<PAGE>
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 DECEMBER 31, 1999 *
-----------------
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
--- THE SECURITIES EXCHANGE ACT OF 1934
For the transition period N/A
Commission file number: 0-10877
TCI INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 94-3026925
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
222 CASPIAN DRIVE, SUNNYVALE, CALIFORNIA 94089-1014
(Address of principal executive offices) (Zip Code)
(408)747-6100
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
--- ---
As of December 31, 1999, 3,386,675 shares of Common Stock were outstanding.
1
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TCI INTERNATIONAL, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Part I - Financial Information Page
- ------------------------------ ----
<S> <C>
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Statements of Operations and Comprehensive
Loss 3
Condensed Consolidated Balance Sheets 4
Condensed Consolidated Statements of Cash Flows 5
Notes to Condensed Consolidated Financial Statements 6-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-11
Item 3. Market Rate Sensitive Instruments 12
Part II - Other Information
- ---------------------------
Item 6. Exhibits and Reports on Form 8-K 20
Signatures 20
</TABLE>
2
<PAGE>
TCI INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
December 31,
------------
1999 1998
---- ----
<S> <C> <C>
Revenues $ 7,117 $ 4,775
-------- --------
Operating costs and expenses:
Cost of revenues 4,617 3,243
Marketing, general and administrative 2,455 2,559
-------- --------
7,072 5,802
-------- --------
Income (loss) from operations 45 (1,027)
Interest income, net 180 169
-------- --------
Income (loss) before provision
for income taxes 225 (858)
Provision for income taxes 15 0
-------- --------
Net income (loss) $ 210 $ (858)
-------- --------
-------- --------
Other comprehensive income (loss):
Unrealized loss on investments (6) 8
-------- --------
Net comprehensive income (loss) $ 204 $ (850)
-------- --------
-------- --------
Basic earnings per share:
Net income (loss) per share $ .06 $ (.27)
-------- --------
-------- --------
Shares used in per share
computations 3,256 3,212
-------- --------
-------- --------
Dilutive earnings per share:
Net income (loss) per share $ .06 $ (.27)
-------- --------
-------- --------
Shares used in per share
computations 3,389 3,212
-------- --------
-------- --------
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
3
<PAGE>
TCI INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands except per share amounts)
<TABLE>
<CAPTION>
December 31, September 30,
1999 1999
------------ -------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 4,392 $ 11,310
(Includes restricted cash of $2,600
on Dec. 31, 1999, $3,846 on Sept 30, 1999)
Short-term investments 7,551 3,360
Accounts receivable
Billed 737 2,434
Unbilled 6,678 3,416
Inventories 1,878 1,704
Prepaid taxes 1,706 1,724
Prepaid expenses 699 427
-------- --------
Total current assets 23,641 24,375
Property and equipment, net 1,912 2,033
Other assets 324 321
-------- --------
Total assets $ 25,877 $ 26,729
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,811 $ 1,830
Customer deposits and billings on uncompleted
contracts in excess of revenue recognized 1,270 3,310
Accrued liabilities 5,353 5,967
-------- --------
Total current liabilities 9,434 11,107
-------- --------
Stockholders' equity:
Common stock, par value $.01; authorized 5,000
shares; issued and outstanding 3,396 shares 12,158 11,780
Retained earnings 4,333 4,176
Accumulated other comprehensive loss (14) (8)
Treasury shares at cost; 10 and 76 shares as of
Dec. 31, 1999 and Sept 30, 1999 (34) (326)
-------- --------
Total stockholders' equity 16,443 15,622
-------- --------
Total liabilities and stockholders' equity $ 25,877 $ 26,729
-------- --------
-------- --------
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
4
<PAGE>
TCI INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED DECEMBER 31,
(In thousands)
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Cash provided by (used in):
Operations:
Net income (loss) $ 210 $ (858)
Reconciliation to cash provided by operations:
Depreciation 166 134
Changes in assets and liabilities:
Accounts receivable (1,565) (1,105)
Inventories (174) (44)
Prepaid taxes 18 28
Prepaid expenses and other assets (275) (290)
Accounts payable 981 348
Customer deposits/billing in excess of revenue (2,040) (455)
Accrued liabilities (613) (90)
-------- ---------
Cash provided by (used in) operations (3,292) (2,332)
-------- ---------
Investing activities:
Purchases of property and equipment (45) (28)
Purchases of short-term investments (4,289) 0
Proceeds from sale of short-term investments 91 4,626
-------- ---------
