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 March 31, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-8086
GENERAL DATACOMM INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 06-0853856
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Middlebury, Connecticut 06762-1299
(Address of principal executive offices) (Zip Code)
Registrant's phone number, including area code: (203) 574-1118
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date:
Number of Shares Outstanding
Title of Each Class at March 31, 1995
Common Stock, $.10 par value 18,049,449
Class B Stock, $.10 par value 2,219,836
Total Number of Pages in This Document is 15.
<PAGE> 2
GENERAL DATACOMM INDUSTRIES, INC.
AND SUBSIDIARIES
INDEX
Page No.
Part I. Financial Information
Consolidated Balance Sheets -
March 31, 1995 and September 30, 1994 3
Consolidated Statements of Operations and
Earnings Reinvested - For the Three and Six
Months Ended March 31, 1995 and 1994 4
Consolidated Statements of Cash Flows - For the
Six Months Ended March 31, 1995 and 1994 5
Notes to Consolidated Financial Statements 6
Management's Discussion and Analysis
of Financial Condition and Results of Operations 9
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 14
- 2 -
<PAGE> 3
PART I. FINANCIAL INFORMATION
GENERAL DATACOMM INDUSTRIES, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
March 31, September 30,
1995 1994
<S> <C> <C>
In thousands except shares
- ---------------------------------------------------------------------------
ASSETS:
Current assets:
Cash and cash equivalents $22,706 $2,939
Accounts receivable, less allowance
for doubtful receivables of $1,619
in March and $1,618 in September 44,682 49,581
Inventories 53,800 42,162
Deferred income taxes 4,325 4,062
Other current assets 6,045 5,288
- ----------------------------------------------------------------------------
Total current assets 131,558 104,032
===========================================================================
Property, plant and equipment:
Land 1,772 1,764
Buildings and improvements 27,324 27,058
Test equipment, fixtures and field
spares 48,864 47,012
Machinery and equipment 42,516 38,522
- ----------------------------------------------------------------------------
120,476 114,356
Less: accumulated depreciation and
amortization 76,248 73,248
- ----------------------------------------------------------------------------
44,228 41,108
Capitalized software development costs,
net of accumulated amortization of $18,805
in March and $14,008 in September 23,407 22,712
Other assets 12,938 12,412
- -----------------------------------------------------------------------------
$212,131 $180,264
=============================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Current portion of long-term debt $7,054 $5,238
Accounts payable, trade 13,013 15,317
Accrued payroll and payroll-related 4,273 5,415
Deferred income 7,489 6,548
Other current liabilities 10,631 15,101
- ----------------------------------------------------------------------------
Total current liabilities 42,460 47,619
============================================================================
Long-term debt, less current portion 26,331 42,118
Deferred income taxes 5,251 4,997
Other liabilities 503 1,043
- ----------------------------------------------------------------------------
Total liabilities 74,545 95,777
============================================================================
Commitments and contingent liabilities - -
Stockholders' equity:
Capital stock, par value $.10 per
share, issued: 21,027,056 shares
in March and 18,733,739 shares
in September 2,103 1,873
Capital in excess of par value 127,416 68,027
Earnings reinvested 15,639 21,477
Cumulative foreign currency translation (2,034) (901)
Common stock held in treasury, at cost:
757,771 shares in March and 841,773
shares in September (5,538) (5,989)
- -----------------------------------------------------------------------------
Total stockholders' equity 137,586 84,487
- -----------------------------------------------------------------------------
$212,131 $180,264
============================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
-3-
<PAGE> 4
GENERAL DATACOMM INDUSTRIES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND EARNINGS REINVESTED
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
In thousands, except per share
- -----------------------------------------------------------------------------
Revenues:
Net product sales $46,120 $38,177 $93,908 $76,154
Service revenue 9,010 8,282 17,997 16,536
Lease revenue 1,401 1,573 2,848 3,392
- -----------------------------------------------------------------------------
56,531 48,032 114,753 96,082
- -----------------------------------------------------------------------------
Costs and expenses:
Cost of product sales 21,871 17,242 44,136 34,569
Amortization of capitalized
software development costs 3,200 2,300 6,000 4,500
