UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934[FEE REQUIRED]
For the fiscal year ended June 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 2-30257
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)
Securities registered pursuant to Section 12(b) or the Act:
Title of each class DBA Systems, Inc., Common Stock, $.10 par value
Name of each exchange on which registered NASDAQ
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 by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in
Part III of the Form 10-K or any amendment to this Form 10-K [ ]
As of September 1, 1995, 4,434,475 shares of the Registrant's Common Stock,
excluding stock held in Treasury, were issued and outstanding, and the
aggregate market value of such shares held by nonaffiliates of the Registrant
on such date was approximately $24,760,000 (based on the last price on that
date of $5.75 per share).
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents if incorporated by reference and
the Part of the Form 10-K into which the document is incorporated: Proxy
Statement, filed within 120 days - Part III, Form S-2 Registration Statement,
filed September 25, 1985 (including Amendment Nos. 1 and 2).
Total number of sequentially numbered pages: 39
The Exhibit index appears on sequential page 37
<PAGE>1
PART 1
ITEM 1
General Description of Business
The Company was founded in 1963 to provide near earth tracking
analysis of spacecraft for NASA. Over the ensuing years, DBA has
been predominantly involved in providing hardware and software
systems for applications in the military defense industry. In April
1984, the Company temporarily broadened its base of business into the
commercial graphic arts, remote sensing and medical imaging markets.
With the sale of these commercial businesses during fiscal year 1988,
DBA re-focused on its traditional capabilities and markets. DBA is
now principally engaged in the defense mapping, charting & geodesy
and electronics business and has re-entered the medical imaging and
commercial imaging markets. DBA provides specialized products and
services in two major areas of concentration: Imaging Systems and
Electro-Optical Systems.
Imaging Systems' scope of activity includes the acquisition of image
data, the processing, manipulation and exploitation of that data, its
dissemination in either electronic or hard copy form, and the
development of derivative products from imagery. Applications of
DBA's imaging technologies include development and support of
precise mapping and targeting systems, development and support of
imagery intelligence systems, development of geographic information
systems and their data bases, and development of products to convert
images from the hard copy to digital form and output digital images in
hard copy form.
Electro-Optical Systems encompasses DBA's design, development and
manufacture of electronic products and systems. This equipment is
primarily used in the test and evaluation of weapons systems and are
employed in both test and training environments. Specific products
include automatic video trackers for use in precision test range
applications and tactical fire control systems and infrared sources used
in the calibration of infrared images and heat sinking missiles. Systems
include range systems for crew and system training against high fidelity
replications of air defense threats in simulations as well as test range
command and control systems for evaluation of crew and system
effectiveness.
Products designed and developed for production are manufactured at
the Melbourne manufacturing facility and include video trackers, IR test
sets, high resolution image scanners, telemetry systems and missile
simulators.
The following table reflects the revenues recorded by the above areas of
concentration during the prior three fiscal years:
<TABLE>
<CAPTION>
PERCENT OF TOTAL REVENUES
Fiscal Year Ended June 30,
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Imaging Systems 68% 55% 52%
Electro-Optical Systems 32% 45% 48%
---- ---- ----
Total 100% 100% 100%
==== ==== ====
</TABLE>
<PAGE>2
Imaging Systems
The Company continues to face the challenge of increased competition
for declining defense dollars in its traditional business areas.
Consequently, we remain vigilant for opportunities to expand our
product and service lines and markets. Our continuing goal of
participating in larger programs has caused us to intensify our efforts to
develop strategic alliances with major firms that can utilize DBA's
leading-edge imaging technology to complement their resources and
strengthen their overall competitive position. Additionally, the
Company has continued its research and development efforts directed
toward new digital-imaging technologies, including the development of
low-cost, high resolution digitizers; data compression techniques, and
other technologies targeted to government and commercial markets.
Product Enhancements
During fiscal year 1995, the Company's continuing research and
development activities enabled us to effect enhancements in our medical
scanning product line These enhancements accrued benefits to our
customers in terms of resolution, greyscale discrimination and
processing speeds. We continue to work very closely with medical
universities and research laboratories in order to continue to gain
operational experience thereby enabling us to better understand and
respond to our customers needs. DBA received authorization to begin
marketing our medical scanners within the United States and has met
the electromagnetic interference (EMI) standards of the Federal
Communications Commission. In addition, DBA has achieved those
manufacturing standards necessary to meet the requirements of the
FDA Good Manufacturing Practices (GMP) program. Moreover, we
were pleased to receive a favorable evaluation of our medical scanner
by the UK Department of Health Facility for the Assessment of X-ray
Imaging at Leeds University.
The merging of certain inventory items purchased from DuPont NDT
Systems, Inc. with DBA's proprietary imaging technology, coupled
with research and development activities, enabled us to produce and
effect the installation of two very successful nondestructive testing
systems during the year. Our customers' enthusiastic acceptance of
these systems has resulted in the identification of prospects for
additional installations in the next fiscal year.
Proprietary Imaging
This business area originated in the late 1960's and early 1970's from
research and development efforts of the Company which were
associated with the exploitation of large area photographic imagery.
These activities led to several multimillion dollar contract awards.
DBA's expertise resides in the development of the mathematical
techniques, systems design and software used to analyze imagery in
support of creating large area, geometrically-precise data bases. These
programs typically involve one-of-a-kind systems comprised of DBA-
developed scientific applications software and mainframe or super-mini
computer hardware configurations. Development extends over several
years with DBA proceeding through various formal customer design
reviews and factory and final acceptance reviews. Subsequent to
delivery, DBA often provides operations and maintenance support
throughout the system life cycle.
Tactical Imagery Exploitation
During fiscal year 1995, the Company continued work on a $27.2
million contract to produce three mobile, Modernized Imagery
Exploitation Systems (MIES) for the U.S. Army. These systems are
enhanced versions of a DBA-developed tactical Imagery Exploitation
System. All three of the MIES were produced and delivered by the end
of the fiscal year. All were enthusiastically received by our customer.
DBA is also integrating a state-of-the-art Redundant Array of
Inexpensive Disks (RAID) system into each MIES which allows direct
and, therefore, quicker access to stored images. This system upgrade
may also provide a future capability to add workstations to the MIES.
In addition, DBA produced and delivered a unique Power Control and
Distribution Facility (PCDF) and commenced production of a second
unit. The PCDF is a ruggedized, transportable and completely self-
contained power conditioning system which converts and conditions
electrical power from the widest possible variations in power sources.
This facility is uniquely valuable in providing power to the MIES and
<PAGE>3
an accompanying complex of other mobile vans at worldwide crisis
locations. Under a separate $5.4 million contract, DBA provides
operations and maintenance support to all three MIES sites.
System Engineering and Development
System Engineering and Development (SED) Division has a thirty year
record of technological leadership in the development of electro-optical
systems designed to provide real-time tracking and evaluation of
complex military systems. The business area has evolved and
expanded to encompass advanced test, threat simulation and training
instrumentation for air, space, naval and ground test range
environments. These systems provide evaluation of both crew and
weapons systems effectiveness.
The Company's threat simulation activities focus on the development of
replicas of foreign weapon systems that threaten all branches of the
U.S. military forces. DBA's air defense weapon simulators give U.S.
pilots the opportunity to engage realistic threats during training and
operational exercises. This type of training results in increased
survivability and fewer casualties.
SED Division continues to perform very successfully, both as the
prime contractor and as a subcontractor, in the provision of Infrared
Target Simulators (IRTS) to both the U.S. Air Force and U.S. Navy.
The IRTS provides simulated infrared targets for operational testing of
the Maverick, GBU-15 and AGM-130 missiles. In addition DBA
technology from the IRTS program has been used in support of the
SLAM and Harpoon programs and to develop TV, laser and other
simulators for other U.S. and foreign consumers. The progression of
target simulators and missiles over the past 15 years has resulted in
contracts with value in excess of $21 million to customers world wide.
Moreover, current prospects for sales in the coming fiscal year are
encouraging.
DBA's international business in the SED area has partially offset the
impact of the continuing decline in U.S. defense spending.
Anticipating this change of market emphasis over two years ago, the
Company has placed increased focus on the development of export
business opportunities and the creation of products for the commercial
market in the SED area.
Electro-Optical Tracking Systems
System Engineering and Development produces Electro-Optical
Tracking Systems for use by U.S. and foreign test ranges. These
systems are mobile, turn-key range units designed to support both
developmental and operational weapon system testing requirements.
Capable of infrared and visual tracking, annotation and recording, these
Electro-Optical Tracking systems provide manual and automatic
tracking of selected targets, including aircraft, rockets, missiles, and
land vehicles. Test data is recorded locally at the system control
console and also transmitted in real-time to remote test control facilities
for display and recording.
DBA continues to deliver to the Kollmorgen Corporation automatic
video trackers for the U.S. Navy's Optical Director Program. These
sophisticated autotracker systems, which employ state-of-the-art
correlation and target tracking algorithms, are being installed on guided
missile destroyers. They provide passive target positioning to fire
control computers to allow precision pointing of the ship's guns
systems without alerting the enemy.
