-----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, LOCnwPhB+4y46hkCzObxuWx5PaZeRINsBtE8EJj0w8udVZykC7YxtGxxivaXVr3Y 62JTEBQZwcN8meO4aarFBQ== 0000876884-96-000010.txt : 19961118 0000876884-96-000010.hdr.sgml : 19961118 ACCESSION NUMBER: 0000876884-96-000010 CONFORMED SUBMISSION TYPE: 10-Q CONFIRMING COPY: PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: WESTWOOD CORP/NV/ CENTRAL INDEX KEY: 0000876884 STANDARD INDUSTRIAL CLASSIFICATION: SWITCHGEAR & SWITCHBOARD APPARATUS [3613] IRS NUMBER: 870430944 STATE OF INCORPORATION: NV FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-19381 FILM NUMBER: 00000000 BUSINESS ADDRESS: STREET 1: PO BOX 35493 CITY: TULSA STATE: OK ZIP: 74153 BUSINESS PHONE: 9182520481 MAIL ADDRESS: STREET 1: PO BOX 35493 CITY: TULSA STATE: OK ZIP: 74153 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [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: 0-19381 WESTWOOD CORPORATION (Exact name of registrant as specified in its charter) Nevada, U.S.A. 87-0430944 (State or other jurisdiction of (I.R.S. Employer of incorporation or organization) Identification No.) 12437 East 60th Street, Tulsa, Oklahoma 74146 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (918) 252-1774 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 and 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. [x] Yes [ ] No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: Common Stock, $.003 par value - 5,581,682 shares as of November 30,1996 PART I. - FINANCIAL INFORMATION WESTWOOD CORPORATION CONSOLIDATED BALANCE SHEETS (In Thousands)
September 30 March 31 1996 1995 ------------- -------- (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 259 $ 598 Accounts receivable (including retain- age receivable of $1,001,000 at September 30, 1996 and $1,425,000 at March 31, 1996) net of allowance for doubtful accounts 4,621 3,973 Note receivable - Officer 104 100 Costs and estimated earnings in excess of billings on uncompleted contracts 1,778 2,989 Inventories: Raw materials and purchased parts 5,070 3,887 Work-in-process 1,172 906 ------- ------- 6,242 4,793 Prepaid expenses 273 73 ------- ------- Total current assets 13,277 12,526 Plant and equipment, at cost: Leasehold improvements 774 269 Machinery and equipment 3,547 2,698 Patterns and tools 385 227 Other - 335 ------- ------- 4,706 3,529 Accumulated depreciation 2,339 2,057 ------- ------- 2,367 1,472 Other assets: Drawings, (net) 30 41 Long-term accounts receivable, retainage 1,112 1,302 Deferred charges 411 383 ------- ------- 1,553 1,726 ------- ------- Total assets $17,197 $15,724 ======= ======= See accompanying notes
WESTWOOD CORPORATION Consolidated Balance Sheets (In Thousands)
September 30 March 31 1996 1995 ------------- -------- (Unaudited) LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 2,027 $ 1,744 Income taxes payable 41 352 Accrued liabilities 723 868 Billings in excess of costs and estimated earnings on uncompleted contracts 2,449 2,393 Current deferred income taxes 5 10 Current portion of long-term debt: Revolving debt agreement 300 - Payable to bank 12 19 Acquisition debt 21 21 ------- ------- 333 40 ------- ------- Total current liabilities 5,578 5,407 Long-term debt: Payable to bank 65 67 Payable to insurance company 640 - ------- ------- 705 67 Deferred income taxes 169 177 Stockholders' equity: Preferred stock, 5,000,000 shares authorized, $.001 par value, no shares issued and outstanding - - Common stock, 20,000,000 shares authorized, $.003 par value, 5,581,682 shares issued and outstanding (Note B) 17 17 Capital in excess of par value 3,511 3,511 Retained earnings 7,217 6,545 ------- ------- Total stockholders' equity 10,745 10,073 ------- ------- Total liabilities and stockholders' equity $17,197 $15,724 ======= ======= See accompanying notes.