Cost of services 5,839 5,463 11,639 10,951
Cost of lease revenue 186 225 354 454
Selling, general and
administrative 22,315 19,512 42,898 38,880
Research and product
development 7,334 4,892 13,221 9,181
- -----------------------------------------------------------------------------
60,745 49,634 118,248 98,535
- -----------------------------------------------------------------------------
Operating loss (4,214) (1,602) (3,495) (2,453)
- -----------------------------------------------------------------------------
Other income (expense):
Interest (320) (893) (1,306) (1,788)
Other, net (199) 95 (437) 110
- ----------------------------------------------------------------------------
(519) (798) (1,743) (1,678)
- ----------------------------------------------------------------------------
Loss before income taxes
and cumulative effect of
accounting changes (4,733) (2,400) (5,238) (4,131)
Income tax provision (benefit) 300 (1,590) 600 (1,445)
- ----------------------------------------------------------------------------
Loss before cumulative effect
of accounting changes (5,033) (810) (5,838) (2,686)
Cumulative effect of changes
in accounting for
post-retirement and
post-employment
benefits - - - (433)
- -----------------------------------------------------------------------------
Net loss (5,033) (810) (5,838) (3,119)
- -----------------------------------------------------------------------------
Earnings reinvested at beginning 20,672 21,812 21,477 23,805
- -----------------------------------------------------------------------------
Earnings reinvested at end of
period $15,639 $21,002 $15,639 $20,686
============================================================================
Loss per share:
Loss before cumulative effect
of accounting changes ($0.25) ($0.05) ($0.30) ($0.16)
Cumulative effect of changes
in accounting for
post-retirement and
post-employment benefits - - - (0.03)
- -----------------------------------------------------------------------------
Loss per share ($0.25) ($0.05) ($0.30) ($0.19)
=============================================================================
Weighted average number of
common and common equivalent
shares outstanding 20,176 16,186 19,176 16,081
=============================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
- 4 -
<PAGE> 5
GENERAL DATACOMM INDUSTRIES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Increase (Decrease) in Cash and Cash Equivalents
Six Months Ended
March 31,
1995 1994
<S> <C> <C>
In thousands
- ----------------------------------------------------------------------------
Cash flows from operating activities:
Loss before cumulative effect
of accounting changes ($5,838) ($2,686)
Adjustments to reconcile loss to net
cash (used) by operating activities:
Depreciation and amortization 11,621 9,437
Decrease in accounts receivables 4,102 2,534
(Increase) in inventories (12,084) (5,576)
(Decrease) in accounts payable
and accrued expenses (5,627) (4,216)
(Increase) decrease in other net
current (2,609) 1,634
(Increase) in other net long-term assets (971) (2,993)
- ---------------------------------------------------------------------------
Net cash (used) by operating activities (11,406) (1,866)
- --------------------------------------------------------------------------
Cash flows from investing activities-1):
Acquisition of property, plant &
equipment (7,768) (4,619)
Capitalized software development costs (6,695) (6,700)
Purchase price of companies acquired - (5,852)
- ----------------------------------------------------------------------------
Net cash (used) by investing activities (14,463) (17,171)
- -----------------------------------------------------------------------------
Cash flows provided by financing activities-1):
Revolver borrowings 19,000 89,033
Revolver repayments (35,200) (71,183)
Proceeds from notes and mortgages 5,341 2,278
Principal payments on notes and
mortgages (3,189) (1,991)
Proceeds from issuing common stock 60,072 1,286
Payments of escrow deposits - (500)
- ----------------------------------------------------------------------------
Net cash provided by financing activities 46,024 18,923
- -----------------------------------------------------------------------------
Effect of exchange rates on cash (388) (74)
- -----------------------------------------------------------------------------
Net increase (decrease) in cash and cash 19,767 (188)
Cash and cash equivalents at beginning
of period-2) 2,939 2,594
- ----------------------------------------------------------------------------
Cash and cash equivalents at end of period-2) $22,706 $2,406
============================================================================
</TABLE>
(1 - Excluded from the Consolidated Statement of Cash Flow
the issuance of common stock with a fair market value
(2 - The Corporation considers all highly liquid investment
to be cash equivalents.
The accompanying notes are an integral part of these consolidated
financial statements.