Aircraft Gyroscopes
The System Engineering and Development Division develops and
produces gyroscopes used to instrument and stabilize a variety of U.S.
manufactured aircraft. Currently in production is a vertical
displacement gyroscope for U.S. Army Black Hawk helicopters. More
than 2,000 of these gyroscopes have been produced and delivered to
date. DBA gyroscopes are used on aircraft manufactured by Bell
(Iroquois), McDonnell Douglas (Apache) and Sikorsky (Black Hawk,
Sea Hawk).
<PAGE>4
Air Defense Autotrackers
System Engineering and Development Division has enjoyed enviable
success in developing and producing the Automatic Video Tracker to
Boeing for the U.S. Army's Pedestal Mounted Stinger Air Defense
System, also known as the Avenger program. SED efforts on this
program caused DBA to be nominated for and selected to receive the
prestigious award as the Small Business Administration Subcontractor
of the Year Award for Region IV.
The Boeing built Avenger is the U.S. Army's line-of-sight rear area
defense system. It carries eight Stinger missiles ready for rapid firing
from a gyroscope stabilized turret. The Army's "HUMMER" is the
primary Avenger Platform; however, it is also designed to operate in a
stand-alone configuration. The Avenger was developed using
principally off-the-shelf components existing in the Army's inventory,
such as the DBA Autotracker. The U.S. Congress has pointed to the
Avenger as an example of a cost effective system procurement by the
virtue of its off-the-shelf, non-developmental nature, thus saving the
government millions of development dollars. DBA continues to
produce video trackers for Avenger systems for employment by U.S.
military forces. Moreover, prospects for foreign military sales (FMS)
over the next two fiscal years appear to be positive.
Medical Autotracker
Another application of the autotracker which DBA views as having
great potential has evolved from SED Division's integration of
autotracker technology into the personal computer (PC) environment.
We view this technology as offering the opportunity for unique
applications in clinical and research activities in the diagnosis and
evaluation of eye disorders, neurological diseases, impairment due to
drug and alcohol affects and drowsiness detection in critical activities.
A specific application of this latter technology is a Small Business
Innovative Research contract awarded to DBA by the Department of
Transportation to develop an automatic video reduction system to
support analysis of automobile lateral positions within prescribed lane
markers in support of detecting impaired vehicle operators.
Customers and Suppliers
During the fiscal years which ended June 30, 1995, 1994 and 1993,
approximately 88%, 92% and 92% respectively, of the Company's
revenues were derived from contracts with agencies of the U.S.
Government and from subcontracts with Government prime
contractors. The Company performs work under fixed-price, time and
material and cost-plus-fee contracts. Contracts performed for the
Government are generally terminable at the will of the Government or
subject to re-negotiation at the election of the Government. Future
revenues and income of the Company could be materially affected by
changes in Government procurement policies or a reduction in
Government expenditures for services of the type provided by the
Company. The Company is not dependent on any one supplier in
connection with the development or manufacture of its products and
services. For the fiscal year which ended June 30, 1995, less than
15% of the Company's revenues were dependent upon sole source
suppliers.
Research and Development
DBA's business generally involves the application of existing
technology to solve specific customer problems. As a result, most of
DBA's research and development efforts emphasize applied research
rather than pure research into new technological frontiers.
Accordingly, research and development activities selected by DBA's
management are a major factor in securing a continuous flow of
business. It is critical that DBA stays abreast of technology relating to
its products and services. Additionally, a substantial amount of DBA's
research and development activity occurs in connection with specific
orders placed by its Government customers.
<PAGE>5
The following table reflects the independent research and development
funds not specifically related to particular contracts expended by the
Company over the last three fiscal years:
<TABLE>
<CAPTION>
Fiscal Year Ended June 30,
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Total Research & Development $331,000 $206,000 $489,000
======== ======== ========
</TABLE>
Backlog
The Company's backlog of unfilled orders at June 30, 1995 was approximately
$16.9 million as compared to $22.7 million at June 30, 1994. Approximately
$16.3 million of the June 30, 1995 backlog is expected to be converted into
revenues during the fiscal year ending June 30, 1996. An order is entered
into backlog only when the Company receives a definite commitment from a
customer.
The Company's backlog is typically subject to a number of contingencies
due to various factors. Such factors include funding constraints,
cancellation or modification of Government programs and changes in
allocation of work between prime and subcontractors. Therefore, the amount
of backlog should not be viewed as the sole determinant of future contract
revenues. Consequently, the dollar amount of the backlog is not necessarily
indicative of the future revenue of the Company.
Competition
DBA experiences substantial competition in its markets and believes its
principal competitive advantages to be its reputation and experience in
its selected technical areas, creativity in applying existing technology to
new applications, technical assistance to customers, price and adherence to
delivery schedules. DBA's systems address a market of high-end applications
in which there are a limited number of competitors. Much of the Company's
business requires highly skilled and experienced technical personnel with
high level U.S. Government security clearances. The Company believes that the
technical expertise and stability of its staff have been a significant factor in
the development of DBA's business and its ability to compete to date. As
the Department of Defense experiences overall budget restraints, DBA
expects the competition for its products and services to significantly
intensify. As a result, there is no assurance the Company can maintain
its current revenue volume. If sufficient new business cannot be
procured, the Company may be forced to downsize to maintain a work
force commensurate with its business size.
Divisions of certain large industrial concerns with financial resources
and facilities substantially greater than those of DBA, such as E-
Systems, Loral Aerospace, General Dynamics, Intergraph, Lockheed,
TRW, Westinghouse and Contraves, are active in fields similar to those
of the Company. DBA also experiences competition from other
specialized firms, such as Autometrics, SAIC, Synectics and Metric.
DBA's future success will depend upon, among other things, its ability
to withstand competition from larger companies, to obtain and retain
competent personnel to successfully accomplish its obligations under
its various contracts and to productively extend its technological
expertise to new applications. All of these factors are subject to
uncertainty.
Patents
The Company holds, and is also licensed, under a number of U.S. and
foreign product and process patents which extend through 2006 and
has filed applications for other such patents that are pending. The
Company follows the practice of obtaining patents on new
developments whenever advisable. While the Company considers that
in the aggregate its patents and licenses are valuable, it does not believe
<PAGE>6
that its business is materially dependent on its patents or licenses or any
group of them. In DBA's opinion, engineering and production skills
and experience are more important to its market position than are
patents or licenses.
Employees
As of June 30, 1995, the Company had approximately 200 full-time
employees. The Company is not subject to any collective bargaining
agreements with its employees.
ITEM 2 PROPERTIES
DBA Systems, Inc. is headquartered in Melbourne, Florida. The
Corporate offices occupy approximately 3,300 square feet in a 64,000
square foot building located at 1200 South Woody Burke Road in
Melbourne.
The leased facilities are occupied under leases for terms ranging from 1
to 40 years, a majority of which can be terminated or renewed at no
longer than five-year intervals at DBA's option. DBA considers its
facilities to be suitable and adequate for the purposes of which they are
used. Following are details of the properties occupied by DBA.
<TABLE>
<CAPTION>
Location Title Size Use
-------- ----- ---- ---
<S> <C> <C> <C>
1200 S. Woody Burke Rd. Land Lease 64,000 sq. ft. Engineering, office
Melbourne, FL Improvements space & assembly
Owned area
Redwood Plaza 1 Leased 20,060 sq. ft. Office space
10560 Arrowhead Dr.
Fairfax, VA
2931 Poinciana Blvd. Owned 141,500 sq. ft. Manufacturing and
Kissimmee, FL Engineering office
space
1101-1103 W. Hibiscus Blvd.Owned 27,500 sq. ft. Office space &
Melbourne, FL retail space
</TABLE>
ITEM 3. 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.
The Company maintains officers' and directors' liability insurance
which insures individual officers and directors of the Company against
certain claims such as those alleged in the above lawsuits, as well as
attorney's fees and related expenses incurred in connection with the
defense of such claims.
<PAGE>7
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the
fourth quarter of the fiscal year through solicitation of proxies or
otherwise.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON
STOCK AND RELATED SECURITY
A. DBA common stock, par value $.10, is currently traded on
NASDAQ/NMS. The high and low closing price for each quarterly
period during the last two fiscal years is as follows:
<TABLE>
<CAPTION>
Lowest Highest
------ -------
<S> <C> <C>
1st Quarter FY95 3 7/8 4 3/16
2nd Quarter FY95 3 7/8 8
3rd Quarter FY95 6 3/8 9 3/8
4th Quarter FY95 6 3/4 8
1st Quarter FY94 3 1/2 4
2nd Quarter FY94 3 1/2 7 1/8
3rd Quarter FY94 5 1/2 7 1/4
4th Quarter FY94 4 1/8 6 1/8
</TABLE>
B. The approximate number of record holders of DBA Systems,
Inc. common stock as of June 30, 1995 and 1994 was 695 and 805,
respectively.
