-----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, OWfFARCCSHKTGAzPhUiv2a1WUy16AhadUcbm95xNhRylzVpGeMwnCf3sURYd+mUB KAwIzL6xFxm5yWcTNFlt1w== 0000950124-98-006786.txt : 19981118 0000950124-98-006786.hdr.sgml : 19981118 ACCESSION NUMBER: 0000950124-98-006786 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19981117 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ANTEC CORP CENTRAL INDEX KEY: 0000908610 STANDARD INDUSTRIAL CLASSIFICATION: RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT [3663] IRS NUMBER: 363892082 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: SEC FILE NUMBER: 000-22336 FILM NUMBER: 98752726 BUSINESS ADDRESS: STREET 1: 2850 W GOLF RD STREET 2: SUITE 600 CITY: ROLLING MEADOWS STATE: IL ZIP: 60008 BUSINESS PHONE: 8474394444 MAIL ADDRESS: STREET 1: 2850 W GOLF ROAD CITY: ROLLING MEADOWS STATE: IL ZIP: 60008 10-Q/A 1 AMENDMENT TO FORM 10-Q/A 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------- FORM 10-Q/A [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NUMBER 0-22336 ANTEC CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 36-3892082 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.)
2850 W. GOLF ROAD ROLLING MEADOWS, IL 60008 (847) 439-4444 (Address, including zip code and telephone number, including area code, of registrant's principal executive offices) 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 period 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 [ ] At July 31, 1997, there were 38,753,280 shares of Common Stock, $0.01 par value, of the registrant outstanding. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 PART I. FINANCIAL INFORMATION ANTEC CORPORATION CONSOLIDATED BALANCE SHEETS (IN THOUSANDS)
JUNE 30, DECEMBER 31, 1997 1996 ----------- ------------ (UNAUDITED) ASSETS Current assets: Cash and cash equivalents $ 5,658 $ 27,398 Accounts receivable (net of allowance for doubtful accounts of $4,174 in 1997 and $3,539 in 1996) 91,824 106,602 Inventories, primarily finished goods 119,479 138,785 Other current assets 3,535 9,706 -------- -------- Total current assets 220,496 282,491 Property, plant and equipment, net 37,276 35,947 Goodwill (net of accumulated amortization of $34,739 in 1997 and $31,858 in 1996) 162,147 167,128 Deferred income taxes, net 16,183 12,174 Other assets 12,958 13,153 -------- -------- $449,060 $510,893 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 26,146 $ 54,039 Accrued compensation, benefits and related taxes 14,931 19,648 Other current liabilities 25,521 24,160 -------- -------- Total current liabilities 66,598 97,847 Long-term debt 86,387 102,658 -------- -------- Total liabilities 152,985 200,505 Stockholders' equity: Preferred stock, par value $1.00 per share, 5 million shares authorized, none issued and outstanding -- -- Common stock, par value $0.01 per share, 50 million shares authorized; 38.5 million and 38.4 million shares issued and outstanding in 1997 and 1996, respectively 385 384 Capital in excess of par value 255,076 254,181 Retained earnings 40,668 55,809 Cumulative translation adjustments (54) 14 -------- -------- Total stockholders' equity 296,075 310,388 -------- -------- $449,060 $510,893 ======== ========
See accompanying notes to the consolidated financial statements. 2 3 ANTEC CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, -------------------- -------------------- 1997 1996 1997 1996 -------- -------- -------- -------- Net sales $124,262 $188,742 $244,296 $371,891 Cost of sales 90,669 140,673 184,575 278,044 -------- -------- -------- -------- Gross profit 33,593 48,069 59,721 93,847 Operating expenses: Selling, general and administrative expenses 27,411 31,856 54,476 64,010 Amortization of goodwill 1,228 1,245 2,472 2,489 Merger/integration costs -- -- 21,550 -- -------- -------- -------- -------- 28,639 33,101 78,498 66,499 -------- -------- -------- -------- Operating income (loss) 4,954 14,968 (18,777) 27,348 Interest expense and other, net 1,679 1,977 3,041 4,327 -------- -------- -------- -------- Income (loss) before income taxes 3,275 12,991 (21,818) 23,021 Income tax expense (benefit) 2,292 5,451 (6,677) 8,011 -------- -------- -------- -------- Net income (loss) $ 983 $ 7,540 $(15,141) $ 15,010 ======== ======== ======== ======== Net income (loss) per common and common equivalent shares $ .03 $ .19 $ (.39) $ .38 ======== ======== ======== ======== Weighted average common and common equivalent shares 38,452 39,568 38,436 39,583 ======== ======== ======== ========
See accompanying notes to the consolidated financial statements. 3 4 ANTEC CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (IN THOUSANDS)
