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 JUNE 30, 2000
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 0-29798
CompuDyne Corporation
(Exact name of registrant as specified in its charter)
Nevada 23-1408659
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
7249 National Drive, Hanover, Maryland 21076
(Address of principal executive offices)
Registrant's telephone number, including area code: (410) 712-0275
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_____
As of August 1, 2000, a total of 5,464,466 shares of Common Stock, $.75
par value, were outstanding.
Page Two
COMPUDYNE CORPORATION AND SUBSIDIARIES
INDEX
Page No.
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets June 30, 2000 (unaudited)
and December 31, 1999 3-4
Consolidated Statements of Operations (unaudited) -
Three Months and Six Months Ended June 30, 2000 and 1999 5
Consolidated Statements of Cash Flows (unaudited) -
Six Months Ended June 30, 2000 and 1999 6
Notes to Consolidated Financial Statements 7-10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 11-14
Item 3. Quantitative and Qualitative Disclosures
About Market Risks 15
Part II. Other Information 16
Signature 17
Page Three
COMPUDYNE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
<TABLE>
<S> <C> <C>
June 30, December 31,
2000 1999
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ - $ 701
Accounts receivable, net 33,054 33,833
Costs in excess of billings 4,393 5,284
Inventories:
Work in process 1,770 705
Raw materials and supplies 4,002 3,933
------ ------
Total inventories 5,772 4,638
Deferred tax asset 412 331
Prepaid expenses and other current assets 602 506
---- ----
Total Current Assets 44,233 45,293
Property, plant and equipment, at cost 7,918 7,613
Less: accumulated depreciation and amortization 1,923 1,262
----- -----
Net property, plant and equipment 5,995 6,351
----- -----
Capitalized software, net 2,222 2,235
Deferred tax asset 93 237
Goodwill, net 835 852
Other intangible assets, net 2,330 2,385
Other assets, net 91 94
----- -----
Total other assets 5,571 5,803
----- -----
Total Assets $ 55,799 $ 57,447
====== ======
</TABLE>
See Notes to Consolidated Financial Statements
Page Four
LIABILITIES AND SHAREHOLDERS' EQUITY
(dollars in thousands)
<TABLE>
<S> <C> <C>
June 30, December 31,
2000 1999
(Unaudited)
LIABILITIES
Current Liabilities:
Accounts payable $ 12,426 $ 11,827
Accrued payroll expense 2,107 3,040
Accrued interest 34 74
Other accrued expenses 1,100 1,319
Billings in excess of contract costs incurred 9,563 9,498
Deferred losses/revenue on acquired contracts - 859
Current portion of term loan 2,436 2,243
------ ------
Total Current Liabilities 27,666 28,860
Term loan 4,350 5,500
Subordinated notes 9,512 9,910
Industrial revenue bond 1,960 1,960
Warranty reserves 455 532
Long- term pension liability - 489
Other liabilities 181 166
------ ------
Total Liabilities 44,124 47,417
SHAREHOLDERS' EQUITY
Common stock, par value $.75 per share:
10,000,000 shares authorized; 5,464,466 shares
issued at June 30, 2000 and 5,412,866 shares
issued at December 31, 1999 4,098 4,060
Other capital 11,820 11,734
Treasury shares, at cost; 105,997 shares at
June 30, 2000 and 88,655 shares at
December 31, 1999 (346) (207)
Receivable from management - (30)
Accumulated deficit (3,897) (5,527)
------- -------
Total Shareholders' Equity 11,675 10,030
------- -------
Total Liabilities and Shareholders' Equity $ 55,799 $ 57,447
======= =======
</TABLE>
See Notes to Consolidated Financial Statements
Page Five
COMPUDYNE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)
<TABLE>
<S> <C> <C> <C> <C>
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
Net sales $ 33,374 $ 27,697 $ 63,935 $ 49,684
Cost of sales 27,222 22,620 51,831 40,296
------ ------ ------ ------
Gross margin 6,152 5,077 12,104 9,388
Selling, general and
administrative expenses 4,212 3,732 8,378 6,824
Research and development 50 41 89 81
----- ----- ----- -----
Operating income 1,890 1,304 3,637 2,483
Other (income) expense
Interest expense 547 554 1,046 1,103
Other income (22) (246) ( 90) (291)
------ ------ ------ ------
Total other (income) expense, net 525 308 956 812
------ ------ ------ ------
Income before income tax provision 1,365 996 2,681 1,671
Income tax provision 538 381 1,051 646
----- ----- ----- -----
Net income $ 827 $ 615 $ 1,630 $ 1,025
======= ======= ======== =======
Basic earnings per share $ .15 $ .12 $ .31 $ .20
======= ======= ======== =======
Weighted average number of
