-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, ql55ilohMsOXnQ+T4TulxYdJVXytV4/4JWfoRUkzaOTsKk9HFgXtYnPxO3xisd/4 C9w+sYpk7ZWpPAYVuJTklA== 0000890566-95-000487.txt : 19950814 0000890566-95-000487.hdr.sgml : 19950814 ACCESSION NUMBER: 0000890566-95-000487 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950811 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TECH SYM CORP CENTRAL INDEX KEY: 0000096669 STANDARD INDUSTRIAL CLASSIFICATION: SEARCH, DETECTION, NAVIGATION, GUIDANCE, AERONAUTICAL SYS [3812] IRS NUMBER: 741509818 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04371 FILM NUMBER: 95561669 BUSINESS ADDRESS: STREET 1: 10500 WESTOFFICE DR STREET 2: SUITE 200 CITY: HOUSTON STATE: TX ZIP: 77042-5391 BUSINESS PHONE: 7137857790 MAIL ADDRESS: STREET 1: 10500 WESTOFFICE DRIVE STREET 2: SUITE 200 CITY: HOUSTON STATE: TX ZIP: 77042-5391 FORMER COMPANY: FORMER CONFORMED NAME: WESTEC CORP DATE OF NAME CHANGE: 19700721 FORMER COMPANY: FORMER CONFORMED NAME: WESTERN EQUITIES INC DATE OF NAME CHANGE: 19660921 10-Q 1 QUARTERLY REPORT FOR THE PERIOD ENDED 06/30/95 Form 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1995 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 1-4371 TECH-SYM CORPORATION (Exact name of Registrant as specified in its charter) NEVADA 74 1509818 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 10500 WESTOFFICE DRIVE, HOUSTON, TEXAS 77042 (Address of principal executive offices) Zip Code REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 713/785-7790 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, and (2) has been subject to such filing requirements for the past 90 days. Yes [X]. 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 JULY 31, 1995 Common Stock, $.10 par value 6,530,259 INDEX ----- PAGE NO. -------- Part I. Financial Information: Consolidated Balance Sheet June 30, 1995 and December 31, 1994 .............................................. 1 Consolidated Statement of Income and Accumulated Earnings for Three Months Ended June 30, 1995 and 1994 ...................................................... 2 Consolidated Statement of Income and Accumulated Earnings for Six Months Ended June 30, 1995 and 1994 ...................................................... 3 Consolidated Statement of Cash Flows for the Six Months Ended June 30, 1995 and 1994 ............................ 4 Notes to Consolidated Financial Statements ........................... 5-6 Management's Discussion and Analysis of Financial Condition and Results of Operations ................................ 7-9 Part II. Other Information: Item 6. Exhibits and Reports on Form 8-K ............................ 10-11 Signatures ............................................................. 11 PART I. FINANCIAL INFORMATION Item 1. Financial Statements Tech-Sym Corporation Consolidated Balance Sheet JUNE 30, 1995 DECEMBER 31, 1994 (RESTATED) ------------- ----------------- (stated in thousands) Assets Current assets: Cash and cash equivalents ............... $ 20,303 $ 24,083 Marketable Securities ................... 100 300 Receivables - net ....................... 46,047 46,870 Unbilled revenue ........................ 37,523 34,329 Inventories ............................. 50,057 42,507 Other ................................... 6,318 3,979 --------- --------- Total current assets .............. 160,348 152,068 Property, plant and equipment - net ....... 38,988 38,841 Long term receivables - net ............... 10,573 10,576 Goodwill and other assets ................. 25,030 24,318 --------- --------- Total assets ...................... $ 234,939 $ 225,803 ========= ========= Liabilities Current liabilities: Notes payable ........................... $ 15,117 $ 10,985 Current maturities of long-term debt .... 3,317 3,318 Accounts payable ........................ 13,724 13,566 Billings in excess of cost and estimated earnings on uncompleted contracts ............................. 6,271 7,636 Taxes on income ......................... 3,745 2,902 Accrued and other liabilities ........... 20,161 17,877 --------- --------- Total current liablilites ......... 62,335 56,284 Long-term debt ............................ 18,490 21,587 Deferred income taxes ..................... 196 196 Other liabilities ......................... 10,935 12,035 --------- --------- Total liabilities ................. 