SIX MONTHS ENDED JUNE 30, --------------------- 1997 1996 -------- --------- Operating activities: Net income (loss) $(15,141) $ 15,010 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 7,383 7,120 Deferred income taxes (4,009) (2,105) Changes in operating assets and liabilities: Accounts receivable 14,578 (7,046) Inventories 19,306 12,381 Accounts payable and accrued liabilities (27,818) (6,717) Other, net 6,429 (39) -------- --------- Net cash provided by operating activities 728 18,604 Investing activities: Purchases of property, plant and equipment (6,240) (4,267) Other (853) 1,549 -------- --------- Net cash used by investing activities (7,093) (2,718) -------- --------- Net cash provided (used) before financing activities (6,365) 15,886 Financing activities: Borrowings 66,000 117,995 Reductions in borrowings (82,271) (125,756) Proceeds from issuance of common stock 896 500 -------- --------- Net cash used by financing activities (15,375) (7,261) -------- --------- Net increase (decrease) in cash and cash equivalents (21,740) 8,625 Cash and cash equivalents at beginning of period 27,398 14,075 -------- --------- Cash and cash equivalents at end of period $ 5,658 $ 22,700 ======== ========= Supplemental cash flow information: Interest paid during the period $ 3,310 $ 4,089 ======== ========= Income taxes paid during the period $ 417 $ 6,297 ======== =========
See accompanying notes to the consolidated financial statements. 4 5 ANTEC CORPORATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1. BASIS OF PRESENTATION ANTEC Corporation ("ANTEC" or herein together with its consolidated subsidiaries called the "Company") is an international communications technology company, headquartered in Rolling Meadows, with major offices in Atlanta and Denver. The consolidated financial statements include the accounts of the Company after elimination of intercompany transactions. The consolidated financial statements furnished herein reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary for a fair presentation of the consolidated financial statements for the periods shown. As described more fully in Note 2, on February 6, 1997, the merger between ANTEC Corporation, TSX Corporation and TSX Acquisition Corporation became effective. The consolidated financial statements have been prepared following the pooling of interests method of accounting and reflect the combined financial position, operating results and cash flows of ANTEC Corporation and TSX Corporation as if they had been combined for all periods presented. Certain amounts have been reclassified for the combined presentation. NOTE 2. MERGER On February 6, 1997, shareholders of ANTEC Corporation and TSX Corporation approved the Plan of Merger ("Merger") dated as of October 28, 1996 among ANTEC Corporation, TSX Corporation ("TSX") and TSX Acquisition Corporation, and the Merger resulting in TSX becoming a wholly-owned subsidiary of ANTEC became effective on that date. Under the terms of the transaction, TSX shareholders received one share of ANTEC common stock for each share of TSX common stock that they owned, while ANTEC shareholders continued to own their existing shares. As a result of the Merger, ANTEC issued approximately 15.4 million shares of common stock. The transaction was tax-free for TSX shareholders and was accounted for as a pooling of interests. Prior to the combination, TSX's fiscal year ended April 30, and ANTEC's fiscal year ended December 31. TSX's historical financial statements for periods prior to the December 31, 1996 had to be adjusted to within 93 days of ANTEC's year-end. Therefore, the statements of operations for the three and six month periods ended June 30, 1996 represents ANTEC's fiscal period ended on that date combined with TSX's three and six month periods ended the last Saturday in April 1996, respectively. All intercompany sales between TSX and ANTEC were eliminated. Operating results for the three and six months ended June 30, 1996 were as follows:
THREE MONTHS SIX MONTHS ENDED ENDED JUNE 30, 1996 JUNE 30, 1996 ------------- ------------- (IN THOUSANDS) (UNAUDITED) Revenue: ANTEC $162,784 $325,176 TSX 26,758 48,315 Intercompany sales elimination (800) (1,600) -------- -------- Combined $188,742 $371,891 ======== ======== Net Income: ANTEC $ 3,006 $ 5,568 TSX 4,534 9,442 -------- -------- Combined $ 7,540 $ 15,010 ======== ========
As a result of the change in the fiscal year end of TSX, the operating results of TSX for the two months ended December 31, 1996 was reflected as an adjustment to retained earnings of the combined companies as 5 6 ANTEC CORPORATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (UNAUDITED) of December 31, 1996. The following summarizes TSX's operating results for the two months ended December 31, 1996 (in thousands) (unaudited): Net sales $ 8,668 Operating loss $(3,560) Net loss $(2,573)
NOTE 3. MERGER/INTEGRATION COSTS In the first quarter of 1997, in connection with the Merger discussed in Note 2, the Company recorded merger/integration costs aggregating approximately $28 million. The components of the non-recurring charge included $6.9 million related to the investment banking, legal, accounting and contractual change of control payments associated with the Merger; $11.2 million related to facility and operational consolidation and reorganization due to the combining of various manufacturing operations; and $3.4 million related to severance costs resulting from the elimination of positions duplicated by the Merger and integration. The personnel-related costs included charges related to the termination of approximately 200 employees primarily resulting from the factors described above. Also included in the total merger/integration charge was a write-off of redundant inventories relating to overlapping product lines and product development efforts totaling approximately $6.5 million which has been reflected in cost of goods sold for the six months ended June 30, 1997. As of June 30, 1997, approximately $9 million of the charge had yet to be utilized. NOTE 4. IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS In February 1997, the FASB issued Statement No. 128, Earnings per Share, which is required to be adopted on December 31, 1997. At that time, the Company will be required to change the method currently used to compute earnings per share and to restate all prior periods. The impact of Statement 128 is not expected to be material. 