common shares outstanding 5,341 5,176 5,341 5,176
======= ======= ======== =======
Diluted earnings per share $ .14 $ .11 $ .27 $ .18
======= ======= ======== =======
Weighted average number of
common shares and equivalents 6,050 5,821 6,050 5,821
======= ======= ======== =======
</TABLE>
See Notes to Consolidated Financial Statements
Page Six
COMPUDYNE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
<TABLE>
<S> <C> <C>
Six Months Ended
June 30,
2000 1999
Cash flows from operating activities:
Net income $ 1,630 $ 1,025
Adjustments to reconcile net income to net cash
provided by operations:
Depreciation and amortization 933 657
Deferred income taxes 63 -
Gain on sale of assets - (184)
Other, net (15) -
Changes in assets and liabilities:
Accounts receivable 779 (637)
Costs in excess of billings 891 (43)
Inventories (1,134) (538)
Prepaid expenses (137) 71
Other assets (51) (22)
Accounts payable 599 1,154
Accrued liabilities (1,185) (911)
Accrued income taxes (6) 327
Billings in excess of costs 65 54
Other liabilities (1,866) (189)
------- ------
Net cash flows provided by operations 566 764
------- ------
Cash flows from investing activities:
Additions to intangibles (16) -
Additions to property, plant and equipment (305) (1,837)
Sale of MicroAssembly assets - 1,200
Purchase of CorrLogic - (1,186)
------- -------
Net cash flows used in investing activities (321) (1,823)
Cash flows from financing activities:
Sale of common stock 124 1
Borrowings on line of credit 4,200 -
Repayment of line of credit (4,200) -
Repayment of long-term debt (1,070) -
Repayment of related party debt - (10)
------- -------
Net cash used in financing activities (946) ( 9)
------- -------
Net decrease in cash (701) (1,068)
Cash and cash equivalents at beginning of period 701 1,528
------- -------
Cash and cash equivalents at end of period $ - $ 460
======= =======
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 1,075 $ 1,103
Income taxes $ 707 $ 305
</TABLE>
See Notes to Consolidated Financial Statements
Page Seven
COMPUDYNE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of CompuDyne
Corporation and subsidiaries (the "Company"), have been prepared pursuant
to the rules and regulations of the Securities and Exchange Commission.
Certain information and note disclosures normally included in the annual
financial statements, prepared in accordance with generally accepted
accounting principles, have been condensed or omitted pursuant to those
rules and regulations, although the Company believes that the disclosures
made are adequate to make the information presented not misleading.
In the opinion of management, the accompanying unaudited consolidated
financial statements reflect all necessary adjustments and
reclassifications (all of which are of a normal, recurring nature) that
are necessary for fair presentation for the periods presented. It is
suggested that these consolidated financial statements be read in
conjunction with the consolidated financial statements and the notes
thereto included in the Company's latest annual report to the Securities
and Exchange Commission on Form 10-K for the year ended December 31,
1999.
New Accounting Pronouncements:
In March 2000, the Financial Accounting Standards Board issued
Interpretation No.44, "Accounting for Certain Transactions Involving
Stock Compensation, an Interpretation of APB Opinion No. 25," which
clarifies the application of Opinion 25 for certain issues including:
(1) the definition of an employee for purposes of applying APB Opinion
25, (2) the criteria for determining whether a plan qualifies as a
noncompensatory plan, (3) the accounting consequences of various
modifications to the terms of a previously fixed stock option or reward
and (4) the accounting for an exchange of stock compensation awards in a
business combination. The Company does not expect that the adoption of
this interpretation will have a material impact on the financial position
or results of operation.
In May 2000, the Emerging Issues Task Force reached a consensus on
EITF Issue No.00-14: "Accounting for Certain Sales Incentives," which
addresses the recognition, measurement and income classification for
sales incentives offered voluntarily by vendors, without costs to
consumers, as a result of a single exchange transaction. The Company
will be required to and will adopt EITF Issue No. 00-14 in the third
quarter of 2000. The Company is in the process of evaluating the
potential impact of this consensus on its financial position and results
of operation.
