SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
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 (Zip Code)
offices)
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 31,1996
------------------- ----------------------------
Common Stock, $.10 par value 18,621,923
Class B Stock, $.10 par value 2,140,443
Total Number of Pages in This Document is 16.
--
<PAGE>
GENERAL DATACOMM INDUSTRIES, INC.
AND SUBSIDIARIES
INDEX
Page No.
--------
Part I. Financial Information
Consolidated Balance Sheets -
March 31, 1996 and September 30, 1995 3
Consolidated Statements of Operations and
Earnings Reinvested (Deficit) - For the Three and
Six Months Ended March 31, 1996 and 1995 4
Consolidated Statements of Cash Flows - For the
Six Months Ended March 31, 1996 and 1995 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 15
- 2 -
<PAGE>
PART I. FINANCIAL INFORMATION
GENERAL DATACOMM INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, September 30,
In thousands except shares 1996 1995
--------------------------------------------------------------------------
ASSETS:
Current assets:
Cash and cash equivalents $11,162 $18,443
Accounts receivable, less allowance
for doubtful receivables of $1,772
in March and $1,704 in September 40,869 43,033
Inventories 45,849 44,958
Deferred income taxes 3,612 3,612
Other current assets 7,914 6,054
--------------------------------------------------------------------------
Total current assets 109,406 116,100
==========================================================================
Property, plant and equipment, net 47,571 46,722
Capitalized software development costs,
net of accumulated amortization of
$18,637 in March and $13,577 in September 23,393 23,407
Other assets 12,092 12,159
--------------------------------------------------------------------------
$192,462 $198,388
==========================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Current portion of long-term debt $5,518 $12,598
Accounts payable, trade 17,028 11,023
Accrued payroll and payroll-related
costs 5,936 6,173
Deferred income 6,637 6,495
Other current liabilities 17,641 16,524
--------------------------------------------------------------------------
Total current liabilities 52,760 52,813
==========================================================================
Long-term debt, less current portion 21,214 23,435
Deferred income taxes 4,466 4,469
Other liabilities 366 586
--------------------------------------------------------------------------
Total liabilities 78,806 81,303
==========================================================================
Commitments and contingent liabilities - -
Stockholders' equity:
Capital stock, par value $.10 per share,
issued: 21,351,577 shares in March and
21,122,209 shares in September 2,135 2,112
Capital in excess of par value 129,214 128,076
Deficit (10,700) (6,153)
Cumulative foreign currency translation
adjustment (2,632) (2,026)
Common stock held in treasury, at cost:
589,211 shares in March and 673,674
shares in September (4,361) (4,924)
--------------------------------------------------------------------------
Total stockholders' equity 113,656 117,085
--------------------------------------------------------------------------
$192,462 $198,388
==========================================================================
The accompanying notes are an integral part of these consolidated
financial statements.
-3-
<PAGE>
GENERAL DATACOMM INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND
EARNINGS REINVESTED (DEFICIT)
(Unaudited)
Three Months Ended Six Months Ended
March 31, March 31,
In thousands, except pershare data 1996 1995 1996 1995
- -------------------------------------------------------------------------------
Revenues:
Net product sales $47,399 $46,120 $95,616 $93,908
Service revenue 9,584 9,010 19,540 17,997
Lease revenue 2,187 1,401 3,813 2,848
- -------------------------------------------------------------------------------
59,170 56,531 118,969 114,753
- -------------------------------------------------------------------------------
Costs and expenses:
Cost of product sales 22,001 21,871 44,919 44,136
Amortization of capitalized
software development costs 3,000 3,200 5,600 6,000
Cost of services 6,294 5,839 13,258 11,639
Cost of lease revenue 280 186 496 354
Selling, general and administrative 21,642 22,315 43,087 42,898
Research and product development 7,830 7,334 15,520 13,221
- -------------------------------------------------------------------------------
61,047 60,745 122,880 118,248
- -------------------------------------------------------------------------------
Operating loss (1,877) (4,214) (3,911) (3,495)
- -------------------------------------------------------------------------------
Other income (expense):
Interest (450) (320) (887) (1,306)
Other, net 971 (199) 851 (437)
- -------------------------------------------------------------------------------
521 (519) (36) (1,743)
- -------------------------------------------------------------------------------
Loss before income taxes (1,356) (4,733) (3,947) (5,238)
Income tax provision 300 300 600 600
- -------------------------------------------------------------------------------
Net loss (1,656) (5,033) (4,547) (5,838)
Earnings reinvested (deficit)
at beginning of period (9,044) 20,672 (6,153) 21,477
- -------------------------------------------------------------------------------
Earnings reinvested (deficit) at end
of period ($10,700) $15,639 ($10,700) $15,639
===============================================================================
Loss per share ($0.08) ($0.25) ($0.22) ($0.30)
===============================================================================
Weighted average number of common and
common equivalent shares outstanding 20,676 20,176 20,586 19,176
===============================================================================
The accompanying notes are an integral part of these consolidated
financial statements.