C. As of June 30, 1995, DBA Systems, Inc. has not declared nor
paid dividends. Although the Company intends to continue to invest
any future earnings in its business, it may determine at some future date
the payment of cash dividends would be desirable. The payment of
such dividends would depend, among other things, upon the earnings
and financial condition of the Company.
D. Convertible Subordinated Debentures
During November, 1985, DBA sold $34,000,000 of Subordinated Convertible
Debentures, due November 1, 2010 (the "Old Debentures"), which generated
proceeds of approximately $33,000,000 net of closing costs. The debentures pay
interest semi-annually at an interest rate of 8.25% and are convertible into
DBA common stock at $19.50 per share, subject to adjustments in certain
events. As of June 30, 1995, $1,926,000 of the Old Debentures were
outstanding.
On April 30, 1991, the Company completed an exchange offer
for its convertible subordinated debentures. The exchange offer,
announced on March 12, 1991 and amended on April 16, 1991,
permitted holders of the Old Debentures to exchange each $1,000
principal amount of Old Debentures for 9.50% Convertible
Subordinated Debentures due November 1, 2003 with a principal
amount of $500 (the "New Debentures"). The New Debentures are
initially convertible into 125 shares of the Company's common stock
for each $500 principal amount, which represents a conversion price of
$4.00 per share.
On July 17, 1992, the Company completed an offering (the
"Offer") to issue and deliver to each holder of its 9.50% Convertible
Subordinated Debentures due 2003 an additional five (5) shares of the
Company's common stock for each $1,000 principal amount of its
New Debentures tendered. Approximately $3,956,000 or 75% of the
<PAGE>8
New Debentures were tendered and accepted by the Company for
conversion. The Company issued approximately 1,010,000 shares of
its common stock as a result of the conversions.
On December 2, 1993, the Company called all of its outstanding 9.50%
Convertible Subordinated Debentures in the amount of $1,311,000 for
redemption. The Debentures were convertible into common stock of the
Company at a conversion price of $4.00 per share. Debentures not converted
into common stock were redeemed for $21,000 cash. Approximately $1,290,000
Debentures were submitted for conversion into 322,500 shares of the Company's
common stock.
Detailed information concerning the Old Debentures is
contained in the Company's Form S-2 Registration Statement filed with
the Securities & Exchange Commission (the "SEC") on September 25,
1985, as amended by Amendment No. 1 filed October 18, 1985, as
amended by Amendment No. 2 filed November 14, 1985. Detailed
information concerning the New Debentures is contained in the
Company's Form 13E-4 filed with the SEC on March 12, 1991, as
amended by Amendment No. 1 filed April 9, 1991, as amended by
Amendment No. 2 filed April 16, 1991, as amended by Amendment
No. 3 filed April 23, 1991, as amended by Amendment No. 4 filed
May 8, 1991. Detailed information concerning the Offer is contained in
the Company's Form 13E-4 filed with the SEC on June 22, 1992 as
amended by Amendment No. 1 filed on July 24, 1992. All of the
above documents are incorporated herein by reference.
ITEMS 6, 7 AND 8
The information called for by Items 6, 7 and 8, inclusive of Part II of
this form, is contained in the following sections of this Report at the
pages indicated below:
<TABLE>
<CAPTION>
Captions and Pages(s) of this Report
<S> <C> <C> <C>
ITEM 6 Selected Financial Data "Selected Financial Data" 15
ITEM 7 Management's Discussion and "Management's Discussion and
Analysis of Financial Condition Analysis" 15-19
and Results of Operations
ITEM 8 Financial Statements and DBA Systems, Inc. and Subsidiaries
Supplementary Data "Consolidated Financial Statements"20-34
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable
PART III
The information required to be set forth herein, Item 10, "Directors and
Executive Officers of the Registrant"; Item 11, "Executive
Compensation"; Item 12, "Security Ownership of Certain Beneficial
Owners and Management"; and Item 13, "Certain Relationships and
Related Transactions", is included in a definitive Proxy Statement
pursuant to Regulation 14A, which is incorporated herein by reference,
filed with the Securities & Exchange Commission not later than 120
days after close of the fiscal year ended June 30, 1995.
<PAGE>9
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT
SCHEDULES AND REPORTS ON FORM 8-K
A-1 Financial Statements
A list of the financial statements included herein is set forth in
the Index to Financial Statements, Schedules and Exhibits submitted as
a separate section of this Report.
A-2 Financial Statement Schedules
A list of financial statement schedules included herein is
contained in the accompanying Index to Financial Statements,
Schedules and Exhibits submitted as a separate section of this Report.
A-3 Exhibits required to be filed by Item 601(a) of Regulation S-K
are included as exhibits to this Report as follows:
3(i) Articles of Incorporation of the Registrant, as amended, are
included as an exhibit to this Report. (Incorporated by reference to
Registrant's 1985 Form 10-K.)
3(ii) By-Laws of the Registrant, as amended, are included as an
exhibit to this Report. (Incorporated by reference to Registrant's 1985
Form 10-K.)
10(a) Lease dated July 9, 1981, between the Registrant and City of
Melbourne Airport Authority. (Incorporated by reference to
Registrant's 1982 Form 10-K.)
10(b) Employee Retirement Plan and Trust. (Incorporated by
reference to the 1979 Definitive Proxy Statement of the Company.)
10(c) 1982 Employee Incentive Stock Option Plan (Incorporated by
reference to the 1982 Proxy Statement of the Company) as amended by
Amendment to the Plan. (Incorporated by reference to the 1983 Proxy
Statement of the Company.)
10(d) 1987 Directors' Stock Option Plan. (Incorporated by reference
to the 1987 Proxy Statement of the Company.)
10(e) Bonus agreement dated August 10, 1989 between DBA
Systems, Inc. and John L. Slack. (Incorporated by reference to the
Registrant's 1990 Form 10-K.)
10(f) Lease agreement executed on June 24, 1993 between the
registrant and the Equitable Life Assurance Society of the United
States.
10(g) 1992 Employee Incentive Stock Option Plan. (Incorporated by
reference to the 1992 Proxy Statement of the Company.)
10(h) 1993 Directors' Stock Option Plan. (Incorporated by reference
to the 1993 Proxy Statement of the Company.)
11 Computation of Earnings per Share.
21 Subsidiaries of the Registrant.
<PAGE>10
28(a) Form S-2 Registration Statement (Convertible Subordinated
Debenture Offering) filed with the SEC on September 25, 1985, as
amended by Amendment No. 1, filed October 18, 1985, as amended
by Amendment No. 2, filed November 14, 1985, all of which are
incorporated herein by reference.
28(b) Form S-8 Registration Statement (Employee Incentive Stock
Option Plan-1982, Directors' Stock Option Plan-1982, and Directors'
Stock Option Plan-1987) filed with the SEC on June 17, 1988 are
incorporated herein by reference.
28(c) Form 13E-4 filed with the SEC on March 12, 1991, as
amended by Amendment No. 1 filed April 9, 1991, as amended by
Amendment No. 2 filed April 16, 1991, as amended by Amendment
No. 3 filed April 23, 1991, as amended by Amendment No. 4 filed
May 8, 1991 is incorporated herein by reference.
28(d) Form 13E-4 filed with the SEC on June 22, 1992, as amended
by Amendment No. 1 filed on July 24, 1992, is incorporated herein by
reference.
28(e) Form S-8 Registration Statement (Employee Incentive Stock
Option Plan-1992, and Directors' Stock Option Plan-1993, filed with
the SEC on February 18, 1994 are incorporated herein by reference.
Registrant agrees to furnish the Commission, upon request, a copy of
each instrument with respect to issues of long-term debt. The principal
amount of any individual instrument, which has not been previously
filed, does not exceed ten percent of the total assets of the Registrant
and its subsidiaries on a consolidated basis.
B. Reports on Form 8-K
The Company had no filings on Form 8-K during the fourth
quarter of the fiscal year ending June 30, 1995.
<PAGE>11
Pursuant to the requirement of Section 13 or 15(d) 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.
DBA SYSTEMS, INC.
