-----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, OlCoWJfCLatd1bsBPLF1lp0dpPFIow98Ib0J2p7DtDVgqKxoDT+AeOzRpbvGtERR HOqfYzQs68//bnYWfAba+g== 0000930661-00-000350.txt : 20000215 0000930661-00-000350.hdr.sgml : 20000215 ACCESSION NUMBER: 0000930661-00-000350 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000214 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: SEC FILE NUMBER: 000-19381 FILM NUMBER: 543864 BUSINESS ADDRESS: STREET 1: 5314 SOUTH YALE AVENUE STREET 2: SUITE 1100 CITY: TULSA STATE: OK ZIP: 74135 BUSINESS PHONE: 9185240002 MAIL ADDRESS: STREET 1: PO BOX 35493 CITY: TULSA STATE: OK ZIP: 74153 10-Q 1 FORM 10-Q 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 December 31, 1999 . ------------------------------------------------- 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 87-0430944 - -------------------------------------------------------------------------------- (State or other jurisdiction (I.R.S. Employer of incorporation) Identification No.) 5314 South Yale Street, Tulsa, Oklahoma 74135 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (918) 524-0002 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 Outstanding at February 14, 2000 - ----------------------------- ------------------------------- Common Stock, $.003 par value 6,891,647 INDEX ----- Page No. ------- Part I Financial Information: Consolidated Balance Sheets as of December 31, 1999 and March 31, 1999 1 Consolidated Statements of Operations for the third quarter and nine months ended December 31, 1999 and 1998 3 Consolidated Statement of Cash Flows for the nine months ended December 31, 1999 and 1998 4 Notes to Consolidated Financial Statements 5 Management's Discussion and Analysis of Financial Condition and Results of Operations 9 Part II Other Information: Item 1. Legal Proceedings 13 Item 2. Changes in Securities (None) Item 3. Defaults Upon Senior Securities (None) Item 4. Submission of Matters to a Vote of Security Holders 14 Item 5. Other Information 14 Item 6. Exhibits and Reports on Form 8-K 15 Signatures 15 WESTWOOD CORPORATION CONSOLIDATED BALANCE SHEETS (In Thousands)
December 31 March 31 1999 1999 ------------------------ (Unaudited) Assets Current assets: Cash and cash equivalents $ 55 $ 1,283 Accounts receivable (including retainage receivable of $14 at December 31, 1999 and $16 at March 31, 1999), net of allowance for doubtful accounts 4,310 3,696 Income tax receivable - 789 Notes receivable 250 - Costs and estimated earnings in excess of billings on uncompleted contracts 791 625 Inventories: Raw materials and purchased parts 2,087 2,648 Work-in-process 1,365 1,573 -------- -------- 3,452 4,221 Prepaid expenses 74 40 Assets held for sale - 402 -------- -------- Total current assets 8,932 11,056 Plant and equipment, at cost: Leasehold improvements 310 310 Machinery and equipment 4,420 4,275 Patterns and tools 79 195 -------- -------- 4,809 4,780 Accumulated depreciation (2,992) (2,937) -------- -------- 1,817 1,843 Goodwill (net) 4,833 6,250 Long-term accounts receivable, retainage 320 533 Note receivable 500 - Deferred charges & other 1 1 -------- -------- Total Assets $ 16,403 $ 19,683 ======== ========
See accompanying notes 1 WESTWOOD CORPORATION CONSOLIDATED BALANCE SHEETS (In Thousands)
December 31 March 31 1999 1999 ------------------------ (Unaudited) Liabilities and stockholders' equity Current liabilities: Accounts payable $ 3,003 $ 2,397 Accrued liabilities 1,602 1,489 Billings in excess of costs and estimated earnings on uncompleted contracts 1,511 501 Current portion of long-term debt: Payable to bank 1,115 6,533 Other 23 46 Acquisition debt 131 990 ------- ------- 1,269 7,569 ------- ------- Total current liabilities 7,385 11,956 Long-term debt: Payable to bank 1,580 - Other 78 77 Acquisition debt 143 480 Convertible debentures 1,000 - ------- ------- 2,801 557 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, 6,891,647 shares issued and outstanding at December 31, 1999 and March 31, 1999 21 21 Capital in excess of par value 5,978 5,978 Retained earnings 313 1,171 ------- ------- Sub-Total 6,312 7,170 Less: Treasury stock, 127,000 shares at December 31, 1999 (95) - ------- ------- Total stockholders' equity 6,217 - Total liabilities and stockholders' equity $16,403 $19,683 ======= =======
See accompanying notes 2 WESTWOOD CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (In Thousands)
