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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
________________________________________
FORM 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1995
[ ] Transition Report Under Section 13 or 15(d) of the Exchange Act
For the transition period from __________ to ___________
COMMISSION FILE NUMBER 0-5351
EIP MICROWAVE, INC.
_______________________________________________________________________________
(Exact name of small business issuer as specified in its charter)
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<S> <C>
DELAWARE 95-2148645
_______________________________ ________________________________
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
3 Civic Plaza, Suite 265, Newport Beach, California 92660
________________________________________________________________________________
(Address of principal executive offices) (Zip Code)
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(714) 720-1766
___________________________________
(Issuer's telephone number)
______________________________________________________________________
(Former name, former address and former fiscal year,
if changed since last report)
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 [ ]
OUTSTANDING COMMON STOCK: As of August 4, 1995, Registrant had
only one class of common stock, and had 423,307 shares of this
$.01 par value common stock outstanding.
Transitional Small Business Disclosure Format (check one):
YES [ ] NO [ X ]
Total Number of Pages: 12
Exhibit Index 11
1
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EIP MICROWAVE, INC.
FORM 10-QSB
Quarter Ended June 30, 1995
PART I FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements Pages 3 - 6
Item 2. Management's Discussion and Analysis of Pages 7 - 8
Results of Operations and Financial Condition
PART II OTHER INFORMATION
Item 2. Changes in Securities Page 9
Item 6. Exhibits and Reports on Form 8-K Page 9
Signatures Page 10
Index to Exhibits Page 11
2
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EIP MICROWAVE, INC.
PART I - FINANCIAL INFORMATION
ITEM 1 - CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
(In thousands, unaudited)
JUNE 30, SEPTEMBER 30,
1995 1994
-------- -------------
ASSETS
Current assets:
Cash and cash equivalents $ 220 $ 211
Short-term investments 312 308
------ ------
532 519
Accounts receivable, net 756 714
Inventories 1,130 984
Prepaid expenses 39 38
------ ------
Total current assets 2,457 2,255
------ ------
Property, plant and equipment, net 288 459
Other assets 30 30
------ ------
$2,775 $2,744
------ ------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 398 $ 527
Accrued liabilities 623 626
------ ------
Total current liabilities 1,021 1,153
------ ------
Commitments and contingencies
Shareholders' equity:
Common stock, $.01 par value, authorized -
10,000,000 shares, 423,307 and 423,307 shares
issued and outstanding, respectively 5 5
Additional paid-in capital 844 844
Retained earnings 905 742
------ ------
Total shareholders' equity 1,754 1,591
------ ------
$2,775 $2,744
------ ------
3
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EIP MICROWAVE, INC.
PART I/ITEM 1 - CONSOLIDATED FINANCIAL STATEMENTS (continued)
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(In thousands except per share data, unaudited)
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<CAPTION>
THREE MONTHS NINE MONTHS
ENDED JUNE 30, ENDED JUNE 30,
1995 1994 1995 1994
--------------- ---------------
<S> <C> <C> <C> <C>
Net sales $1,679 $1,264 $4,880 $3,900
Costs and expenses:
Cost of sales 964 696 2,537 2,179
Research, development and engineering 172 158 544 476
Selling, general and administrative 540 541 1,710 1,663
Interest and other, net (20) 1 (75) 1
------ ------ ------ ------
1,656 1,396 4,716 4,319
Income (loss) before income tax 23 (132) 164 (419)
Income tax provision 0 0 1 1
------ ------ ----- -------
Net income (loss) 23 (132) 163 (420)
Retained earnings at beginning of period 882 907 742 1,195
------ ------ ----- -------
Retained earnings at end of period $ 905 $ 775 $ 905 $ 775
------ ------ ----- -------
Income (loss) per share $ .05 $ (.31) $ .39 $ (.99)
------ ------ ----- -------
Shares of common stock 423 423 423 423
------ ------ ----- -------
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4
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EIP MICROWAVE, INC.
