UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 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 0-4633
DBA SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Florida
(State or other jurisdiction of
incorporation or organization)
59-0996417
(I.R.S. Employer Identification No.)
1200 South Woody Burke Road, Melbourne, Florida 32901
(Address of principal executive offices) (Zip Code)
(407) 727-0660
(Registrant's telephone number, including area code)
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 _____
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest
practicable date.
DBA Systems, Inc. Common Stock, $.10 par value, 4,431,975
shares outstanding as of September 30, 1995.
Total number of sequentially numbered pages: 10
The Exhibit index appears on sequential page 9
<PAGE>
1
PART I -- FINANCIAL INFORMATION
ITEM 1 -- FINANCIAL STATEMENTS
DBA SYSTEMS, INC.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF INCOME
(in thousands, except per share information)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
1995 1994
<S> <C> <C>
Revenues $4,900 $7,720
Costs and expenses 4,667 7,278
Operating income 233 442
Other income (expense):
Interest income 116 46
Interest expense (41) (57)
Other expense - net (33) (31)
Total other income (expense) - net 42 (42)
Income before taxes 275 400
Less provision for income taxes 16 13
NET INCOME $259 $387
Earnings per common and common
equivalent share $.06 $.09
Earnings per common share assuming
full dilution $.06 $.09
Primary weighted shares outstanding 4,509 4,376
Fully diluted shares outstanding 4,509 4,376
</TABLE>
See accompanying Notes to Condensed
Consolidated Interim Financial Statements
<PAGE>
2
DBA SYSTEMS, INC.
CONDENSED CONSOLIDATED INTERIM BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
SEPT 30, 1995 JUNE 30, 1995
ASSETS (Unaudited) (Audited)
<S> <C> <C>
Current Assets:
Cash and cash equivalent $9,976 $3,202
Investments 5,000
Accounts receivable-net 3,942 4,919
Costs and estimated earnings in excess
of billings on uncompleted contracts 3,954 4,164
Inventory 2,304 2,185
Other current assets 519 387
Total Current Assets 20,695 19,857
Property:
Cost 21,827 21,691
Less accumulated depreciation
and amortization 10,383 10,159
Property-net 11,444 11,532
Other Assets:
Cost in excess of value of
net assets of businesses acquired 237 239
Other assets 551 581
Total Other Assets 788 820
Total Assets $32,927 $32,209
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $2,152 $1,556
Accrued expenses 1,085 1,261
Billings in excess of costs and
estimated earnings on uncompleted
contracts 827 694
Estimated losses on uncompleted
contracts 208 241
Other current liabilities 57 107
Total Current Liabilities 4,329 3,859
Long-term Debt 1,926 1,926
Stockholders' Equity:
Common stock 551 551
Paid-in capital 24,307 24,307
Retained earnings 20,840 20,548
Total 45,698 45,406
Treasury stock (19,026) (18,982)
Stockholders' Equity-net 26,672 26,424
Total Liabilities and
Stockholders' Equity $32,927 $32,209
</TABLE>
See accompanying Notes to Condensed Consolidated Interim
Financial Statements
<PAGE>
3
DBA Systems, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Sept. 30,
1995 1994
<S> <C> <C>
Cash Flows From Operating Activities:
Net income $259 $387
Adjustments to reconcile net income to
net cash provided by (used in) activities:
Depreciation and amortization 253 285
Decrease (increase) in current assets:
Accounts receivable 977 681
Costs and estimated earnings in excess
of billings on uncompleted contracts 209 (1,392)
Inventory (119) 63
Other current assets (132) 153
Increase (decrease) in current liabilities:
Accounts payable 597 976
Accrued expenses (240) (253)
Billings in excess of costs and estimated
earnings on uncompleted contracts 133 192
Estimated losses on uncompleted contracts (33) 322
Other current liabilities 13 29
Other - net (6) 7
Net cash provided by operating activities 1,911 1,450
Cash Flows From Investing Activities
Sale of investment 5,000
Capital expenditures (137) (24)
Net cash provided by investing activities 4,863 (24)
Cash Flows From Financing Activities
Repayments of long-term debt (60)
Net increase (decrease) in cash
during the period 6,774 1,366
Cash and cash equivalents at
beginning of period 3,202 3,651
Cash and cash equivalents at end of period $9,976 $5,017
</TABLE>
See Notes to Condensed Consolidated Interim Financial Statements
<PAGE>
4
DBA SYSTEMS, INC.
