-----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, M0jFzNJIZ7UCrdFu/kQRlKxdcuSctdvE111+Y8pt6ZiZSyVXHRx9cJsyDbo8DhwY wy1HZr9Fx35NQATHSGu5+g== 0000950134-96-004756.txt : 19960911 0000950134-96-004756.hdr.sgml : 19960911 ACCESSION NUMBER: 0000950134-96-004756 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960727 FILED AS OF DATE: 19960910 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: TSX CORP CENTRAL INDEX KEY: 0000896560 STANDARD INDUSTRIAL CLASSIFICATION: RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT [3663] IRS NUMBER: 742678034 STATE OF INCORPORATION: NV FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-11814 FILM NUMBER: 96627739 BUSINESS ADDRESS: STREET 1: 4849 N MESA STREET 2: STE 200 CITY: EL PASO STATE: TX ZIP: 79912 BUSINESS PHONE: 9155334600 MAIL ADDRESS: STREET 1: 4849 N MESA STREET 2: STE 200 CITY: EL PASO STATE: TX ZIP: 79912 10-Q 1 FORM 10-Q FOR QUARTER ENDED JULY 27, 1996 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 period ended July 27, 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 001-11814. TSX CORPORATION ------------------------------------------------------ (Exact name of registrant as specified in its charter) Nevada 74-2678034 - -------------------------------- ---------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 4849 N. Mesa, Suite 200 El Paso, Texas 79912 - ---------------------------------------- ------------- (Address of principal executive offices) (Zip Code) (915) 533-4600 - -------------------------------------------------------------------------------- Registrant's telephone number, including area code Not Applicable - -------------------------------------------------------------------------------- Former name, former address and former fiscal year, if change since last report. 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 [ ]. APPLICABLE ONLY TO CORPORATE ISSUERS Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date. Common stock, $.01 par value, 15,421,544 shares outstanding at August 30, 1996. 2 INDEX TSX CORPORATION AND SUBSIDIARY
PART I. FINANCIAL INFORMATION PAGE NO. Item 1. Financial Statements (Unaudited) Condensed Consolidated Balance Sheets -- July 27, 1996 and April 30, 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Condensed Consolidated Statements of Operations -- . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Three months ended July 27, 1996, and July 29, 1995 Condensed Consolidated Statements of Cash Flows -- . . . . . . . . . . . . . . . . . . . . . . . . . 6 Three months ended July 27, 1996, and July 29, 1995 Notes to Condensed Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2 3 PART I. FINANCIAL INFORMATION CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) TSX CORPORATION AND SUBSIDIARY
July 27, 1996 April 30, 1996 -------------------- --------------------- (Expressed in Thousands) ASSETS CURRENT ASSETS Cash and cash equivalents $ 28,368 21,688 Trade and other receivables, less allowances-- $341 at July 27, 1996 and $335 at April 30, 1996 13,585 19,645 Inventories, net 14,408 12,041 Other current assets 878 853 Deferred income tax, net 950 959 -------- -------- TOTAL CURRENT ASSETS 58,189 55,186 PROPERTY, PLANT AND EQUIPMENT, Net 9,547 9,192 DEFERRED INCOME TAX, Net 4,008 3,813 OTHER ASSETS, Net 881 886 -------- -------- $ 72,625 69,077 ======== ========
See notes to condensed consolidated financial statements. 3 4 CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) TSX CORPORATION AND SUBSIDIARY
July 27, 1996 April 30, 1996 ------------------- --------------------- (Expressed in Thousands, Except Share Data) LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 4,518 3,545 Warranty reserve 122 169 Accrued expenses: Salaries, wages and commissions 1,112 1,730 Taxes payable 2,646 3,841 Restructure reserve 108 108 Deferred income tax, net 2,918 2,336 Other 1,134 1,431 -------- -------- TOTAL CURRENT LIABILITIES 12,558 13,160 DEFERRED INCOME TAX, Net 0 6 -------- -------- TOTAL LIABILITIES 12,558 13,166 COMMITMENTS AND CONTINGENCIES - - STOCKHOLDERS' EQUITY Preferred stock, $.01 par value, authorized 10,000,000 shares, none issued and outstanding - - Common stock, $.01 par value, authorized 20,000,000 shares, 15,421,544 issued and outstanding at July 27, 1996 and 15,350,615 at April 30, 1996 154 154 Additional paid-in capital 35,149 34,487 Retained earnings from December 11, 1987 24,963 21,469 Cumulative Foreign Currency Adjustment (199) (199) -------- -------- TOTAL STOCKHOLDERS' EQUITY 60,067 55,911 -------- -------- $ 72,625 69,077 ======== ========
See notes to condensed consolidated financial statements. 4 5 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) TSX CORPORATION AND SUBSIDIARY