PART I/ITEM 1 - CONSOLIDATED FINANCIAL STATEMENTS (continued)
CONSOLIDATED STATEMENT OF CASH FLOWS
Increase (decrease) in cash
(In thousands, unaudited)
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<CAPTION>
NINE MONTHS ENDED
JUNE 30, JUNE 30,
1995 1994
------- -------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $163 $(420)
Adjustments to reconcile net income (loss) to net cash
used by operating activities:
Depreciation and amortization 144 199
Change in assets and liabilities:
Accounts receivable, net (42) (233)
Inventories (146) 60
Prepaid expenses and other assets (1) 39
Accounts payable (129) 172
Accrued liabilities (3) (11)
------ ------
Cash used by operating activities (14) (194)
------ ------
Cash flows from investing activities:
Short-term investments 4 -
Capital expenditures (9) (9)
Sale of capital equipment 28 -
------ ------
Cash provided (used) by investing activities 23 (9)
------ ------
Increase (decrease) in cash and equivalents 9 (203)
Cash and equivalents at beginning of year 211 247
------ ------
Cash and equivalents at end of third quarter $ 220 $ 44
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5
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EIP MICROWAVE, INC.
PART I/ITEM 1 - CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(a) The consolidated financial information presented in this
Form 10-QSB has been prepared from the accounting records
without audit and conforms with the financial statements
included in the Company's annual report filed with the
Commission for the preceding fiscal year. The information
furnished reflects all adjustments and disclosures which
are, in the opinion of management, of a normal, recurring
nature, and necessary for a fair statement of the results
for the interim periods. This report should be read in
conjunction with the Company's 1994 Annual Report on
Form 10-KSB.
(b) Composition of certain balance sheet captions (in thousands,
unaudited):
June 30, September 30,
1995 1994
-------- ------------
Inventories, net:
Raw materials $ 569 $ 576
Work-in-process 455 401
Finished goods 106 7
-------- ------
$ 1,130 $ 984
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Property, plant and equipment:
Cost $ 5,185 $ 5,388
Accumulated depreciation (4,897) (4,929)
-------- -------
$ 288 $ 459
-------- -------
6
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EIP MICROWAVE, INC.
PART I/ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
Net sales for the three months ended June 30, 1995, were
$1,679,000, a 33% increase from the same period last year. Net
sales for the nine months ended June 30, 1995, were $4,880,000, a
25% increase from the same period last year. The increase in
sales for both periods was attributable to increased sales to
government contractors, increased sales of product configured in
the VXIbus standard, and an increase in international sales,
compared to the same periods last year. The Company still
believes the overall softness in domestic and foreign markets for
the Company products will continue to affect sales.
Product cost of sales increased to 57% of sales in the third
fiscal quarter of 1995, from 55% of sales in the third fiscal
quarter of 1994. The increase was primarily attributable to
change in product mix, compared to the same period last year.
Product cost of sales was 52% of sales for the nine months ended
June 30, 1995, as compared to 56% of sales for the same period
last year. The decrease was primarily attributable to
substantially higher production volume, and change in product
mix, compared to the same period last year.
Incoming orders for the third fiscal quarter were $2,445,000, a
76% increase from the same period a year ago. Incoming orders
for the nine months ended June 30, 1995, were $5,679,000, a 39%
increase from the same period a year ago. Backlog at June 30,
1995, was $1,602,000, a 191% increase from the end of the third
fiscal quarter last year. The increase in orders for both
periods, and backlog, resulted primarily from increased orders
from government contractors, increased orders of product
configured in the VXIbus standard, and an increase in
international orders, compared to the same periods last year.
The Company still believes the overall softness in domestic and
foreign markets for the Company products will continue to affect
orders.
Research, development and engineering expenses increased 9% to
$172,000 in the third fiscal quarter of 1995, compared to
$158,000 for the same quarter last year. Research, development
and engineering expenses increased 14% to $544,000 for the nine
months ended June 30, 1995, compared to $476,000 for the same
period last year. The increase in research, development and
engineering expenses for both periods was primarily attributable
to new product development.
Selling, general and administrative expenses for the third fiscal
quarter of 1995 of $540,000 was comparable to selling, general
and administrative expenses of $541,000 for the same quarter last
year. Despite a 33% increase in net sales for the three months
ended June 30, 1995, as compared to the same period last year,
total selling, general and administrative expenses remained
comparable, primarily due to increased commission expense offset
by decreased professional and consulting fees. Selling, general
and administrative expenses increased 3% to $1,710,000 for the
nine months ended June 30, 1995, compared to $1,663,000 in the
same period last year. The
7
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EIP MICROWAVE, INC.
