UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(X) Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended_September 30, 1995____________________________
or
( ) Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period from _________to __________________________
Commission File Number:___________0-9463_______________________________
_______________________________ULTRAK, INC._______________________
(Exact name of registrant as specified in its charter)
_______Colorado___________________________84-0819156_________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1220 Champion Circle, Suite 100
Carrollton, Texas ____________________ 75006_______________________
(Address of principal executive offices) (Zip Code)
__________________________(214) 280-9675________________________
(Registrant's telephone number, including area code)
_____________________________________________________________________
(Former name, former address and former fiscal year, if changed
since last report)
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 September 30, 1995:
7,164,119 shares of no par value common stock.
<PAGE>
ULTRAK, INC. and SUBSIDIARIES
QUARTER ENDED SEPTEMBER 30, 1995
INDEX
[S] [C]
Part I: Financial Information Page No.
Consolidated Balance Sheets 3
Consolidated Statements of Income 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 6
Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
Part II: Other Information 11
Signatures 13
<PAGE>
<TABLE>
PART I. - FINANCIAL INFORMATION
ULTRAK, INC. and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<CAPTION>
September 30, December 31
1995 1994
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash deposits $0 642,241
Accounts receivable, net 15,760,572 10,743,091
Inventories, net 20,145,232 14,396,438
Advances for inventory purchases 4,222,595 5,381,437
Prepaid expenses and other current assets 1,042,771 432,469
Deferred income taxes 784,055 362,988
__________ __________
Total Current Assets 41,955,225 31,958,664
__________ __________
Furniture and Equipment, net 4,069,247 1,971,393
Goodwill, net 2,159,098 1,259,969
Notes Receivable, Noncurrent (Note 2) 1,041,000 984,208
Other Assets 348,725 178,456
_________ _________
TOTAL ASSETS $49,573,295 36,352,690
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current Liabilities:
Accounts payable-trade $7,339,151 6,531,779
Current Portion of Long Term Debt (note 3) 179,628 0
Notes payable (Note 3) 22,339,867 18,244,183
Accrued liabilities 1,187,325 664,740
Other current liabilities 1,374,304 841,600
__________ __________
Total Current Liabilities 32,420,275 26,282,302
__________ __________
Long Term Debt (note 3) 1,590,444 0
Stockholders' Equity:
Preferred Stock 976,755 976,755
Common Stock 111,565 73,254
Additional Paid-in Capital 10,804,692 7,213,747
Retained Earnings 3,669,564 1,806,632
__________ __________
Total Stockholders' Equity 15,562,576 10,070,388
__________ __________
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $49,573,295 36,352,690
___________ __________
<FN>
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
<PAGE>
<TABLE>
ULTRAK, INC. and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<CAPTION>
Three Months Three Months Nine Months Nine months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
1995 1994 1995 1994
_____________ _____________ _____________ ______________
<S> <C> <C> <C> <C>
Net Sales $28,429,494 21,436,468 72,564,527 58,193,687
Cost of Sales 21,620,440 16,202,204 55,110,537 43,768,136
___________ __________ __________ __________
Gross Profit 6,809,054 5,234,264 17,453,990 14,425,551
___________ __________ __________ __________
Other Operating Expenses 5,202,376 3,641,231 13,072,936 10,243,298
___________ __________ __________ __________
Operating Income 1,606,678 1,593,033 4,381,054 4,182,253
___________ __________ __________ __________
Other (Income) Expense:
Other (Income) Expense,Net 9,592 (207,379) (21,951) (285,307)
Interest Expense 492,691 284,184 1,304,174 757,209
___________ __________ __________ __________
Other Expenses 502,283 76,805 1,282,223 471,902
Net Income before Income
Taxes 1,104,395 1,516,228 3,098,831 3,710,351
Income Taxes 421,233 516,800 1,147,992 1,257,355
__________ __________ __________ __________
Net Income from Cont.
Operations 683,162 999,428 1,950,839 2,452,996
__________ __________ __________ __________
Loss from Discont.