Three Months Ended July 27, '96 July 29, '95 ------------- ------------ (Expressed in Thousands, Except Share Data) Net sales $ 21,173 20,327 Cost of sales 11,659 11,261 ---------- ---------- Gross profit 9,514 9,066 Engineering, research and development expense 937 739 Selling and administrative expense 4,254 3,624 ---------- ---------- INCOME FROM OPERATIONS 4,323 4,703 Interest income 241 80 Other income, net of other expense 36 9 Foreign currency exchange gain 11 32 ---------- ---------- INCOME BEFORE PROVISION FOR INCOME TAXES 4,611 4,824 Provision for income taxes 1,115 1,622 ---------- ---------- NET INCOME $ 3,496 3,202 ========== ========== Net Income per share $ 0.22 0.20 ========== ========== Weighted average shares and common stock equivalents outstanding 16,177,035 16,021,047 ========== ==========
See notes to condensed consolidated financial statements. 5 6 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) TSX CORPORATION AND SUBSIDIARY
Three Months Ended July 27, 1996 July 29, 1995 ------------------ ----------------- (Expressed in Thousands) OPERATING ACTIVITIES Net income $ 3,496 3,202 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 418 357 Charge in lieu of income tax and benefit from exercise of stock options and warrants 316 1,812 Loss on sale of property, plant and equipment 8 --- Provision for losses on accounts receivable 6 9 Foreign currency exchange gain (11) (32) Net change in deferred income taxes net of changes in the reserve 390 --- Changes in operating assets and liabilities: (Increase) decrease in accounts receivable 6,065 (2,595) Increase in inventories and other current assets (2,381) (3,241) (Increase) decrease in other assets 5 (1) Increase (decrease) in accounts payable and accrued expenses (1,502) 1,930 --------- --------- Net cash provided by operating activities 6,810 1,441 INVESTING ACTIVITIES Purchases of property, plant, and equipment (782) (1,054) --------- --------- Net cash and cash equivalents used by investing activities (782) (1,054) FINANCING ACTIVITIES Proceeds from issuance of common stock 662 688 --------- --------- Net cash and cash equivalents provided by financing activities 662 688 Effect of exchange rate changes on cash and cash equivalents (10) (152) --------- --------- Increase in cash and cash equivalents 6,680 923 Cash and cash equivalents at beginning of period 21,688 7,294 --------- --------- Cash and cash equivalents at end of period $ 28,368 8,217 ========= =========
See notes to condensed consolidated financial statements. 6 7 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) TSX CORPORATION AND SUBSIDIARY NOTE A -- BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the requirements of 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. These interim financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended April 30, 1996. NOTE B -- INVENTORIES The components of inventory consist of the following:
July 27, 1996 April 30, 1996 --------------- ---------------- (Expressed in Thousands) Raw Materials $ 9,396 7,946 Work in process 3,003 2,453 Finished Goods 4,837 4,336 ------- ------- 17,236 14,735 Reserves (2,828) (2,694) ------- ------- $14,408 12,041 ======= =======
Inventory reserves have been provided for excess inventory, obsolete inventory and differences between inventory cost and its net realizable value. NOTE C -- INCOME TAXES As of July 27, 1996, net deferred tax assets were comprised of a realizable net current and net noncurrent deferred tax asset of $1.0 million and $4.0 million, respectively, and fully reserved deferred tax assets of $4.8 million, which principally related to U.S. federal and state net operating loss carryforwards. In accordance with the provisions of FAS No. 109, a valuation allowance of $4.8 million at July 27, 1996 was deemed adequate for these and other items which were not considered probable of realization. The Company will continue to review the deferred tax valuation allowance on a quarterly basis and make adjustments as appropriate. 7 8 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED TSX CORPORATION AND SUBSIDIARY Effective with the second quarter of fiscal 1997, the Company established a different tax structure with a low tax jurisdiction advantage. Based on this new tax structure, the Company expects to be subject to a 20% effective tax rate in the second quarter and thereafter. As a result, the Company lowered its first quarter effective tax rate from approximately 36% to 22% which represents a weighted average of the expected effective tax rate for fiscal year 1997. This lower effective tax rate of 22% had the effect of increasing first quarter net income $0.7 million or $0.04 per share. NOTE D -- STOCKHOLDERS' EQUITY On June 5, 1996 the Company announced a three-for-two stock split of its common stock to be effected in the form of a 50% stock dividend. The stock dividend was distributed on July 18, 1996 to stockholders of record at the close of business on June 28, 1996. All share and per share amounts reported in this report have been adjusted to reflect the effect of the three-for-two stock split. 