(Registrant)
DATED: September 22, 1995
By John L. Slack
---------------------------
(signature)
Chairman of the Board, President,
Treasurer, Acting, &
Chief Executive Officer
By Charles B. Robertson
---------------------------
(signature)
Vice President of Administration
Corporate Secretary
By Timothy L. Stull
---------------------------
(signature)
Corporate Controller
<PAGE>12
Pursuant to the requirement of the Securities Exchange Act of 1934,
this Report has been executed below by the following persons on
behalf of the Registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
John L. Slack
_____________________________ Treasurer, Acting __________
Signature (Principal Financial Officer)
Dr. Richard N. Baney
______________________________ Director __________
Signature
Dr. Joseph A. Boyd
______________________________ Director __________
Signature
Ambassador Robert F. Ellsworth
______________________________ Director __________
Signature
William C. Potter
______________________________ Director __________
Signature
Dr. Louis W. Tordella
______________________________ Director __________
Signature
Dr. Lynn E. Weaver
______________________________ Director __________
Signature
<PAGE>13
INDEX TO FINANCIAL STATEMENTS, SCHEDULES AND
EXHIBITS
Page(s) in this Report
The following documents are filed as part of this Report:
(1) Financial Statements:
Selected Financial Data ................................................15
Management's Discussion and Analysis ................................15-19
Quarterly Financial Data (Unaudited) ...................................20
Consolidated Statements of Income for the
years ended June 30, 1995, 1994 and 1993 ............................ 21
Consolidated Balance Sheets at June 30, 1995 and
June 30, 1994 .....................................................22-23
Consolidated Statements of Cash Flows for the years ended
June 30, 1995, 1994 and 1993 ......................................24-25
Consolidated Statements of Stockholders' Equity for the years
ended June 30, 1995, 1994 and 1993 ....................................26
Notes to Consolidated Financial Statements .........................27-34
Independent Auditors' Report ..........................................35
(2) Financial Statement Schedule
II Allowance for Doubtful Accounts on Accounts Receivable ..............36
(3) Exhibits
11 Computation of Earnings per Share ...................................38
21 Subsidiaries of the Registrant ......................................39
All other schedules are omitted because they are not applicable or the
required information is shown in the Consolidated Financial Statements
or Notes thereto.
<PAGE>14
DBA Systems, Inc. and Subsidiaries
SELECTED FINANCIAL DATA
(In Thousands, Except Per Share Information)
</TABLE>
<TABLE>
<CAPTION>
Year Ended June 30,
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Revenues $29,696 $24,316 $33,298 $38,570 $33,517
Operating income $ 1,675 $ 1,231 $ 3,047 $ 3,203 $ 2,054
Income (loss) before
extraordinary item $ 1,502 $ 837 $ 2,209 $ 1,939 $ (953)
Net income $ 1,502 $ 837 $ 2,209 $ 1,939 $ 3,233
Total assets $32,209 $29,061 $30,687 $31,046 $30,160
Long-term debt $ 1,926 $ 2,540 $ 4,816 $ 9,359 $ 9,262
Stockholders' equity $26,424 $24,632 $22,071 $15,834 $13,563
Earnings (loss) per common
share assuming full dilution:
Income (loss) before
extraordinary item per share $ .34 $ .20 $ .56 $ .61 $ (.04)
Net income per share $ .34 $ .20 $ .56 $ .61 $ 1.15
</TABLE>
Management's Discussion and Analysis
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 to these conditions, during fiscal year
1994, the Company 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
thereby reducing its 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.
<PAGE>15
Results of Operations
The following table sets forth, for the periods indicated, the percentage
that certain items in the Company's Consolidated Statements of Income
bear to revenues and the annual percentage change of such items for the
period indicated:
<TABLE>
<CAPTION>
Percentage of Revenues Percentage Change
Year Ended June 30, Year Ended June 30,
---------------------- -------------------
<S> <C> <C> <C> <C> <C>
1995 1994 1993 1994 to 1993 to
1995 1994
----- ----- ------ ------- -------
Revenues 100.0% 100.0% 100.0% 22.1% (27.0)%
Costs and expenses 94.4 94.9 90.8 21.4 (23.7)
----- ----- ----- ------- -------
Operating income (loss) 5.6 5.1 9.2 36.1 (59.6)
Interest income 1.0 0.4 0.3 203.1 (13.3)
Interest expense (.7) (1.5) (1.3) (43.9) (20.9)
Other expense - net (.7) (0.5) (1.4) 90.8 (73.5)
----- ----- ----- ------- -------
Total other expense (.4) (1.6) (2.4) (65.3) (52.2)
Income (loss) before taxes 5.2 3.5 6.8 80.8 (62.2)
Provision for taxes (0.1) (0.1) (0.2) 147.1 (66.0)
----- ----- ----- ------- --------
Net Income 5.1% 3.4% 6.6% 79.5% (62.1)%
===== ===== ===== ======= ========
During the years ended June 30, 1995, 1994 and 1993, approximately
88%, 92% and 92%, respectively, of the Company's revenues were
derived from contracts with agencies of the U.S. Government and from
subcontracts with government prime contractors. Future revenues and
income of the Company could be materially affected by changes in
Government procurement policies or a reduction in Government
expenditures for services of the type provided by the Company. The
Company's business is performed under cost reimbursement, fixed
price and fixed rate item and materials contracts.
Significant Event
The Company has 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. In addition to the potential default by AMMS,
the Company believes that the provisions of the financial guarantee of
the agreement have been breached. The Company has filed suit to
enforce the financial guarantees.
The Company is not able to assess the probability of AMMS curing the
potential default within the 90 days allowed under the contract. If
AMMS does not perform as specified within the contract, the Company
intends to either replace them with another licensee or bring the
digitizers to market on its own.
Fiscal Year 1995 Compared with Fiscal Year 1994
Revenues for the fiscal year ending June 30, 1995 were approximately
$29,696,000, an increase of $5,380,000 or 22.1% when compared to
the $24,316,000 recorded in the prior fiscal year. The increase in
revenues was attributable to favorable bookings during fiscal year 1994
and 1995 as well as increased levels of government and commercial
contract activity throughout the year. The Company recorded
approximately $23,000,000 in new bookings during fiscal 1995 as
compared to approximately $28,300,000 during fiscal 1994.
Decreased bookings in fiscal year 1995 were due to rescheduling of
certain government procurements into the Company's 1996 fiscal year.
<PAGE>16
The Company has entered into certain contracts with The Sokol Group,
Inc., whose President and CEO is a DBA director. Under such
contracts, the Company recognized revenues of approximately
$128,000 and $315,000 for the fiscal years ended June 30, 1995 and
1994, respectively.
Costs and expenses increased from approximately $23,085,000 for the
fiscal year ending June 30, 1994 to approximately $28,021,000 for the
fiscal year ending June 30, 1995. The increase in costs and expenses
was attributable to heightened levels of direct contract activity. Indirect
support costs were reduced by approximately $3,030,000 or 24.5%
from fiscal 1994 to fiscal 1995.
Interest expense for fiscal 1995 was $199,000 as compared to
$355,000 during fiscal 1994. The reduction in interest expense was
primarily attributable to advance payment of the Company's Industrial
Development Revenue Bonds. A secondary factor was the reduction of
other interest costs and financing fees as a result of active management
of the Company's treasury function. The Company has approximately
$1,843,000 of federal net operating loss carryforwards as of June 30,
1995.
As a result of the above factors net income of $1,502,000 was earned
during fiscal 1995 as compared to $837,000 in the prior fiscal year.
Fiscal Year 1994 Compared with Fiscal Year 1993
Revenues for the fiscal year ending June 30, 1994 were approximately
$24,316,000, a decline of $8,982,000 or 27% when compared to the
$33,298,000 recorded in the prior fiscal year. The decline in revenues
was attributable to delays in the procurement cycle of anticipated new
business and increased competition which resulted in a loss of certain
new business opportunities to competitors. The Company recorded
approximately $28,300,000 in new bookings during fiscal 1994 as
compared to approximately $26,100,000 during fiscal 1993.
The Company entered into certain contracts with The Sokol Group,
Inc., whose President and CEO is a DBA director. Under such
contracts, the Company recognized revenues of approximately
$315,000 and $235,000 for the fiscal years ended June 30, 1994 and
1993, respectively.
Costs and expenses decreased from approximately $30,251,000 for the
fiscal year ending June 30, 1993 to approximately $23,085,000 for the
fiscal year ending June 30, 1994. The reduction in costs and expenses
was attributable to the reduction in revenues mentioned above.
Additionally, indirect support costs were reduced by approximately
$1,274,000 or 9.3% from fiscal 1993 to fiscal 1994.
Interest expense for fiscal 1994 was $355,000 as compared to
$449,000 during fiscal 1993. The reduction in interest expense was
primarily attributable to repayment of the Chrysler Capital note and the
calling of the Company's Convertible Subordinated Debenture
conversion described herein.
The Company has approximately $3,463,000 of federal net operating
loss carryforwards as of June 30, 1994.
As a result of the above factors net income of $837,000 was earned
during fiscal 1994 as compared to $2,209,000 in the prior fiscal year.
Fiscal Year 1993 Compared with Fiscal Year 1992
Revenues for the fiscal year ending June 30, 1993 were approximately
$33,298,000, a decline of $5,272,000 or 13.6% when compared to the
$38,570,000 recorded in the prior fiscal year. The decline in revenues
was attributable to delays in the procurement cycle of anticipated new
business and increased competition which has resulted in a loss of
certain new business to competitors. As a result of these factors the
Company recorded approximately $26,100,000 in new business
<PAGE>17
bookings during fiscal 1993 as compared to approximately
$41,100,000 during fiscal 1992.