Operations 0 (190,000) 0 (190,000)
__________ __________ __________ __________
Net Income 683,162 809,428 1,950,839 2,262,996
__________ __________ __________ __________
Dividend Requirements on
Preferred Stock (29,302) (29,302) (87,908) (87,908)
__________ __________ __________ __________
Net Income Allocable to
Common Stockholders $ 653,860 780,126 1,862,931 2,175,088
========== ========== ========== ==========
Net Income per Common Share $0.09 $0.11 $0.26 $0.32
========== ========== ========== ==========
Number of Common Shares
Used in Computation 7,448,066 6,817,707 7,089,211 6,812,064
========== ========== ========== ==========
<FN>
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
<PAGE>
<TABLE>
ULTRAK, INC. and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Nine Months Nine Months
Ended Ended
September 30, September 30,
1995 1994
______________ ______________
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income $1,950,839 $2,262,996
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation and amortization 439,602 311,700
Changes in operating assets and liabilities:
(net of effects of acquisition)
(Increase), decrease in accounts receivable (3,232,517) (4,867,568)
(Increase), decrease in inventory (3,001,293) 2,228,370
(Increase), decrease in advances for inventory 1,158,842 (3,643,862)
(Increase), decrease in prepaid expenses (516,418) (788,872)
Increase, (decrease) in trade accounts payable (327,213) 306,406
Increase, (decrease) in accrued liabilities 83,878 1,326,188
(Increase), decrease in discontinued operations 0 224,966
_________ _________
Net cash provided by operating activities (3,444,280) (2,639,676)
_________ _________
Cash Flows from Investing Activities:
Capital expenditures for furniture and equipment (740,698) (829,266)
Investment in other assets (700,205) (551,129)
Purchase of Diamond Electronics, Inc., net of
cash acquired 371,278 0
__________ __________
Net cash used in investing activities (1,069,625) (1,380,395)
__________ __________
Cash Flows from Financing Activities:
Issuance of common stock, net
of issuance costs 21,887 (29,694)
Changes in notes payable 3,937,685 4,445,854
Payment of dividends on preferred stock (87,908) (87,908)
__________ __________
Net cash used in financing activities 3,871,664 4,328,252
__________ __________
Net increase (decrease) in cash (642,241) 308,181
__________ __________
Cash and Cash Equivalents at Begin. of the Period 642,241 500,106
__________ __________
Cash and Cash Equivalents at End of the Period $0 808,287
________ ________
<FN>
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
<PAGE>
ULTRAK, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation:
The accompanying unaudited interim consolidated financial statements
include the accounts of Ultrak, Inc. and its subsidiaries ("Ultrak" or
"the Company"). All significant intercompany balances and transactions have
been eliminated in consolidation.
The interim financial statements are prepared on an unaudited basis and do
not include all of the information and disclosures required by generally
accepted accounting principles for complete financial statements. All
adjustments which are, in the opinion of management, necessary for a fair
presentation of the results of operations for the interim periods have been
made and are of a recurring nature unless otherwise disclosed herein. The
results of operations for such interim periods are not necessarily
indicative of results of operations for a full year. For further
information, refer to the consolidated financial statements and notes to the
consolidated financial statements for the year ended December 31, 1994
included in the Ultrak, Inc. Annual Report on Form 10-K.
2. Notes Receivable-Noncurrent:
Notes receivable-noncurrent consists of the following as of September 30,
1995:
<TABLE>
<S> <C>
$1,000,000 notes receivable, principal payments
due and payable annually beginning in October 1995
until July 1998; interest payable monthly at 10%
per annum, collateralized by substantially all assets
of the maker $650,000
$116,000 note receivable, due and payable on April
21, 1996; interest payable quarterly at prime plus
4%, collateralized by certain assets of the maker 116,000
$275,000 note receivable, principal payments due and
payable on January 14, 1997, interest payable annually
at 8%, partially collateralized by certain assets
of the maker 275,000
________
$1,041,000
=========
</TABLE>
In connection with the $1,000,000 notes receivable, the Company has received
warrants to purchase up to 59% of the common stock of the maker. The
Chairman of the Board of the Company has guaranteed approximately $470,000
of the notes and has received approximately 50% of the warrants.
<PAGE>
ULTRAK, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(Unaudited)
3. Notes Payable and Long Term Debt:
Notes payable consists of the following as of September 30, 1995:
<TABLE>
<S> <C>
$17.5 million revolving line of credit, due upon
demand or July 31, 1997; interest at floating
prime plus .25% or LIBOR plus 2.50% payable monthly;
collateralized by substantially all assets $15,671,815
$7.0 million revolving line of credit, due upon
demand or April 4, 1996; interest at the greater
of 8.5% or floating prime plus 2.0% per annum
payable monthly; collateralized by inventory 6,668,052
___________
$22,339,867
===========
</TABLE>
At September 30, 1995, the Company had unused available revolving lines of
credit totalling approximately $2.2 million.
Long term debt as of September 30, 1995 is due on July 31, 1997, bears
interest at floating prime plus .25% or LIBOR plus 2.50% and is secured by
real estate and equipment. Principal repayments are made on a ten year
amortization.
All of the credit facilities are guaranteed in part by the principal
stockholder of the Company. The credit agreements contain certain
restrictive covenants and conditions, including debt to tangible net worth
ratios, current ratios and working capital ratios.