Cash provided by (used in) investing activities (4,243) 4,598
-------- ---------
Financing activities:
Stock options exercised 617 25
Treasury stock purchases 0 0
-------- ---------
Cash provided by (used in) financing activities 617 25
Net increase in cash and cash equivalents (6,918) 2,266
Cash and cash equivalents at beginning of period 11,310 8,782
-------- ---------
Cash and cash equivalents at end of period $ 4,392 $ 11,048
-------- ---------
-------- ---------
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements
5
<PAGE>
TCI INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1
Basis of Presentation
The unaudited condensed consolidated financial statements included herein have
been prepared by the Company pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to such
rules and regulations. The Company believes the information included herein,
when read in conjunction with the financial statements and related notes
included in the Company's Annual Report on Form 10-K for the year ended
September 30, 1999, filed with the Securities and Exchange Commission, to be not
misleading. Further, the accompanying financial statements reflect, in the
opinion of management, all adjustments necessary (consisting of normal recurring
entries) to present fairly the financial position and results of operations as
of and for the periods indicated.
The results of operations for the three months ended December 31, 1999, are not
necessarily indicative of results to be expected for the entire year ending
September 30, 2000.
NOTE 2
Inventories consist of the following (in thousands):
<TABLE>
<CAPTION>
December 31, September 30,
1999 1999
---- ----
<S> <C> <C>
Material and component parts $1,373 $1,326
Work in process 505 378
------ ------
$1,878 $1,704
------ ------
------ ------
</TABLE>
NOTE 3
At December 31, 1999 there were outstanding standby letters of credit of
approximately $2,600,000 serving as performance and payment bonds. The standby
letters of credit expire at various dates through 2001; however, certain
performance bonds are automatically renewable until canceled by the beneficiary.
These outstanding standby letters of credit are fully secured by the Company's
cash or short term investment portfolio.
NOTE 4
Net Income Per Share
Basic per share amounts are computed using the weighted average number of common
shares outstanding during the period. Dilutive per share amounts are computed
using the weighted average number of common and dilutive common equivalent
shares outstanding during the period. Dilutive common equivalent shares consist
of common stock issuable upon the exercise of stock options using the treasury
stock method.
6
<PAGE>
TCI INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following schedule reconciles, in thousands, the shares used in the
Company's basic and diluted net income (loss) per share calculation.
<TABLE>
<CAPTION>
Quarter Ended
December 31, December 31,
1999 1998
<S> <C> <C>
Basic earnings per share weighted 3,256 3,212
average shares outstanding
Effect of dilutive securities options
outstanding 134 0
Denominator for diluted earnings
per share - adjusted weighted
average shares 3,389 3,212
</TABLE>
Common stock equivalent of 34,769 shares were excluded from the net loss share
calculation for the quarter ended December 31, 1998, due to their antidilutive
effect. As of December 31, 1999 and 1998, there were options outstanding to
purchase 707,333 and 870,700, respectively, shares of the Company's common stock
which could potentially dilute future basic earnings per share.
NOTE 5
Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133
"Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts,
(collectively referred to as derivatives) and for hedging activities. It
requires that an entity recognizes all derivatives as either assets or
liabilities in the statement of financial position and measures those
instruments at fair value. If certain conditions are met, a derivative may be
specifically designated and accounted for as (a) a hedge of the exposure to
changes in the fair value of a recognized asset or liability or an
unrecognized firm commitment, (b) a hedge of the exposure to variable cash
flows of a forecasted transaction, or (c) a hedge of the foreign currency
exposure of a net investment in a foreign operation, an unrecognized firm
commitment, an available-for-sale security, or a foreign-currency-denominated
forecasted transaction. For a derivative not designated as hedging
instrument, changes in the fair value of the derivative are recognized in
earnings in the period of change. This statement will be effective for all
annual and interim periods beginning after June 15, 2000, and management does
not believe the adoption of SFAS No. 133 will have a material effect on the
financial position of the Company.