91,956 90,102 Shareholders' Investment Preferred stock - authorized 2,000,000 shares, without par value; none issued Common stock - authorized 20,000,000 shares, $.10 par value; issued 7,830,751 and 7,797,651 shares ........... 783 780 Additional capital ........................ 37,826 37,365 Accumulated earnings ...................... 116,094 109,734 Cumulative translation adjustments ........ (706) (1,164) Common stock held in treasury at cost (1,307,592 and 1,307,592 shares ..... (11,014) (11,014) --------- --------- Total shareholders' investment .... 142,983 135,701 --------- --------- Total liabilities and shareholders' investment ......... $ 234,939 $ 225,803 ========= ========= The accompanying notes are an integral part of these consolidated financial statements. 1 Tech-Sym Corporation Consolidated Statement of Income and Accumulated Earnings FOR THE THREE MONTHS ENDED JUNE 30, --------------------------- 1995 1994 (restated) (stated in thousands except for per share amounts) Sales ............................................ $ 60,052 $ 52,665 --------- --------- Costs and expenses: Cost of sales ................................ 39,630 32,846 Selling, general and administrative expenses ................................... 11,942 11,970 Company sponsored product development ................................ 3,569 3,307 Interest expense ............................. 832 667 Interest and other (incom expense - net .............................. (1,039) (522) --------- --------- 54,934 48,268 --------- --------- Income before income taxes ................ 5,118 4,397 Provision for income taxes ....................... 1,405 1,392 --------- --------- Net income ................................ 3,713 3,005 Accumulated earnings: Beginning of period .......................... 112,381 100,427 --------- --------- End of period ................................ $ 116,094 $ 103,432 ========= ========= Earnings per common share: Net income ................................ $ .57 $ .46 ========= ========= The accompanying notes are an integral part of these consolidated financial statements. 2 Tech-Sym Corporation Consolidated Statement of Income and Accumulated Earnings FOR THE SIX MONTHS ENDED JUNE 30, ---------------------------- 1995 1994 (restated) (stated in thousands except for per share amounts) Sales ...................................... $ 117,989 $ 100,220 --------- --------- Costs and expenses: Cost of sales .......................... 77,229 61,933 Selling, general and administrative expenses ............................. 24,746 22,775 Company sponsored product development .......................... 6,959 6,540 Interest expense ....................... 1,710 1,328 Interest and other (income) expense - net ........................ (1,895) (900) --------- --------- 108,749 91,676 --------- --------- Income before income taxes .......... 9,240 8,544 Provision for income taxes ................. 2,880 2,779 --------- --------- Net income .......................... 6,360 5,765 Accumulated earnings: Beginning of period .................... 109,734 97,667 --------- --------- End of period .......................... $ 116,094 $ 103,432 ========= ========= Earnings per common share: Net income .......................... $ .98 $ .89 ========= ========= The accompanying notes are an integral part of these consolidated financial statements. 3 Tech-Sym Corporation Consolidated Statement of Cash Flows FOR THE SIX MONTHS ENDED JUNE 30, ---------------------- 1995 1994 (restated) (stated in thousands) Cash flows from operating activities: Net income ......................................... $ 6,360 $ 5,765 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization ................... 5,477 4,160 Change in operating assets and liabilities: Receivables ..................................... 823 (3,157) Unbilled revenue ................................ (3,194) 1,581 Inventories ..................................... (7,550) (770) Accounts payable and taxes on income ............ 1,001 (160) Billing in excess and other accrued liabilities ...................... 919 (2,795) Other current assets ............................ (2,339) (1,221) Long-term receivables - net and other assets .... (1,276) (355) Other - net ..................................... (642) 91 -------- -------- Net cash provided by (used for) operating activities .................. (421) 3,139 -------- -------- Cash flows from investing activities: Capital expenditures ............................... (4,782) (3,710) Payment for purchase of business, net of cash acquired .............................. (635) Purchase of investment securities .................. (1,000) Sales of investment securities ..................... 200 3,422 Other investing activities ......................... (275) (243) -------- -------- Net cash used for investing activities ............. (4,857) (2,166) -------- -------- Cash flows from financing activities: Net borrowings (payments) under line of credit agreements ......................... 4,281 1,455 Proceeds from long-term debt ....................... 1,607 460 Payments on long-term debt ......................... (4,854) (245) Proceeds from exercise of stock options ............ 464 372 -------- -------- Net cash provided by financing activities .......... 1,498 2,042 -------- -------- Net increase (decrease) in cash and cash equivalents .......................... (3,780) 3,015 Cash and cash equivalents at beginning of period ... 24,083 21,308 -------- -------- Cash and cash equivalents at end of period ......... $ 20,303 $ 24,323 ======== ======== Cash flow from operating activities include: Interest paid ...................................... $ 1,816 $ 1,327 Income taxes paid .................................. 3,371 3,735 The accompanying notes are an integral part of these consolidated financial statements. 4 Notes to Consolidated Financial Statements 1. The unaudited consolidated financial statements include the accounts of Tech-Sym Corporation and its subsidiaries ("the Company") for the three month and six month periods ended June 30, 1995 and 1994 and should be read in conjunction with the financial statements and the notes thereto included in the Company's 1994 annual report and Form S-4 dated May 19, 1995. In the opinion of management, all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of these unaudited statements have been included. Such financial results, however, should not be construed as necessarily indicative of future earnings. 2. Inventories are valued at the lower of cost or market. Cost is determined on the first-in, first-out method. Inventories (principally electronic parts) which aggregated $50,057,000 at June 30, 1995, include raw materials of $20,457,000 and work-in-process and finished goods of $29,600,000. 3. Shares of common stock of the Company have been reserved at June 30, 1995 for issuance as follows: 35,400 shares for issuance upon exercise of options granted under the 1980 Stock Option Plan of the Company. 28,600 shares for issuance upon exercise of options granted to nonemployee directors. 705,970 shares for issuance upon exercise of options granted or to be granted under the 1990 Stock Option Plan of the Company. 3,646,565 shares for issuance upon exercise of common stock purchase rights granted pursuant to the Company's Common Stock Purchase Rights Plan adopted by the Board of Directors on June 1, 1988. 4. The Company provides deferred income taxes for temporary differences arising when revenues or expenses are recognized in different periods for financial and tax reporting purposes. Provision for federal income taxes for the three and six month periods ended June 30, 1995 and 1994 was equivalent to an effective rate of 32% and 35%, respectively, of earnings before income taxes. The difference between the effective rate and the U.S. statutory rate is due principally to tax benefits of foreign sales and research and development credits. 5 Additionally, for both the 1995 and 1994 periods, foreign income taxes were not accrued on certain foreign income due to operating loss carry forwards. Also, the Company received certain state income tax refunds due to overpayment in prior periods. 5. Earnings per common share are based on the weighted average number of shares outstanding during each period (6,511,000 and 6,510,000 for the three months ended June 30, 1995 and 1994, respectively,and 6,501,000 and 6,504,000 for the six month period ended June 30, 1995 and 1994, respectively). 