<PAGE>
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 March 31, 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 59-0996417
(State or other jurisdiction of (I.R.S. Employer )
incorporation or organization) 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, 4,413,860 shares outstanding as
of March 31, 1995.
Total number of sequentially numbered pages: 10
The Exhibit index appears on sequential page 9
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PART I -- FINANCIAL INFORMATION
ITEM 1 -- FINANCIAL STATEMENTS
DBA SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share information)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31 March 3
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenues $10,585 $5,249 $23,819 $18,587
Costs and expenses 10,014 5,102 22,433 17,809
Operating income 571 147 1,386 778
Other income (expense):
Interest income 74 13 190 60
Interest expense (48) (57) (158) (297)
Other expense - net (47) (37) (184) (88)
Total other expense - net (21) (81) (152) (325)
Income before taxes 550 66 1,234 453
Less provision for income taxes 20 1 42 9
NET INCOME $ 530 $ 65 $1,192 $ 444
Earnings per common
and common equivalent share $ .12 $ .01 $ .27 $ .11
Earnings per common
share assuming full dilution $ .12 $ .01 $ .27 $ .11
Primary weighted shares outstanding 4,524 4,444 4,446 4,152
Fully diluted shares outstanding 4,524 4,543 4,450 4,365
</TABLE>
See accompanying notes.
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DBA SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
March 31, 1995 June 30, 1994
(Unaudited) (Audited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 4,094 $ 3,651
Accounts receivable - net 5,941 3,486
Costs and estimated earnings in excess of billings on
uncompleted contracts 6,724 5,399
Inventory 2,537 2,525
Other current assets 371 1,027
Total Current Assets 19,667 16,088
Property:
Cost 21,622 21,738
Less accumulated depreciation
and amortization 9,922 9,648
Property - net 11,700 12,090
Other Assets:
Cost in excess of value of net assets of
businesses acquired 242 252
Other assets 692 631
Total Other Assets 934 883
Total Assets $32,301 $29,061
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 191
Accounts payable $ 2,054 183
Accrued expenses 1,478 1,266
Billings in excess of costs and estimated earnings on
uncompleted contracts 362 123
Estimated losses on uncompleted contracts 393 45
Other current liabilities 103 81
Total Current Liabilities 4,390 1,889
Long-term Debt 1,926 2,540
Stockholders' Equity:
Common stock 551 545
Paid-in capital 24,300 24,129
Retained earnings 20,458 19,267
Total 45,309 43,941
Treasury stock (19,324) (19,309)
Stockholders' Equity - Net 25,985 24,632
Total Liabilities and Stockholders' Equity $32,301 $29,061
</TABLE>
See accompanying notes.
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DBA SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net income $1,192 $ 444
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Depreciation and amortization 868 943
Gain on sale of assets 2 11
Decrease (increase) in current assets:
Accounts receivable (2,455) 529
Costs and estimated earnings in excess of billings on
uncompleted contracts (1,325) 3,066
Inventory (12) (924)
Other current assets 656 (471)
Increase (decrease) in current liabilities:
Accounts payable 1,871 (817)
Accrued expenses 211 150
Billings in excess of costs and estimated earnings on
uncompleted contracts 239 103
Estimated losses on uncompleted contracts 349 (285)
Other current liabilities 21 (36)
Other - net 16 181
Net cash provided by operating activities 1,633 2,894
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (386) (1,451)
Proceeds from sale of property 1 6
Net cash used in investing activities (385) (1,445)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of long-term debt (805) (1,132)
Net cash used in financing activities (805) (1,132)
Net increase in cash during the period 443 317
Cash and cash equivalents at beginning of period 3,651 4,091
Cash and cash equivalents at end of period $4,094 $4,408
</TABLE>
See accompanying notes.
<PAGE>
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
interim periods presented. 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, 1994, 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) Inventories consist of the following (in thousands):
<TABLE>
<CAPTION>
March 31, 1995 June 30, 1994
(Unaudited) (Audited)
<S> <C> <C>
Finished goods $1,551 $1,504
Work in progress 901 848
Raw material 85 173
Inventory $2,537 $2,525
</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 nine-month periods ending March 31, 1995
and 1994, weighted average shares were 4,446,000 and 4,152,000,
respectively. Weighted average shares for the three-month periods ending
March 31, 1995 and 1994 were 4,524,000 and 4,444,000, respectively.
Net earnings per share, assuming full dilution, are computed based on the
assumption that issuable shares under the Company's 8 1/4% Convertible
Debentures were converted at the beginning of the period. Net earnings
are adjusted for the recorded interest expense and amortization of debt
issue costs, net of the corresponding tax effect. For the nine-month
periods ending March 31, 1995 and 1994, weighted average shares were
4,450,000 and 4,365,000, respectively. Weighted average shares for the
three-month periods ending March 31, 1995 and 1994 were 4,524,000 and
4,543,000, respectively.
<PAGE>
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 Government, and this
trend is expected to continue for the immediate future. As a result,
competition for available contracts is increasing. The Company must,
therefore, keep abreast of industry changes and selectively target
opportunities where the probabilities of success are the greatest.
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.
The Company has embarked on a business strategy to aggressively control
costs, effectively manage its programs and prudently marshal resources while
identifying and pursuing those business opportunities which were compatible
with its technological, financial and personnel resources. As a result of
this program, the Company has significantly reduced its current and
long-term liabilities, reduced its indirect costs 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 1995 with increased
competitiveness as its primary goal.
RESULTS OF OPERATIONS
During the three-month period ending March 31, 1995, DBA recorded revenues of
$10,585,000, up $5,336,000 from the $5,249,000 recorded in the comparable
three-month period in the prior fiscal year. The increase in revenues was
primarily attributable to schedule acceleration and increased contract
values on certain government contracts. Operating income of $571,000 or a
margin of 5.4% was recorded during the three-month period ending March 31,
1995 as compared to $147,000 or a margin of 2.8% recorded in the
- - - - - - -month period as compared to $81,000 in the prior year's comparable quarter.