The Company has entered into a contract with The Sokol Group, Inc.,
whose President and CEO, is a DBA director. The contract, which
represents less than $235,000 in revenues for the fiscal year ending
June 30, 1993, is for the provision of photogrammetric and other
technical services to evaluate Russian satellite imagery.
Costs and expenses decreased from approximately $35,367,000 for the
fiscal year ending June 30, 1992 to approximately $30,251,000 for the
fiscal year ending June 30, 1993. The reduction in costs and expenses
was attributable to the reduction in revenues mentioned above.
Additionally, indirect support costs were reduced by approximately
$599,000 or 4.2% from fiscal 1992 to fiscal 1993.
Interest expense for fiscal 1993 was $449,000 as compared to
$1,011,000 during fiscal 1992. The reduction in interest expense was
primarily attributable to the exchange offer and induced conversion of
the convertible debentures described herein.
Other expense was $452,000 during fiscal 1993 as compared to
$295,000 during fiscal 1992. Approximately $87,000 of the increase
was attributable to costs incurred in connection with the induced
conversion described herein. The Company has approximately
$4,760,000 of federal net operating loss carryforwards as of June 30,
1993.
As a result of the above factors net income of $2,209,000 was earned
during fiscal 1993 as compared to $1,939,000 in the prior fiscal year.
Liquidity and Capital Resources
At June 30, 1995, the Company had working capital of approximately
$15,998,000 as compared to approximately $14,199,000 at June 30,
1994. The current ratio on June 30, 1995 was approximately 5.15:1
versus 8.52:1 on June 30, 1994. The decline in the Company's current
ratio was the result of an increase in accounts payable balances brought
about by withholding approximately $1,200,000 for vendor
performance. Allowing for payment of the vendor withhold, the
Company's current ratio is 7.02:1. The Company has retained a very
strong cash position and remains financially flexible.
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 June 30, 1995.
During the year ended June 30, 1995, the Company incurred capital
expenditures of approximately $427,000 for manufacturing equipment,
test fixtures and office equipment which were financed from working
capital. The Company believes capital requirements for fiscal 1996 can
be internally generated from working capital. The Company anticipates
that capital requirements for fiscal 1996 will include manufacturing
equipment, test fixtures and office equipment and will be comparable or
less than the amounts incurred during fiscal 1995. The Company
believes its capital requirements in the foreseeable future will be similar
to those experienced in the recent past and will be funded through
working capital or lease financing arrangements.
On February 10, 1995, The Company redeemed its Industrial
Development Revenue Bonds (the "Bond") for $707,243. Redemption
of the Bond left the Company with $1,926,000 in Convertible
Subordinated Debentures outstanding as the only long-term liability.
In connection with the sale of the Company's commercial operations to
an unrelated entity (the "Buyer") in 1987, the Company was named as
a guarantor under 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
<PAGE>18
mortgage, the Company received a promissory note from the Buyer in
the amount of $250,000, plus interest at the prime lending rate plus
1.50%. The note is payable in quarterly installments of $16,666 which
began March 31, 1995 and conclude March 31, 1997. On June 30,
1995, the balance outstanding on the promissory note was $116,662.
On July 17, 1992, DBA completed its offer (the "Offer") to issue and
deliver to each holder of its 9.50% Convertible Subordinated
Debentures due 2003 (the "New Debentures") an additional five (5)
shares of the Company's common stock for each $1,000 principal
amount of its New Debentures tendered for conversion into common
stock. The New Debentures are convertible at the option of the holder,
at the conversion price of $4.00 per share, into 250 shares of common
stock for each $1,000 principal amount of Debentures. The Offer was
subject to the terms and conditions of the Company's Offering Circular
dated June 19, 1992.
Prior to the Offer, the Company had $5,272,000 aggregate principal
amount of New Debentures outstanding. Approximately $3,956,000
or 75% of the New Debentures were tendered and accepted by the
Company for conversion. The Company issued approximately
1,010,000 shares of DBA common stock as a result of the
conversions.
On December 2, 1993, the Company called all of its outstanding 9.50%
Convertible Subordinated Debentures in the amount of $1,311,000 for
redemption. The Debentures were convertible into common stock of
the Company at a conversion price of $4.00 per share. Debentures not
converted into common stock were redeemed for $21,000 cash.
Approximately $1,290,000 Debentures were submitted for conversion
into 322,500 shares of the Company's common stock.
<PAGE>19
</TABLE>
<TABLE>
<CAPTION>
DBA Systems, Inc. and Subsidiaries
QUARTERLY FINANCIAL DATA
(Unaudited)
(In Thousands, Except Per Share Information)
Selected quarterly financial data is summarized as follows:
Quarter Ended
<S> <C> <C> <C> <C>
1995 Sep 30 Dec 31 Mar 31 Jun 30
---- ------- ------- ------- -------
Revenues ....................... $ 7,720 $ 5,514 $10,585 $ 5,877
Operating income ............... $ 442 $ 373 $ 571 $ 289
Income before income taxes ..... $ 400 $ 284 $ 550 $ 310
Net income ..................... $ 387 $ 275 $ 530 $ 310
Fully-diluted earnings per share $ .09 $ .06 $ .12 $ .07
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended
<S> <C> <C> <C> <C>
1994 Sep 30 Dec 31 Mar 31 Jun 30
---- ------- ------- ------- ------
Revenues ....................... $ 6,914 $ 6,424 $ 5,249 $5,729
Operating income................ $ 336 $ 295 $ 147 $ 453
Income before income taxes...... $ 193 $ 194 $ 66 $ 401
Net income ..................... $ 188 $ 191 $ 65 $ 393
Fully-diluted earnings per share $ .05 $ .05 $ .01 $ .09
</TABLE>
<PAGE>20
<TABLE>
<CAPTION>
DBA Systems, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share information)
Year Ended June 30,
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Revenues (Notes 1 and 11) $29,696 $24,316 $33,298
Costs and expenses (Note 1) 28,021 23,085 30,251
------ ------ ------
Operating income 1,675 1,231 3,047
Other income (expense): ------ ------ ------
Interest income 297 98 113
Interest expense (Note 3) (199) (355) (449)
Other expense-net (Note 9) (229) (120) (452)
------ ------ ------
Total other expense - net (131) (377) (788)
------ ------ ------
Income before income taxes 1,544 854 2,259
Less provision for income taxes
(Notes 1 and 6) 42 17 50
------- ------- -------
Net income $ 1,502 $ 837 $ 2,209
======= ======= =======
Earnings per common and
common equivalent share (Note 7) $ .34 $ .20 $ .57
======= ======= =======
Earnings per common share
assuming full dilution (Note 7) $ .34 $ .20 $ .56
======= ======= =======
Primary weighted shares outstanding 4,460 4,210 3,886
======= ======= =======
Fully diluted shares outstanding 4,480 4,210 4,359
======= ======= =======
See accompanying Notes to Consolidated Financial Statements
<PAGE>21
</TABLE>
<TABLE>
<CAPTION>
DBA Systems, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(In Thousands)
June 30,
--------------
ASSETS 1995 1994
---- ----
<S> <C> <C>
Current Assets:
Cash and cash equivalents (Note 1) $3,202 $3,651
Investments (Note 1) 5,000
Accounts receivable, less allowance for doubtful
accounts of $100 in 1995 and $96 in 1994 4,919 3,486
Costs and estimated earnings in excess of billings
on uncompleted contracts (Notes 1 and 2) 4,164 5,399
Inventory (Note 1):
Finished goods 1,420 1,413
Work in progress 348 848
Raw materials 417 264
------- -------
Total inventory 2,185 2,525
Other current assets 387 1,027
------- -------
Total Current Assets 19,857 16,088
Property (Note 1):
Land 1,552 1,552
Buildings and improvements 8,902 8,819
Furniture and fixtures 1,599 1,691
Machinery and equipment 9,264 9,043
Leasehold improvements 374 364
Leased equipment under capital leases 269
------- -------
Total 21,691 21,738
Less: accumulated depreciation and amortization 10,159 9,648
------- -------
Property-net 11,532 12,090
Other Assets:
Cost in excess of value of net assets of businesses
acquired less accumulated amortization of $94 in
1995 and $81 in 1994 (Note 1) 239 252
Other assets 581 631
------- -------
Total Other Assets 820 883
------- -------
TOTAL $32,209 $29,061
======= =======
</TABLE>
See accompanying Notes to Consolidated Financial Statements
<PAGE>22
<TABLE>
<CAPTION>
DBA Systems, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(In Thousands)
June 30,
--------------
LIABILITIES AND STOCKHOLDERS' EQUITY 1995 1994
---- ----
<S> <C> <C>
Current Liabilities:
Current portion of long-term debt (Note 3) $ 191
Accounts payable $ 1,556 183
Accrued expenses:
Salaries and wages 148 151
Vacation pay 459 472
Other 654 643
Billings in excess of costs and estimated earnings on
uncompleted contracts (Notes 1 and 2) 694 123
Estimated losses on uncompleted contracts (Note 1) 241 45
Other current liabilities 107 81
------- -------
Total Current Liabilities 3,859 1,889
Long-term Debt (Note 3) 1,926 2,540
Commitments and contingencies (Notes 5 and 10)
Stockholders' Equity (Notes 1 and 4):
Common stock-$.10 par value; shares authorized, 10,000;
shares issued, 5,514 shares in 1995; and 5,450 in 1994;
shares outstanding, 4,434 in 1995 and 4,355 in 1994 551 545
Additional paid-in capital 24,307 24,129
Retained earnings 20,548 19,267
------- -------
Total 45,406 43,941