WESTWOOD CORPORATION Consolidated Statements of Income (In Thousands)
Second Quarter Ended Six Months Ended September 30 September 30 1996 1995 1996 1995 -------------------- ---------------- (Unaudited) (Unaudited) Sales $8,288 $6,773 $16,077 $16,221 Cost of sales 6,350 5,558 12,458 13,411 ------ ------ ------- ------- Gross profit 1,938 1,215 3,619 2,810 Operating expenses: Marketing and selling expenses 513 288 924 592 General and administrative expenses 708 437 1,394 909 ------ ------ ------ ------- 1,221 725 2,318 1,501 ------ ------ ------ ------- Operating income 717 490 1,301 1,309 Other income (expense): Interest expense (37) (12) (68) (40) Other income (expense) 22 16 28 18 ------ ------ ------ ------ (15) 4 (40) (22) ------ ------ ------ ------ Income before taxes 702 494 1,261 1,287 Provision for income taxes 265 188 477 489 ------ ------ ------ ------ Net income $ 437 $ 306 $ 784 $ 798 ====== ====== ====== ====== Earnings per share (Note B) $ .078 $ .055 $ .140 $ .143 Cash dividends per share $ .010 $ .010 $ .020 $ .020 See accompanying notes.
WESTWOOD CORPORATION Consolidated Statements of Cash Flows (In Thousands)
Six Months Ended September 30 1996 1995 ------------------ (Unaudited) OPERATING ACTIVITIES Net income $ 784 $ 798 Adjustments to reconcile net income to net cash provided by (used in) operations: Depreciation and amortization 293 249 Deferred income taxes (98) (86) Cash flows impacted by changes in: Accounts receivable 613 380 Costs and estimated earnings in excess of billings on uncompleted contracts 1,211 84 Inventories (249) 548 Prepaid expenses (114) 41 Long-term accounts receivable, retainage 190 (216) Deferred charges (65) (14) Accounts payable (660) 886 Accrued liabilities (564) (251) Billings in excess of costs and estimated earnings on uncompleted contracts 56 702 Income taxes payable (310) 138 Other (4) (62) ------- ------- Net cash provided by operating activities 1,083 3,197 INVESTING ACTIVITIES Purchase of plant and equipment (187) (122) Acquisition of Roflan (990) - ------- ------- Net cash used in investing activities (1,177) (122) FINANCING ACTIVITIES Principal payments on bank notes (4,533) (5,004) Borrowings on bank notes 4,400 3,505 Cash dividends paid (112) (102) ------- ------- Net cash used in financing activities (245) (1,601) ------- ------- Net increase (decrease) in cash (339) 1,474 Cash at beginning of period 598 103 ------- ------- Cash at end of period $ 259 $ 1,577 ======= ======= See accompanying notes.
WESTWOOD CORPORATION NOTES TO FINANCIAL STATEMENTS September 30, 1996 Note A - Basis of Presentation - ------------------------------ The accompanying unaudited consolidated financial statements, which include NMP Corp. and Roflan Associates, Inc. (since May 1st, 1996, see Note C), Westwood Corporation's wholly-owned subsidiaries, 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. Management believes all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the fiscal second quarter and six months ended September 30, 1996, may not necessarily be indicative of the results that may be expected for the year ended March 31, 1997. For further information, refer to the consolidated financial statements and footnotes included in the Westwood Corporation's annual report on Form 10-K for the year ended March 31, 1996, and Form 8-K dated May 1, 1996. Note B - Common Stock - --------------------- The financial statements, including earnings per share calculation, reflect the impact of a 10% stock dividend declared by the Board of Directors in October, 1995. Earnings per share are based on 5,581,682 shares issued and outstanding. Stock option plans for directors and employees, adopted in 1992 and 1993 and adjusted for stock dividends, aggregate 665,000 shares. As of September 30, 1996, total options actually issued under these plans were for 387,000 shares, and no options have been exercised or cancelled. Note C - Acquisition of Roflan Associates, Inc. - ----------------------------------------------- On May 1, 1996 Westwood Corporation acquired 100% of the issued and outstanding common stock of Roflan Associates, Inc. and through Roflan's ownership interest, 100% of the outstanding common stock of its wholly-owned subsidiary, Peter Gray Corporation. Westwood Corporation's acquisition of Roflan for $990,000 has been accounted for as a purchase. The Company utilized its bank credit line for the purchase of Roflan and the payment of certain Roflan liabilities. The pro forma unaudited results of operations for the six months ended September 30, 1996 and 1995, assuming consummation of the purchase as of the beginning of the periods are as follows: Six Months Ended September 30 1996 1995 ----------------------------- ($000 except share data) Sales $ 16,645 $ 20,478 Net Income $ 761 $ 879 Earnings per share $ .136 $ .157 WESTWOOD CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS September 30, 1996 General - ------- Results of Operations - --------------------- The Company has been dependent upon long-term switchgear contracts relating to major new shipbuilding programs for the bulk of its sales revenues. However, the Company has been successful in becoming somewhat less dependent upon these major contracts due to recent acquisitions and increased sales of RoxSystem products. The DDG-51 and LHD programs are the most significant switchgear contracts currently in production. The DDG-51 contract will be completed in the fiscal year ending March 31, 1998, and the Company was not the low bidder for renewal of this contract. The current LHD