-5-
<PAGE> 6
GENERAL DATACOMM INDUSTRIES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
NOTE 1. BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited
consolidated financial statements contain all adjustments
necessary to fairly present the financial position of General
DataComm Industries, Inc. and subsidiaries (the "Corporation")
as of March 31, 1995, the results of operations for the three
and six months ended March 31, 1995 and 1994 and the cash flows
for the six months ended March 31, 1995 and 1994. Such
adjustments are generally of a normal recurring nature and
include adjustments to certain accruals and asset reserves to
appropriate levels.
The consolidated financial statements contained herein should
be read in conjunction with the consolidated financial
statements and related notes thereto filed with Form 10-K/A for
the year ended September 30, 1994.
Certain reclassifications were made to the prior year's
financial statements to conform to the current year's
presentation.
NOTE 2. INVENTORIES
<TABLE>
<CAPTION>
Inventories consist of (in thousands):
March 31,1995 September 30, 1994
<S> <C> <C>
Raw materials $21,654 $18,313
Work-in-process 7,375 7,249
Finished goods 24,771 16,600
Total $53,800 $42,162
</TABLE>
- 6 -
<PAGE> 7
GENERAL DATACOMM INDUSTRIES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
NOTE 3. LONG-TERM DEBT
<TABLE>
<CAPTION>
Long-term debt consists of the following (in thousands):
March 31, 1995 September 30, 1994
<S> <C> <C>
Revolving credit loan $ - $16,200
Notes payable 19,140 18,318
Mortgages payable 13,354 11,809
Capital lease obligations 891 1,029
------- -------
33,385 47,356
Less: current portion 7,054 5,238
------- -------
$26,331 $42,118
======= =======
</TABLE>
Revolving Credit Loan
Effective January 15, 1995, the Corporation's revolving credit
loan was amended to provide for interest on outstanding
borrowings to be charged at the higher of either (1) the prime
rate or (2) the federal funds rate plus 1/2 of 1% (on March 31,
1995, the prime rate was 9% and the federal funds rate was
6.3%). Alternately, the Corporation may elect to borrow at
1.00% to 2.00% over LIBOR (depending upon a financial ratio
test) for terms of 1, 2, 3 or 6 months (on March 31, 1995, these LIBOR
rates ranged from 6.06% to 6.38%).
Effective March 31, 1995, the Corporation amended its revolving
credit and term loan agreement to modify certain financial
covenants and improve the availability of funds in the future.
Currently, there are no borrowings outstanding under the
revolving credit loan portion of the agreement, which provides
for up to $25 million in available financing.
Notes Payable
On June 1, 1994, the Corporation refinanced $8,000,000 of a note
payable, previously maturing January 2, 1995, with The Bank of
New York as lender and agent for other institutions by
incorporating term loan provisions and additional collateral
into the above-mentioned revolving credit loan agreement.
Quarterly principal payments of $250,000, $375,000 and $500,000
are required in the first, second and third (partial) years,
respectively, with the final payment due November 30, 1996.
Effective January 15, 1995, this note was amended to provide for
interest on the outstanding principal balance to be charged at
the
-7-
<PAGE> 8
GENERAL DATACOMM INDUSTRIES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
NOTE 3. LONG-TERM DEBT (continued)
higher of either (1) the prime rate or (2) the federal funds
rate plus 1/2 of 1% (on March 31, 1995, the prime rate was 9%
and the federal funds rate was 6.3%). Alternately, the
Corporation may elect to borrow at 1.00% to 2.00% over LIBOR
(depending upon a financial ratio test) for terms of 1, 2, 3 or
6 months (on March 31, 1995, these LIBOR rates ranged from 6.06%
to 6.38%). At March 31, 1995, the outstanding balance on this
note was $7,000,000.
NOTE 4. COMMON STOCK OFFERING
On December 22, 1994, the Corporation completed the sale of
2,070,000 shares of common stock pursuant to an underwritten
public offering. The sales price was $29.875 per common share
before offering costs and commissions. Net proceeds of
approximately $58.1 million have been used to reduce debt and to
provide additional working capital for general corporate
purposes.