Treasury stock-at cost, 1,080 shares in 1995 and
1,095 shares in 1994 (18,982) (19,309)
------- -------
Total Stockholders' Equity-net 26,424 24,632
------- -------
TOTAL $32,209 $29,061
======= =======
</TABLE>
See accompanying Notes to Consolidated Financial Statements
<PAGE>23
<TABLE>
<CAPTION>
DBA Systems, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
Year Ended June 30,
--------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net income $1,502 $ 837 $2,209
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 1,179 1,320 1,335
Loss (gain) on disposal of property 2 14 (14)
Cost of property used on a contract 3 33
Issuance of treasury stock to employees 24 14 17
Contribution of treasury stock to ESOP 100 100 100
Decrease (increase) in current assets:
Accounts receivable (1,433) 17 944
Costs and estimated earnings in excess of
billings on uncompleted contracts 1,235 2,469 (760)
Inventory 268 (889) (46)
Other current assets 640 (499) 172
Increase (decrease) in current liabilities:
Accounts payable 1,373 (791) (242)
Accrued expenses (5) (158) (289)
Billings in excess of costs and estimated
earnings on uncompleted contracts 571 (53) (886)
Estimated losses on uncompleted contracts 196 (413) 119
Other current liabilities 26 (195) (174)
Other-net (62) 18 17
------ ------ ------
Net cash provided by operating activities 5,616 1,794 2,535
Cash Flows from Investing Activities:
Capital expenditures (427) (1,219) (236)
Purchase of investment (5,000)
Proceeds from sale of property 1 2
------ ------ ------
Net cash used in investing activities (5,426) (1,219) (234)
Cash Flows from Financing Activities:
Repayments of long-term debt (15) (1,166) (932)
Cash paid for conversion of debentures (21) (41)
Repayments on Industrial Development Revenue Bond (790) (175) (175)
Proceeds from issuance of common stock 166 347
------ ------ ------
Net cash used in financing activities (639) (1,015) (1,148)
------ ------ ------
Net Increase (Decrease) In Cash For The Year (449) (440) 1,153
Cash and Cash Equivalents At Beginning Of Year 3,651 4,091 2,938
------ ------ ------
Cash and Cash Equivalents At End Of Year $3,202 $3,651 $4,091
====== ====== ======
</TABLE>
Supplemental Disclosure of Non-Cash Investing and Financing
Activities (In Dollars):
During 1993, the Company acquired approximately $20,000 in machinery and
equipment by entering into a lease agreement that is classified as a capital
lease.
On July 17, 1992, the Company completed its offer (the "Offer") to
issue and deliver to each holder of its 9.50% Convertible Subordinated
Debentures (the "Debentures") an additional five shares of the
Company's common stock. The Debentures are convertible at the
option of the holder, at the conversion price of $4.00 per share, into
250 shares of common stock for each $1,000 principal amount of
Debentures. As a result of the Offer, $3,956,000 of the Debentures
outstanding were converted. DBA issued approximately 1,010,000
shares of stock under the terms of the Offer.
<PAGE>24
DBA Systems, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)
For the years ended June 30, 1995 and 1994, the Company transferred
approximately $72,000 and $335,000, respectively, from inventory to
property.
On December 2, 1993, DBA called all of its outstanding 9.50%
Convertible Subordinated Debentures. The Debentures were
convertible into common stock at a conversion price of $4.00 per
share. Approximately $1,290,000 in debentures were submitted for
conversion into 322,500 shares of the Company's common stock.
Supplemental Disclosure of Cash Flow Information (In Thousands):
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Income Taxes Paid $ 20 $ 28 $ 44
==== ==== ====
Interest Paid $199 $355 $449
==== ==== ====
</TABLE>
See accompanying Notes to Consolidated Financial Statements
<PAGE>25
<TABLE>
<CAPTION>
DBA Systems, Inc. and Subsidiaries
CONSOLIDATED STATEM
(In Thousands)
Additional Total
Common Paid-In Retained Treasury Stockholders'
Stock Capital Earnings Stock Equity
ital Earnings Stock Equity
June 30,
--------------
LIABILITIES AND STOCKHOLDERS' EQUITY 1995 1994
---- ----
<S> <C> <C>
Current Liabilities:
Current portion of long-term debt (Note 3) $ 191
Accounts payable $ 1,556 183
ital Earnings Stock Equity
----- ------- -------- -------- -------
22,071
Stock issued to ESOP:
23 shares (303) 403 100
Stock issued to employees:
5 shares (72) 86 14
Stock options exercised:
107 shares 11 337 348
Conversion of debentures:
323 shares 32 1,230 1,262
Net income 837 837
----- ------- -------- -------- -------
Balance at June 30, 1994 545 24,129 19,267 (19,309) 24,632
Stock issued to ESOP:
15 shares (161) 261 100
Stock issued to employees:
5 shares (60) 84 24
Stock options exercised:
63 shares 6 178 (18) 166
Net income 1,502 1,502
----- ------- -------- -------- -------
Balance at June 30, 1995 $551 $24,307 $20,548 $(18,982) $26,424
===== ======= ======== ======== =======
</TABLE>
See accompanying Notes to Consolidated Financial Statements
<PAGE>26
DBA Systems, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
AND OTHER MATTERS
Description of Business and Major Customer
DBA Systems, Inc. and subsidiaries ("DBA" or the "Company")
operate in a single line of business. DBA is principally engaged in
developing and manufacturing computerized image processing and
electro optical systems for a variety of defense electronics applications.
Approximately 88%, 92% and 92% of DBA's fiscal 1995, 1994 and
1993 revenues from continuing operations, respectively, were derived
from contracts with the U.S. Government, or agencies thereof.
Principles of Consolidation
The consolidated financial statements include the accounts of DBA
Systems, Inc. and its wholly-owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated.
Revenue and Cost Recognition
Revenues and costs from government fixed-priced and time-and-
material contracts are recognized on the percentage-of-completion
method, measured by the percentage of total costs incurred to date to
total estimated costs for each contract. This method is used because
management considers total expended costs to be the best available
measure of progress on these contracts. Revenues from cost-plus-fee
Government contracts are recognized on the basis of costs incurred
during the period plus the fee earned measured by the same method.
Total expended costs as used to compute revenues exclude, especially
during early stages of a contract, all or a portion of the costs of such
materials or subcontracts if, in the opinion of management, it appears
that such an exclusion would result in a more accurate measurement of
the level of work performed towards contract completion. Estimates
of the effect of changes in total estimated contract costs are recognized
in the period determined. At the time a loss on a contract becomes
known, the entire amount of the estimated loss on the contract is
accrued.
Government contract costs include all direct material and labor costs
and those indirect costs related to contract performance such as indirect
labor, supplies, repairs and depreciation costs. General and
administrative expenses (including bid and proposal expenses and
independent research and development costs) allowable in accordance
with United States Government procurement practices are included in
contract costs because they are identifiable with contract revenue and
are reimbursable under the contracts.
The asset, "Costs and estimated earnings in excess of billings on
uncompleted contracts," represents revenues recognized in excess of
amounts billed. The liability, "Billings in excess of costs and estimated
earnings on uncompleted contracts," represents billings in excess of
revenues recognized. The Company progress bills its customers
monthly as the work is in progress.
Property
DBA amortizes the cost of depreciable properties over their estimated
service lives. Expenditures for maintenance, repairs and minor
renewals are charged against operations. Interest cost is capitalized for
qualifying assets during the assets' acquisition periods.
<PAGE>27
The approximate annual rates of depreciation and the methods of
application are as follows:
Buildings and improvements 2.5%-3% straight-line
Furniture and fixtures 10%-33% straight-line and declining balance
Machinery and equipment 10%-33% straight-line and declining
balance
Leasehold improvements 7%-50% straight-line
Leased equipment under capital leases 14%-33% straight-line
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" (FAS 121) effective for fiscal years beginning after
December 15, 1995. FAS 121 requires that long-lived assets and
certain identifiable intangibles to be held and used by an entity be
reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable.
Management believes that the adoption of FAS 121 will not have a
material impact on the Company.
Income Taxes
Deferred income taxes are provided on items which are recognized in
different years for tax and financial reporting purposes.
The Company accounts for income taxes using the liability method of
computing deferred income taxes. Deferred tax assets and liabilities are
recognized for the future consequences attributed differences between
the financial statement carrying amounts of existing assets and liabilities
and their respective tax bases. Differences between income for
financial and tax reporting purposes arise primarily from the use of
accelerated depreciation as required for income tax purposes and
recording of estimated losses on uncompleted contracts for financial
reporting purposes. Also, under the liability method, deferred tax
assets and liabilities are measured using estimated tax rates expected to
apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled.