Page Eight
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial
Statements," which provides guidance on the recognition, presentation and
disclosure of revenue in financial statements. The guidelines in SAB
No. 101 must be adopted by the fourth quarter of 2000. The Company is in
the process of evaluating the potential impact of SAB No. 101 on its
financial position and results of operations.
Certain 1999 amounts have been reclassified to conform to the 2000
presentation.
2. ACCOUNTS RECEIVABLE
<TABLE>
<S> <C> <C>
Accounts receivable consist of the following:
(dollars in thousands) June 30, December 31,
2000 1999
U.S. Government Contracts
Billed $ 2,406 $ 1,433
Unbilled 1,319 2,636
------ ------
3,725 4,069
Commercial
Billed 23,186 23,598
Unbilled 6,533 6,568
------ ------
29,719 30,166
------ ------
Total Accounts Receivable 33,444 34,235
Less: Allowance for Doubtful Accounts (390) (402)
------ ------
Net Accounts Receivable $ 33,054 $ 33,833
====== ======
</TABLE>
Page Nine
3. COMMON STOCK AND COMMON STOCK OPTIONS
On May 22, 2000, the Compensation and Stock Options Committee
("Committee") granted options to purchase 2,500 shares of common stock to
non-employee directors at a price of $8.813 per share, the then current
market price. On June 14, 2000, the Committee granted options to
purchase 2,000 shares of common stock to non-employee directors at a
price of $7.75 per share, the then current market price.
On April 4, 2000, the Committee granted options to purchase 9,408 shares
of CompuDyne common stock to key employees of Quanta SecurSystems, Inc.
at a price of $8.875 per share, the then current market price. On April
14, 2000, the Committee granted options to purchase 27,500 shares of
CompuDyne common stock to key employees of Norment Security Group at a
price of $8.50 per share, the then current market price. On June 12,
2000, the Committee granted options to purchase 12,500 shares of
CompuDyne common stock to a key employee of CorrLogic, Inc. at a price of
$8.00 per share, the then current market price. On June 28, 2000, the
Committee granted options to purchase 25,000 shares of CompuDyne common
stock to a key employee of Norment Security Group at a price of $8.688
per share, the then current market price.
4. NET INCOME PER SHARE
Earnings per share are presented in accordance with SFAS No. 128,
"Earnings Per Share." This statement requires dual presentation of basic
and diluted earnings per share on the face of the income statement.
Basic earnings per share excludes dilution and is computed by dividing
income available to common shareholders by the weighted-average number of
shares outstanding for the period. Diluted earnings per share reflects
the potential dilution that could occur if securities or other contracts
to issue common stock were exercised or converted into common stock.
The following is a reconciliation of the amounts used in calculating
basic and diluted net income per common share:
<TABLE>
<S> <C> <C> <C>
Per Share
Income Shares Amount
(dollars in thousands)
Basic net income per common share
for the three months ended June 30, 2000:
Income available to common stockholders $ 827 5,341,409 $ .15
Effect of dilutive stock options 708,198
--------- -----
Diluted net income per common share
for the three months ended June 30, 2000 $ 827 6,049,607 $ .14
------- --------- -----
Basic net income per common share
for the three months ended June 30, 1999:
Income available to common stockholders $ 615 5,176,055 $ .12
-----
Effect of dilutive stock options 645,357
-------
Diluted net income per common share
for the three months ended June 30, 1999 $ 615 5,821,412 $ .11
------- --------- -----
Page Ten
Per Share
Income Shares Amount
(dollars in thousands)
Basic net income per common share for
the six months ended June 30, 2000:
Income available to common stockholders $ 1,630 5,341,409 $ .31
-----
Effect of dilutive stock options 708,198
---------
Diluted net income per common share for
the six months ended June 30, 2000 $ 1,630 6,049,607 $ .27
-------- --------- -----
Basic net income per common share for
the six months ended June 30, 1999:
Income available to common stockholders $ 1,025 5,176,055 $ .20
-----
Effect of dilutive stock options 645,357
---------
Diluted net income per common share
for the six months ended June 30, 1999 $ 1,025 5,821,412 $ .18
-------- --------- -----
</TABLE>
Page Eleven
COMPUDYNE CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Second Quarter 2000 and 1999 Comparison
---------------------------------------
Net sales for the Company were $33.4 million for the second quarter of
2000, an increase of $5.7 million from $27.7 million for the second
quarter of 1999. Sales in the Corrections group were $24.1 million, an
increase of $2.2 million from $21.9 million in 1999. This increase is
primarily a result of increased revenues for the Norment Security Group,
completing new work from the backlog accumulated in 1999 and incremental
sales at CorrLogic, Inc. Net sales for the Federal Systems group
increased $1.1 million to $3.5 million in the second quarter of 2000,
from $2.4 million in the same period in 1999. Net sales for the Attack
Protection group were $5.8 million in the second quarter of 2000, an
increase of $2.6 million from the $3.2 million for the same period in
1999. MicroAssembly Systems, Inc. ("MicroAssembly") which had net sales
of $270 thousand in the second quarter of 1999, was sold on May 28, 1999.
