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 June 30, 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 June 30, 1995
Common Stock, $.10 par value 18,147,894
Class B Stock, $.10 par value 2,217,836
Total Number of Pages in This Document is 22.
<PAGE> 2
GENERAL DATACOMM INDUSTRIES, INC.
AND SUBSIDIARIES
INDEX
Page No.
Part I. Financial Information
Consolidated Balance Sheets -
June 30, 1995 and September 30, 1994 3
Consolidated Statements of Operations and
Earnings Reinvested - For the Three and Nine
Months Ended June 30, 1995 and 1994 4
Consolidated Statements of Cash Flows - For the
Nine Months Ended June 30, 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
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<PAGE> 3
PART I. FINANCIAL INFORMATION
GENERAL DATACOMM INDUSTRIES, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
June 30, September 30,
In thousands except shares 1995 1994
<S> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents $19,594 $ 2,939
Accounts receivable, less allowance
for doubtful receivables of $1,977
in June and $1,618 in September 35,554 49,581
Inventories 50,208 42,162
Deferred income taxes 4,709 4,062
Other current assets 6,390 5,288
------- -------
Total current assets 116,455 104,032
======= =======
Property, plant and equipment:
Land 1,766 1,764
Buildings and improvements 27,769 27,058
Test equipment, fixtures and field
spares 50,195 47,012
Machinery and equipment 45,891 38,522
------- -------
125,621 114,356
Less: accumulated depreciation and
amortization 78,238 73,248
------- -------
47,383 41,108
Capitalized software development costs,
net of accumulated amortization of
$21,705 in June and $14,008 in
September 23,407 22,712
Other assets 12,818 12,412
-------- --------
$200,063 $180,264
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Current portion of long-term debt $6,703 $5,238
Accounts payable, trade 12,700 15,317
Accrued payroll and payroll-related 7,028 5,415
Deferred income 6,841 6,548
Other current liabilities 14,209 15,101
------ ------
Total current liabilities 47,481 47,619
====== ======
Long-term debt, less current portion 24,781 42,118
Deferred income taxes 5,712 4,997
Other liabilities 538 1,043
------ ------
Total liabilities 78,512 95,777
====== ======
Commitments and contingent liabilities - -
Stockholders' equity:
Capital stock, par value $.10 per
share, issued: 21,117,301 shares
in June and 18,733,739 shares in
September 2,112 1,873
Capital in excess of par value 127,790 68,027
Earnings reinvested (deficit) (959) 21,477
Cumulative foreign currency
translatation adjustment (1,899) (901)
Common stock held in treasury,
at cost: 751,571 shares in June
and 841,773 (5,493) (5,989)
------- ------
Total stockholders' equity 121,551 84,487
------- ------
$200,063 $180,264
======== ========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
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<PAGE> 4
GENERAL DATACOMM INDUSTRIES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND EARNINGS REINVESTED
(Unaudited)
<TABLE>
<CAPTION>
Three Months Nine Months Ended
June 30, June 30,
In thousands, except per share data 1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenues:
Net product sales $37,222 $44,510 $131,130 $120,664
Service revenue 9,444 8,757 27,441 25,293
Lease revenue 1,426 1,636 4,274 5,028
------ ------ ------- -------
48,092 54,903 162,845 150,985
------ ------ ------- -------
Costs and expenses:
Cost of product sales 18,450 20,928 62,586 55,497
Inventory write-down and other
items 6,500 - 6,500 -
Amortization of capitalized
software development costs 2,900 2,400 8,900 6,900
Cost of services 6,217 5,777 17,856 16,728
Cost of lease revenue 204 235 558 689
Selling, general and
administrative 22,803 20,078 65,701 58,958
Research and product development 7,498 4,910 20,719 14,091
------ ------ ------- -------
64,572 54,328 182,820 152,863
------ ------ ------- -------
Operating income (loss) (16,480) 575 (19,975) (1,878)
-------- ------ -------- --------
Other income (expense):
Interest (458) (985) (1,764) (2,773)
Other, net 590 30 153 140
------- ------ ------- --------
132 (955) (1,611) (2,633)
------- ------ ------- --------
Loss before income taxes
and cumulative effect of
accounting changes (16,348) (380) (21,586) (4,511)