Inventory
Inventories are valued at the lower of cost (weighted average) or market
and include applicable material, labor and overhead costs. During the
years ending June 30, 1995, 1994 and 1993, approximately $110,000,
$67,000 and $76,000, respectively, in general and administrative costs
were charged to inventory. As of June 30, 1995 and 1994,
approximately $101,000 and $84,000, respectively, in general and
administrative costs were included in inventory.
Leases
Leases which meet certain criteria are classified as capital leases, and
assets and liabilities are recorded at amounts equal to the lesser of the
present value of the minimum lease payments or the fair value of the
leased properties at the beginning of the respective lease terms. Such
assets are amortized over their economic useful life on a straight-line
basis. Leases which do not meet such criteria are classified as
operating leases and related rentals are charged to expense as incurred.
<PAGE>28
Cost in Excess of Value of Net Assets of Businesses Acquired
The cost in excess of the value of net assets of businesses acquired is
amortized using the straight-line method over forty years. Management
evaluates the recoverability of such assets quarterly and annually based
on current operating trends in relation to their recorded values.
Research and Development Costs
Research and development costs associated with product development
programs are expensed as incurred. Research and development
expenditures incurred by the Company and not expressly reimbursed
pursuant to contracts with customers were approximately $331,000 in
fiscal 1995, $206,000 in fiscal 1994 and $489,000 in fiscal 1993.
Cash and Cash Equivalents
Cash equivalents consist of financial instruments which are readily
convertible to cash and mature less than three months after the date of
acquisition.
Investments
The Company does not invest in securities as its primary business and
does not maintain a trading account. Occasionally, however, the
Company purchases financial instruments with maturities greater than
three months from the date of acquisition. Such securities are
classified as either "available for sale" or "held to maturity" as required
by Statement of Financial Accounting Standards No. 115 (FAS 115)
"Accounting for Certain Investments in Debt and Equity Securities"
which the Company adopted as of June 30, 1994. As of June 30 1995
and 1994, all such investment securities owned by the Company
mature in one year or less, were classified as "available for sale," and
were carried at their current market value, which approximates their
cost, as required by FAS 115.
Reclassification
Certain amounts have been reclassified in the prior years' financial
statements to conform with the current year presentation.
2. COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS
<TABLE>
<CAPTION>
As of June 30,
-----------------
1995 1994
---- ----
(in thousands)
<S> <C> <C>
Costs and estimated earnings on uncompleted contracts $262,628 $299,666
Less: billings to date 259,158 294,390
-------- --------
Total $ 3,470 $ 5,276
======== ========
Included in accompanying balance sheet under the
following captions:
Costs and estimated earnings in excess of billings on
uncompleted contracts $ 4,164 $ 5,399
Billings in excess of costs and estimated earnings on
uncompleted contracts (694) (123)
-------- --------
Total $ 3,470 $ 5,276
======== ========
</TABLE>
<PAGE>29
As of June 30, 1995 and 1994, the amounts billed but not paid under
contract retainage provisions were approximately $1,130,000 and
$718,000 respectively. Such retainage amounts are expected to be
collected within one year. Amounts included in Costs and Estimated Earnings
on Uncompleted Contracts which are subject to future negotiation
were approximately $558,000 and $558,000 as of June 30, 1995 and 1994,
respectivly.
3. LONG-TERM DEBT
Long-term debt at June 30, 1995 and 1994 consisted of the following:
<TABLE>
<CAPTION>
1995 1994
---- ----
(in thousands)
<S> <C> <C>
8.25% convertible subordinated debentures $1,926 $1,926
Industrial development revenue bond 790
Other notes payable 15
------ ------
Total 1,926 2,731
Less: current portion 191
------ ------
Long-term portion $1,926 $2,540
====== ======
</TABLE>
The 8.25% Convertible Subordinated Debentures, $1,000 par value,
mature on November 1, 2010 and pay interest semi-annually on
November 1 and May 1. The debentures may be converted at any time
up to maturity into shares of DBA common stock at a price of $19.50
per share (subject to adjustments).
The Industrial Development Revenue Bond (the "Bond") was due in
quarterly installments through January 1999. The Bond's stated
interest rate of 83.11% of the prime rate was collateralized by
equipment and a building. The Bond was redeemed in February 1995,
for $707,243, including accrued interest.
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 June 30, 1995.
4. STOCKHOLDERS' EQUITY
The 1982 Employee Incentive Stock Option Plan, as amended, which
expired on December 3, 1992, provided for the issuance of up to
530,000 shares of the Company's common stock. Options may be
granted only to employees of DBA and its subsidiaries at an option
price not less than the fair market value of DBA common stock on the
date of grant. At June 30, 1995, 50,600 of these shares were under
option.
The 1992 Employee Incentive Stock Option Plan which will expire on
November 12, 2002, provided for the issuance of up to 500,000 shares
of the Company's common stock. Options may be granted only to
employees of DBA and its subsidiaries at an option price not less than
the fair market value of DBA common stock on the date of grant. At
June 30, 1995, 211,870 of these shares were under option.
The 1993 Directors' Stock Option Plan which will expire on November
17, 1998, provided for the issuance of up to 200,000 shares of DBA's
common stock. Options can only be granted to members of the Board
of Directors at an option price not less than the fair market value of
DBA's common stock on the date of grant. At June 30, 1995, 30,000
of these shares were under option.
DBA also grants options not pursuant to a formal plan to officers,
directors and key employees at the discretion of the Board of Directors.
Options are granted at an option price not less than the fair market value
of DBA's common stock on the date of grant. At June 30, 1995,
options for 31,000 shares were outstanding.
<PAGE>30
The following is a summary of the activity in all of DBA's Option
Plans for the three year period ended June 30, 1995:
<TABLE>
<CAPTION>
Option Price
Shares Per Share
------ --------------
<S> <C> <C>
Outstanding June 30, 1992 338,050 $2.50 - $16.25
Options Granted Fiscal 1993 114,500 $3.88 - $ 4.75
Options Canceled Fiscal 1993 (54,250) $2.50 - $12.25
--------
Outstanding June 30, 1993 398,300 $2.50 - $16.25
Options Granted Fiscal 1994 148,250 $2.56 - $ 4.50
Options Canceled Fiscal 1994 (134,819) $2.50 - $ 4.75
Options Exercised Fiscal 1994 (107,079) $2.50 - $ 4.75
--------
Outstanding June 30, 1994 304,652
Options Granted Fiscal 1995 126,100 $3.88 - $ 8.63
Options Canceled Fiscal 1995 (43,801) $2.50 - $16.25
Options Exercised Fiscal 1995 (63,481) $2.50 - $ 4.75
--------
Outstanding June 30, 1995 323,470
========
Shares Exercisable June 30, 1995 152,055
========
</TABLE>
5. COMMITMENTS AND CONTINGENCIES
DBA leases land, office space, manufacturing facilities and various
equipment under non-cancelable operating leases. The leased facilities
are occupied under leases with escalation clauses and terms ranging
from one to forty years, a majority of which can be terminated or
renewed at no longer than five (5) year intervals at the Company's
option.
Total rent expense charged to operations for all operating leases was
approximately $396,000 in 1995, $488,000 in 1994, and $810,000 in
1993.
Future minimum payments under all operating leases having a
remaining non-cancelable term of more than one year are approximately
as follows:
<TABLE>
<S> <C>
For the Year Ended June 30, (in thousands)
1996 ................................. $377
1997 ................................. 335
1998 ................................. 60
1999 ................................. 40
2000 ................................. 34
Thereafter............................ 764
-----
Total ................................ $1,610
======
</TABLE>
In connection with the sale of the Company's commercial operations to
an unrelated entity (the "Buyer") in 1987, the Company was named as
a guarantor under 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
1.50%. The note is payable in quarterly installments of $16,666 which
began March 31, 1995 and conclude March 31, 1997. On June 30,
1995, the balance outstanding on the promissory note was $116,662.
<PAGE>31
As a normal consequence of the Company's business, contract claims
against the U.S. Government, or agencies thereof, can arise. Contract
claims are comprised of costs which the Company has incurred and
expects to recover from the U.S. Government. The Company had
various claims pending against the U.S. Government at June 30, 1995
and 1994.