Third Quarter Ended Nine Months Ended December 31 December 31 1999 1998 1999 1998 ------------------- ------------------- (Unaudited) (Unaudited) Sales $4,133 $7,572 $13,073 $23,795 Cost of sales 3,348 6,681 10,653 20,944 ------ ------ ------- ------- Gross profit 785 891 2,420 2,851 Operating expenses: Selling, general & admin. 1,136 1,300 3,627 3,752 ------ ------ ------- ------- Operating loss (351) (409) (1,207) (901) Other income: Interest expense (61) (111) (306) (445) Other income 88 4 135 100 Gain on sale of product lines - - 309 - ------ ------ ------- ------- 27 (107) 138 (345) ------ ------ ------- ------- Loss before taxes (324) (516) (1,069) (1,246) Benefit for income taxes - (178) (211) (428) ------ ------ ------- ------- Net loss $ (324) $ (338) $ (858) $ (818) ====== ====== ======= ======= Basic loss per share $(.047) $(.049) $ (.124) $ (.119) Weighted average common shares used in computing basic earnings per share 6,889 6,892 6,891 6,892 ------ ------ ------- ------- Cash dividends per share $ - $ - $ - $ .010
See accompanying notes 3 WESTWOOD CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands)
Nine Months Ended December 31 1999 1998 -------------------- (Unaudited) Operating activities Net loss $ (858) $ (818) Adjustments to reconcile net loss to cash provided by operations: Depreciation and amortization 681 998 Deferred income taxes -- 11 Gain on sale of product lines (309) -- Cash flows impacted by changes in: Accounts receivable (464) 58 Costs and estimated earnings in excess of billings on uncompleted contracts (166) 1,577 Inventories (1,141) 116 Prepaid expenses (34) (13) Long-term accounts receivable, retainage 213 150 Deferred charges -- 37 Accounts payable 606 (1,332) Accrued liabilities and rent 113 (559) Billings in excess of costs and estimated earnings on uncompleted contracts 1,010 (362) Income taxes payable/receivable 789 119 Other 16 55 ------- ------- Net cash provided by operating activities 456 37 Investing activities Purchase of plant and equipment (469) (314) Proceeds from sales of product lines 1,849 -- ------- ------- Net cash provided by investing activities 1,380 (314) Financing activities Principal payments on debt (7,969) (1,076) Borrowings on debt 4,000 1,250 Proceeds from issuing convertible debentures 1,000 -- Dividends paid -- (69) Acquisition of treasury stock (95) -- ------- ------- Net cash (used) provided by financing activit (3,064) 105 ------- ------- Net decrease in cash (1,228) (172) Cash at beginning of period 1,283 574 ------- ------- Cash at end of period $ 55 $ 402 ======= =======
See accompanying notes 4 WESTWOOD CORPORATION NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999 Note 1 - Basis of Presentation - ------------------------------ The accompanying unaudited consolidated financial statements include Westwood wholly-owned subsidiaries NMP Corp., TANO Corp., and MCII Electric Company. Consolidated operations for Westwood include Peter Gray Corporation only for April, 1999, when its operations ceased, and NMP Corp. marine hardware products only through the four months ended July, 1999, when these hardware-related assets were sold. These 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. Management believes that all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the fiscal third quarter and nine months ended December 31, 1999, may not necessarily be indicative of the results that may be expected for the year ended March 31, 2000. For further information, refer to the consolidated financial statements and footnotes included in Westwood Corporation's annual report on Form 10-K for the year ended March 31, 1999. Note 2 - Sale of Businesses - --------------------------- In April, 1999, the Company sold certain Peter Gray inventory and equipment for $568,000, and Peter Gray operations ceased on April 30, 1999. The Company sold the remaining equipment at that location for $181,000 in June, 1999. In connection with this sale, the Company recorded a gain of $294,000 in the first quarter ended June 30, 1999. Proceeds from this sale were used to reduce debt. In July, 1999, the Company sold certain marine hardware-related assets of NMP Corp. which generated operating losses in fiscal 1999 and the first quarter of fiscal 2000, for a total sales price of $2,000,000. Of the sales price, $1,100,000 was paid at closing, with $150,000 to be paid within 90 days, and the remaining balance of $750,000 is to be paid in three annual installments of $250,000. The Company recorded a $15,000 gain in the second quarter in connection with the sale, and proceeds were used to reduce debt. 5 Note 3 - Long-Term Debt - ----------------------- On August 13, 1999, the Company closed a new bank credit facility for a $2,000,000 revolving credit line, and a $2,000,000 five-year term note. Proceeds from this new credit facility were used to repay all amounts outstanding