7
<PAGE>
NOTE 6
Financial Information about Business Segments
<TABLE>
<CAPTION>
Quarter Ended
December 31, December 31,
1999 1998
<S> <C> <C>
Revenue
Broadcast Products 2,099 1,558
Signal Processing Products 5,018 3,217
Operating income (loss)
Broadcast Products 8 (181)
Signal Processing Products 37 (846)
</TABLE>
8
<PAGE>
TCI INTERNATIONAL, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
First Fiscal Quarter of 2000
Compared to First Fiscal Quarter of 1999
Except for historical information contain herein, the matters discussed in this
report contain forward-looking statements that involve risks and uncertainties
which could cause future results to differ materially. The results of operations
for the first three months in fiscal year 2000 are not necessarily indicative of
future quarterly or annual performance expectations.
Total revenue for the first quarter of fiscal year 2000 was $7,117,000, an
increase of approximately 49% over revenue of $4,775,000 for the same period a
year ago. Total operating income in the first quarter was $45,000 compared to a
net loss of $1,027,000 a year ago.
The Company has two distinct product groups: the Broadcast Products Group and
the Signal Processing Products Group. The Company's product offerings are
managed and directed by separate management teams. While the two businesses
segments currently share facilities and certain manufacturing resources, the
customers who routinely purchase these products are distinct.
Segment revenue and operating income for the two product groups were as follows
(in thousands):
<TABLE>
<CAPTION>
Quarter Ended
December 31, December 31,
1999 1998
<S> <C> <C>
Revenue
Broadcast Products 2,099 1,558
Signal Processing Products 5,018 3,217
Operating income (loss)
Broadcast Products 8 (181)
Signal Processing Products 37 (846)
</TABLE>
Revenue for the Broadcast Products group in the first quarter ended December
30, 1999, increased 35% over revenue a year ago. Higher backlog going into
fiscal year 2000, together with the timing of the execution of these
contracts, were the main reasons for this increase in revenue. As a result of
the increase in revenue, the Broadcast Products group recorded an income of
$8,000 in the current quarter compared to a net loss of $181,000 a year ago,
a significant improvement.
9
<PAGE>
TCI INTERNATIONAL, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
First Fiscal Quarter of 2000
Compared to First Fiscal Quarter of 1999
Revenue for the Signal Processing Products group in the first quarter ended
December 30, 1999, increased 56% over revenue a year ago. Significant orders
received in the last quarter of fiscal year 1999 for Spectrum Management Systems
contributed significantly to the increase in revenue for the current fiscal
quarter, thus improving the operating results from this segment. In comparison,
the operating loss for the first quarter of fiscal year 1998 was negatively
affected by an unplanned delay in contract completion of one major contract for
Spectrum Management equipment.
Fluctuations in revenue from one quarter to the next are inherent in the nature
of the Company's business due to the project-oriented nature of the business.
Future growth is always dependent on the Company continuing to secure adequate
new business. Based upon the strength to its existing backlog and subject to
unanticipated future delays, the Company is optimistic about its future growth.
Total gross margins for the Company expressed as a percentage of revenue
increased from 32% to 35% when compared to the same period in fiscal 1999. This
increase is primarily due to improved execution of existing contracts.
Marketing, general and administrative expenses for the first quarter of fiscal
2000 remained approximately constant with those of fiscal 1999. However,
expressed as a percentage of revenue, marketing, general and administrative
expenses for the first quarter of fiscal 2000 were 35% compared to 54% a year
ago. This change was due to a higher revenue base in the first quarter of fiscal
2000.
The Company's total backlog as of December 30, 1999 was $20 million compared to
$28 million as of September 30, 1999. The total funded portion of the Company's
backlog, which excludes unfunded and unexercised options (on U.S. Government
contracts) the Company believes are likely to be exercised, was $15 million and
$14 million, respectively.
10
<PAGE>
TCI INTERNATIONAL, INC.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
DERIVATIVES AND FINANCIAL INSTRUMENTS
FOREIGN CURRENCY HEDGING INSTRUMENTS
The Company transacts business in various foreign currencies. Accordingly, the
Company is subject to exposure from adverse movements in foreign currency
exchange rates. This exposure is primarily related to pesos denominated payments
in Colombia, a contract denominated in British pounds sterling and local
currency denominated operating expenses in the U. K. where the Company sells
primarily in U. S. dollars. However, as of December 31, 1999, the Company had no
hedging contracts outstanding.