6. On June 30, 1995, the Company completed its acquisition of CogniSeis Development, Inc. through the issuance of 737,781 shares of common stock. CogniSeis develops, markets and licenses seismic processing and geologic interpretation systems. The transaction was accounted for as a pooling of interests. Accordingly, the financial information presented herein has been restated to include the accounts of the Company and CogniSeis as of June 30, 1994 and for the three and six month periods then ended. Separate results of operations of the combining entities for the periods prior to the acquisition are as follows (in thousands): FOR THE FOR THE THREE MONTHS SIX MONTHS ENDED ENDED JUNE 30, JUNE 30, 1995 1994 1995 1994 ----------------------- ------------------------ Sales Tech-Sym ........... $ 54,461 $ 48,329 $ 108,273 $ 92,007 CogniSeis .......... 5,591 4,336 9,716 8,213 --------- --------- --------- --------- $ 60,052 $ 52,665 $ 117,989 $ 100,220 ========= ========= ========= ========= Net Income Tech-Sym ........... $ 3,310 $ 2,991 $ 6,406 $ 5,779 CogniSeis .......... 403 14 (46) (14) --------- --------- --------- --------- $ 3,713 $ 3,005 $ 6,360 $ 5,765 ========= ========= ========= ========= 6 Management's Discussion and Analysis of Financial Condition and Results of Operations LIQUIDITY AND CAPITAL RESOURCES: The Company's operating activities used cash in the amount of $421,000 for the six months ended June 30, 1995, and provided cash in the amount of $3,139,000 for the six months ended June 30 1994. During March 1989, the Company completed a long-term unsecured note financing in the principal amount of $20,000,000. In March, 1995, the Company began to repay such amount in annual principal installments of approximately $2,857,000. The terms of the unsecured note financing impose limitations on future (additional) borrowings. Given the current level of liquid assets and projected cash flows from future operations, the Company does not presently anticipate the need for future borrowings in excess of such limitations. Subsequent to the completion of the note financing, the Company also negotiated new unsecured bank lines of credit which, among other changes, removed the restrictions as to amounts that may be distributed from subsidiaries to Tech-Sym Corporation. At June 30, 1995, the Company had unused committed lines of credit which aggregated $35,000,000. After working capital, the chief use of the Company's funds has normally been capital expenditures. Capital expenditures for property, plant and equipment were $4,782,000 and $3,710,000 for the six months ended June 30, 1995 and 1994, respectively. RESULTS OF OPERATIONS: The following is management's discussion and analysis of certain significant factors which have affected the Company's earnings during the periods included in the accompanying consolidated statements of income. A summary of the period to period changes in the principal items included in the consolidated statements of income is shown below: COMPARISON OF COMPARISON OF THREE MONTHS SIX MONTHS ENDED JUNE 30, ENDED JUNE 30, 1995 AND 1994 1995 AND 1994 ------------------------------ Increase(Decrease) (stated in thousands) Sales ........................................ $ 7,387 $17,769 Costs and expenses ........................... 6,666 17,073 ------- ------- Income before income taxes ................... 721 696 Provision for income taxes ................... 13 101 ------- ------- Net income ................................... $ 708 $ 595 ======= ======= 7 COMPARISON OF THREE MONTHS ENDED JUNE 30, 1995 AND 1994: Sales for the quarter ended June 30, 1995 increased 14.0% from the like quarter of 1994 while costs and expenses increased 13.8% which resulted in an increase in income before income taxes of 16.4%. The increase in sales for the quarter as compared to the same quarter a year ago was primarily the result of improved sales in the seismic exploration area ($5,133,000 or 31%) primarily due to a general increase in digital streamer systems as well as new seismic cables and cable repairs. In addition, seismic processing software sales also improved for the quarter ending June 30, 1995. The communications area also contributed to the increase in sales for the quarter ($2,858,000 or 18%) due to greater demand in general for commercial microwave components and strong foreign demand for high power broadcast equipment. A sales increase was also registered in the environmental area ($2,032,000 or 75%) due to the acquisition of Anarad, Inc. effective July 8, 1994. The above increases in sales were somewhat offset by a decrease in sales in the defense