under the previous bank facility. As part of the new bank commitment, the Company was required to obtain $1,000,000 of subordinated debt which was accomplished on December 23, 1999. Note 4 - Income Taxes - --------------------- The Company generated net operating loss carryforwards in fiscal 1999 and the first nine months of fiscal 2000, whereby no deferred tax asset was established as future taxable income is not certain in fiscal 2000. However, the Company filed an amended tax return for the fiscal year ended March 31, 1999, which resulted in a refund of $211,000 and was recorded as a tax benefit for the quarter ended September 30, 1999. Note 5 - Comprehensive Income - ----------------------------- For the third quarter and nine month periods ended December 31, 1999, and 1998, comprehensive loss and net loss are the same. Note 6 - Contingencies - ---------------------- See note under Liquidity and Capital Resources. 6
Note 7 - Segment Information - ---------------------------- (In Thousands) Revenues ------------------------------------ Three Months Ended Inter- Net Income Total Dec. 31, 1999 External Segment Total (Loss) Assets - ------------------ -------- ------- ----- ---------- ------ Marine Switchgear $ 1,719 $ 86 $ 1,805 $ 10 $ 14,062 Mobile Power Systems 839 -- 839 (222) 7,352 Engineered Automation Controls 1,575 136 1,711 54 4,707 Eliminations -- (222) (222) (166) (9,718) -------- -------- -------- -------- -------- Total $ 4,133 $ -- $ 4,133 $ (324) $ 16,403 ======== ======== ======== ======== ======== Three Months Ended Dec. 31, 1998 - ------------- Marine Switchgear $ 2,952 $ 211 $ 3,163 $ (106) $ 13,791 Mobile Power Systems 2,915 -- 2,915 (227) 9,038 Engineered Automation Controls 1,705 -- 1,705 5 3,964 Eliminations -- (211) (211) (10) (4,928) -------- -------- -------- -------- -------- Total $ 7,572 $ -- $ 7,572 $ (338) $ 21,865 ======== ======== ======== ======== ========
Revenues -------------------------------- Nine Months Ended Inter- Net Income Total Dec. 31, 1999 External Segment Total (Loss) Assets - ------------- -------- ------- ----- ----- -------- Marine Switchgear $ 5,304 $ 351 $ 5,655 $ 118 $ 14,062 Mobile Power Systems 2,549 -- 2,549 (1,458) 7,352 Engineered Automation Controls 5,220 253 5,473 472 4,707 Eliminations -- (604) (604) 10 (9,718) -------- -------- -------- -------- -------- Total $ 13,073 $ -- $ 13,073 $ (858) $ 16,403 ======== ======== ======== ======== ======== Nine Months Ended Dec. 31, 1998 - ------------- Marine Switchgear $ 8,836 $ 764 $ 9,600 $ (220) $ 13,791 Mobile Power Systems 10,946 10,946 -- 10,946 (634) 9,038 Engineered Automation Controls 4,013 -- 4,013 87 3,964 Eliminations -- (764) (764) (51) (4,928) -------- -------- -------- -------- -------- Total $ 23,795 $ -- $ 23,795 $ (818) $ 21,865 ======== ======== ======== ======== ========
7 Included in revenues of the marine switchgear segment for the third quarter and nine months ended December 31, 1998, were revenues of $1,871,000 and $6,470,000, respectively, that were attributable to Peter Gray and NMP marine hardware product lines sold in April and July, 1999. Assets attributable to the sold operations were $4,246,000 at December 31, 1998. 8 WESTWOOD CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS DECEMBER 31, 1999 GENERAL Results of Operations - Third Quarter Ended December 31, 1999 and 1998 - ------------------------------------------------------------------------- For the third quarter ended December 31, 1999, the Company had a net loss of $324,000 compared to a net loss of $338,000 for the same quarter last year. The net loss per share was $.047 compared to a net loss of $.049 for the prior year. Consolidated sales for the third quarter decreased 45.4% to $4,133,000 compared to $7,572,000 for the previous year. Last year's third quarter sales included $1,871,000 from the Peter Gray and NMP Corp. marine hardware product lines, both of which have been subsequently sold. Gross profit, as a percentage of sales, was 18.5% for the current quarter compared to 11.8% for the same period last year. Mobile power system revenues, which have a lower gross profit, contributed 38.5% of total sales for the third quarter last year but only 20.3% in the current period. The Company incurred an operating loss of $351,000 in the current quarter compared to a loss of $409,000 for the same period last year. The improvement was primarily due to reduced SG&A expense associated with Peter Gray and NMP Corp. hardware product lines. SG&A expense was reduced $164,000 in the current quarter. Interest expense decreased 45% as a result of lower borrowings. A breakdown by company