Income tax provision (benefit) 250 122 850 (1,323)
------ ------ ------- -------
Loss before cumulative effect
of accounting changes (16,598) (502) (22,436) (3,188)
Cumulative effect of changes
in accounting for post-retirement
and post-employment benefits - - - (433)
-------- ------- ------- ------
Net loss (16,598) (502) (22,436) (3,621)
-------- ------- ------- ------
Earnings reinvested at beginning
of period 15,639 21,002 21,477 23,805
------ ------ -------- -------
Earnings reinvested (deficit) at
end of period ($959) $20,500 ($959) $20,184
===== ======= ======== =======
Loss per share:
Loss before cumulative effect
of accounting changes ($0.82) ($0.03) ($1.15) ($0.19)
Cumulative effect of changes
in accounting for
post-retirement and
post-employment benefits - - - (0.03)
------- ------ ------ -------
Loss per share ($0.82) ($0.03) ($1.15) ($0.22)
======= ======= ====== ======
Weighted average number of
common and common equivalent
shares outstanding 20,332 16,790 19,562 16,317
====== ====== ====== ======
</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
Nine Months Ended
June 30,
In thousands 1995 1994
<C> <C> <C>
Cash flows from operating activities:
Loss before cumulative effect
of accounting changes ($22,436) ($3,188)
Adjustments to reconcile loss to net
cash provided (used) by operating activities:
Depreciation and amortization 17,634 14,408
Inventory write-down and other items 6,500 -
(Increase) decrease in accounts receivable 13,206 (3,125)
(Increase) in inventories (13,480) (5,259)
Increase in accounts payable and accrued expenses 367 2,085
(Increase) decrease in other net current assets (5,412) 958
(Increase) in other net long-term assets (751) (4,788)
------- ------
Net cash provided (used) by operating activities (4,372) 1,091
------- ------
Cash flows from investing activities-1):
Acquisition of property, plant & equipment (13,606) (7,395)
Capitalized software development costs (9,595) (9,900)
Purchase price of companies acquired - (5,852)
-------- --------
Net cash (used) by investing activities (23,201) (23,147)
-------- --------
Cash flows provided by financing activities-1):
Revolver borrowings 21,400 107,933
Revolver repayments (37,600) (101,383)
Proceeds from notes and mortgages 5,479 10,702
Principal payments on notes and mortgages (5,178) (10,968)
Proceeds from issuing common stock 60,475 16,170
Payments of escrow deposits - (500)
------ -------
Net cash provided by financing activities 44,576 21,954
------ -------
Effect of exchange rates on cash (348) (23)
------ ------
Net increase (decrease) in cash and cash equivalents 16,655 (125)
Cash and cash equivalents at beginning of period-2) 2,939 2,594
------ ------
Cash and cash equivalents at end of period-2) $19,594 $2,469
======= ======
</TABLE>
(1 - Excluded from the Consolidated Statement of Cash Flows for
the nine months ended June 30, 1994 is the issuance of common
stock with a fair market value of $1,846 related to the
acquisition of a company.
(2 - The Corporation considers all highly liquid investments
purchased with a maturity of three months or less to be cash
equivalents.
The accompanying notes are an integral part of these
consolidated financial statements.
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<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 June 30, 1995, the results of
operations for the three and nine months ended June 30, 1995
and 1994 and the cash flows for the nine months ended
June 30, 1995 and 1994. Such adjustments are generally of a
normal recurring nature (except for the $6.5 million charge
related to an inventory write-down and other items) 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.
NOTE 2. INVENTORIES
Inventories consist of (in thousands):
June 30,1995 September 30, 1994
Raw materials $21,206 $18,313
Work-in-process 8,030 7,249
Finished goods 20,972 16,600
------- --------
Total $50,208 $42,162
======= =======
The quarter ended June 30, 1995 included a $(6.5) million, or
$(0.32) per share, charge relating to an inventory write-down
and other items, primarily related to rapid technological improvements
which served to devalue earlier generations of the APEX
ATM product line and to performance issues in vendor-supplied component
parts.