6 7 ANTEC CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS COMPARISON OF OPERATIONS FOR THE SIX AND THREE MONTHS ENDED JUNE 30, 1997 AND 1996 Net Sales. Net sales for the six and three month periods ended June 30, 1997 were $244.3 million and $124.3 million, respectively, compared to $371.9 million and $188.7 million for the same period in 1996. This decrease primarily reflects the ongoing reduction in capital spending by ANTEC's largest customer, Tele-Communications, Inc. ("TCI") and the impact of the substantial completion of a major Australian system build in 1996. Gross Profit. Gross profit for the six and three month periods ended June 30, 1997 was $59.7 million and $33.6 million, respectively, compared to $93.8 million and $48.1 million for the same periods in 1996. These decreases reflect lower sales discussed above and, for the six month period ended June 30, 1997, a $6.5 million write-off of redundant inventories relating to overlapping product lines and product development efforts in connection with the Merger. (See Note 3 of the Notes to the Consolidated Financial Statements.) Excluding the inventory charge, gross profit as a percentage of net sales for the six and three month periods ended June 30, 1997 was 27.1% and 27.0%, respectively, compared to 25.2% and 25.5% for the same periods in 1996. The improved gross profit percentages for the six and three month periods ended June 30, 1997 are a result of product mix, notably an increase in ANTEC manufactured product sales. Gross profit for the six and three month periods ended June 30, 1997, includes $1.0 million for the partial reversal of a charge taken in December 1996 by TSX for modifications it had agreed to make to products previously sold by TSX. The partial reversal of this charge in the second quarter of 1997 was due to the agreement of the customer during the second quarter to permit products to be modified in the Company's factory instead of in the field as originally contemplated and the determination as the result of testing that was completed during the second quarter that a smaller number of units needed to be modified than originally contemplated. The initial charge for $2.6 million was taken in December 1996 primarily because TSX agreed at that time to replace the lids on 3,447 gate keepers, to install new covers on 58,950 minibridgers, and to replace the plugs and gaskets on 10,771 amplifiers and line extenders for a customer who had purchased these products from TSX over the period 1993 to 1994. The customer in November and December 1996 pressed TSX to agree to make these modifications because of the customer's concern that these products might prematurely fail. TSX believed that the customer's concern was not justified and that it was not obligated to make these modifications under its warranties covering these products. Nevertheless, in order to maintain good relations with a major customer, TSX agreed in December 1996 at the insistence of the customer to make these modifications. Having agreed to make these modifications, TSX believed it was legally obligated to make modifications without further consideration from the customer other than its forbearance. Although the agreement was not in writing, TSX's understanding was that it was obligated to make the requested modifications to the customer's reasonable satisfaction as soon as practicable at no significant cost or inconvenience to the customer. The Company initially estimated the cost of making the modifications by multiplying the estimated labor and material costs for modifying each unit times the number of units then believe to be involved based upon the number of units that had been sold to the customer. The Company determined that it would cost approximately $2.4 million to complete these modifications for this customer. (This estimate was subsequently revised as described above.) It was contemplated that these modifications would begin promptly and be completed in a few months. However because of a general hold on construction imposed by the customer, the modifications have not been made as of June 30, 1997. Selling, General and Administrative ("SG&A") Expenses. SG&A expenses for the six and three month periods ended June 30, 1997 were $54.5 million and $27.4 million, respectively, compared to $64.0 million and $31.9 million for the same periods in 1996. This represents decreases of 14.9% and 14.0% for the six and three month periods, respectively. These reductions reflect ongoing expense controls and savings resulting from the Merger. 