NOTE 5. REAL ESTATE GAIN
Included in selling, general and administrative expenses for the
six months ended March 31, 1995 is a gain of $650,000 resulting
from the early termination of a lease obligation for an
industrial facility which had been vacated in 1988 as part of a
cost reduction program.
- 8 -
<PAGE> 9
GENERAL DATACOMM INDUSTRIES, INC.
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
GENERAL DISCUSSION
Fiscal 1995 revenues reflect both the positive market momentum
for the Corporation's new APEX ATM (Asynchronous Transfer Mode)
family of products and the negative impact of lower product
demand in certain traditional lines of business. Fiscal second
quarter revenues for the APEX family of ATM switches exceeded
$10 million as compared to $2 million in the comparable period
one year ago and was nearly double the level of the first fiscal
quarter of 1995. However, for the first six months sales of
analog modems declined 15% from last year and now account for
only about 16% of total revenues as the anticipated migration
from analog to digital continues.
Revenues for the quarter ended March 31, 1995 increased $8.5
million, or 17.7%, over the same period one year ago. For the
six months ended March 31, 1995, revenues increased $18.7
million, or 19.4%, as compared to the first six months of fiscal
1994.
The net loss for the second quarter of fiscal 1995 was
$(5,033,000), or $(0.25) per share, compared to a net loss of
$(810,000), or $(0.05) per share, in the same period last fiscal
year. On a year-to-date basis, the net loss for fiscal 1995 was
$(5,838,000), or $(0.30) per share, versus a net loss of
$(3,119,000), or $(0.19) per share, in fiscal 1994. The prior
year net loss for the quarter and year-to-date included a tax
benefit of $1.7 million, or $0.11 per share.
As a result of the fiscal 1995 losses, the Corporation's
management is considering actions to improve sales and product
development productivity, selectively reduce operating expenses
and streamline product offerings with a goal of returning to
profitability by early next fiscal year.
The Corporation has paid off its revolving credit term loan with
net proceeds from the sale of common stock pursuant to an
underwritten public offering completed in the first fiscal
quarter of 1995. In addition, offering proceeds have been used
toward investments required for the new ATM product family in
such areas as research and development, production engineering,
pre-sales support activities and inventories, including
significant APEX customer demonstrations and internal lab
requirements.
-9-
<PAGE> 10
RESULTS OF OPERATIONS
The following table sets forth selected consolidated financial
data stated as a percentage of total revenues (unaudited):
<TABLE>
<CAPTION>
Three months ended Six months ended
March 31, March 31,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------
Revenues:
Net product sales 81.6% 79.5% 81.8% 79.3%
Service revenue 15.9 17.2 15.7 17.2
Leasing revenue 2.5 3.3 2.5 3.5
- ----------------------------------------------------------------------------
100.0 100.0 100.0 100.0
- ----------------------------------------------------------------------------
Costs and expenses:
Cost of revenues 49.3 47.7 48.9 47.8
Amortization of capitalized
software development costs 5.7 4.8 5.2 4.7
Selling, general and
administrative 39.5 40.6 37.4 40.5
Research and product
development 13.0 10.2 11.5 9.6
- -----------------------------------------------------------------------------
Operating (loss) (7.5) (3.3) (3.0) (2.6)
- ----------------------------------------------------------------------------
Net (loss) (8.9)% (1.7)% (5.1)% (3.3)%
============================================================================
</TABLE>
Total revenues for the quarter ended March 31, 1995 increased by
$8.5 million to $56.5 million, a 17.7% improvement from the same
period one year ago. Growth markets in the fiscal second quarter
included the domestic carriers, which increased by $2.4 million,
or 24%, and international distributors which increased by $6.1
million, more than double the prior fiscal year quarter. New
products introduced during fiscal 1994, such as ATM cell
switches, V.F. 28.8 modems, and additions to digital data set
and multiplexer product lines, sold higher volumes compared to
the second quarter of fiscal 1994. For the second quarter of
fiscal 1995 as compared to the second quarter of fiscal 1994,
net product sales were up $7.9 million, or 20.8%, service
revenue was up $728,000, or 8.8%, and leasing revenue was down
$172,000, or 10.9%. On a six-month basis, net product sales
increased $17.8 million, or 23.3%, service revenue increased
$1.5 million, or 8.8%, and leasing revenue decreased $544,000,
or 16.0%.