- 6 -
<PAGE> 7
GENERAL DATACOMM INDUSTRIES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
NOTE 3. LONG-TERM DEBT
Long-term debt consists of the following (in thousands):
June 30, 1995 September 30, 1994
Revolving credit loan $ - $ 16,200
Notes payable 17,372 18,318
Mortgages payable 13,165 11,809
Capital lease obligations 947 1,029
------ ------
31,484 47,356
Less: current portion 6,703 5,238
-------- -------
$ 24,781 $42,118
======== =======
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 June 30, 1995, the prime rate was 9% and the
federal funds rate was 6.11%). 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 June 30, 1995, these LIBOR
rates ranged from 5.88% to 6.00%).
Effective June 30, 1995, the Corporation amended its revolving
credit and term loan agreement to modify certain financial covenants.
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. However, it is contemplated that the
agreement will be further modified to reduce the $25,000,000 maximum
available borrowings by the outstanding balance ($6,625,000 as of
June 30, 1995) of the term note referenced below.
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.
-7-
<PAGE> 8
GENERAL DATACOMM INDUSTRIES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
NOTE 3. LONG-TERM DEBT (continued)
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 higher of either (1) the prime rate or (2)
the federal funds rate plus 1/2 of 1% (on June 30, 1995, the prime rate
was 9% and the federal funds rate was 6.11%). 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 June 30, 1995, these
LIBOR rates ranged from 5.88% to 6.00%). At June 30, 1995, the outstanding
balance on this note was $ 6,625,000.
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, including development and expansion of the APEX ATM product family.
NOTE 5. REAL ESTATE GAIN
Included in selling, general and administrative expenses for the
nine months ended June 30, 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.
NOTE 6. OTHER INCOME
Included in other income for the quarter ended June 30, 1995 is
an insurance claim reimbursement of $457,000.
- 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 were negatively impacted by technical
problems which delayed the development of features for the APEX
ATM (Asynchronous Transfer Mode) switch. These technical
problems resulted partially from performance issues, in
vendor-supplied component parts, which are expected to be resolved by the
end of the fourth fiscal quarter. As a result, fiscal third quarter
revenues for the APEX family of ATM switches were approximately $3 million,
as compared to $10 million in the second quarter and to $3 million
in the comparable period one year ago. In addition, as a result
of the continued customer migration from analog to digital products, for
the first nine months of fiscal 1995, sales of analog modems declined
approximately 18% from the last fiscal year and now account for
only about 16% of net product sales.
Revenues for the quarter ended June 30, 1995 decreased $6.8
million, or 12.4%, from the same period one year ago. For the
nine months ended June 30, 1995, revenues increased $11.9
million, or 7.9%, as compared to the first nine months of fiscal
1994.
The net loss for the third quarter of fiscal 1995 was
$(16,598,000), or $(0.82) per share, including a $(6,500,000),
or $(0.32) per share, charge relating to an inventory write-down
and other items. This compared to a net loss of $(502,000), or
$(0.03) per share, in the same period last fiscal year. On a
year-to-date basis, the net loss for fiscal 1995 was
$(22,436,000), or $(1.15) per share, versus a net loss of
$(3,621,000), or $(0.22) 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.
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 APEX ATM product family
in such areas as research and development, production
engineering, pre-sales support activities and inventories,
including 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 Nine months ended
June 30, June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenues:
Net product sales 77.4% 81.1% 80.5% 79.9%
Service revenue 19.6 15.9 16.9 16.8
Leasing revenue 3.0 3.0 2.6 3.3
----- ----- ----- -----
100.0 100.0 100.0 100.0
----- ----- ----- -----
Costs and expenses:
Cost of revenues 51.7 49.1 49.7 48.3
Inventory write-down and other
items 13.5 - 4.0 -
Amortization of capitalized
software development costs 6.0 4.4 5.5 4.6
Selling, general and
administrative 47.5 36.6 40.4 39.0
Research and product development 15.6 8.9 12.7 9.3
---- ---- ---- ---
Operating income (loss) (34.3) 1.0 (12.3) (1.2)
------ ----- ------ -----
Net (loss) (34.5)% (0.9)% (13.8)% (2.4)%
------ ----- ------- ------
</TABLE>
As noted above, net product sales for the quarter ended June 30,
1995 were negatively impacted by technical problems which
reduced shipments of the APEX ATM switch and related products.