6. INCOME TAXES
The components of the provision for income taxes are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
(in thousands)
<S> <C> <C> <C>
Current federal $ 42 $ 17 $ 50
</TABLE>
DBA's effective tax rate differs from the statutory federal income tax
rate for the following reasons:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
(in thousands)
<S> <C> <C> <C>
Computed statutory amount $525 $290 $768
Change in valuation allowance for
deferred tax assets (374) (291) (681)
Other (109) 18 (37)
----- ----- -----
$ 42 $ 17 $ 50
===== ===== =====
</TABLE>
The tax effect of temporary differences that give rise to deferred tax
assets and deferred tax liabilities at June 30, 1995 and 1994 are
presented below:
Net deferred tax assets are comprised of the following:
<TABLE>
<CAPTION>
1995 1994
---- ----
(in thousands)
<S> <C> <C>
Deferred Tax Assets:
Net operating loss carryforwards $ 627 $1,178
Alternative minimum tax credits 344 315
Deferred compensation 105 160
Reserve for uncompleted contracts 154 15
Other individually immaterial items 220 144
----- -----
Total deferred tax assets 1,450 1,812
Deferred Tax Liabilities:
Depreciation 1,033 967
Purchase accounting adjustment 63 63
Other individually immaterial items 54
----- -----
Total deferred tax liabilities 1,096 1,084
Subtotal 354 728
Valuation allowance (354) (728)
----- -----
Total net deferred tax assets $ 0 $ 0
===== =====
</TABLE>
DBA has approximately $1,843,000 of federal net operating loss
carryforwards and $343,000 of minimum tax credits remaining at June
30, 1995 which give rise to a deferred tax asset. Management believes
that the inability to utilize net operating loss carryforwards and
minimum tax credits to offset future taxable income within the carry
forward periods under existing tax laws and regulations is more likely
than not. Therefore, a valuation allowance against the deferred tax
asset of approximately $354,000 and $728,000 has been recorded as of
<PAGE>32
June 30, 1995 and 1994, respectively. The net operating loss
carryforwards expire in 2006. The minimum tax credits do not expire.
7. EARNINGS PER SHARE
Earnings per common share 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. Weighted
shares used in 1995, 1994 and 1993 were approximately 4,460,000,
4,210,000 and 3,886,000, respectively.
In 1993, earnings per common share, assuming full dilution, are
computed on the above and assume the convertible subordinated
debentures (See Note 3) were converted on the date of issue and that
net earnings were adjusted for the recorded interest expense net of its
tax effect. As to common stock equivalents, consideration is given to
the additional dilutive effect which results from year-end market prices
exceeding the average market price during the period. Weighted shares
used in 1995, 1994 and 1993 were approximately 4,480,000
4,210,000 and 4,359,000, respectively.
8. EMPLOYEE BENEFIT PLANS
The Company has a contributory retirement plan covering all
employees who meet the eligibility requirement of one year of
continuous service and have attained the age of 21. DBA makes
contributions to the plan equal to the amounts as determined by the
Board of Directors. Total retirement expense for 1995, 1994 and 1993
was $150,000, $150,000 and $225,000, respectively.
Effective July 1, 1988, the Company's Board of Directors approved
the establishment of an Employee Stock Ownership Plan (the "Plan").
Contributions to the Plan are at the discretion of the Board of Directors.
During each of the fiscal years ended June 30, 1995, 1994 and 1993,
$100,000 was accrued towards stock contributions, respectively. The
actual contributions of stock are made from Treasury Stock.
Effective July 1, 1989, the Company adopted a qualified 401(k) plan
covering all employees who elected to participate and who met the
eligibility requirement of one year of continuous service and have
attained the age of 21. The Company has agreed to contribute an
amount equal to 50% of a participant's contributions up to the lesser of
$750 or 3% of the employee's aggregate compensation. The 401(k)
plan expense for the years ended June 30, 1995, 1994 and 1993 was
approximately $119,000, $136,000 and $131,000, respectively.
9. OTHER EXPENSE-NET
The components of other expense -net are as follows:
<TABLE>
<CAPTION>
Year Ended June 30,
1995 1994 1993
---- ---- ----
(in thousands)
<S> <C> <C> <C>
Patent amortization expense $(112) $(112) $(112)
Debenture conversion costs (87)
Other-net (117) (8) (253)
----- ----- -----
Total $(229) $(120) $(452)
===== ===== =====
</TABLE>
<PAGE>33
10. LITIGATION
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 of 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.
The Company maintains officers' and directors' liability insurance
which insures individual officers and directors of the Company against
certain claims such as those alleged in the above lawsuits, as well as
attorney's fees and related expenses incurred in connection with the
defense of such claims.
11. RELATED PARTY TRANSACTIONS
The Company has entered into certain contracts with The Sokol Group,
Inc., whose President and CEO is a DBA director. Under such
contracts, the Company recognized revenues of approximately
$128,000 and $315,000 for the fiscal years ended June 30, 1995 and
1994, respectively.
<PAGE>34
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders of DBA Systems, Inc.:
We have audited the accompanying consolidated balance sheets of DBA
Systems, Inc. and subsidiaries (the "Company") as of June 30, 1995
and 1994, and the related consolidated statements of income,
stockholders' equity and cash flows for each of the three years in the
period ended June 30, 1995. Our audits also included the financial
statement schedule listed in the Index at Item 14. The financial
statements and the financial statement schedule are the responsibility of
the Company's management. Our responsibility is to express an
opinion on the financial statements and the financial statement schedule
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of the Company at June 30,
1995 and 1994, and the results of their operations and their cash flows
for each of the three years in the period ended June 30, 1995, in
conformity with generally accepted accounting principles. Also, in our
opinion, the financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, presents
fairly in all material respects the information set forth therein.
DELOITTE & TOUCHE LLP
Orlando, Florida
August 16, 1995
<PAGE>35
SCHEDULE II
DBA Systems, Inc. and Subsidiaries
<TABLE>
<CAPTION>
ALLOWANCE FOR DOUBTFUL ACCOUNTS ON ACCOUNTS RECEIVABLE
(In Thousands)
Balance at Charged to Charged Balance
Allowance for Beginning Costs and to Other at End
Doubtful Accounts of Year Expense Accounts Deductions of Year
----------------- ---------- ---------- -------- ---------- -------
<S> <C> <C> <C> <C> <C>
1995 $ 96 $ 34 $ 4 $ (34) $ 100
===== ===== ===== ===== =====
1994 $ 76 $ 20 $ 0 $ 0 $ 96
===== ===== ===== ===== =====
1993 $ 150 $ 76 $ 0 $(150) $ 76
===== ===== ===== ===== =====
<PAGE>36
DBA SYSTEMS, INC.
EXHIBIT INDEX
Page No.
--------
Exhibit 11 - Computation of earnings per share 38
Exhibit 21 - Subsidiaries of the Registrant 39
<PAGE>37
</TABLE>
EXHIBIT 11
<TABLE>
<CAPTION>
DBA Systems, Inc. and Subsidiaries
COMPUTATION OF EARNINGS PER SHARE
(In Thousands, Except Per Share Information)
Year Ended June 30,
1995 1994 1995
---- ---- ----
<S> <C> <C> <C>
Net income (A) $1,502 $ 837 $2,209
Interest on convertible debentures
net of tax effect 238
Amortization of registration costs incurred
in the issuance of convertible debentures
net of tax effect 5
----- ----- -----
Adjusted net income (B) $1,502 $ 837 $2,452
===== ===== =====
Weighted average shares outstanding 4,385 4,130 3,826
Incremental shares-stock options 75 80 60
----- ----- -----
Subtotal (C) 4,460 4,210 3,886
Incremental shares-stock options 20
Assumed conversion of convertible debentures 473
----- ----- -----
Total (D) 4,480 4,210 4,359
===== ===== =====
Primary earnings per share:
Net Income (A/C) $.34 $.20 $.57
===== ===== =====
Fully diluted earnings per share:
Net income (B/D) $.34 $.20 $.56
===== ===== =====
See accompanying Notes to Consolidated Financial Statements
<PAGE>38
</TABLE>
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
(1) DBA/Delaware Systems Corporation
100% Owned Subsidiary
Incorporated in the State of Delaware
(2) LTM Corporation
100% Owned Subsidiary
Incorporated in the State of Ohio
(3) Energy/Environmental Research Group, Inc.
100% Owned Subsidiary
Incorporated in the State of Arizona
<PAGE>39
<TABLE> <S> <C>
<ARTICLE>5
<MULTIPLIER>1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> JUN-30-1995
<CASH> 3,202
<SECURITIES> 5,000
<RECEIVABLES> 4,919
<ALLOWANCES> 100
<INVENTORY> 2,185
<CURRENT-ASSETS> 19,857
<PP&E> 21,691
<DEPRECIATION> 10,159
<TOTAL-ASSETS> 32,209
<CURRENT-LIABILITIES> 3,859
<BONDS> 1,926
<COMMON> 551
0
0
<OTHER-SE> 25,873
<TOTAL-LIABILITY-AND-EQUITY> 32,209
<SALES> 29,696
<TOTAL-REVENUES> 29,993
<CGS> 0
<TOTAL-COSTS> 28,021
<OTHER-EXPENSES> 428
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 199
<INCOME-PRETAX> 1,544
<INCOME-TAX> 42
<INCOME-CONTINUING> 1,502
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,502
<EPS-PRIMARY> .34
<EPS-DILUTED> .34
</TABLE>