segments follows: . Marine switchgear sales by NMP Corp. were $1,805,000 for the third quarter compared to $3,163,000 for the same period last year, which included $1,871,000 attributable to Peter Gray and NMP hardware products. . Mobile power system revenues by MCII Electric Company were $839,000 for the quarter compared to $2,915,000 for last year. The third quarter last year included $1,500,000 in revenues from MEP units, a contract that was substantially completed in the last fiscal year. A net loss of $222,000 for the quarter compares to a net loss of $227,000 for the same period last year. 9 . Engineered automation and control system sales by TANO Corp. were $1,711,000, compared to $1,705,000 for last year. Net income for the period was $54,000 compared to a net income of $5,000 for the same period last year. Nine Months Ended December 31, 1999 and 1998 - -------------------------------------------- For the nine months ended December 31, 1999, the Company incurred a net loss of $858,000 compared to a net loss of $818,000 for the same period last year. Net loss per share was $.124 compared to a net loss of $.119 per share for the prior year. Sales for the nine months ended December 31, 1999, were $13,073,000, a 45% decrease compared to $23,795,000 for the previous year. Last year's revenues included $6,470,000 for Peter Gray and NMP marine hardware product lines which have been subsequently sold. In addition, last year's revenues also included $1,598,000 in connection with the shipment by MCII Electric Company of the TQG test units, as well as $1,500,000 for MEP shipments. For the nine months ended December 31, 1999, gross profit was 18.5% compared to 12% for the same period last year. Last year's gross profit margins were impacted as a result of substantial cost overruns incurred to meet shipping dates for the TQG test units. The Company incurred an operating loss of $1,207,000 for the nine months ended December 31, 1999, compared to an operating loss of $901,000 for the same period last year. The increased operating loss for the period was primarily the result of substantially lower sales volume. Liquidity and Capital Resources - ------------------------------- Operating activities for the nine months ended December 31, 1999, resulted in providing net cash flow of $456,000. The major items providing cash were depreciation and amortization of $681,000, increased accounts payable of $606,000, billings in excess of costs and estimated earnings on uncompleted contracts of $1,010,000, and income tax refunds of $789,000. Major use of cash flow included increased inventories of $1,141,000, increased accounts receivable of $464,000, and the net loss for the nine months ending December 31, 1999 of $858,000. Investing activities, which consisted of the sale of Peter Gray and the Hardware Product line of NMP Corp. provided cash flow of $1,380,000. Significant financing activities included cash usage for a reduction in debt of $3,969,000. Proceeds from issuing convertible debentures provided cash flow of $1,000,000. 10 Net cash usage for the nine months ended December 31, 1999, was $1,228,000. Subsequent to the close of the Company's third quarter, the Company announced the completion of a $1.0 million convertible subordinated debenture offering. The private placement was purchased by a small group of outside investors as well as certain officers and directors of the Company. The Notes bear interest of 10% per annum and mature on December 23, 2004. The Notes are convertible into common stock at a price of $1.00 per share. Each $10,000 Note is coupled with a warrant to purchase 5,000 shares of common stock at $1.00 per share. (See, Part II, Item 5, at page 14.) The Company also announced on December 29, 1999 that its subsidiary, MCII Electric Company, entered into a Settlement Agreement with the seller of MCII Electric Company to Westwood Corporation. The effect of the settlement amounted to a note cancellation owed by Westwood Corporation in the amount of $1.5 million, the payment of $100,000, and the creation of a new note payable to the seller of MCII Corporation in the amount of $300,000, thereby reducing Westwood's investment in MCII Electric Company in the amount of $1.1 million. (See, Part II, Item 1, at page 13.) In connection with this settlement, Westwood Corporation purchased 127,000 shares of its common stock from the seller of MCII Electric Company. This stock is recorded as treasury stock of Westwood Corporation. The effect of the debenture offering, and the MCII Electric Company settlement provides for a net improvement in the Company's working capital. At December 31, 