The Company's U.K. operating expenses are in sterling, which mitigates a portion
of the exposure related to the contract denominated in sterling. The Company
currently does not use financial instruments to hedge local currency denominated
operating expenses in the U.K. Instead, the Company believes that a natural
hedge exists, in that local currency revenues will substantially offset the
local currency denominated operating expenses. The Company assesses the need to
utilize financial instruments to hedge currency exposures on an ongoing basis.
The Company does not use derivative financial instruments for speculative
trading purposes, nor does the Company hedge its foreign currency exposure in a
manner that entirely offsets the effects of changes in foreign exchange rates.
The Company regularly reviews its hedging program and may as part of this review
determine at any time to change its hedging program.
No sensitivity analysis was performed on the Company's hedging portfolio as of
December 31, 1999 as there was no hedging contracts outstanding as of December
31, 1999.
FIXED INCOME INVESTMENTS
The Company's investments in U.S. corporate securities include commercial paper.
Foreign securities include certificates of deposit with financial institutions,
most of which are denominated in U.S. dollars. The Company's cash equivalents
and short-term investments have generally been held until maturity. Gross
unrealized gains and losses were negligible as of December 31, 1999.
The Company's exposure to market risk for changes in interest rates relate
primarily to the Company's investments. The Company places its investments
with high credit quality issuers and, by policy, limits the amount of credit
exposure to any one issuer. The Company's general policy is to limit the risk
of principal loss and ensure the safety of invested funds by limiting market
and credit risk. All highly liquid investments with a maturity of three
months or less at the date of purchase are considered to be cash equivalents;
investments with maturities between three and twelve months are considered to
be short-term investments. The average interest rate on the investment
portfolio is 5.87%. As of December 31, 1999, there are no investments with
maturities greater than 12 months. The Company does not expect any material
loss with respect to its investment portfolio.
11
<PAGE>
TCI INTERNATIONAL, INC.
FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS
The Company operates in a highly competitive environment that involves a number
of risks, some of which are beyond the Company's control. The following
discussion highlights some of these risks.
FLUCTUATIONS IN OPERATING RESULTS
The Company's operating results may fluctuate from quarter to quarter and year
to year for a number of reasons. While there is no seasonality to the Company's
business, because of the Company's relatively small size, combined with the
extended delivery cycles of its long-term project-oriented business, revenue and
accompanying gross margins are inherently difficult to predict. Since the
Company records revenue on a percentage of completion basis, unexpected changes
in project budgets during the course of execution can cause revenue and
accompanying gross margins to vary from quarter to quarter. Because the Company
plans its operating expenses, many of which are relatively fixed in the short
term, based on the assumption of stable performance, a relatively small revenue
shortfall may cause profitability from operations to suffer. Historically, the
Company has endured periods of volatility in its revenue results due to a number
of factors, including shortfalls in new orders, delays in the availability of
new products, delays in subcontractor provided materials and services, and
delays associated with foreign construction activities. Gross margins are
strongly influenced by several factors, including pressures to be the low price
supplier in competitive bid solicitations, the mix of contract material and
non-recurring engineering services, and the mix of newly developed and existing
product sold to various customers. The Company believes these historical
challenges will continue to affect its future business.
In order to address these challenges, the Company intends to pursue a product
and market diversification strategy. By leveraging its expertise in RF
technology applications, and its ability to conduct business in foreign
countries, the Company will pursue outside technology and business acquisitions,
which complement various characteristics of its existing core business. Combined
with the operating pressures detailed above, the Company expects that the future
cost of this product diversification strategy may be significant enough to
generate a loss from operations during fiscal year 2000.
MANAGING A CHANGING BUSINESS
The Company is in the process of adopting a business management plan that
includes substantial investments in its sales and marketing organizations,
increased funding of existing internal research and development programs, and
certain investments in corporate infrastructure that will be required to
support the Company's diversification objectives during the next three years.
Inherent in this process are a number of risks, including a higher level of
operating expenses, the difficulty of competing with companies of larger size
for talented technical personnel, and the complexities of managing a changing
business. There also exists the risk the Company may inaccurately estimate
the viability of any one or all of its diversification efforts and as a
result, may experience substantial revenue shortfalls of a size so
significant as to generate losses from operations.