CompuDyne's gross margin increased $1.1 million in the second quarter of
2000 to $6.2 million, an increase of $5.1 million in the second quarter
of 1999. The Corrections group increased $642 thousand to $4.8 million
for the second quarter of 2000 from $4.2 million for the second quarter
of 1999. This increase was primarily a result of the increased net sales
of the Norment Security Group. Gross margin for the Federal Systems
group increased by $223 thousand from $397 thousand in the second quarter
of 1999 to $620 thousand in the second quarter of 2000. The Attack
Protection group increased $229 thousand to $727 thousand for the second
quarter of 2000 from $498 thousand for the second quarter of 1999.
MicroAssembly, which had a gross margin of $20 thousand in the second
quarter of 1999, was sold on May 28, 1999.
CompuDyne's selling, general and administrative expenses increased $480
thousand to $4.2 million for the second quarter of 2000 from $3.7 million
for the same period in 1999. The Corrections group was $3.0 million for
the second quarter of 2000, an increase of $221 thousand from $2.8
million for the first quarter of 1999. This increase is primarily due to
the addition of CorrLogic, Inc. on April 30, 1999. The Federal Systems
group selling, general and administrative expenses were $224 thousand in
the second quarter of 2000, an increase of $44 thousand from $180
thousand in the second quarter of 1999. The Attack Protection group
increased selling, general and administrative expenses by $162 thousand
to $514 thousand for the second quarter of 2000, from $352 thousand for
the same period in 1999. MicroAssembly, which had selling, general and
administrative expenses of $60 thousand in the second quarter of 1999,
was sold on May 28, 1999. CompuDyne corporate selling, general and
administrative expenses increased $113 thousand from $331 thousand in the
second quarter of 1999 to $444 thousand for the second quarter of 2000.
This increase is primarily attributable to costs associated with the
purchase of an annuity to relieve CompuDyne of the liability for the
Kolux pension plan obligation and incurring costs associated with a
potential acquisition that has been abandoned.
Page Twelve
Research and development costs increased to $50 thousand for the second
quarter of 2000, an increase of $9 thousand from $41 thousand in the
same period of 1999. All research and development costs for both periods
were spent in the Federal Systems group for improvements to the current
product line of Data Control Systems, a division of Quanta Systems
Corporation.
Interest expense was $547 thousand in the second quarter of 2000, a
decrease of $7 thousand from $554 thousand in the second quarter of
1999. This is attributable to principal prepayments made during the
third quarter of 1999.
Net income for the second quarter of 2000 for CompuDyne was $827
thousand, an increase of $212 thousand from $615 thousand in the second
quarter of 1999. Net income for the Corrections group increased $242
thousand to $713 thousand for the second quarter of 2000 from $471
thousand for the second quarter of 1999. CorrLogic, a unit within the
Corrections group, has had the major portion of its operating expenses
charged against a reserve established at the time of its acquisition for
anticipated losses to be incurred on acquired contracts. This amounted
to $366 thousand, net of tax benefit, during the second quarter of 2000
and at June 30, 2000, the reserve was fully utilized. Favorable
operating results going forward from this unit is dependent on its
ability to successfully compete for and win profitable contracts. The
Federal Systems group net income increased $84 thousand to $136 thousand
in the second quarter of 2000, from $52 thousand for the second quarter
of 1999. Net income for the Attack Protection group was $39 thousand for
the second quarter 2000, an increase of $21 thousand from $18 thousand
for the same period in 1999. MicroAssembly's contribution to net income
went down by $84 thousand, since it was sold on May 28, 1999. The
unallocated corporate office costs for the second quarter increased $51
thousand to $61thousand in the second quarter of 2000, from $10 thousand
for the second quarter of 1999.