For the third quarter of fiscal 1995 as compared to the third
quarter of fiscal 1994, net product sales declined $7.3 million,
or 16.4%, service revenue was up $687,000, or 7.8%, and leasing
revenue was down $210,000, or 12.8%. However, on a nine-month
basis, APEX ATM shipments resulted in a net product sales
increase of $10.5 million, or 8.7%. In addition, service
revenue, impacted by the growing product base and new offerings,
increased $2.1 million, or 8.5%; and leasing revenue decreased
$754,000, or 15.0%, due to lower domestic end-user product
shipments. Also for the nine-month comparison, international
revenues grew 15.3% while domestic revenues increased 3.6%.
Gross margin as a percent of sales (which includes inventory
write-downs and other items and amortization of capitalized
software development costs) declined 17.9%, from 46.6% in the
third quarter of fiscal 1994 to 28.7% in the third quarter of
fiscal 1995. Inventory write-downs and other items totaled $6.5
million in the quarter ended June 30, 1995 and alone had the
effect of reducing gross margin by 13.5%. These charges primarily related to
rapid technological improvements which served to devalue earlier generations
of the APEX ATM product line and to performance issues in vendor-supplied
component parts. Amortization of capitalized software development costs
- 10 -
<PAGE> 11
charged to product cost of sales increased to $2.9 million in
the quarter ended June 30, 1995 from $2.4 million in the same
quarter one year ago and reduced gross margin an additional
1.6%. The remaining 2.7% reduction was due to the reduced
manufacturing volumes and the resulting higher per unit costs,
high startup costs associated with the APEX ATM product family
and reduced sales prices on legacy products. On a nine-month
basis, gross margin declined from 47.1% to 40.8%, or 6.3%.
Inventory write-down and other items reduced gross margin 4.0%,
and amortization of capitalized software development costs
charged to product cost of sales increased $2.0 million and
reduced gross margin 0.9%. The remaining impact of 1.1% is
attributable to lower margins on net product sales for the
reasons described in the quarter comparison above.
Selling, general and administrative expenses increased from
$20.1 million in the third quarter of fiscal 1994 to $22.8
million in the third quarter of fiscal 1995. This net increase
of $2.7 million, or 13.6%, is primarily due to a growing APEX
ATM marketing organization and related product launch expenses
and expansion of international sales activities. The decline in
revenue combined with the increased spending caused selling,
general and administrative expenses to increase to 47.4% in
fiscal 1995 from 36.6% of revenues in fiscal 1994. On a
nine-month basis, selling, general and administrative expenses
increased $6.7 million, or 11.4%. As a percentage of nine-month
revenue, selling, general and administrative expenses rose to
40.3% of fiscal 1995 revenue from 39.0% of fiscal 1994 revenue.
Research and product development spending, before consideration
of capitalized software development costs, increased to $10.4
million, or 21.6% of revenues, in the third quarter of fiscal
1995 from $8.1 million, or 14.8% of revenues, in the comparable
quarter one year ago. This increase of $2.3 million, or 28.2%,
reflects continued investment in ATM development in three
research centers: the Montreal Research Center (Canada);
Advanced Research Centre (UK); and the domestic ATM Product
Development Group (CT). Capitalized software development costs
decreased $300,000 to $2.9 million compared to $3.2 million in
the same quarter one year ago but, as a percentage of total
research and development spending, fell to 27.9% of total
spending in the third quarter of fiscal 1995 from 39.5% of total
spending in the same quarter one year ago. On a nine-month
basis, research and product development spending, before
consideration of capitalized software development costs,
increased to $30.3 million, or 18.6% of revenues, in fiscal 1995
from $24.0 million, or 15.9% or revenues, in fiscal 1994.
Capitalized software development costs decreased $305,000 to
$9.6 million in fiscal 1995 compared to $9.9 million in fiscal
1994 and fell to 31.7% of total spending in fiscal 1995 from
41.3% of total spending in fiscal 1994.
Interest expense in the quarter ended June 30, 1995 decreased
$527,000 from the comparable period one year ago. This amount
included $324,000 of interest income on short-term investments
made in the quarter ended June 30, 1995. For the nine-month
period, interest expense decreased $1,009,000 from $2,773,000 in
fiscal 1994 to $1,764,000 in fiscal 1995, reflecting the
favorable impact of $952,000 of interest income in fiscal 1995
and reduced borrowing levels.