The reduction was attributable to a decrease in expenses as a result of the
Company reducing its debt position and favorable returns on invested funds.
The reduction in the Company's total debt from approximately $2,786,000 at
March 31, 1994 to approximately $1,926,000 at March 31, 1995 is attributed
to redemption of the Company's Industrial Development Revenue Bonds on
February 10, 1995 for $707,243.
The Company currently has a net operating loss carryforward available. The
benefit of the tax loss carryforward is recorded as realized.
As a result of the above factors, net income was $530,000 in the current
quarter ended March 31, 1995, up $465,000 as compared to $65,000 in the
same period of the prior fiscal year. Fully diluted earnings per share were
$.12 for the three months ended March 31, 1995 as compared to $.01 for the
three months ended March 31, 1994.
<PAGE>
Revenues for the nine-month period ended March 31, 1995 were $23,819,000, up
$5,232,000 or 28.1%, from $18,587,000 reported in the comparable period in
the prior fiscal year. The increase in revenues was attributable to
schedule acceleration and increased contract values on certain government
contracts. Operating income for the nine-month period ended March 31, 1995,
was $1,386,000 up $608,000 or 78.1% as compared to $778,000 reported in the
prior year's nine-month period as a result of the Company's successful indirect
cost control efforts.
During the nine-month period ended March 31, 1995 the Company recorded
approximately $20,800,000 in new business bookings as compared to $26,700,000
during the nine-month period ending March 31, 1994. As a result, the backlog
at March 31, 1995 was approximately $20,500,000 when compared to the
June 30,1994 balance of approximately $22,700,000. An order is entered into
backlog only when the Company receives a definite commitment from a customer.
Total other expenses were $152,000 during the current nine-month period as
compared to $325,000 in the prior year's comparable period. The reduction
was attributable to a decrease in expenses as a result of the Company
reducing its debt position and favorable returns on invested funds.
In March, 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of." The Company
owns assets subject to the provisions of the statement which had combined net
book value $11,700,000 as of March 31, 1995. Statement of Financial
Accounting Standards No. 121 is effective for years beginning after
December 15, 1995; and accordingly, the Company intends to adopt the provisions
of the Statement no later than the fiscal year ending June 30, 1997.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1995, the Company had working capital of approximately
$15,277,000, up $1,078,000 or 7.6% when compared to the $14,199,000 as of
June 30, 1994. Long term debt was $1,926,000 at March 31, 1995, down 24.2%
as compared to $2,540,000 at June 30, 1994. Accounts receivable-net
increased $2,455,000 from $3,486,000 at June 30, 1994 to $5,941,000 at
March 31, 1995. Costs and estimated earnings in excess of billings on
uncompleted contracts increased from $5,399,000 at June 30, 1994 to
$6,724,000 at March 31, 1995 due to work in process on commercial contracts.
The reduction in the Company's total debt from approximately $2,786,000 at
March 31, 1994 to approximately $1,926,000 at March 31, 1995, was attributed
to redemption of the Industrial Development Revenue Bonds and principal
payments on other notes payable.
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 bank's 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
March 31, 1995.
In connection with the sale of the Company's commercial operations to an
unrelated entity in a prior year, (the Buyer), the Company was named as a
guarantor of a mortgage assumed by the Buyer. The mortgage was
collateralized by a building which the Buyer sold for less than the mortgage
value during October 1994. In exchange for settlement of the mortgage, the
Company received a promissory note from the Buyer in the amount of $250,000,
plus interest at the prime lending rate plus 1.5%. The note is payable
inning on March 31, 1995, and concluding on December 31, 1997.
<PAGE>
During the nine-month period ending March 31, 1995, the Company incurred
capital equipment additions of approximately $371,000. The Company believes
any further capital requirements for fiscal 1995 can be internally generated
or financed through lease 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, final judgments, if
any, which might be rendered against DBA in potential or pending litigation,
would not have a material adverse effect on its assets or business.
ITEM 6. REPORTS ON FORM-8K
(a) The exhibit index filed with this report is on page 10.
(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 thereunto duly authorized.
DBA SYSTEMS, INC.
(Registrant)
John L. Slack
Date: May 15, 1995 By: (signature)
John L. Slack
Chairman of the Board, President
Treasurer, Acting
and Chief Executive Officer
Timothy L. Stull
Date: May 8, 1995 By: (signature)
Timothy L. Stull
Controller
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DBA SYSTEMS, INC.
EXHIBIT INDEX
Page No.
Exhibit 11 - Computation of earnings per share 10
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EXHIBIT 11
DBA SYSTEMS, INC.
COMPUTATION OF EARNINGS PER SHARE
(in thousands, except per share information)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31 March 31
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net income (A) $530 $ 65 $1,192 $444
Interest on convertible debentures
- - - - - - -net of tax effect 40 161
Amortization of registration costs
incurred in the issuance of
convertible debentures-net of
tax effect 1 3
Adjusted net income (B) $530 $106 $1,192 $608
Weighted average shares outstanding 4,405 4,322 4,374 4,063
Incremental shares - stock options 119 122 72 89
Subtotal (C) 4,524 4,444 4,446 4,152
Incremental shares - stock options 4 5
Assumed conversion of convertible
debentures 99 208
Total (D) 4,524 4,543 4,450 4,365
Net earnings per common and common
equivalent share (A/C) $.12 $.01 $.27 $.11
Net earnings per common share,
assuming full dilution (B/D) $.12 $.01 $.27 $.11
</TABLE>