- 4 -
<PAGE>
GENERAL DATACOMM INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Increase (Decrease) in Cash
and Cash Equivalents
---------------------------
Six Months Ended
March 31,
In thousands 1996 1995
- ---------------------------------------------------------------------------
Cash flows from operating activities:
Net (loss) ($4,547) ($5,838)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 12,644 11,621
Gain on sale of real estate (1,000) --
Decrease in accounts receivable 1,833 4,102
(Increase) in inventories (1,203) (12,084)
Increase (decrease) in accounts payable
and accrued expenses 6,653 (5,627)
(Increase) in other net current assets (1,488) (2,609)
(Increase) in other net long-term assets (915) (971)
- -------------------------------------------------------------------------------
Net cash provided by (used in) operating activities 11,977 (11,406)
- -------------------------------------------------------------------------------
Cash flows from investing activities:
Acquisition of property, plant, and equipment (7,129) (7,768)
Capitalized software development costs (5,586) (6,695)
Sale of real estate 1,000 --
- -------------------------------------------------------------------------------
Net cash used in investing activities (11,715) (14,463)
- -------------------------------------------------------------------------------
Cash flows from financing activities:
Revolver borrowings -- 19,000
Revolver repayments -- (35,200)
Proceeds from notes and mortgages 582 5,341
Principal payments on notes and mortgages (9,758) (3,189)
Proceeds from issuing common stock 1,724 60,072
- -------------------------------------------------------------------------------
Net cash provided by (used in) financing activities (7,452) 46,024
- -------------------------------------------------------------------------------
Effect of exchange rates on cash (91) (388)
- -------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents (7,281) 19,767
Cash and cash equivalents at beginning of period-(1) 18,443 2,939
- -------------------------------------------------------------------------------
Cash and cash equivalents at end of period-(1) $11,162 $22,706
===============================================================================
(1)-The Corporation considers all highly liquid investments purchaed with a
maturity of three months or less to be cash equivalents.
The accompanying notes are an integral part of these consolidated financial
statements.
-5-
<PAGE>
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, 1996, the results of operations for the three and
six months ended March 31, 1996 and 1995 and the cash flows for
the six months ended March 31, 1996 and 1995. 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 for the year ended
September 30, 1995.
NOTE 2. INVENTORIES
Inventories consist of (in thousands):
March 31, 1996 September 30, 1995
-------------- ------------------
Raw materials $18,587 $19,466
Work-in-process 7,252 5,801
Finished goods 20,010 19,691
-------- ------
Total $45,849 $44,958
======== =======
NOTE 3. LONG-TERM DEBT
Long-term debt consists of (in thousands):
March 31, 1996 September 30, 1995
-------------- ------------------
Notes payable $13,325 $22,179
Mortgages payable 12,678 13,018
Capital lease obligations 729 836
-------- --------
26,732 36,033
Less: current portion 5,518 12,598
--------- -------
$ 21,214 $23,435
========= ========
-6-
<PAGE>
GENERAL DATACOMM INDUSTRIES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
NOTE 3. LONG-TERM DEBT (continued)
Revolving Credit Loan
---------------------
On November 30, 1995, the Corporation entered into an amended
agreement with The Bank of New York Commercial Corporation to
provide a revolving credit facility maturing in November 1998 in
the amount of $25,000,000 with availability subject to a
borrowing base formula. The facility provides for a sub-limit of
$5,000,000 for letters of credit. The amended agreement provides
for interest on outstanding borrowings to be charged at the
higher of either (1) the prime rate plus 3/4 of 1%, or (2) the
federal funds rate plus 1.25% (on March 31, 1996, the prime rate
was 8.25% and the federal funds rate was 5.25%). Alternatively,
the Corporation may elect to borrow at 2.75% over LIBOR for terms
of 1, 2, 3 or 6 months (on March 31, 1996, these LIBOR rates
ranged from 5.31% to 5.38%).
