sales from the prior year quarter. Administrative expenses increased one percent as a percent of sales compared to the prior year quarter. Other expenses decreased $145,000, driven primarily by the decrease in interest expense of $122,000 compared to the prior year quarter. This is due to the lower average note payable balance due to the bank. The estimated effective income tax rate was 39 percent for both the current and previous year period. LIQUIDITY AND CAPITAL RESOURCES Cash flows provided by operations were $3,392,000 for the three month period ended September 30, 1996, this compared to cash flows used in operations of $2,456,000 in the prior year quarter. This increase was primarily due to a decrease in accounts receivable of $2,720,000 for the current quarter compared to an increase of $2,457,000 in the prior year quarter. An increase in inventory in the current quarter of $1,439,000 partially offset this improvement. Working capital decreased from $27,273,000 at June 30, 1996 to $26,512,000 at September 30, 1996. The Board of Directors of the Company had previously authorized the repurchase of up to 1,000,000 shares of the Company's common stock. During the quarter ended September 30, 1996 the remaining shares available under the program were exhausted. On September 20, 1996 an additional 500,000 shares were authorized for repurchase by the Board of Directors. No shares have been purchased as of September 30, 1996 under this new authorization. The Company has available unsecured lines of credit for $15,000,000 which expire on June 30, 1997. At September 30, 1996, $12,220,000 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, 1997. 8 PART II -- OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 11.0 Statement Re: Computation of Per Share Earnings 27.0 Financial Data Schedule (b) No Form 8-k was filed during the quarter ended September 30, 1996. 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 25, 1996 /s/ Alfred H. Hunt ------------------------------- Alfred H. Hunt, III, President and CEO (Duly authorized officer) /s/ Jeffrey A. Bloomer ------------------------------- Jeffrey A. Bloomer, Chief Financial Officer and Treasurer (Principal financial and chief accounting officer) 10 EX-11 2 EXHIBIT 11 IFR SYSTEMS, INC. EXHIBIT (11.0) - STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE THREE MONTHS ENDED SEPTEMBER 30, 1996 1995 ------ ------ (000'S OMITTED, EXCEPT PER SHARE DATA) PRIMARY: Average shares outstanding 5,459 5,490 Net effect of dilutive stock options-based on the treasury stock method using average market price 174 153 ------ ------ Totals 5,633 5,643 ------ ------ ------ ------ Net Income $1,210 $ 408 ------ ------ ------ ------ Per Share Amount $ 0.21 $ 0.07 ------ ------ ------ ------ FULLY DILUTED: Average shares outstanding 5,459 5,490 Net effect of dilutive stock options-based on the treasury stock method using the period- end market price, if greater than average market price 227 153 Assumed conversion of 10% convertible notes 4 16 ------ ------ Totals 5,690 5,659 ------ ------ ------ ------ Net Income $1,210 $ 408 Add 10% convertible note interest, net of federal income tax effect 1 2 ------ ------ Totals $1,211 $ 410 ------ ------ ------ ------ Per Share Amount $ 0.21 $ 0.07 ------ ------ ------ ------ EX-27 3 EXHIBIT 27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATIONS FROM FORM 10-Q FOR SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS JUN-30-1997 JUL-01-1996 SEP-30-1996 649 0 14192 418 25265 40963 19462 9984 59727 14451 2691 0 0 62 42428 59727 23258 23258 14394 21251 31 5 107 2002 792 1210 0 0 0 1210 .21 .21
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