1999, $1,200,000 was available under the Company's revolving credit line. Year 2000 Compliance The Company completed the company-wide project to address the year 2000 compliance issues for all technology hardware and software, and has either purchased or produced external interfaces with customers and suppliers, operations process controls, account and other information systems and facility items. The implementation phase of this project as it related to traditional information technology areas was completed prior to December 31, 1999. The Company utilized both internal and external resources to complete this process. Costs incurred for new software and hardware purchases were capitalized and other costs were expensed as incurred. The total cost of this project for external costs of hardware and software, excluding planned system replacements, was approximately 11 $225,000. In summary, the Company completed the project and is confident that there are no issues of year 2000 compliance that will materially effect the ongoing operations of the businesses. Statements included in this Form 10-Q constitute "year 2000 readiness disclosures" subject to the Year 2000 Information and Readiness Disclosure Act of 1998. Outlook for Fiscal Year 2000 and Beyond - --------------------------------------- Westwood Corporation finished the third quarter of fiscal year 2000 with a funded backlog of $57 million based primarily on contracts held by NMP Corp. and MCII Electric Company. NMP Corp. recently received an award from Avondale Industries, a Litton Shipbuilding subsidiary, for the power and lighting panels for the LPD17-class new amphibious assault ship. The current value of all orders received from Avondale for this program is $2.5 million per ship with anticipated growth to $3.5/$3.7 million per ship upon completion of engineering requirements by Avondale. A total of twelve ships are scheduled to be built over the next 5 years. Total revenues to be recognized by Westwood Corporation over the life of the program is estimated to be $42 million. Late in the third quarter ending September 30, 1999, NMP Corp. was awarded requirements contracts for the DDG51-class Aegis destroyer program from Lead Yard Services, Bath Iron Works and Ingalls Shipbuilding. The total number of ships to be built is dependent on the progress of the new DD21-class destroyer, however, best estimates place the number at 17. Revenue value per shipset is $2.8 million placing the total revenues over the life of the contract at approximately $27 million. Westwood Corporation's wholly owned subsidiary, MCII Electric Company, is in the initial production phase of the U.S. Army's contract for Tactically Quiet Generators. There are currently 1252 units on conditional release until testing is completed at a value of $29 million. The current requirements for this equipment is greater than 12,000 units and therefore, the Company expects additional production releases in the future. The total current backlog inclusive of option requirements exercisable over the next five years stands at $116 million. The synergy between Westwood Corporation's two marine products subsidiaries position in the company very well for new business imminent 12 in the near-term future. These opportunities include the LHD8-class amphibious assault vessel and the LSD41/49-class upgrade. NMP Corp. and TANO Corp. were significant equipment suppliers on the first seven ships of the LHD class and both companies also participated on the LSD class original equipment program. Management feels that there is significant potential for participation in these programs as well as the last of the CVN77-class nuclear powered aircraft carriers and the new twenty-first century destroyer DD21. Forward Looking Information - --------------------------- Certain matters discussed in this report, excluding historical information, include forward-looking statements. Although the Company believes such forward-looking statements are based on reasonable assumptions, no assurance can be given that every objective will be reached. Such statements are made in reliance on the safe harbor protections provided under the Private Securities Litigation Reform Act of 1995. As required by such Act, the Company hereby identifies the following important factors that could cause actual results to differ materially from any results projected, forecasted, estimated or budgeted by the Company in forward-looking statements: (i) risks and uncertainties impacting the Company as a whole relate to changes in general economic conditions in the United States; the availability and cost of capital; changes in