8 9 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS TSX CORPORATION AND SUBSIDIARY NET SALES For the quarter ended July 27, 1996, international demand for the Company's cable television (CATV) fiber and radio frequency (RF) distribution segment's products helped cause a 4% ($0.8 million) and 10% ($0.02) increase in consolidated net sales and earnings per share, respectively, compared to the prior year. Current quarter net sales to customers for CATV systems outside the United States improved 66% ($2.7 million) over the prior year. This international demand was responsible for the CATV fiber and RF distribution segment's net sales increase of 18% ($3.0 million) over the prior year. In contrast, the Company's advertising insertion segment posted significant declines of 69% ($2.2 million) and 231% ($1.7 million) in net sales and income from operations, respectively, versus the prior year. This segment's operating results continue to be impacted by the poor performance of its digital advertising insertion product. Technology problems in this digital product prompted one customer to return one system during the first quarter. Management is examining its strategic options with regard to the advertising insertion segment. Consolidated quarter end backlog of $22.3 million declined $1.8 million from fiscal 1996 year-end on reduced domestic order input. GROSS PROFITS Consolidated gross profit of 45% for the current quarter remained unchanged from the prior year on the strength of the CATV fiber and RF distribution segment's improved gross profit of 47% versus prior year 44%. This segment's gross profit percentage improvement, which was attributable to volume efficiencies and a higher sales mix of more profitable CATV fiber optic products, offset the advertising insertion segment's gross profit percentage reduction of 46 percentage points from the prior year. During the current quarter, advertising insertion segment gross profit percentage declined significantly due to the digital ad insertion system return mentioned above and related additional expenses. OPERATING PROFITS Consolidated engineering, selling and administrative expenses of 25% ($5.2 million) of net sales for the quarter increased from 21% ($4.4 million) for the prior year quarter, due to additional spending in engineering and selling in support of increased volume. Consolidated operating profit for the quarter was $4.3 million, a decrease of $0.4 million from the operating profit of $4.7 million reported in the prior year. The reduction in operating profit was due to increased engineering and selling expenses discussed above. 9 10 MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED TSX CORPORATION AND SUBSIDIARY OTHER INCOME/EXPENSES Due to the strengthening of the U.S. dollar in relation to the Mexican peso and weakening of the U.S. dollar in relation to the British pound, the Company's foreign operations experienced an exchange gain of less than $0.1 million for both the three month period ended July 27, 1996, and for the same period a year earlier. The Company's foreign operations render the Company susceptible to gains and losses from currency exchange rate fluctuations. The Company anticipates that it will continue to be susceptible to such gains and losses for the foreseeable future. INCOME TAXES Under Financial Accounting Standards No. 109 (FAS No. 109), the Company has recorded deferred tax assets for the expected future benefit of net operating loss carryforwards and items for which expenses have been recognized for financial statement purposes, but that are expected to be deductible for tax purposes in a future period, to the extent they are considered realizable. In accordance with the provisions of FAS No. 109, a valuation allowance of $4.8 million at July 27, 1996 was deemed adequate for various net operating loss carryforwards and other items which were not considered probable of realization. The Company will continue to review the deferred tax valuation allowance on a quarterly basis and make adjustments as appropriate. Effective with the second quarter of fiscal 1997, the Company established a different tax structure with a low tax jurisdiction advantage. Based on this new tax structure, the Company expects to be subject to a 20% effective tax rate in the second quarter and thereafter. As a result, the Company lowered its first quarter effective tax rate from approximately 36% to 22% which represents a weighted average of the expected effective tax rate for fiscal year 1997. This lower effective tax rate of 22% had the effect of increasing first quarter net income $0.7 million or $0.04 per share. LIQUIDITY AND CAPITAL RESOURCES For the three months ended July 27, 1996, consolidated cash of $28.4 million and working capital of $45.6 million increased $6.7 million and $3.6 million, respectively, from fiscal 1996 year-end. Cash provided by operating activities and sale of common stock, in connection with options exercised were largely responsible for increased cash. Working capital