The agreement also requires conformity with various financial
covenants, the most restrictive of which include minimum tangible
net worth and a fixed charge coverage ratio. Certain assets of
the Corporation, including most accounts receivable and
inventories, are pledged as collateral. The amount of borrowing
is predicated on satisfying a borrowing base formula related to
levels of certain accounts receivable and inventories. This
amended agreement replaced the prior revolving credit agreement
which also provided for borrowings of up to $25,000,000 and a
sub-limit of $5,000,000 for letters of credit. Although there
were no borrowings outstanding, there were $550,000 of letters of
credit outstanding as of March 31, 1996.
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 previous revolving credit agreement. In conjunction with the
amended revolving credit loan mentioned above, this note, in the
amount of $6,625,000, was paid in its entirety on November 30,
1995.
-7-
<PAGE>
GENERAL DATACOMM INDUSTRIES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
NOTE 4. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of (in thousands):
March 31, 1996 September 30, 1995
-------------- ------------------
Land $ 1,755 $ 1,764
Buildings and improvements 28,287 27,894
Test equipment, fixtures and
field spares 50,550 50,632
Machinery and equipment 46,805 46,669
------- -------
127,397 126,959
Less: accumulated depreciation
and amortization 79,826 80,237
-------- --------
$ 47,571 $ 46,722
======== ========
NOTE 5. REAL ESTATE TRANSACTIONS
Other income for the three and six months ended March 31, 1996
includes a $1.0 million gain from a real estate transaction.
Selling, general and administrative expenses for the six months
ended March 31, 1995 includes a $650,000 gain resulting from the
early termination of a lease obligation.
-8-
<PAGE>
GENERAL DATACOMM INDUSTRIES, INC.
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
GENERAL DISCUSSION
While total revenues for the second fiscal quarter ended March 31, 1996 showed
growth of $2.6 million, or 4.7%, from the same period one year ago, anticipated
revenue levels were not achieved. Current quarter revenues were $0.6 million, or
1.1%, below the preceding fiscal quarter ended December 31, 1995. Asynchronous
Transfer Mode ("ATM") product line shipments continued an upward trend,
amounting to $9.2 million, $10.9 million, and $13.0 million for the quarters
ended September 30, 1995, December 31, 1995, and March 31, 1996, respectively.
The Transmission product segment is continuing to experience some initial
adverse effects of a sales organization restructuring designed to shift focus
from direct sell activity to more cost-effective channels of distributors and
value-added resellers. While execution of the strategy is taking longer than
anticipated, we continue to believe pursuit of this strategy is in the Company's
long-term interest. In addition, the Company is pursuing royalty revenue
opportunities on certain transmission product technology as another means of
contributing to revenues.
The above trends are also evident on a year-to-date basis. Total revenues are up
$4.2 million, or 3.7%, from the corresponding six month period one year ago. ATM
product line revenues are up $7.9 million , or 50% over the same period. Other
product revenues were down, offsetting a portion of the ATM gains. ATM product
revenue comprised 25.0% of total product revenue in the six months ended March
31, 1996, as compared to only 17.0% for the same six month period one year ago.
The lower-than-planned revenues contributed to a net loss of $1.7 million in the
second fiscal quarter. The net loss included a one-time $1.0 million gain from
the sale of real estate. The year-to-date net loss amounts to $4.5 million. The
Corporation continues to heavily invest in marketing and engineering resources
to promote and develop products for the emerging ATM technology applications.
The Corporation expects ATM business will continue to grow and in the
longer-term has the potential to deliver substantially higher revenues.
Cash flows from operations were positive in each of the first two quarters of
fiscal 1996, amounting to $12.0 million for the six month period ended March 31,
1996. The Corporation reduced long-term debt by $9.2 million during the six
months ended March 31, 1996.