NOTES TO CONDENSED CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
1) The Condensed Consolidated Interim Financial
Statements contained herein reflect all adjustments of
a normal recurring nature which are, in the opinion of
management, necessary to a fair statement of the
results for the three month periods ended September 30,
1995 and 1994. The results of operations for the
interim periods contained herein are not necessarily
indicative of the results to be expected for the
fiscal year.
2) Refer to the Company's Annual Consolidated Financial
Statements for the Year Ended June 30, 1995, for a
description of accounting policies, which have been
continued without change. Also, refer to the Notes
included in those Consolidated Financial Statements
for additional details of the Company's financial
condition, results of operations and changes in
financial position.
3) Inventory consists of the following (in thousands):
<TABLE>
<CAPTION>
Sept. 30, 1995 June 30, 1995
(Unaudited) (Audited)
<S> <C> <C>
Finished Goods $1,228 $1,420
Work in Progress 625 348
Raw Materials 451 417
TOTAL $2,304 $2,185
</TABLE>
4) Net earnings per common and common equivalent share
are computed by dividing net income by the weighted
average number of common shares and common equivalent
shares outstanding during the period. Common
equivalent shares consist of common stock which may be
issued upon exercise of outstanding stock options.
For the three-month periods ending September 30, 1995
and 1994, weighted shares were 4,509,000 and
4,376,000, respectively.
<PAGE>
5
ITEM 2 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
Business Environment
The defense industry continues to experience numerous
mergers and consolidations of companies doing business with
the Federal Government, and this trend is expected to
continue for the immediate future. In addition, the Federal
Government continues to decrease and scrutinize its spending
in the high technology and defense areas. As a result,
competition for available contracts in the Company's
business areas is intense. In response, the Company has
significantly reduced its current and long-term liabilities,
reduced its indirect costs, thereby reducing its indirect overhead rates, and
focused its primary marketing efforts in areas where it has
been the most successful. The Company will continue to
pursue this strategy during fiscal year 1996 with increased
competitiveness as its primary goal.
Reduction in the Department of Defense budget, continued
Congressional and regulatory oversight of the Government
procurement process, increased competition within the
Company's traditional market niches, and the current
Government procurement policy to award contracts based
primarily on price and not exclusively on technical
capabilities are all factors which may have a material
effect on the Company's future operating revenues and profit
margins. The Government's decisions of whether to exercise
options presently held by the Company under existing
contracts may also have an impact on the Company. These
trends may result in delays in previously anticipated
contracts or the loss of anticipated business to
competitors. As a result, the reported financial
information may not necessarily be indicative of the
Company's future operating results or financial condition.
Significant Event
The Company had a $12.8 million contract with Advanced
Medical Management Systems, Inc. (AMMS) for the production
and exclusive worldwide distribution of its ImagClear(TM)
medical digitizers. On July 17, 1995, the Company informed
AMMS that they had 90 days to cure their delinquent status
in paying invoices or they would be in default of the
contract. AMMS failed to cure their delinquent status
within the specified time period and was terminated for
default by DBA. The Company is preceeding with plans to
either replace AMMS with another reseller or bring the
digitizers to market on its own.
Results of Operations
During the three-month period ended September 30, 1995, DBA
recorded revenues of $4,900,000, down $2,820,000 from the
$7,720,000 recorded in the comparable three-month period in
the prior fiscal year. The decrease in revenues was
primarily attributable to lower pass through of
material costs on certain government contracts. Operating
income was $233,000 during the current three-month period,
down $209,000 from $442,000 in the comparable period in the
prior fiscal year. The current quarter's operating margin
was 4.8% as compared to the operating margin of 5.7% in the
prior year's comparable quarter. The slight decrease in
operating margin was attributable to indirect cost accruals
and other minor fluctuations in indirect expense
recognition.
During the three-month period ending September 30, 1995, the
Company recorded new business bookings of $4,235,000 as
compared to $11,430,000 in the prior year. As a result, the
backlog at September 30, 1995 was approximately $16,200,000,
down $700,000 as compared to the June 30, 1995 balance of
approximately $16,900,000. An order is entered into backlog
<PAGE>
6
only when the Company receives a definite commitment from a
customer. The decrease in bookings from the first quarter
of the prior year is attributable to certain anticipated
fiscal year 1996 bookings occurring in the second quarter
instead of the first quarter as they have occurred in the
past. The Company expects such timing differences in new
business bookings for the current fiscal year will reverse
throughout the year, and that overall, bookings will show a
slight increase.
Interest expense during the current period was $41,000 as
compared to $57,000 recorded in the comparable quarter in
the prior fiscal year. The reduction in interest was
attributable to pay down of the Company's long term debt
during fiscal year 1995.