-11-
<PAGE> 12
Included in other income for the quarter ended June 30, 1995 is
an insurance claim reimbursement of $457,000.
In the quarter ended June 30, 1995, the Corporation recorded an
income tax provision of $250,000, as compared to an income tax
provision of $122,000 in the same quarter one year ago. On a
nine-month basis, the income tax provision of $850,000 compared
to an income tax benefit of $1,323,000 in fiscal 1994. The
benefit resulted from the resolution of a foreign tax issue in
the amount of $1,700,000.
LIQUIDITY AND CAPITAL RESOURCES
The Corporation's cash and cash equivalents were $19.6 million
at June 30, 1995, compared to $2.9 million at September 30, 1994.
Operating
Non-debt working capital, excluding cash and cash equivalents,
decreased $2.6 million to $56.1 million at June 30, 1995. This
decrease resulted primarily from a decrease in accounts
receivable and the timing of quarter-end payrolls, which was
partially offset by an increase in inventories and other current
assets and a decrease in accounts payable and other current
liabilities. Inventory grew $8.0 million to $50.2 million,
while accounts payable decreased $2.6 million as payments came
due for materials purchased earlier in the fiscal year.
Accounts receivable decreased $14.0 million in the third quarter
of fiscal 1995 to $35.6 million at June 30, 1995, due
principally to the lower revenues ($11.9 million) in the current
quarter as compared to the fourth quarter of fiscal 1994. During
the nine months ended June 30, 1995, the Corporation's operating
activities resulted in a net cash consumption of $4,372,000
compared to cash generation of $1,091,000 in the same period one
year ago.
Investing
Net investments in property, plant and equipment for the
nine-month period ended June 30, 1995 increased $6,211,000 to
$13,606,000 from $7,395,000 in the prior fiscal year's period,
principally for equipment to improve the manufacturing and
engineering processes (including new surface-mount manufacturing
equipment), for sales force automation and for the
relocation of the service subsidiary. Investments in
capitalized software development were $9,595,000 in fiscal 1995
compared to $9,900,000 in the same period one year ago.
Investment activities in fiscal 1994 included $5.9 million
relating to the acquisition of Netcomm Limited (UK).
Financing
Financing activities during the nine-month period ended June 30,
1995 added $44.6 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.
-12-
<PAGE> 13
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, including development and expansion of the APEX ATM
product family.
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
June 30, 1995, the prime rate was 9% and the federal funds rate
was 6.11%). 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 June 30, 1995, these
LIBOR rates ranged from 5.88 to 6.00%). Effective, June 30,
1995, the Corporation amended its revolving credit and term loan
agreement to modify certain financial covenants. At June 30,
1995, there were no borrowings outstanding under the revolving
credit loan portion of the agreement, which provides for up to
$25 million in available financing. However, it is contemplated
that the agreement will be further modified to
reduce the $25,000,000 maximum available borrowings by the
outstanding balance ($6,625,000 as of June 30, 1995) of the term
loan.
-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 nine-month periods ended June
30, 1995 and 1994.
28.1 First Amendment to Second Amended and Restated
Revolving Credit Term Loan and Security Agreement
between General DataComm Industries, Inc. et al.
and The Bank of New York et al.