-9-
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth selected consolidated financial data stated as a
percentage of total revenues (unaudited):
Three months ended Six months ended
March 31, March 31,
1996 1995 1996 1995
- -------------------------------------------------------------------------------
Revenues:
Net product sales 80.1% 81.6 % 80.4% 81.8%
Service revenue 16.2 15.9 16.4 15.7
Leasing revenue 3.7 2.5 3.2 2.5
- -------------------------------------------------------------------------------
100.0 100.0 100.0 100.0
- -------------------------------------------------------------------------------
Costs and expenses:
Cost of revenues 48.3 49.3 49.3 48.9
Amortization of
capitalized software
development costs 5.1 5.7 4.7 5.2
Selling, general and
administrative 36.6 39.5 36.3 37.4
Research and
product development 13.2 13.0 13.0 11.5
- -------------------------------------------------------------------------------
Operating (loss) (3.2) (7.5) (3.3) (3.0)
- -------------------------------------------------------------------------------
Net (loss) (2.8)% (8.9)% (3.8)% (5.1)%
===============================================================================
Noteworthy items from the table above include: year-to-date research and product
development expense has grown to 13.0% of total revenue versus 11.5% in the
prior year, reflecting our continued strategic investment in the ATM business;
the net loss as a percent of revenue has decreased from the prior year for both
the three and six months ended March 31, 1996; service and leasing revenues
comprise a slightly larger percentage of total revenues for the three and six
months ended March 31, 1996 versus the corresponding periods of the prior year.
Three Months Ended March 31, 1996 vs. Three Months Ended March 31, 1995:
- -----------------------------------------------------------------------
Total revenues increased by $2.6 million, or 4.7% from the corresponding quarter
of the previous year. Product, service, and leasing revenues increased $1.3
million (2.8%), $574,000 (6.4%), and $786,000 (56.1%), respectively. From a
product mix perspective, revenue growth in the ATM and Transmission (including
royalties) product lines was partially offset with reduced Internetworking
product revenue. Geographically, a 2.2% reduction in domestic revenues was more
than offset with a 9.8% increase in international revenue. Our subsidiaries in
France and Germany delivered the largest international product revenue gains.
Strong service revenue growth in the international marketplace offset a much
smaller decline in domestic service revenue. The increase in leasing revenue was
unusually strong due to a few large transactions. Future leasing revenue is
expected to return to more historical levels.
-10-
<PAGE>
Three Months Ended March 31, 1996 vs. Three Months Ended March 31, 1995
- Continued:
- ------------------------------------------------------------------------
Gross margin as a percent of revenues (excluding the amortization of capitalized
software development costs) improved by 1.0% from 50.7% in the second quarter of
fiscal 1995 to 51.7% in the second quarter of the current fiscal year. Royalty
revenue, which approximated $1.4 million for the quarter ended March 31, 1996,
accounted for the entire margin gain. No royalty revenue existed in the
corresponding quarter of the prior year. Amortization of capitalized software
development costs declined slightly from $3.2 million in the quarter ended March
31, 1995 to $3.0 million in the quarter ended March 31, 1996.
Selling, general and administrative expenses decreased from $22.3 million in the
second quarter of fiscal 1995 to $21.6 million in the second quarter of fiscal
1996, a reduction of $673,000 or 3.0%, due primarily to lower administrative
expenses. Selling, general and administrative expenses were 36.6% of revenue for
the quarter ended March 31, 1996, versus 39.5% for the same quarter one year
ago, reflecting ATM product sales support and marketing activities, and
investments in international sales organizations.
Research and product development spending, before consideration of capitalized
software development costs, increased to $10.8 million, or 18.3% of revenues, in
the second quarter of fiscal 1996, from $10.5 million, or 18.6% of revenues, in
the same quarter one year ago. This represents a 2.7% increase. The Corporation
remains committed to aggressively pursuing product development and revenue
growth opportunities in the ATM and other product lines. Current research and
development spending reflects support of product development operations located
in the U.S., Canada, and U.K. Capitalized software costs equaled $3.0 million
for the second quarter of fiscal 1996, vs. $3.2 million for corresponding period
one year ago.
The second quarter of fiscal 1996 includes a $1.0 million gain from a real
estate transacion. Separately, net interest expense for the quarter ended March
31, 1996 increased $130,000 from the corresponding period one year ago. The
primary cause of the net increase is the reduction of interest income from cash
investments.