The Company currently has a net operating loss carryforward
available for federal tax purposes. The benefit of the tax
loss carryforward will be recorded when realized. The
Company accrues a provision for state income taxes as income
is recognized based on the current prevailing state tax
rates.
As a result of the above factors, net income was $259,000 in
the current period as compared to $387,000 in the same
period of the prior fiscal year. Fully diluted earnings per
share were $.06 for the three months ending September 30,
1995 versus $.09 recorded in the comparable quarter in the
prior fiscal year.
Liquidity and Capital Resources
At September 30, 1995, the Company had working capital of
approximately $16,366,000, up $368,000 or 2.3%, when
compared to the $15,998,000 as of June 30, 1995. Long term
debt was $1,926,000 at September 30, 1995, unchanged from
June 30, 1995. Accounts receivable-net decreased $977,000
from $4,919,000 at June 30, 1995 to $3,942,000 at September
30, 1995 due to efficient collection of outstanding trade
receivables and aggressive pursuit of "past due" accounts.
Costs and estimated earnings in excess of billings on
uncompleted contracts decreased from $4,164,000 at June 30,
1995 to $3,954,000 at September 30, 1995 as a result of
progress payment type billings and other more favorably
negotiated billing terms on certain contracts.
The Company has a $4,000,000 unsecured line of credit with a
bank which expires January 31, 1996. Amounts drawn on this
line of credit accrue interest at either the bank's prime
rate or the banks LIBOR plus 2.5% as selected by the
Company upon the utilization of any portion of the line of
credit. The Company had no borrowings against the line of
credit at September 30, 1995.
During the period ending September 30, 1995, the Company
recognized additions to capital equipment of approximately
$137,000. The Company believes capital requirements for
fiscal 1996 can be internally generated from working capital
or lease financing arrangements.
PART II -- OTHER INFORMATION
ITEM 1 -- LEGAL PROCEEDINGS
From time to time, as is normal with respect to the nature
and kind of business in which DBA is engaged, various
claims, charges and litigation are asserted or commenced
against DBA arising from or related to product liability,
patent, breach or warranty, contractual relations or
employee relations. The amounts claimed in such litigation
may be substantial but may not bear any reasonable
relationship to the merits of the claim or the extent of any
real risk of court awards. In the opinion of management,
<PAGE>
7
final judgments, if any, which might be rendered against DBA
in potential or pending litigation, would no have a material
adverse effect on its assets or business.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The exhibit index filed with this report
is on page 9.
(b) Reports on Form 8-K - none.
Pursuant to the requirements of the Securities and Exchange
Act of 1934, the Registrant has duly caused this Report to
be signed on its behalf by the undersigned, thereto duly
authorized.
DBA SYSTEMS, INC.
Date: November 14, 1995 By: John L. Slack
_____________
John L. Slack
Chairman of the
Board, President,
Treasurer, Acting
and Chief Executive Officer
Date: November 14, 1995 By: Timothy L. Stull
________________
Timothy L. Stull
Corporate Controller
DBA SYSTEMS, INC.
EXHIBIT INDEX
Page No.
Exhibit 11 - Computation of earnings per share 10
<PAGE>
9
EXHIBIT 11
DBA SYSTEMS, INC.
COMPUTATION OF EARNINGS PER SHARE
(in thousands, except per share information)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ending Sept. 30,
1995 1994
<S> <C> <C>
Net income (A) $259 $387
Weighted average shares outstanding 4,434 4,355
Incremental shares - stock options 75 21
Subtotal (B) 4,509 4,376
Incremental shares - stock options
Total (C) 4,509 4,376
Net earnings per common and common
equivalent share (A/B) $.06 $.09
Net earnings per common share, assuming
full dilution (A/C) $.06 $.09
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> SEP-30-1995
<CASH> 9,976
<SECURITIES> 0
<RECEIVABLES> 3,942
<ALLOWANCES> 100
<INVENTORY> 2,304
<CURRENT-ASSETS> 20,695
<PP&E> 21,827
<DEPRECIATION> 10,383
<TOTAL-ASSETS> 32,927
<CURRENT-LIABILITIES> 4,329
<BONDS> 1,926
<COMMON> 551
0
0
<OTHER-SE> 26,121
<TOTAL-LIABILITY-AND-EQUITY> 32,927
<SALES> 4,900
<TOTAL-REVENUES> 5,016
<CGS> 0
<TOTAL-COSTS> 4,667
<OTHER-EXPENSES> 74
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 41
<INCOME-PRETAX> 275
<INCOME-TAX> 16
<INCOME-CONTINUING> 259
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 259
<EPS-PRIMARY> .06
<EPS-DILUTED> .06
</TABLE>