The Company had a backlog at the end of the second quarter of 2000 of
$116 million, an increase of $11 million from $105 million at the end of
the second quarter of 1999.
Page Thirteen
Year-to-Date Comparison
-----------------------
Net sales for the Company were $63.9 million for the first half of 2000,
an increase of $14.2 million from $49.7 million for the first half of
1999. Sales in the Corrections group were $46.6 million, an increase of
$8.9 million from $37.7 million in 1999. This increase is primarily a
result of increased revenues for the Norment Security Group, completing
new work from the backlog accumulated in 1999. Net sales for the Federal
Systems group increased $961 thousand to $5.9 million in the first half
of 2000, from $4.9 million in the same period in 1999. Net sales for the
Attack Protection group were $11.4 million in the first half of 2000, an
increase of $5.0 million from the $6.4 million for the same period in
1999. MicroAssembly, which had net sales of $670 thousand in the first
half of 1999, was sold on May 28, 1999.
CompuDyne's gross margin increased $2.7 million in the first half of 2000
to $12.1 million, an increase of $9.4 million in the first half of 1999.
The Corrections group increased $1.8 million to $9.1 million for the
first half in 2000 from $7.3 million for the first half of 1999. Gross
margin for the Federal Systems group increased by $288 thousand from $708
thousand in the first half of 1999 to $996 thousand in the first half of
2000. The Attack Protection group increased $750 thousand to $2.0 million
for the first quarter in 2000 from $1.3 million for the second quarter
of 1999. MicroAssembly, which had a gross margin of $152 thousand in
the first half of 1999, was sold on May 28, 1999.
CompuDyne's selling, general and administrative expenses increased $1.6
million to $8.4 million for the first half of 2000 from $6.8 million for
the same period in 1999. The Corrections group was $6.1 million for the
first half of 2000, an increase of $1.3 million from $4.8 million for
the first half of 1999. The Federal Systems group selling, general and
administrative expenses were $406 thousand in the first half of 2000, an
increase of $84 thousand from $322 thousand in the first half of 1999.
The Attack Protection group increased selling, general and administrative
expenses by $145 thousand to $1.0 million for the first half of 2000,
from $856 thousand for the same period in 1999. MicroAssembly, which had
selling, general and administrative expenses of $148 thousand in the
first half of 1999, was sold on May 28, 1999. CompuDyne corporate
selling, general and administrative expenses increased $195 thousand from
$632 thousand in the first half of 1999 to $827 thousand for the first
half of 2000. This increase is primarily attributable to costs associated
with the purchase of an annuity to relieve CompuDyne of the liability for
the Kolux pension plan obligation and the costs incurred for a potential
acquisition that has been abandoned.
Research and development costs were $89 thousand for the first half of
2000, an increase of $8 thousand from $81 thousand in 1999. All research
and development costs for both periods were spent in the Federal Systems
group for improvements to the current product line of Data Control
Systems, a division of Quanta Systems Corporation.
Page Fourteen
Interest expense was $1.0 million in the first half of 2000, a decrease
of $57 thousand from $1.1 million in the first half of 1999. This is
attributable to principal prepayments made during the third quarter of
1999.
Net income for the first half of 2000 for CompuDyne was $1.6 million, an
increase of $605 thousand from $1.0 million in the first half of 1999.
Net income for the Corrections group increased $290 thousand to $1.1
million for the first half of 2000, from $760 thousand for the first half
of 1999. CorrLogic, a unit within the Corrections group, has had the
major portion of its operating expenses charged against a reserve
established at the time of its acquisition for anticipated losses to be
incurred on acquired contracts. This amounted to $982 thousand, net of
tax benefit, during the first half of 2000 and at June 30, 2000, the
reserve was fully utilized. Favorable operating results going forward
from this unit is dependent on its ability to successfully compete for
and win profitable contracts. The Federal Systems group net income
increased $118 thousand to $186 thousand in the first half of 2000, from
$68 thousand for the first half of 1999. Net income for the Attack
Protection group was $440 thousand for the first half of 2000, an
increase of $330 thousand from $110 thousand for the same period in 1999.