(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: August 11, 1995
-14-
<TABLE>
<CAPTION>
General DataComm Industries, Inc. and Subsidiaries
Calculation of Earnings per Share
Exhibit 11
(In thousands except per share data)
Three months Nine months ended
June 30, June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Primary earnings per share:
Weighted average number of common
shares outstanding 20,332 16,790 19,562 16,317
Assumed exercise of certain stock
options - - - -
------ ------ ------ ------
20,332 16,790 19,562 16,317
------ ------ ------ ------
Loss before cumulative effect of
accounting changes ($16,598) ($502) ($22,436) ($3,188)
-------- ------ -------- -------
Cumulative effect of changes in
accounting for post-retirement
and post-employment benefits - - - (433)
-------- ----- -------- -------
Net loss ($16,598) ($502) ($22,436) ($3,621)
-------- ----- -------- -------
Loss per share-1)
Loss before cumulative effect of
accounting changes ($0.82) ($0.03) ($1.15) ($0.19)
Cumulative effect of changes in
accounting for post-retirement
and post-employment benefits - - - (0.03)
-------- ------- ------ ------
Loss per share ($0.82) ($0.03) ($1.15) ($0.22)
====== ====== ======= =======
Fully diluted earnings per share:
Weighted average number of common
shares 20,332 16,790 19,562 16,317
Assumed exercise of certain stock
options - - - -
------ ------ ------ ------
20,332 16,790 19,562 16,317
------ ------ ------ ------
Loss before cumulative effect of
accounting changes ($16,598) ($502) ($22,436) ($3,188)
Cumulative effect of changes in
accounting for post-retirement and
post-employment benefits - - - (433)
-------- ----- -------- -------
Net loss ($16,598) ($502) ($22,436) ($3,621)
--------- ----- -------- -------
Loss per share-1)
Loss before cumulative effect of
accounting changes ($0.82) ($0.03) ($1.15) ($0.19)
Cumulative effect of changes in
accounting for post-retirement
and post-employment benefits - - - (0.03)
------- ------ ------ ------
Loss per share ($0.82) ($0.03) ($1.15) ($0.22)
====== ====== ======= ======
</TABLE>
(1 - Loss per share amounts for the three-month periods are
required to be computed independently and, in 1995, do not equal
the nine-month loss-per-share amounts.
-15-
<PAGE> 16
EXHIBIT 28.1
AMENDMENT NO. 1 PAGE 1 OF 7
TO
SECOND AMENDED AND RESTATED
REVOLVING CREDIT, TERM LOAN AND
SECURITY AGREEMENT
THIS AMENDMENT NO. 1 ("Amendment") is entered into as of May ,
1995 among GENERAL DATACOMM INDUSTRIES, INC., a corporation
organized under the laws of the State of Delaware, GENERAL
DATACOMM, INC., a corporation organized under the laws of the
State of Delaware, GDC NAUGATUCK, INC., a corporation organized
under the laws of the State of Delaware, DATACOMM SERVICE
CORPORATION, a corporation organized under the laws of the State
of Delaware, GDC REALTY, INC., a corporation organized under the
laws of the State of Texas, GENERAL DATACOMM INTERNATIONAL
CORP., a corporation organized under the laws of the State of
Delaware, GENERAL DATACOMM SYSTEMS, INC., a corporation
organized under the laws of the State of Delaware (each a
"Borrower" and jointly and severally, the "Borrowers"), the
undersigned financial institutions (collectively, "Lenders") and
THE BANK OF NEW YORK ("BNY"), a New York banking corporation, as
agent for Lenders (BNY in such capacity, "Agent").
BACKGROUND
Borrowers, Lenders and Agent are parties to a Second Amended and
Restated Revolving Credit, Term Loan and Security Agreement
dated as of June 1, 1994, (as amended, supplemented or otherwise
modified from time to time, the "Loan Agreement") pursuant to
which Lenders provide Borrowers with certain financial
accommodations.
Borrowers have requested that Lenders and Agent amend the Loan
Agreement and Lenders and Agent are willing to do so on the
terms and conditions hereafter set forth.
NOW, THEREFORE, in consideration of any loan or advance or grant
of credit heretofore or hereafter made to or for the account of
Borrowers by Lenders, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Definitions. All capitalized terms not otherwise defined
herein shall have the meanings given to them in the Loan
Agreement.
2. Amendment to Loan Agreement. Subject to satisfaction of the
conditions precedent set forth in Section 3 below, the Loan
Agreement is hereby amended as follows:
-1-
<PAGE> 17
EXHIBIT 28.1
PAGE 2 OF 7
(a) Section 1.2 of the Loan Agreement is hereby amended as
follows:
(i) effective as of January 24, 1995, the following defined
terms are hereby deleted:
"CDA"
"CDA Guaranty"
"CDA Guaranty Fee"
(ii) effective as of January 15, 1995, the following defined
terms are hereby amended in their entirety to provide as follows:
"Revolving Interest Rate" shall mean an interest rate per annum
equal to (a) with respect to Domestic Revolving Loans, the
Alternate Base Rate, (b) with respect to Eurodollar Revolving
Loans, the sum of the Eurodollar Rate plus two percent (2.00%)
and (c) with respect to Alternate Currency Advances, the sum of
the Alternate Currency Interest Rate plus two percent (2.00%).