At September 30, 1995, the Company was in compliance with all of its
covenants with its lenders.
4. Acquisition of Diamond Electronics, Inc.:
On July 13, 1995, shareholders of Diamond Electronics, Inc. ("Diamond"),
an Ohio corporation, voting at a Special Meeting of Shareholders, approved
and adopted the terms of an Agreement and Plan of Reorganization ("the
Agreement") among Diamond, Ultrak, Diamond Purchasing Corp., a Texas
corporation and wholly owned subsidiary of Ultrak, and certain
stockholders of Diamond, pursuant to which (i) Diamond Purchasing Corp.
would merge with and into Diamond (ii) Diamond would become a wholly owned
subsidiary of Ultrak and (iii) the outstanding shares of common stock, no
par value, of Diamond would be converted into an aggregate of 600,000
share of common stock, no par value, of Ultrak pursuant to the formula
described in the Agreement.
The Agreement specifies certain conditions under which up to 100,000
additional shares of Ultrak stock could be issued. Diamond is a
manufacturer of commercial video CCTV security and surveillance systems
used by large retailers and hazardous viewing systems used by industry and
municipalities. The transaction has been accounted for as a purchase,
effective as of July 1, 1995.
5. Acquisition of G.P.S. Standard U.S.A.:
On June 14, 1995, the Company signed a letter of intent with BLC &
Associates, Inc., a California corporation doing business as G.P.S.
Standard U.S.A. ("GPS") to purchase 100% of the outstanding stock of GPS
for consideration of 176,470 shares of registered Ultrak common stock.
For the year ended June 30, 1995, GPS had unaudited revenues of
approximately $1.3 million and unaudited net loss of approximately
$85,000. GPS is a manufacturer of a line of surveillance camera housings,
pan and tilt devices, matrix switchers and other advanced software driven
camera control systems. A definitive agreement was signed on August 22,
1995 and the transaction is expected to close by November 30, 1995. The
transaction will be accounted for as a pooling of interests.
<PAGE>
ULTRAK, INC. and SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations:
For the three and nine months ended September 30, 1995, net sales increased
$6,993,026 (33%) and $14,370,840 (25%), respectively, over the comparable
1994 period. The increase for the three months ended September 30, 1995
was due to the acquisition of Diamond Electronics, Inc., effective July 1,
1995, ($3,318,225 or 47% of the increase) and because of increased volume of
sales of existing closed circuit television (CCTV) products to all of the
markets that the Company serves (approximately $3,000,000 or 42% of the
increase). New products introduced by the Company during 1995 contributed
approximately 11% of the increase in net sales during the three months ended
September 30, 1995.
In comparison, for the three and nine months ended September 30, 1995,
cost of goods sold increased $5,418,236 (33%) and $11,342,401 (26%).
respectively, over the comparable 1994 period. The increase for the three
months ended September 30, 1995 was due to the acquisition of Diamond
Electronics, Inc. ($2,269,596 or 42% of the increase) and because of the
overall increase in net sales ($3,148,640 or 58% of the increase).
The overall gross profit percentage decreased to 23.95% for the three
months ended September 30, 1995 from 24.42% for the three months ended
September 30, 1994 and decreased to 24.05% for the nine months ended
September 30, 1995 from 24.79% for the nine months ended September 30,
1994. The decrease in gross profit percentages was due primarily to
competitive market conditions and a strategic decision by the Company to
be the industry value leader.
For the three and nine months ended September 30, 1995, other operating
expenses increased $1,561,145 (43%) and $2,829,638 (28%), respectively,
over the comparable 1994 period. This increase was primarily due to the
acquisition of Diamond Electronics, Inc. (increase of $572,592 or 37% of the
increase), increased engineering, product development, and sales and
marketing costs including personnel, travel and other related costs
commensurate with the overall increase in sales and the strategic plan to
build the market for greater sales in the future. In addition, new product
promotion costs were incurred during 1995 including advertising, printing,
product shows and other promotional activities.
For the three and nine months ended September 30, 1995, other (income)
expenses increased $425,478 (>100%) and $810,321 (>100%), respectively,
over the comparable 1994 period because of increased interest expense on
higher borrowings due to greater prime interest rates, offset somewhat by
interest income on notes receivable and miscellaneous income.
<PAGE>
ULTRAK, INC. and SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS, CONTINUED
Liquidity and Capital Resources:
The Company's cash management policy is to directly apply all cash proceeds
to offset bank debt. The Company had a net decrease in cash for the nine
month period ended September 30, 1995 of $642,241. Net cash used in the
operating activities was $3,444,280, primarily because of increases in accounts
and notes receivable, prepaid expenses and inventory on hand related to
higher sales during the period and reductions in trade accounts payable,
offset somewhat by net cash profits and reductions in advances for inventory.