Gross margin as a percent of sales (which includes amortization
of capitalized software development costs) declined from 47.5%
in the comparable quarter of fiscal 1994 to 45.0% in the second
quarter of fiscal 1995. Amortization of capitalized software
development costs charged to product cost of sales increased to
$3.2 million in the quarter ended March 31, 1995 from $2.3
million in the same quarter one year ago and had the effect of
reducing gross margin as a percent of sales by 0.9%. Product
margin on traditional products declined due to market pressures
to reduce prices. In addition, premium costs associated with
the subcontracting of surface-mount production also reduced
gross margin. The installation of new surface-mount
manufacturing equipment in the third fiscal quarter is expected
to reduce manufacturing costs
-10-
<PAGE> 11
of new-generation products and favorable results are expected to
be reflected in the first quarter of fiscal 1996. In addition,
the Corporation continues to work on the reduction of material
component prices and manufacturing improvements. On a six-month
basis, gross margin declined from 47.5% to 45.9%, or 1.6%.
Amortization of capitalized software development costs charged
to product cost of sales increased from $4.5 million in fiscal
1994 to $6.0 million in fiscal 1995, with the effect of reducing
gross margin as a percent of sales by 0.5%. The remaining
impact of 1.1% is attributable to lower margins on product sales
for the reasons described in the quarter comparison above.
Selling, general and administrative expenses increased from
$19.5 million in the second quarter of fiscal 1994 to $22.3
million in the second quarter of fiscal 1995. This net increase
of $2.8 million, or 14.4%, is primarily due to the Corporation's
significant investments in ATM pre-sales support activities (an
increase of $273,000), the domestic sales organization (an
increase of $510,000, reflecting headcount additions and higher
commissions due to increased revenues), domestic marketing (an
increase of $462,000), international operations (an increase of
$884,000 mostly related to the expansion of European operations)
and general & administrative expenses (an increase of $786,000
reflecting higher benefits, franchise taxes, legal and
recruiting fees, goodwill amortization and bad debt provisions
associated with higher revenue levels). Due to the revenue
growth, selling, general and administrative expenses fell from
40.6% of revenues in fiscal 1994 to 39.5% in fiscal 1995. On a
six-month basis, selling, general and administrative expenses
increased $4.0 million, or 10.3%. As a percentage of six-month
revenue, selling, general and administrative expenses fell from
40.5% of fiscal 1994 revenue to 37.4% of fiscal 1995 revenue,
while six-month spending increased by $4.0 million from $38.9
million in the prior fiscal year to $42.9 million.
Research and product development spending, before consideration
of capitalized software development costs, increased to $10.5
million, or 18.6% of revenues, in the second quarter of fiscal
1995 from $8.1 million, or 16.9% of revenues, in the comparable
quarter one year ago. This increase of $2.5 million, or 30.8%,
reflects the heavy investment in ATM development, now over 40%
of total research and product development spending. Such ATM
development spending includes activities in Quebec, Canada
($406,000) and at Netcomm Limited ("Netcomm") ($184,000), and
the growth of the ATM portion of the domestic product
development organization and ATM subcontract services ($1.9
million). Capitalized software development costs remained flat
quarter-to-quarter at $3.2 million but, as a percentage of total
research and development spending, fell to 30.4% of total
spending in the second quarter of fiscal 1995 from 39.6% of
total spending in the same quarter one year ago. On a six-month
basis, research and product development spending, before
consideration of capitalized software development costs,
increased to $19.9 million, or 17.4% of revenues, in fiscal 1995
from $15.9 million, or 16.5% or revenues, in fiscal 1994.
Capitalized software development costs remained flat on a
year-to-year basis at $6.7 million, yet fell to 33.6% of total
spending in fiscal 1995 from 42.2% of total spending in fiscal
1994.
-11-
<PAGE> 12
Interest expense in the quarter ended March 31, 1995 decreased
$573,000 from the comparable period one year ago. In the second
quarter of fiscal 1995, the Corporation mortgaged its principal
facility in the UK, adding $40,000 to interest in the period.