"Term Loan Interest Rate" shall mean an interest rate per annum
equal to (a) with respect to the Domestic Term Loan, the
Alternate Base Rate and (b) with respect to the Eurodollar Term
Loan, the sum of the Eurodollar Rate plus two percent (2.00%).
(b) Sections 2.11(b) and 6.16 of the Loan Agreement are hereby
deleted.
(c) Effective as of January 15, 1995, Section 3.3 of the Loan
Agreement is hereby amended by deleting "one-half of one percent
(.50%)" on the sixth line thereof and inserting "three-eights of
one percent (.375%)" in its place and stead.
(d) Effective as of March 30, 1995, Section 6.7 of the Loan
Agreement is hereby amended in its entirety to provide as
follows:
"6.7 Fixed Charge Coverage Ratio. Cause to be maintained as of
the end of each fiscal quarter a Fixed Charge Coverage Ratio for
the immediately preceding four fiscal quarters equal to or
greater than the ratio set opposite such fiscal quarter end
below:
FISCAL QUARTER ENDING FIXED CHARGE COVERAGE RATIO
March 31, 1994 1.00 to 1.00
June 30, 1994 1.00 to 1.00
-2-
<PAGE> 18
EXHIBIT 28.1
PAGE 3 OF 7
September 30, 1994 1.25 to 1.00
December 31, 1994 1.25 to 1.00
March 31, 1995 1.00 to 1.00
June 30, 1995 and at the
end of each fiscal quarter
thereafter 1.50 to 1.00"
(e) Section 9.9(ii) of the Loan Agreement is hereby amended in
its entirety to provide as follows:
"(ii) copies of all notices sent pursuant to the Chase
Agreements, and"
(f) Effective as of January 24, 1995, Article X(k) of the Loan
Agreement is hereby amended in its entirety to provide as
follows:
"(k) Intentionally Omitted."
(g) Schedules 1.2, 5.2(b), 5.8(b), 5.9(a), 5.9(c), 5.13, 7.3 and
7.8 to the Loan Agreement are hereby deleted and replaced with
Schedules 1.2, 5.2(b), 5.8(b), 5.9(a), 5.9(c), 5.13, 7.3 and
7.8, respectively, to this Amendment.
3. Conditions of Effectiveness. This Amendment shall become
effective upon satisfaction of the following conditions
precedent: (i) Agent shall have received six (6) copies of this
Amendment executed by Borrowers and Lenders and consented and
agreed to by Guarantors, (ii) Agent shall have received from
Netcomm a valid, binding and enforceable Guarantee of the
Obligations of Borrowers in favor of Lenders, and valid, binding
and enforceable debentures covering personal property of
Netcomm, (iii) Agent shall have received a valid, binding and
enforceable Pledge Agreement pursuant to which GDC pledges all
of the issued and outstanding shares of Netcomm which are owned
by GDC, (iv) Borrowers shall have paid all outstanding legal
fees of Agent's and each Lender's counsel and (v) Agent shall
have received such other certificates, instruments, documents,
agreements and opinions of counsel as may be required by Agent,
Lenders or their counsel, each of which shall be in form and
substance satisfactory to Agent, Lenders and their counsel.
4. Representations and Warranties. Borrowers hereby represent
and warrant as follows:
(a) This Amendment and the Loan Agreement, as amended hereby,
constitute legal, valid and binding obligations of Borrowers and
are enforceable against Borrowers in accordance with their
respective terms.
(b) Upon the effectiveness of this Amendment, Borrowers hereby
reaffirm all covenants, representations and
-3-
<PAGE> 19
EXHIBIT 28.1
PAGE 4 OF 7
warranties made in the Loan Agreement to the extent the same are
not amended hereby and agree that all such covenants,
representations and warranties shall be deemed to have been
remade as of the effective date of this Amendment.
(c) No Event of Default or Default has occurred and is
continuing or would exist after giving effect to this Amendment.
(d) Borrowers have no defense, counterclaim or offset with
respect to the Loan Agreement.
5. Effect on the Loan Agreement.
(a) Upon the effectiveness of Section 2 hereof, each reference
in the Loan Agreement to "this Agreement," "hereunder,"
"hereof," "herein" or words of like import shall mean and be a
reference to the Loan Agreement as amended hereby.