The Corporation recorded an income tax provision, principally for state and
foreign taxes, of $300,000 in the second quarter of both fiscal 1996 and
1995.
Six Months Ended March 31, 1996 vs. Six Months Ended March 31, 1995:
- -------------------------------------------------------------------
On a six month year-to-date basis, total revenues increased by $4.2 million, or
3.7%. Product, service and leasing revenues were up $1.7 million (1.8%), $1.5
million (8.6%), and $1.0 million (33.9%), respectively. An ATM product revenue
growth rate of approximately 50% more than offset product revenue declines in
our Internetworking and legacy analog modem product lines. Geographically,
international revenues increased almost 18%, more than offsetting a domestic
revenue decline of approximately 8.6%.
-11-
<PAGE>
Six Months Ended March 31, 1996 vs. Six Months Ended March 31, 1995
- Continued:
- -------------------------------------------------------------------
Gross margin as a percent of revenue, excluding amortization of capitalized
software development costs, declined slightly (.4%) from the prior year; gross
margins totaled 50.7% and 51.1% in the first six months of fiscal 1996 and 1995,
respectively. Amortization of capitalized software development costs declined
slightly from $6.0 million in the six months ended March 31, 1995 to $5.6
million in the six months ended March 31, 1996.
On a six month basis, selling, general and administrative expenses increased by
$189,000, or .4%. However, the first six months of the prior fiscal year
includes a $650,000 gain resulting from the early termination of a lease
obligation. Excluding the prior year $650,000 gain, current year-to-date
expenses are down $461,000, or 1.1%. The $461,000 reduction represents the net
effect of increased selling and marketing costs to support our revenue growth
objectives, and lower administrative expenses. Due to revenue growth and general
and administrative cost containment efforts, year-to-date selling, general and
administrative costs declined as a percent of revenue, from 37.4% in fiscal 1995
to 36.2% in fiscal 1996.
Research and product development spending, before consideration of
capitalized software development costs, was up $1.2 million, or 6.0% from the
prior year. Current year-to-date spending as a percent of revenue increased to
17.7%, as compared to 17.4% in the prior year -- despite revenue growth of $4.2
million or 3.7%. The amount of research and development spending capitalized as
capitalized software costs equaled $5.6 million (or 26.5% of research and
development spending) for the six months ended March 31, 1996, as compared to
$6.7 million (or 33.6% of research and development spending) for the same period
one year ago, down $1.1 million. The majority of this difference, which occurred
in the first quarter, was due to the timing, technical complexity, and nature of
ATM software development projects. The 6.0% increase in spending and the reduced
rate of capitalization had the combined impact of increasing net research and
development expense by $2.3 million, or 17.4% versus the first six months of
fiscal 1995.
Year-to-date net interest expense is down $419,000, or 32.1% from the prior
year, principally due to a reduced level of outstanding debt. Other income for
the six months ended March 31, 1996 includes a $1.0 million gain on the sale of
real estate.
Tax provisions for the six month periods ended March 31, 1996 and 1995 each
amount to $600,000, principally for state and foreign taxes.
-12-
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Corporation's cash and cash equivalents were $11.2 million at March 31,
1996, as compared to $18.4 million at September 30, 1995. Bank debt was reduced
by $9.3 million during the six months ended March 31, 1996, from $36.0 million
at September 30, 1995 to $26.7 million at March 31, 1996.
Operating
- ---------
During the six months ended March 31, 1996, the Corporation's operating
activities generated positive cash flow of $12.0 million, versus a negative cash
flow of $11.4 million for the same period one year ago, a year-to-year
improvement of $23.4 million. Non-debt working capital, excluding cash and cash
equivalents, decreased $6.4 million to $51.0 million at March 31, 1996. The
decrease is primarily comprised of an increase in accounts payable and accrued
expenses. Effective accounts receivable management resulted in a decrease of
$2.2 million, from $43.0 million at September 30, 1995 to $40.9 million at March
31, 1996. Inventories are up slightly from year-end, reflecting the impact of
product shipments not achieving forecast.
Investing
- ---------
Net investments in property, plant and equipment for the six months ended March
31, 1996 amounted to $7.1 million, versus $7.8 million for the same six month
period one year ago. Separately, investments in capitalized software amounted to
$5.6 million and $6.7 million for the six months ended March 31, 1996 and 1995,
respectively.