contract will also be completed in the 1998 fiscal year, and a possible follow-on order may be received under this program. Second Quarter Ended September 30, 1996 and 1995 - ------------------------------------------------ Sales for the fiscal second quarter ended September 30, 1996 were $8,288,000, a 22.4% increase over the same quarter last year. Most of this sales increase was in marine hardware products as a result of the recent acquisition of Roflan Associates. During the quarter, sales of RoxSystem products also increased significantly, while revenues recognized on major switchgear contracts declined. Gross profit for the quarter was $1,938,000, or 23.4% of sales, compared to $1,215,000 or 17.9% of sales for the same period last year. Higher sales volume and an improved product mix accounted for most of the higher margin. Operating expenses were $1,221,000, a 68.4% increase over last year, and primarily resulted from the acquisition of Roflan. During the quarter, the Company also incurred substantial sales promotion expenses relating to RoxSystem products. Operating income for the quarter was $717,000, or 8.7% of sales, compared to $490,000 or 7.2% of sales for the same period last year. Net income for the quarter was $437,000 or $.078 per share, and a 42.8% increase compared to $306,000, or $.055 per share for the same period last year. Six Months Ended September 30, 1996 and 1995 - -------------------------------------------- Sales for the six months ended September 30, 1996 were $16,077,000, a .9% decrease compared to last year. Revenues recognized on major switchgear contracts declined compared to last year, while sales of marine hardware products increased substantially as a result of the Roflan acquisition. Sales of RoxSystem products also increased significantly over the same period last year. Gross profit for the six months ended September 30, 1996 was $3,619,000 or 22.5% of sales, compared to $2,810,000 or 17.3% for the same period last year. An improved product mix accounted for the higher margin. Last year's sales included a large shipment of low-margin air circuit breakers. Operating expenses for the period were $2,318,000 compared to $1,501,000 for last year. The 54.4% increase in expenses was primarily due to the Roflan acquisition. Operating income for the six months ended September 30, 1996 was $1,301,000 or 8.1% of sales, compared to $1,309,000 which was also 8.1% of sales for the same period last year. Net income was $784,000, or .140 per share, compared to $798,000, or .143 per share for the same period last year. Liquidity and Capital Resources - ------------------------------- For the six months ended September 30, 1996, net cash provided by operating activities was $1,083,000. Net income provided $784,000, with other cash adjustments and sources being depreciation and amortization of $293,000, decreases in accounts receivable of $613,000, and costs and estimated earnings in excess of billings on uncompleted contracts of $1,211,000. Significant uses of operating cash flow were increases in inventories of $249,000, reductions in accounts payable of $660,000, accrued liabilities of $564,000, and income taxes payable of $310,000. The decreases in accounts receivable and costs and estimated earnings in excess of billings were primarily due to reduced progress billings and purchasing activity on major switchgear contracts. Inventory increases related to a buildup in RoxSystem and marine hardware products. The reductions in accounts payable concerned the timing of payments, as well as lower switchgear purchasing activity. Most of the decrease in accrued liabilities related to the payment of Roflan accruals, and the reduction in income taxes payable was due to the timing of estimated tax payments. The major use of cash for investing activities was the Roflan acquisition for $990,000, discussed in Note C to the financial statements. The Company borrowed $2,000,000 under its revolving credit facility to fund this purchase and pay certain Roflan liabilities. The Company has a bank credit agreement which provides a $3,000,000 revolving facility based upon a borrowing base of qualifying accounts receivables and inventory. This credit agreement has been renewed to expire on July 31, 1997. The Company borrows from time-to-time under this credit facility to support working capital requirements, and believes that available borrowing capacity, along with cash flows from operations, is adequate for future operations. PART II - OTHER INFORMATION Item 5. Other Information - --------------------------- Regular Quarterly Dividend - -------------------------- On November 7th, 1996, the Board of Directors approved a regular quarterly dividend of $.01 per common share to stockholders of record on December 1, 1996, and paid on December 22, 1996. Issuance of Stock Dividend - -------------------------- On November 7th, 1996, the Board of Directors approved a ten percent stock dividend (one new share of common stock, par value $.003 for each ten shares now held) to stockholders of record December 1, 1996. The new shares will be issued on December 22, 1996. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned hereunto duly authorized. DATE: November 14, 1996 WESTWOOD CORPORATION By: /s/ Ernest H. McKee ---------------------------- Ernest H. McKee, Director President and Chief Executive Officer By: /s/ Paul R. Carolus ---------------------------- Paul R. Carolus, Director Secretary/Treasurer and Chief Financial Officer EX-27 2
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