U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-KSB/A
Amendment No. 1
ANNUAL REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For fiscal year ended Commission File Number
September 30, 1996 0-3392
WESTERN MICROWAVE, INC.
(Name of small business issuer in its charter)
Virginia 94-1530593
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
P.O. Box 64252, Sunnyvale, California 94086
-------------------------------------------
(Address of principal executive offices)
(408) 745-6679
--------------
Issuer's telephone number
Securities registered under
Section 12(b) of the Exchange Act: None
Securities registered under
Section 12(g) of the Exchange Act: Common Stock, $.10 par value
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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
--- ---
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]
The issuer's revenues for its most recent fiscal year ended September 30, 1996
were $0.
The aggregate market value of the voting stock held by non-affiliates of the
issuer on January 31, 1997, based upon the average bid and ask prices of such
stock on that date, was $1,552,935. The number of shares of Common Stock of the
issuer outstanding as of January 31, 1997 was 1,528,491.
Documents Incorporated By Reference: None
Transitional Small Business Disclosure Format: Yes No X
--- ---
- 1 -
PART II
ITEM 6. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
Assets. Total assets as of September 30, 1996 increased from the beginning of
the fiscal year by approximately $1.23 million to a total of $8.55 million. The
increase in total assets is the result of additional purchases of investment
securities on margin ($1.1 million), appreciation in the fair value of
investment securities ($97,000) and proceeds from sale of common stock
($150,000), offset by the net loss for the year of approximately $117,000.
Investment income for fiscal 1996, consisting of interest, dividends and capital
gains on the sales of securities, totaled $731,531.
Total Stockholders' Equity. Total stockholders' equity as of the close of the
1996 fiscal year increased from approximately $5.13 million (or $3.73 per share)
at the beginning of the fiscal year to approximately $5.27 million (or $3.44 per
share) at the close of the fiscal year. The increase of approximately $129,000
in total stockholders' equity for the current fiscal year is the result of the
aforementioned increase in the fair value of investment securities and proceeds
from the sale of common stock offset by the net loss incurred for the year. The
decline in the book value per share of $.29 is the result of additional shares
issued in the sale of common stock which more than offset the increase in
stockholders' equity on a per share basis.
Environmental Liability. Under the terms of the settlement agreements entered
into by the Company in connection with the settlement of the environmental
lawsuits, the Company has agreed to undertake certain soil and groundwater
remediation activities at its former headquarters on Reamwood Avenue, Sunnyvale,
California (See, Item 3, LEGAL PROCEEDINGS - Environmental Claims)
In fiscal year 1990, the Company established a reserve in the amount of $250,000
to cover the anticipated costs and expenses of conducting the environmental
investigation and defending against the environmental claims instituted by
Intersil and by the owner of the Former Headquarters or which might be
instituted by the California Regional Water Quality Control Board. In the second
quarter of fiscal 1992, the legal reserve was increased by $150,000. As a result
of the settlement of the environmental lawsuits, at the end of 1992 the legal
reserve was converted to a reserve for anticipated environmental cleanup costs.
As a result of the conditional approval of the Company's workplan contemplating
significant soil and groundwater remediation activities in 1993, the Company
increased the reserve for future environmental cleanup costs to $500,000. In
fiscal
- 2 -
1994 and 1995, the Company expensed all current environmental costs which
totaled approximately $564,000 for the two year period.
As a result of further investigation and soil remediation activities completed
by the Company at the site in fiscal 1995, the Company determined that the
existing $500,000 environmental reserve should not be adequate to complete the
cleanup. As a result, in fiscal 1995, the Company increased the reserve for
future environmental costs by $500,000 to $1,000,000. The $500,000 increase in
the environmental reserve at the close of the 1995 fiscal year was based, in
large part, on the historical costs expended by the Company in the clean up in
fiscal 1994 and 1995. During such two year period, the Company's cleanup costs
and expenses averaged approximately $282,000 per year. Under the Company's
workplan, the Company could reasonably expect to continue groundwater treatment
for a minimum of two to three years at an annual cost per year of at least
$250,000. Accordingly, the $1,000,000 reserve at September 30, 1995 was intended
to cover the anticipated cleanup costs of operating a groundwater treatment
system for a three to four year period.
The Company, in fiscal 1996, expensed approximately $200,000 in costs relating
to the environmental cleanup but has left the $1,000,000 reserve unchanged. The
$1,000,000 reserve at September 30, 1996 represents management's best estimate
of the anticipated costs and expenses to complete the cleanup of the site in
accordance with the Company's proposed workplan. However, there is no assurance
that the cleanup of the site can be completed for the reserved amount and
changes in conditions at the site as the cleanup is undertaken or other unknown
circumstances may result in significant increases in future cleanup costs which
cannot be reasonably anticipated by the Company at this time. At September 30,
1996, the Company's total assets exceeded $8.5 million, and, therefore, the
Company believes that it has more than sufficient assets to complete the cleanup
in the event the anticipated costs and expenses exceed the amount of the
reserve.
After the liquidation of the Company and the distribution to the Shareholders,
the reserve will be the Company's remaining asset. The liquidation of the
Company will not discharge the Company's environmental liabilities and
accordingly, the reserve exists to discharge these obligations. If the reserve
is insufficient to discharge these obligations, the Shareholders of the Company
may be liable to the Company in the amount of any distributions made by the
Trustee of the Liquidating Trust.
Liquidity and Capital Resources. As a result of the sale of the WMI Business in
fiscal 1995, substantially all of the Company's assets consist of cash and
marketable securities. Pending the resolution of the Company's environmental
liability for the cleanup of the Former Headquarters, the Company has invested
substantially all of its current assets in a diversified portfolio of marketable
securities. As of September 30, 1996, the portfolio of marketable securities
were valued at approximately $8.33 million.
- 3 -
RESULTS OF OPERATIONS
Sales or Cost of Sales. The Company had no sales or costs of sales in fiscal
1996.
Selling, General and Administrative Expenses. Included in total selling, general
and administrative expenses for fiscal 1996 were compensation paid to Dr. Hefni
in the form of environmental consulting fees of $150,000, portfolio management
fees of $66,000 and a portfolio value increase fee of $112,000. Other
significant expense items include legal expenses of $214,000 and environmental
cleanup related expenses of $200,000.
Interest, Dividends and Capital Gains. Investment income for fiscal 1996
consisting of interest, dividends and capital gains on the sales of securities
totaled $731,531, an increase of approximately $203,000 (or 38%) from fiscal
1995 levels. In addition, in fiscal 1996, the Company realized an additional
gain of approximately $105,000 on the sale of operating and business assets in
connection with the sale of WMI Business.
- 4 -
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this Form 10-KSB/A amending its annual report on Form 10-KSB for the
fiscal year ended September 30, 1996 to be signed on its behalf by the
undersigned, thereunto duly authorized.
WESTERN MICROWAVE, INC.
By: Dr. Ibrahim Hefni
/s/ I. Hefni
-----------------------------------
President, Chief Executive Officer,
and Treasurer
Dated: June 11, 1997
- 5 -