laws and regulations to which the Company is subject, including tax, environmental and employment laws and regulations; the cost and effects of legal and administrative claims and proceedings against the Company or its subsidiaries or which may be brought against the Company or its subsidiaries; conditions of the capital markets utilized by the Company to access capital to finance operations; and, to the extent the Company increases its investments and activities abroad, such investments and activities will be subject to foreign economies, laws, and regulations; and (ii) for the Company's defense-related business, business conditions in the military and commercial industries served by the Company; Federal Government defense budgeting process; compliance with Government contract and inspection programs; and other risk factors listed from time-to-time in the Company's reports with the Securities and Exchange Commission. PART II OTHER INFORMATION: Item 1. Legal Proceedings - ------- The action styled Westwood Corporation and MCII Electric Company, Inc. v. Herschel P. McCullough, District Court of Tulsa County, State of Oklahoma, Case No. CJ-98-0876, filed in February, 1998, has been resolved 13 by way of a settlement agreement dated December 28, 1999. Pursuant to the settlement agreement, the claims by the Company and its subsidiary, MCII Electric Company, as well as counterclaims against the Company and MCII Electric Company are to be dismissed without prejudice upon consummation of the terms of the settlement agreement, including (i) the elimination of $1.5 million in unsecured indebtedness from the Company to the former shareholder of MCII Electric Company; (ii) the Company's purchase of 127,000 shares of its common stock from MCII Electric Company's former shareholder for a purchase price of $.75 per share; and (iii) $400,000 of which $100,000 was paid to MCII Electric Company's former shareholder on December 28, 1999, and the balance to be paid in quarterly installments of $37,500 from April 1, 2000 through December 1, 2001. Item 4. Submission of Matters to a Vote of Security Holders - ------- The annual meeting of the shareholders of the Company was held on December 29, 1999. By the vote of a majority of the shareholders entitled to vote at the meeting, directors were elected as follows: For Against Abstain --- ------- ------- Ernest H. McKee 3,780,078 313,642 6,195 Paul R. Carolus 3,780,078 313,642 6,195 Richard E. Minshall 4,047,664 46,056 6,195 Anthony Pantaleoni 3,966,991 126,729 6,195 John H. Williams 3,780,078 313,642 6,195 William J. Preston 4,001,564 92,156 6,195 In addition, the shareholders approved the amendment of the 1992 Directors' Stock Option Plan to increase the number of shares available from 562,820 to 612,820 by casting 3,633,806 votes for the proposal and 460,550 votes against the proposal, with 5,559 abstentions. Item 5. Other Information - ------- On December 23, 1999, the Company completed the offer and sale of $1,000,000 of 10% Convertible Subordinated Notes in the principal amount of $1,000,000, convertible into 1,000,000 shares of the common stock of the Company at a purchase price of $1.00 per share, and Warrants to purchase up to 500,000 shares of the common stock of the Company at a price of $1.00 per share. Both the maturity date of each 10% Convertible Subordinated Note and the expiration date of each Warrant will occur on December 23, 2004. The Notes are callable at the Company's option after December 15, 2001 upon thirty (30) days notice in the event the Company's common stock closing price is in excess of $2.50 per share for thirty (30) consecutive trading days, within sixty (60) days of notice of 14 redemption. The proceeds of the Note Offering are to be used as operating capital and also satisfies a requirement of the Company's commercial lender. Item 6. - ------ (a) The following document is filed as an exhibit to this Form 10-Q: Exhibit 27 - Financial Data Schedule. 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: February 14, 2000 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 15 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE WESTWOOD CORPORATION CONSOLIDATED BALANCE SHEET (UNAUDITED) FOR DECEMBER 31, 1999, AND THE RELATED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) FOR THE NINE MONTHS ENDED DECEMBER 31, 1999, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 9-MOS MAR-31-2000 DEC-31-1999 55 0 4,345 35 3,452 8,932 4,809 2,992 16,403 7,385 2,801 0 0 21 6,196 16,403 13,073 13,073 10,653 14,280 (444) 0 306 (1,069) (211) (858) 0 0 0 (858) (.124) (.124)
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