increased primarily due to increased cash. The Company had a bank Revolving Credit Agreement (the "Credit Agreement") which expired August 31, 1996. The Credit Agreement permitted borrowings of up to $9.0 million, bearing interest at a minimum floating rate of prime to a maximum of prime plus 0.5% determined by the Company's debt to tangible net worth ratio, secured under a borrowing base formula by the Company's inventory and accounts receivable. The Credit 10 11 MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED TSX CORPORATION AND SUBSIDIARY Agreement contained various covenants and conditions which are customary in transactions of this type and which, in particular, prohibit the purchase or redemption of the Company's common stock or the payment of dividends or any other distributions to stockholders; prohibit debt-financed acquisitions without the prior consent of the bank, unless the debt is subordinated to indebtedness to the bank, or acquisition in which the Company is not the surviving entity; and provide for certain minimum net worth and financial ratio requirements. The Company was in compliance with such covenants at July 27, 1996 and has to date made no borrowings whatsoever under the Credit Agreement. The Company is currently negotiating a one year extension of the Credit Agreement on substantially the same terms and believes the extension will be obtained although the bank is not committed to do so. Management believes it has adequate cash to meet its operating needs through April 30, 1997 and will continue to be able to obtain borrowing necessary to meet its future cash needs should it continue to operate profitably. During the three months ended July 27, 1996 and the last five fiscal years, the Company has not paid dividends. Future dividend payments by TSX must be funded from the proceeds of dividends paid to TSX by its Texscan subsidiary or subsidiaries acquired in the future. It is the present policy of TSX's Board of Directors to retain any future earnings of TSX to finance development of TSX's business and/or to retire any future debt. No dividend payments are anticipated within the foreseeable future. The Company has no commitments for capital expenditures for amounts which are not comparable to commitments made in prior year periods in the ordinary course of business. 11 12 TSX CORPORATION AND SUBSIDIARY PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits The following exhibits are filed as part of this report:
Exhibit No. Exhibit Description Method of Filing - ---------- ------------------- ---------------- 11 Statement re Computation Submitted herein of Per Share Earnings 27 Financial Data Schedule Submitted herein
(b) Reports on Form 8-K During the quarter for which this report is filed, the Registrant filed one report on form 8-K dated June 5, 1996 which reported the declaration of a three-for-two stock split of the Company's common stock by the Board of Directors. The split will be in the form of a stock dividend of one share of the authorized but unissued common stock for each two shares of the issued and outstanding common stock. The stock dividend was distributed on July 18, 1996 to stockholders of record at the close of business on June 28, 1996. No financial statements were filed as part of such Form 8-K. 12 13 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. TSX Corporation ----------------------------------- (Registrant) Date September 9, 1996 /s/ Harold C. Tamburro -------------------- ----------------------------------- Harold C. Tamburro, Duly Authorized Officer Vice President, Secretary and Chief Financial Officer 13 14 EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION ----------- ----------- 11 Statement re Computation of Per Share Earnings 27 Financial Data Schedule
EX-11 2 COMPUTATION OF EARNINGS PER SHARE 1 EXHIBIT 11 -- STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS TSX CORPORATION AND SUBSIDIARY
Three Months Ended July 27, 1996 July 29, 1995 -------------------- ------------------- (Expressed in Thousands, except per share data) PRIMARY Average shares outstanding 15,409 14,810 Net effect of dilutive stock options and warrants 701 1,031 -------- -------- TOTAL 16,110 15,841 ======== ======== Net Income $ 3,496 $ 3,202 ======== ======== Net Income per share $ 0.22 $ 0.20 ======== ======== FULLY DILUTED Average shares outstanding 15,409 14,810 Net effect of dilutive stock options and warrants 768 1,211 -------- -------- TOTAL 16,177 16,021 ======== ======== Net Income $ 3,496 $ 3,202 ======== ======== Net Income per share $ 0.22 $ 0.20 ======== ========
14 EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q FOR THE THREE MONTHS ENDED JULY 27, 1996. 1,000 3-MOS APR-30-1997 MAY-01-1996 JUL-27-1996 28,368 0 13,926 341 14,408 58,189 19,509 9,962 72,625 12,558 0 154 0 0 59,913 72,625 21,173 21,173 11,659 16,850 0 0 0 4,611 1,115 0 0 0 0 3,496 0 .22
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