12
<PAGE>
TCI INTERNATIONAL, INC.
FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS
RISK ASSOCIATED WITH EXPANSION INTO ADDITIONAL MARKETS AND PRODUCT DEVELOPMENT
The Company believes that its future success is substantially dependent on its
ability to successfully acquire, develop and commercialize new products and
penetrate new markets. In addition to the Company's ongoing efforts to diversify
its product offerings within its core businesses such as the spectrum management
system business, the Company intends to pursue a diverse, but focused product
and market development initiative during the next three years. The Company
believes that its general knowledge of RF technology and its related
applications combined with its ability to conduct business in overseas markets
can be exploited to return the Company to an aggressive growth posture. While
not strictly limited to these product areas, the Company is currently pursuing
certain product and turnkey project initiatives in the FM and digital TV
transmission equipment markets which compliment the Company's antenna expertise.
There can be no assurance that the Company can successfully develop these or any
other additional products, that any such products will be capable of being
produced in commercial quantities at reasonable cost, or that any such products
will achieve market acceptance. Should the Company expend funds to acquire
outside entities or technology, there can be no assurance that sufficient
returns will be realized to offset these investments. The inability of the
Company to successfully develop or commercialize new products or failure of such
products to achieve market acceptance would have a material adverse effect on
the Company's business, financial condition and results of operations.
RISKS ASSOCIATED WITH CONDUCTING BUSINESS OVERSEAS
A substantial part of the Company's revenue is derived from fixed priced
contracts with foreign governmental entities. With increasing frequency, the
Company finds a demand for its products in third world countries and developing
nations which have an inherently more volatile and uncertain political and
credit risk profile than the U.S. Government market with which the Company is
accustomed to conducting its business. While the Company seeks to minimize the
collection risks on these contracts by normally securing significant advanced
payments with the balance secured by irrevocable letters of credit, the Company
cannot always be assured of receiving full payment for work that it has
performed due to unforeseen credit and political risks. Should such default on
payments owed the Company ever occur, a significant effect on earnings, cash
flows and cash balances may result.
COMPETITION
Most of the Company's products are positioned in niche markets, which include
strong elements of imbedded proprietary technology. In most of these markets,
the Company competes with companies of significantly larger size, many of whom
have substantially greater technical, marketing, and financial resources
compared to similar resources available within the Company. This type of
competition has resulted in, and is expected to continue to result in,
significant price competition.
13
<PAGE>
TCI INTERNATIONAL, INC.
LIQUIDITY AND CAPITAL RESOURCES
December 31, 1999 Compared to September 30, 1999
Consolidated cash, cash equivalents and marketable securities totaled
$11,943,000 at December 31, 1999, compared to $14,670,000 at September 30, 1999.
The Company currently believes that its cash, cash equivalents and short-term
investments, together with expected revenues from operations, will be sufficient
to fund its operations through fiscal year 2000.
Cash used in operations for the first quarter of fiscal 2000 was $3.3 million
compared to $2.3 million for the first quarter in fiscal 1999. Cash used in the
first quarter of fiscal 2000 resulted primarily from the decrease in customer
deposits and billing in excess of revenue of $2.0 million and a decrease in
accounts receivable of $1.6 million. Cash used in the first quarter of fiscal
1999 was primarily due to the net loss of $ .9 million and an increase in
accounts receivable of $1.1 million. Cash used in investing activities in the
first quarter of fiscal 2000 was $4.2 million compared to cash provided by
investing activities of $4.6 million in fiscal 1999.
A significant portion of the Company's sales is associated with long-term
contracts and programs in which there are significant inherent risks. These
risks include the uncertainty of economic conditions, dependence on future
appropriations and administrative allotments of funds, changes in governmental
policies, difficulty of forecasting costs and work schedules, product
obsolescence, and other factors characteristic of the industry. Contracts with
agencies of the U.S. Government or with prime contractors working on U.S.
Government contracts contain provisions permitting termination at any time for
the convenience of the Government. No assurance can be given regarding future
financial results, as such results are dependent upon many factors including
economic and competitive conditions, incoming order levels, shipment volume,
product margins and foreign exchange rates.