MicroAssembly's contribution to net income went down by $101 thousand,
since it was sold on May 28, 1999. The unallocated corporate office
costs for the first half of 2000 was $45 thousand, in increase of $32
thousand from $13 thousand for the first half of 1999.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
Net cash provided by operations was $566 thousand in the first half of
2000, a decrease of $198 thousand from $764 thousand provided by
operations in the first half of 1999. The primary operational uses of
cash include payments to decrease accrued and other liabilities of $1.2
million and $1.9 million, respectively, an increase in inventories of
$1.1 million and property and equipment purchases of $305 thousand.
These were patricianly offset by decreases in accounts receivable and
costs in excess of billings. The primary financing activities were
principal payments of $1,070 thousand in long-term debt.
YEAR 2000 COMPLIANCE
--------------------
Subsequent to December 31, 1999 and to date, the Company has not had any
adverse effects to its systems or operations resulting from the Year 2000
issues. As a result, there has been no need to implement any Year 2000
contingency plans.
Page Fifteen
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
----------------------------------------------------------
Interest Rate Risk
__________________
CompuDyne used fixed and variable rate notes payable to finance its
acquisition of Norment/Norshield. These on-balance sheet financial
instruments, to the extent they provide for variable rates of interest,
expose the Company to interest rate risk, with the primary interest rate
exposure resulting from changes in the LIBOR rate used to determine the
interest rate applicable to the borrowing under the Company's loan from
LaSalle National Bank.
The information below summarizes CompuDyne's sensitivity to market risks
associated with fluctuations in interest rates as of June 30, 2000. To
the extent that the Company's financial instruments expose the Company to
interest rate risk, they are presented in the table below. The table
presents principal cash flows and related interest rates by year of
maturity of the Company's notes payable with variable rates of interest
in effect at June 30, 2000.
Financial Instruments by Expected Maturity Date
<TABLE>
<S> <C> <C> <C> <C>
Year Ending December 31 2000 2001 2002 2003
Notes Payable:
Variable rate ($) $ 1,000,000 $ 2,375,000 $ 2,500,000 $ 600,000
Average interest rate 7.79% 7.85% 7.90% 7.96%
Fixed rate ($) $ - $ - $ - $ -
Average interest rate
Year Ending December 31 Thereafter Total Fair Value
Notes Payable:
Variable rate ($) $ - $ 6,475,000 $ 6,475,000
Average Interest Rate
Fixed rate ($) $ 9,000,000 $ 9,000,000 $ 9,000,000
Average Interest Rate 13.15% 13.15% 13.15%
Year Ending December 31 2000 2001 2002 Thereafter
Interest Rate Swaps:
Variable to Fixed ($) $ 6,750,000 $ 6,750,000 $ - $ -
Average pay rate 8.5% 8.5%
Average receive rate 7.55 % 7.55 %
</TABLE>
The Company used a foreign exchange contract to partially hedge their
exposure to exchange rate risk related to one firmly committed sales
contract. The foreign exchange contract was entered into for non-trading
purposes and was matched to the underlying transaction and did not
constitute speculative or leveraged positions independent of this
exposure. As most of this contract has been completed, no significant
exchange risk exists as of June 30, 2000.
Page Sixteen
PART II - OTHER INFORMATION
Item 4 Submission of Matters to a Vote of Security Holders
At the annual meeting on May 22, 2000, the shareholders approved the
appointment of Director Miles P. Jennings for a period of three years to
expire at the 2003 Annual Meeting. The votes were cast as follows:
For 5,165,190
Against -
Withheld 391
At the annual meeting on May 22, 2000, the shareholders approved the
appointment of Director Millard H. Pryor, Jr. for a period of three years
to expire at the 2003 Annual Meeting. The votes were cast as follows:
For 5,164,835
Against -
Withheld 746
At the annual meeting on May 22, 2000, the shareholders approved an
amendment to Article Five of the CompuDyne Corporation Articles of
Incorporation to increase the number of authorized shares of the
Corporation's Common Stock from 12,000,000 to 15,000,000. The votes were
cast as follows:
For 5,131,234
Against 31,467
Abstain 2,880
At the annual meeting on May 22, 2000, the shareholders approved the
appointment of Deloitte & Touche LLP as the independent auditors of the
corporation for the fiscal year ending December 31, 2000. The votes were
cast as follows:
For 5,162,326
Against 3,026
Abstain 229
Item 6 - Exhibits and Reports on Form 8-K
(a) Financial Data Schedule
Page Seventeen
SIGNATURE
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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.
COMPUDYNE CORPORATION
Date: August 1, 2000 /s/ William C. Rock
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William C. Rock
Chief Financial Officer