Financing
- ---------
Financing activities during the six-month period ended March 31, 1996 required
the use of $7.5 million in cash, including $6.6 million for the repayment of a
term loan, and $3.2 million for principal payments on notes and mortgages. Total
debt payments amounted to $9.8 million for the six months ended March 31, 1996;
this cash outflow, which has a favorable impact on interest expense, was
partially offset with $1.7 million of cash proceeds from the exercise of stock
options and $582,000 in new loan proceeds.
On November 30, 1995, the Corporation entered into an amended agreement with The
Bank of New York Commercial Corporation to provide a revolving credit facility
maturing in November 1998 in the amount of $25,000,000, with availability
subject to a borrowing base formula. Please reference Note 3 of the accompanying
financial statements for a more detailed description of the new agreement.
Although there were no borrowings outstanding, there were $550,000 of letters of
credit outstanding as of March 31, 1996.
The Company believes that the combination of its existing cash balances, any
future cash flows from operations, and available funds under its revolving
credit facility will be adequate to support the Corporation's cash requirements
for the near term. In addition, the Corporation considers its ability to offer
for sale its common stock and/or warrants as a viable alternative source of
financing.
-13-
<PAGE>
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995
- ---------------------------------------------------------------------------
Portions of the foregoing discussion include descriptions of the Company's
expectations regarding future trends affecting its business. The forward-
looking statements made in this document, as well as all other forward-looking
statements or information provided by the Company or its employees, whether
written or oral, are made in reliance upon the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Forward-looking statements and
future results are subject to, and should be considered in light of, risks,
uncertainties, and other factors which may affect future results including, but
not limited to: competition, rapid changing technology, regulatory requirements,
and uncertainties of international trade.
-14-
<PAGE>
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, 1996 and 1995.
(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
Senior Vice President and Principal
Financial Officer
Dated: May 15, 1996
-15-
Exhibit 11
General DataComm Industries, Inc. and Subsidiaries
Calculation of Earnings per Share
(In thousands except per share data)
Three months ended Six months ended
March 31, March 31,
1996 1995 1996 1995
- ------------------------------------------------------------------------------
Primary earnings per share:
- --------------------------
Weighted average number of common
shares outstanding 20,676 20,176 20,586 19,176
Assumed exercise of certain stock
options - - - -
- ------------------------------------------------------------------------------
20,676 20,176 20,586 19,176
- ------------------------------------------------------------------------------
Net loss ($1,656) ($5,033) ($4,547)($5,838)
- ------------------------------------------------------------------------------
Loss per share ($0.08) ($0.25) ($0.22) ($0.30)
- ------------------------------------------------------------------------------
Fully diluted earnings per share:
- --------------------------------
Weighted average number of common
shares outstanding 20,676 20,176 20,586 19,176
Assumed exercise of certain stock
options - - - -
- ------------------------------------------------------------------------------
20,676 20,176 20,586 19,176
- ------------------------------------------------------------------------------
Net loss ($1,656) ($5,033) ($4,547) ($5,838)
- -------------------------------------------------------------------------------
Loss per share ($0.08) ($0.25) ($0.22) ($0.30)
- -------------------------------------------------------------------------------
-16-
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> MAR-31-1996
<CASH> 11,162
<SECURITIES> 0
<RECEIVABLES> 40,869
<ALLOWANCES> 1,772
<INVENTORY> 45,849
<CURRENT-ASSETS> 11,526
<PP&E> 127,397
<DEPRECIATION> 79,826
<TOTAL-ASSETS> 192,462
<CURRENT-LIABILITIES> 52,760
<BONDS> 21,214
0
0
<COMMON> 2,135
<OTHER-SE> 111,521
<TOTAL-LIABILITY-AND-EQUITY> 192,462
<SALES> 95,616
<TOTAL-REVENUES> 118,969
<CGS> 50,519
<TOTAL-COSTS> 64,273
<OTHER-EXPENSES> 57,756
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (887)
<INCOME-PRETAX> (3,947)
<INCOME-TAX> 600
<INCOME-CONTINUING> 4,547
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,547)
<EPS-PRIMARY> (0.22)
<EPS-DILUTED> (0.22)
</TABLE>