7 8 ANTEC CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS -- (CONTINUED) Merger/Integration Costs. In the first quarter of 1997, the Company recorded merger/integration costs aggregating approximately $28 million. The non-recurring charge included investment banking, legal, accounting and contractual change of control payments associated with the Merger; facility and operational consolidation and reorganization costs due to the combining of various manufacturing operations; and severance costs resulting from the elimination of positions duplicated by the Merger and integration. Also included in the total merger/integration charge was a write-off of redundant inventories relating to overlapping product lines and product development efforts totaling approximately $6.5 million which has been reflected in cost of goods sold for the six months ended June 30, 1997. (See Note 3 of the Notes to the Consolidated Financial Statements.) Interest Expense and Other, Net. Interest expense and other, net for the six and three month periods ended June 30, 1997 was $3.0 million and $1.7 million, respectively, compared to $4.3 million and $2.0 million for the same periods in 1996. These decreases primarily relate to decreased debt levels resulting from improved working capital levels and, to a lesser extent, a lower average interest rate under the Company's Credit Facility. Net Income (Loss). Net income (loss) for the six and three month periods ended June 30, 1997 was $(15.1) million and $1.0 million, respectively, compared to $15.0 million and $7.5 million for the same periods in 1996. Included in the net loss for the six month period ended June 30, 1997 were approximately $28.0 million of pretax merger/integration costs. (See Note 3 of the Notes to the Consolidated Financial Statements.) The decreases in net income from the same periods in 1996 are due to the factors described above. FINANCIAL LIQUIDITY AND CAPITAL RESOURCES In the first quarter of 1997, in connection with the Merger discussed in Note 2 of the Notes to the Consolidated Financial Statements, the Company recorded merger/integration costs aggregating approximately $28 million. The components of the non-recurring charge included $6.9 million related to the investment banking, legal, accounting and contractual change of control payments associated with the Merger; $11.2 million related to facility and operational consolidation and reorganization due to the combining of various manufacturing operations; and $3.4 million related to severance costs resulting from the elimination of positions duplicated by the Merger and integration. The personnel-related costs included charges related to the termination of approximately 200 employees primarily resulting from the factors described above. Also included in the total merger/integration charge was a write-off of redundant inventories relating to overlapping product lines and product development efforts totaling approximately $6.5 million which has been reflected in cost of goods sold for the six months June 30, 1997. As of June 30, 1997, approximately $9 million of the charge had yet to be utilized. As of June 30, 1997, the Company had a balance of $84 million outstanding under its credit facility. At June 30, 1997, the Company had approximately $101 million of available borrowings under its Credit Facility. The average interest rate on these borrowings was 6.5% at June 30, 1997. The commitment fee on unused borrowings is approximately 1/4 of 1%. The Company's capital expenditures were $6.2 million and $4.3 million in the six months ended June 30, 1997 and 1996, respectively. The Company has no significant commitments for capital expenditures at June 30, 1997. The Company's primary need for capital has been to fund working capital requirements, primarily accounts receivable and inventory. The accounts receivable component of working capital tends to fluctuate closely with the overall volume of sales activity. The Company has generally been able to adjust inventory levels according to anticipated business activity. Reflecting sales decreases, the investment in accounts 8 9 ANTEC CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS -- (CONTINUED) receivable and inventory decreased approximately $33.9 million and $5.3 million for the six months ended June 30, 1997 and 1996, respectively. CASH FLOW Cash flows provided by operating activities were $0.7 million and $18.6 million for the six months ended June 30, 1997 and 1996, respectively. 1997 includes the impact of merger/integration costs and a reduction in accounts payable. 1996 reflects the Company's improved working capital position resulting from its continued effort to control inventory. Cash flows used by investing activities were $7.1 million and $2.7 million for the six months ended June 30, 1997 and 1996, respectively. Both periods include the impact of planned sales, factory and warehouse improvements. Cash flows used by financing activities were $15.4 million and $7.3 million for the six months ended June 30, 1997 and 1996, respectively. Both periods reflect their respective trends in operating and investing activities. 9 10 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits None (b) Reports on Form 8-K None 10 11 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. ANTEC CORPORATION By: /s/ LAWRENCE A. MARGOLIS ------------------------------------ Lawrence A. Margolis Executive Vice President (Principal Financial Officer, duly authorized to sign on behalf of the registrant) Dated: October , 1998 11 -----END PRIVACY-ENHANCED MESSAGE-----