This was offset by $557,000 of interest income on short-term
investments made in the quarter ended March 31, 1995. For the
six-month period, interest expense decreased $482,000 from
$1,788,000 in fiscal 1994 to $1,306,000 in fiscal 1995,
reflecting the favorable impact of $641,000 of interest income
in fiscal 1995 and reduced borrowing levels.
In the quarter ended March 31, 1995, the Corporation recorded an
income tax provision of $300,000, as compared to an income tax
benefit of $1,590,000 in the same quarter one year ago. The
benefit resulted from the resolution of a foreign tax issue in
the amount of $1,700,000. On a six-month basis, the income tax
provision of $600,000 compared to an income tax benefit of
$1,445,000 in fiscal 1994.
LIQUIDITY AND CAPITAL RESOURCES
The Corporation's cash and cash equivalents were $22.7 million
at March 31, 1995, compared to $2.9 million at September 30,
1994.
Operating
Non-debt working capital, excluding cash and cash equivalents,
increased $14.7 million to $73.4 million at March 31, 1995.
This increase resulted primarily from an increase in inventories
and decreases in accounts payable, accrued payroll and other
current liabilities, which was partially offset by a decrease in
accounts receivable and an increase in deferred income on
maintenance contracts. Inventory grew $11.6 million to $53.8
million, while accounts payable decreased $2.3 million as
payments came due for materials purchased earlier in the fiscal
year. Accounts receivable decreased $4.9 million in the second
quarter of fiscal 1995 to $44.7 million at March 31, 1995, due
principally to the lower revenues ($3.5 million) in the current
quarter as compared to the fourth quarter of fiscal 1994 and
improved collections. During the six months ended March 31,
1995, the Corporation's operating activities resulted in a net
cash consumption of $11,406,000 compared to $1,866,000 in the
same period one year ago.
Investing
Net investments in property, plant and equipment for the
six-month period ended March 31, 1995 increased $3,149,000 to
$7,768,000 from $4,619,000 in the prior fiscal year's period,
principally for equipment to improve the manufacturing and
engineering processes, for sales force automation and for the
strategic relocation of the service subsidiary from the
engineering building to the manufacturing facility. Investments
in capitalized software development were $6,695,000 in fiscal
1995 compared to $6,700,000 in the same period one year ago.
Investment activities in fiscal 1994 included $5.9 million
relating to the acquisition of Netcomm.
-12-
<PAGE> 13
Financing
Financing activities during the six-month period ended March 31,
1995 added $46.0 million in cash, representing $60.1 million
from both the sale of stock, as described below, and the
exercise of stock options, partially offset by the net repayment
of the Corporation's revolving credit loan of $16.2 million.
On December 22, 1994, the Corporation completed the sale of
2,070,000 shares of common stock pursuant to an underwritten
public offering. The sales price was $29.875 per share before
offering costs and commissions. The net proceeds of
approximately $58.1 million have been used to reduce debt and to
provide additional working capital for general corporate
purposes.
Effective January 15, 1995, the Corporation's revolving credit
loan and term loan were amended to provide for interest on
outstanding borrowings to be charged at the higher of either (1)
the prime rate of (2) the federal funds rate plus 1/2 of 1% (on
March 31, 1995, the prime rate was 9% and the federal funds rate
was 6.3%). Alternately, the Corporation may elect to borrow at
1.00% to 2.00% over LIBOR (depending upon a financial ratio
test) for terms of 1,2, 3 or 6 months (on March 31, 1995, these
LIBOR rates ranged from 6.06% to 6.38%). Effective March 31,
1995, the Corporation amended its revolving credit and term loan
agreement to modify certain financial covenants and improve the
availability of funds in the future. At March 31, 1995, there
were no borrowings outstanding.
Adoption of Financial Accounting Standards Nos. 106 and 112
Effective October 1, 1993, the Corporation adopted the
provisions of Statement of Financial Accounting Standards No.
106, "Employers' Accounting for Post-Retirement Benefits Other
Than Pensions", requiring the use of an accrual method of
accounting for post-retirement benefits. The Corporation
elected to recognize the transition obligation as a one-time
cumulative after-tax charge to income of $(117,000), or $(0.01)
per share. The increase in annual expense for retiree health
care was not material.
Effective October 1, 1993, the Corporation adopted the
provisions of Statement of Financial Accounting Standards No.