Net cash used in investing activities for the nine months ended September 30,
1995 was $1,069,625 primarily for capital expenditures for office and
warehouse equipment, upgrades to the Company's computer system, leasehold
improvements and increases in noncurrent notes receivable, offset somewhat
by the purchase of Diamond Electronics, Inc.
Net cash provided by financing activities for the nine months ended September
30, 1995 was $3,871,664 due to a net increase during the period in borrowings
on the Company's two revolving lines of credit and its term loan facility,
offset somewhat by payment of dividends on preferred stock.
As of September 30, 1995, the Company had unused available lines of credit
totaling approximately $2.2 million.
The Company will continue to be dependent upon its bank and other lender
financing to fund its operations. The Company anticipates that its current
operations and future growth will be financed through increased lines of
credit and internally generated profits. The Company believes such sources
of funds will be adequate for its projected needs for the next twelve (12)
months. The Company may attempt to raise additional equity capital if
sales increase faster than planned or if it is otherwise deemed
advantageous to do so.
<PAGE>
ULTRAK, INC. and SUBSIDIARIES
QUARTER ENDED SEPTEMBER 30, 1995
Part II: Other Information
Item 1.Legal Proceedings
Not Applicable
Item 2.Changes in Securities
Not Applicable
Item 3.Defaults Upon Senior Securities
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not Applicable
Item 5.Other Information
Not Applicable
Item 6.Exhibits and Reports on Form 8-K
(a) Exhibits filed with this report:
Exhibit 11-Computation of Per Share Income for the three and nine
months ended September 30, 1995.
Exhibit 27-Financial Data Schedule for the nine months ended September
30, 1995.
(b) Reports on Form 8-K.
No Form 8-Ks were filed during the quarter ended September 30, 1995.
<PAGE>
EXHIBIT 11
ULTRAK, INC. and SUBSIDIARIES
Computation of Per Share Income
For the Three and Nine Months ended September 30, 1995
(Unaudited)
Three Nine
Months Months
______ ______
Computation of Income per Share-Primary:
<TABLE>
<S> <C> <C>
Net income $683,162 $1,950,839
Less: Dividend requirements on preferred stock (29,302) (87,908)
_________ _________
Net income allocable to common stockholders $653,860 $1,862,931
======== ==========
Weighted average number of common shares
outstanding during the period 7,156,733 6,759,011
Net effect of dilutive stock options and
warrants based on the treasury method using
average market price 291,333 330,200
_________ ________
Shares used for computation 7,448,066 7,089,211
========= =========
Income per share-primary $.09 $.26
==== ====
Computation of Earnings per Share-Assuming
Full Dilution:
Net income $683,162 $1,950,839
Less: Dividend requirements on preferred stock 0 0
________ __________
Net income allocable to common stockholde $683,162 $1,950,839
Weighted average number of common shares
outstanding during the period 7,156,733 6,759,011
Net effect of dilutive stock options and
warrants based on the treasury method using
the greater of average or ending price 291,333 330,200
Net effect of preferred stock conversion 406,981 406,981
_______ _______
Shares used for computation 7,855,047 7,496,192
========= =========
Earnings per share-assuming full dilution $.09 $.26
==== ====
</TABLE>
<PAGE>
ULTRAK, INC. and SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ULTRAK, INC.
(Registrant)
November 10, 1995 Tim D. Torno
Date Tim D. Torno
Principal Financial and
Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> Dec-31-1995
<PERIOD-START> Jan-01-1995
<PERIOD-END> Sep-30-1995
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 16381106
<ALLOWANCES> 620534
<INVENTORY> 20145232
<CURRENT-ASSETS> 41955225
<PP&E> 7429847
<DEPRECIATION> 3360600
<TOTAL-ASSETS> 49573295
<CURRENT-LIABILITIES> 32420275
<BONDS> 0
<COMMON> 111565
0
976755
<OTHER-SE> 14474256
<TOTAL-LIABILITY-AND-EQUITY> 49573295
<SALES> 72564527
<TOTAL-REVENUES> 72564527
<CGS> 55110537
<TOTAL-COSTS> 55110537
<OTHER-EXPENSES> 13072936
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1304174
<INCOME-PRETAX> 3098831
<INCOME-TAX> 1147992
<INCOME-CONTINUING> 1950839
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1950839
<EPS-PRIMARY> .26
<EPS-DILUTED> .26
</TABLE>