(b) Except as specifically amended herein, the Loan Agreement,
and all other documents, instruments and agreements executed
and/or delivered in connection therewith, shall remain in full
force and effect, and are hereby ratified and confirmed.
(c) The execution, delivery and effectiveness of this Amendment
shall not operate as a waiver of any right, power or remedy of
Agent or any Lender, nor constitute a waiver of any provision of
the Loan Agreement, or any other documents, instruments or
agreements executed and/or delivered under or in connection
therewith.
6. Governing Law. This Amendment shall be binding upon and
inure to the benefit of the parties hereto and their respective
successors and assigns and shall be governed by and construed in
accordance with the laws of the State of New York.
7. Headings. Section headings in this Amendment are included
herein for convenience of reference only and shall not
constitute a part of this Amendment for any other purpose.
-4-
<PAGE> 20
EXHIBIT 28.1
PAGE 5 OF 7
8. Counterparts. This Amendment may be executed by the parties
hereto in one or more counterparts, each of which taken together
shall be deemed to constitute one and the same instrument.
IN WITNESS WHEREOF, this Amendment has been duly executed as of
the day and year first written above.
GENERAL DATACOMM INDUSTRIES, INC.
GENERAL DATACOMM, INC.
GDC NAUGATUCK, INC.
DATACOMM SERVICE CORPORATION
GDC REALTY, INC.
GENERAL DATACOMM INTERNATIONAL CORP.
GENERAL DATACOMM SYSTEMS, INC.
By:
William S. Lawrence, the Vice President
of each of the foregoing corporations
1579 Straits Turnpike
Middlebury, Connecticut 06762-1299
THE BANK OF NEW YORK
By:
Name:
Its:
123 Main Street
White Plains, New York 10602
Commitment Percentage: 45.4545455%
IBJ SCHRODER BANK & TRUST COMPANY
By:
Name
Its
One State Street
New York, New York 10004
Commitment Percentage: 30.3030303%
(signatures continued on next page)
-5-
<PAGE> 21
EXHIBIT 28.1
PAGE 6 OF 7
PEOPLE'S BANK
By:
Name:
Its:
255 Bank Street
Waterbury, Connecticut 06703
Commitment Percentage: 24.2424242%
THE BANK OF NEW YORK, as Agent
By:
Name:
Its:
CONSENTED AND AGREED TO:
General DataComm Ltd.
By:
Name: W. S. Lawrence
Its: Vice President
General DataComm Limited
By:
Name: W. S. Lawrence
Its: Vice President
Eurotech France S.A.R.L. (now known as General DataComm France
S.A.R.L.)
By:
Name: W. S. Lawrence
Its: Authorized Signator
General Telecomm, S.A. de C.V. (now known as General DataComm de
Mexico S.A. de C.V.)
By:
Name: W. S. Lawrence
Its: Authorized Signator
(signatures continued on next page)
-6-
<PAGE> 22
EXHIBIT 28.1
PAGE 7 OF 7
DataComm Rental Corporation
By:
Name: W. S. Lawrence
Its: Vice President
General DataComm Pty Limited
By:
Name: W. S. Lawrence
Its: Authorized Signator
General DataComm S.A.R.L.
By:
Name: W. S. Lawrence
Its: Authorized Signator
-7-
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> QTR-3
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> JUN-30-1995
<CASH> 19,594
<SECURITIES> 0
<RECEIVABLES> 35,554
<ALLOWANCES> 1,977
<INVENTORY> 50,208
<CURRENT-ASSETS> 11,099
<PP&E> 125,621
<DEPRECIATION> 78,238
<TOTAL-ASSETS> 200,063
<CURRENT-LIABILITIES> 47,481
<BONDS> 24,781
<COMMON> 2,112
0
0
<OTHER-SE> 119,439
<TOTAL-LIABILITY-AND-EQUITY> 200,063
<SALES> 131,130
<TOTAL-REVENUES> 162,845
<CGS> 71,486
<TOTAL-COSTS> 89,900
<OTHER-EXPENSES> 92,767
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,764
<INCOME-PRETAX> (21,586)
<INCOME-TAX> 850
<INCOME-CONTINUING> (22,436)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (22,436)
<EPS-PRIMARY> (1.15)
<EPS-DILUTED> (1.15)
</TABLE>