112, "Employers' Accounting for Post-Employment Benefits",
requiring the use of an accrual method of accounting for
post-employment benefits. The Corporation elected to recognize
the transition obligation as a one-time cumulative after-tax
charge to income of $(316,000), or $(0.02) per share. The
increase in annual expense for post-employment costs was not
material.
-13-
<PAGE> 14
GENERAL DATACOMM INDUSTRIES, INC.
AND SUBSIDIARIES
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Index of Exhibits
11. Calculation of Earnings Per Share for the three and
six-month periods ended March 31, 1995 and 1994.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the
quarter for which this report is filed.
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.
GENERAL DATACOMM INDUSTRIES, INC.
(Registrant)
William S. Lawrence
Vice President and Principal
Financial Officer
Dated: May 15, 1995
-14-
<TABLE>
<CAPTION>
General DataComm Industries, Inc. and Subsidiaries Exhibit 11
Calculation of Earnings per Share
(in thousands except per share data)
Three months ended Six months ended
March 31, March 31,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------
Primary earnings per share:
Weighted average number of
commmon shares outstanding 20,176 16,186 19,176 16,081
Assumed exercise of certain
stock options - - - -
- ----------------------------------------------------------------------------
20,176 16,186 19,176 16,081
- ----------------------------------------------------------------------------
Loss before cumulative effect of
accounting changes ($5,033) ($810) ($5,838) ($2,686)
Cumulative effect of changes in
accounting for post-retirement
and post-employment benefits - - - (433)
- -----------------------------------------------------------------------------
Net loss ($5,033) ($810) ($5,838) ($3,119)
- -----------------------------------------------------------------------------
Loss per share-1)
Loss before cumulative effect
of accounting changes ($0.25) ($0.05) ($0.30) ($0.16)
Cumulative effect of changes in
accounting for post-retirement
and post-employment benefits - - - (0.03)
- -----------------------------------------------------------------------------
Loss per share ($0.25) ($0.05) ($0.30) ($0.19)
============================================================================
Fully diluted earnings per share:
Weighted average number of
common shares outstanding 20,176 16,186 19,176 16,081
Assumed exercise of certain
stock options - - - -
- -----------------------------------------------------------------------------
20,176 16,186 19,176 16,081
- -----------------------------------------------------------------------------
Loss before cumulative effect of
accounting changes ($5,033) ($810) ($5,838) ($2,686)
Cumulative effect of changes
in accounting for
post-retirement and
post-employment benefits - - - (433)
- -----------------------------------------------------------------------------
Net loss ($5,033) ($810) ($5,838) ($3,119)
- -----------------------------------------------------------------------------
Loss per share-1)
Loss before cumulative effect
of accounting changes ($0.25) ($0.05) ($0.30) ($0.16)
Cumulative effect of changes
in accounting for
post-retirement and
post-employment benefits - - - (0.03)
- -----------------------------------------------------------------------------
Loss per share ($0.25) ($0.05) ($0.30) ($0.19)
=============================================================================
</TABLE>
(1- Loss per share amounts are required to be computed independently and,
in 1995, do not equal the six-month loss-per-share amounts.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> QTR-2
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> MAR-31-1995
<CASH> 22,706
<SECURITIES> 0
<RECEIVABLES> 44,682
<ALLOWANCES> 1,619
<INVENTORY> 53,800
<CURRENT-ASSETS> 10,370
<PP&E> 120,476
<DEPRECIATION> 76,248
<TOTAL-ASSETS> 212,131
<CURRENT-LIABILITIES> 42,460
<BONDS> 26,331
<COMMON> 2,103
0
0
<OTHER-SE> 135,483
<TOTAL-LIABILITY-AND-EQUITY> 212,131
<SALES> 93,908
<TOTAL-REVENUES> 114,753
<CGS> 50,136
<TOTAL-COSTS> 62,129
<OTHER-EXPENSES> 56,540
<LOSS-PROVISION> 16
<INTEREST-EXPENSE> 1,306
<INCOME-PRETAX> (5,238)
<INCOME-TAX> 600
<INCOME-CONTINUING> (5,838)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,838)
<EPS-PRIMARY> (0.30)
<EPS-DILUTED> (0.30)
</TABLE>