system area ($2,467,000 or 14%) due to a major contract still in the design stage. Cost of sales increased 21% while selling, general and administrative expenses remained constant for the quarter. The increase in cost of sales for the 1995 quarter as compared to 1994 was primarily due to the increase in sales as well as product mix in the seismic exploration area and lower gross margins in the environmental monitoring area. Company sponsored product development increased 8% due to increased projects in the seismic exploration area. Interest expense increased primarily due to an increase in rates as well as a larger average principal balance outstanding during the period for 1995. Interest and other income increased principally due to an increase in rates. A lower effective tax rate also contributed to the increase in net income. See Note 4 of the Notes to the Consolidated Financial Statements contained on pages 5 and 6 of this report for income tax information. COMPARISON OF SIX MONTHS ENDED JUNE 30, 1995 AND 1994: Sales for the six month period ended June 30, 1995 increased 17.7% while costs and expenses increased 18.6% which resulted in an increase of 8.1% in income before income taxes. The increase in sales was attributable to increases in sales in the (i) seismic exploration system area ($9,483,000 or 28%); (ii) communications area ($7,923,000 or 32%); and (iii) environmental area 8 ($3,430,000 or 65%), which were offset somewhat by a decrease in sales of defense systems ($1,938,000 or 7%). Cost of sales increased 25% as compared to the 18% increase in sales while selling, general and administrative expenses increased 9% as compared to last year. Company sponsored product development increased 6%, interest expense increased 29% and interest and other income more than doubled. The reason for the changes for the six month comparisons are substantially the same as for the quarter comparisons described above. 9 PART II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS The shareholders of Registrant took the following action at the Annual Meeting held April 25, 1995: 1. Elected all nine management nominees for directors pursuant to proxies solicited without opposition under regulation 14A, as stated below: VOTES IN VOTES NOMINEE FAVOR WITHHELD ------- --------- -------- W.L. Creech 4,828,472 17,565 A.A. Gallotta, Jr. 4,827,922 18,115 W.W. Gamel 4,785,372 60,665 C.C. Kraft, Jr. 4,828,472 17,565 R.E. Moore 4,785,372 60,665 C.J. Scribner 4,785,372 60,665 R.J. Sloan 4,784,822 61,215 J.A. Teresko 4,828,672 17,365 C.K. Watt 4,785,022 61,015 2. Ratified the appointment of Price Waterhouse as independent accountants of the Registrant for the year ending December 31, 1995 (4,818,662 shares voted for, 11,680 shares voted against and 15,695 shares abstained). ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) There are no exhibits to this report except for Exhibit 27 - Financial Data Schedule which is deemed not to be filed for purposes of liability under the federal securities laws. (b) Three reports on Form 8-K were filed with the Commission during the three months ended June 30, 1995, as follows: (i) Form 8-K dated April 13, 1995, incorporating a press release announcing a letter of intent that the Company acquire all the outstanding shares of CogniSeis Development, Inc. ("CogniSeis"); (ii) Form 8-K dated May 15, 1995, incorporating a press release announcing the signature of a definitive merger agreement with CogniSeis; and 10 (iii) Form 8-K dated June 30, 1995, incorporating a press release announcing the completion of the acquisition of CogniSeis. No financial statements were filed as a part of this report. 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. TECH-SYM CORPORATION Registrant Date: August 11, 1995 /s/ WENDELL W. GAMEL Wendell W. Gamel, Chairman of the Board and President Date: August 11, 1995 /s/ RAY F. THOMPSON Ray F. Thompson, Vice- President, Treasurer, Controller and Chief Financial Officer EX-27 2 FINANCIAL DATA SCHEDULE
5 THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S 10-Q FOR THE PERIOD ENDED JUNE 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS DEC-31-1995 JUN-30-1995 20,303 100 46,047 0 50,057 160,348 38,988 0 234,939 62,335 0 783 0 0 0 234,939 117,989 0 77,229 108,749 (1,895) 0 1,710 9,240 2,880 0 0 0 0 6,360 .98 .98
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