The large size of certain of the Company's orders makes it possible that a
single contract termination, cancellation, delay, or failure to perform could
have a significant adverse effect on revenue, results of operations, and the
cash position of the Company.
A portion of the Company's revenues is derived from governments in areas of
political instability. The Company generally attempts to reduce the risks
associated with such instability by requesting advance payment if appropriate,
as well as letters of credit or central government guarantees. Most of the
Company's overseas contracts provide for payments in U.S. dollars. However, in
certain instances, the Company, for competitive reasons, must accept payment in
a foreign currency.
At December 31, 1999, the Company has standby letters of credit outstanding of
approximately $2,600,000. The standby letters of credit are collateralized by
the Company's cash or short-term investments.
14
<PAGE>
TCI INTERNATIONAL, INC.
YEAR 2000 ISSUE
The Year 2000 statements set forth below are designated as "Year 2000 Readiness
Disclosure" pursuant to the Year 2000 Information and Readiness Disclosure Act.
Many currently installed computer systems and software products are designed to
accept only two-digit entries in the date field. Beginning January 1, 2000,
these date fields must accept four digit entries to distinguish twenty-first
century dates from twentieth-century dates. If a computer system or software
product is not Year 2000 compliant, it may not operate properly during the
transition from December 31, 1999, to January 1, 2000, and may not recognize the
year 2000 as a leap year. A non-compliant system or product may suddenly halt,
continue operating but interpret or calculate data incorrectly, or otherwise
operate improperly, causing disruption to the Company's operations or the
operations of others.
The Company diligently addressed potential Year 2000 problems by using a
four-phase approach was used to determine the Year 2000 readiness of the
Company's internal systems, software, equipment, and products. Phase 1,
Assessment, included taking an inventory of all systems, software, equipment and
products, and the identification of those with year 2000 issues which needed
remediation. Phase 1 also called for the preparation of plans needed for
remediation. Phase 2, Remediation, included repairing, upgrading, and/or
replacing any critically non-compliant equipment or systems identified in Phase
1. Phase 3, Testing, included testing the Company's systems, software, and
equipment for year 2000 readiness, or in certain cases, relying on test results
or certifications provided to the Company by third parties. Phase 4,
Implementation, involved placing compliant systems, software, and equipment into
service. The Company completed all these initiatives at the estimated cost of $1
million dollars. Thus, the Company believes it has diligently addressed Year
2000 issues. To date, the Company has not experienced any significant business
disruption or system failures as a result of Year 2000 issues. There have been
no substantial Year 2000 related issues reported from our major suppliers and
customers.
Although the Year 2000 event has past there can be no assurance that there will
be no problems related to the Year 2000 for a period of time after January 1,
2000. However, the Company does not expect to be adversely impacted by Year 2000
issues.
15
<PAGE>
TCI INTERNATIONAL, INC.
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits: Exhibit 27.1-Financial Data Schedule
b. Reports on Form 8-K: None
No other applicable items.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TCI INTERNATIONAL, INC.
-----------------------
(Registrant)
/s/ Mary Ann W. Alcon
-------------------------
Mary Ann W. Alcon
Chief Financial Officer
(Duly authorized officer of the registrant and
principal financial officer of the registrant)
- ---------------------------
Date
16
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-START> OCT-01-1999
<PERIOD-END> DEC-30-1999
<CASH> 4,392
<SECURITIES> 7,551
<RECEIVABLES> 7,415
<ALLOWANCES> 0
<INVENTORY> 1,878
<CURRENT-ASSETS> 23,641
<PP&E> 8,669
<DEPRECIATION> 6,757
<TOTAL-ASSETS> 25,877
<CURRENT-LIABILITIES> 9,434
<BONDS> 0
0
0
<COMMON> 12,158
<OTHER-SE> 4,285
<TOTAL-LIABILITY-AND-EQUITY> 25,877
<SALES> 7,117
<TOTAL-REVENUES> 7,117
<CGS> 4,617
<TOTAL-COSTS> 4,617
<OTHER-EXPENSES> 2,455
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 45
<INCOME-TAX> 15
<INCOME-CONTINUING> 210
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 210
<EPS-BASIC> 0.06
<EPS-DILUTED> 0.06
</TABLE>