PART I/ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION (continued)
increase in selling, general and administrative expenses for the
nine months ended June 30, 1995, was due primarily to increased
commission expense resulting from increased sales volume.
The Company recorded net income of $23,000 for the third fiscal
quarter of 1995, as compared to a net loss of $132,000 recorded
during the third fiscal quarter of the previous year. The
Company recorded net income of $163,000 for the nine months ended
June 30, 1995, compared to a net loss of $420,000 for the same
period last year. The Company still believes that the overall
softness in domestic and foreign markets for the Company's
products will continue to affect earnings.
FINANCIAL CONDITION
At June 30, 1995, the Company's cash and short-term investment
balance was $532,000, as compared with a cash and short-term
investment balance of $519,000 at September 30, 1994. At June 30,
1995, the Company had no material commitments for capital
expenditures. At June 30, 1995, working capital increased
$334,000, to $1,436,000, from $1,102,000 at September 30, 1994,
and the Company's current ratio increased to 2.4:1 from 2.0:1
over the same time period.
The Company still believes that the overall softness in domestic
and foreign markets for the Company's products will continue to
affect incoming orders and net sales. This market softness will
be at least partially offset by increased orders and sales of
products configured in the VXIbus standard and the recently
introduced pulsed frequency counter with peak power measurement.
The Company will continue to control expenses and minimize debt
during fiscal 1995.
On December 20, 1994, the Company obtained a line of credit
agreement with a bank that allows the Company to borrow on a
short-term basis through December 5, 1995. The maximum
borrowings under this agreement are the lesser of $500,000, or
60% of the net amount of the Company's eligible accounts
receivable as determined by the bank, bearing interest at the
prime rate plus 3.5% per annum, provided that the interest rate
in effect each month shall not be less than 7.50% per annum. The
agreement, as amended, contains various restrictive covenants
requiring, among other matters, the maintenance of minimum levels
of tangible net worth and certain financial ratios, including
debt to net worth. At June 30, 1995, the Company was in compliance
with the restrictive covenants of the line. No borrowings were
outstanding under the line at June 30, 1995.
The Company believes that the cash on hand and funds generated
from operations and the Company's line of credit will adequately
finance the Company's operations during fiscal 1995.
8
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EIP MICROWAVE, INC.
PART II - OTHER INFORMATION
Item 2. Changes in Securities
The existing credit facility between the Company and its
commercial bank contains restrictions on dividend payments and
financial ratios regarding, among other matters, the maintenance
of minimal levels of tangible net worth, minimum quick ratio and
limits of debt to net worth. The credit agreement is more fully
described in Part I/Item 2 - Financial Condition.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule.
(b) Reports on Form 8-K.
The Company did not file with the Commission any reports
on Form 8-K in the quarter ended June 30, 1995.
9
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant has
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
EIP MICROWAVE, INC.
(Registrant)
DATE: August 10, 1995 BY: /s/ J. Bradford Bishop
_________________________
J. Bradford Bishop
Chairman of the Board and
Chief Executive Officer
DATE: August 10, 1995 BY: /s/ John Ardizzone
___________________________
John Ardizzone
Vice President - Finance and
Chief Financial Officer
10
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EIP MICROWAVE, INC.
INDEX TO EXHIBITS
Sequentially
Exhibit No. Description Numbered Page
---------- ----------- -------------
27 Financial Data Schedule 12
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> JUN-30-1995
<CASH> 220
<SECURITIES> 312
<RECEIVABLES> 830
<ALLOWANCES> 74
<INVENTORY> 1,130
<CURRENT-ASSETS> 2,457
<PP&E> 5,185
<DEPRECIATION> 4,897
<TOTAL-ASSETS> 2,775
<CURRENT-LIABILITIES> 1,021
<BONDS> 0
<COMMON> 5
0
0
<OTHER-SE> 1,749
<TOTAL-LIABILITY-AND-EQUITY> 2,775
<SALES> 4,880
<TOTAL-REVENUES> 4,880
<CGS> 2,537
<TOTAL-COSTS> 2,537
<OTHER-EXPENSES> 2,198
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (19)
<INCOME-PRETAX> 164
<INCOME-TAX> 1
<INCOME-CONTINUING> 163
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 163
<EPS-PRIMARY> .39
<EPS-DILUTED> 0
</TABLE>
