<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 JUNE 29, 1997
COMMISSION FILE NUMBER: 0-4384
MICRODYNE CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MARYLAND 52-0856493
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
3601 EISENHOWER AVENUE, ALEXANDRIA, VA 22304
(Address of principal executive office) (Zip Code)
(703) 329-3700
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or 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:
<TABLE>
<S> <C>
CLASS OUTSTANDING AT JUNE 29, 1997
---------------------------- ----------------------------
Common stock, $.10 par value 12,898,564
</TABLE>
Page 1 of 12 pages
Exhibit Index appears on page 12
<PAGE> 2
MICRODYNE CORPORATION
INDEX
<TABLE>
<CAPTION>
PAGE NUMBER
PART I - FINANCIAL INFORMATION
<S> <C> <C>
Item 1. Consolidated Financial Statements
Statements of Operations
Three and nine months ended June 29, 1997
and June 30, 1996 3
Balance Sheets
June 29, 1997 and September 29, 1996 4
Statements of Cash Flows
Nine months ended June 29, 1997
and June 30, 1996 5
Notes to Consolidated Financial
Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 7
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports. 12
SIGNATURES 12
</TABLE>
2
<PAGE> 3
MICRODYNE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended
Dollars and shares in thousands, June 29, June 30,
except per share data, unaudited 1997 1996
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Revenue:
Product $ 4,017 $ 3,905
Service 8,508 3,633
-------- --------
Total revenue 12,525 7,538
Cost of product sold and service provided:
Product 1,751 1,779
Service 5,884 2,449
-------- --------
Total cost of product sold and service provided 7,635 4,228
Gross profit 4,890 3,310
Selling, general and administrative 2,357 2,122
Research and development 409 377
-------- --------
Income from operations 2,124 811
Other (expense) income, net (197) (481)
-------- --------
Income from continuing operations before income taxes 1,927 330
Income tax expense 732 125
-------- --------
Income from continuing operations $ 1,195 $ 205
======== ========
Discontinued operations:
Loss from operations, net of tax effect (947) (1,395)
Loss on disposal, net of tax effect (4,222) --
-------- --------
Net loss from discontinued operations (5,169) (1,395)
-------- --------
Net loss (3,974) (1,190)
======== ========
Earnings per share from continuing operations $ 0.09 $ 0.02
Loss per share from discontinued operations $ (0.40) $ (0.11)
-------- --------
Net loss per share $ (0.31) $ (0.09)
======== ========
Weighted average shares outstanding 12,877 12,811
======== ========
<CAPTION>
Nine Months Ended
Dollars and shares in thousands, June 29, June 30,
except per share data, unaudited 1997 1996
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Revenue:
Product $ 13,069 $ 11,851
Service 18,883 10,909
-------- --------
Total revenue 31,952 22,760
Cost of product sold and service provided:
Product 5,612 5,589
Service 13,327 7,334
-------- --------
Total cost of product sold and service provided 18,939 12,923
Gross profit 13,013 9,837
Selling, general and administrative 6,519 6,311
Research and development 1,151 1,065
-------- --------
Income from operations 5,343 2,461
Other (expense) income, net (835) (1,429)
-------- --------
Income from continuing operations before income taxes 4,508 1,032
Income tax expense 1,716 392
-------- --------
Income from continuing operations $ 2,792 $ 640
======== ========
Discontinued operations:
Loss from operations, net of tax effect (29,112) (3,932)
Loss on disposal, net of tax effect (4,222) --
-------- --------
Net loss from discontinued operations (33,334) (3,932)
-------- --------
Net loss $(30,542) $ (3,292)
======== ========
Earnings per share from continuing operations $ 0.22 $ 0.05
Loss per share from discontinued operations $ (2.59) $ (0.31)
-------- --------
Net loss per share $ (2.37) $ (0.26)
======== ========
Weighted average shares outstanding 12,871 12,803
======== ========
</TABLE>
The notes on the following pages are an integral part of these statements
3
<PAGE> 4
MICRODYNE CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 29, September 29,
Dollars in thousands 1997 1996
- ----------------------------------------------------------------------------------------------------
(unaudited) (audited)
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash $ 1,017 $ 1,791
Accounts receivable, net 15,103 9,527
Inventories 4,546 3,604
Income tax receivable 1,541 1,946
Prepaid expenses and other 361 384
Current assets of discontinued operations 6,285 42,770
Deferred income taxes 3,603 1,053
--------- ---------
Total current assets 32,456 61,075
PROPERTY AND EQUIPMENT, net 2,252 2,451
NON-CURRENT ASSETS OF
DISCONTINUED OPERATIONS 225 16,232
DEFERRED TAX ASSET 146 113
OTHER ASSETS 34 123
--------- ---------
$ 35,113 $ 79,994
========= ==========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES
Current maturities of
long-term obligations $ 8,379 $ 15,119
Accounts payable 2,243 1,579
Accrued liabilities 6,046 2,194
Current liabilities of discontinued operation 8,299 13,507
--------- --------
Total current liabilities 24,967 32,399
LONG-TERM OBLIGATIONS
net of current maturities 3,579 10,539
NON-CURRENT LIABILITIES OF
DISCONTINUED OPERATIONS 286 532
STOCKHOLDERS' EQUITY
Common stock, $.10 par value authorized
50,000,000 shares, 12,898,564 shares
issued and outstanding at June 29, 1997,
and 12,832,203 shares issued and
outstanding at September 29, 1996 1,290 1,283
Additional paid-in-capital 10,308 10,016
Retained earnings (deficit) (5,317) 25,225
---------- ---------
Total Stockholders' Equity 6,281 36,524
---------- ---------
$ 35,113 $ 79,994
========== ==========
</TABLE>
The notes on the following pages are an integral part of these statements
4
<PAGE> 5
MICRODYNE CORPORATION
Consolidated Statement of Cash Flows
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
6/29/97 6/30/96
------- -------
<S> <C> <C>
Increase (decrease) in Cash:
Cash flows from operating activities:
Net loss $ (30,542) $ (3,292)
Adjustments to reconcile net loss to net cash from operating activities:
Depreciation and amortization 427 370
Provision for doubtful accounts receivable and
inventory obsolescence -- --
Loss on Discontinued Operations 33,334 3,932
Changes in assets and liabilities, net of effect of
discontinued operations
(Increase) decrease in accounts receivable (5,576) 527
Increase in inventories (942) (843)
Decrease (increase) in prepaid expenses 23 (348)
Decrease in other assets 89 43
Decrease (increase) in income tax receivable 405 (240)
Increase in deferred tax asset (2,583) (468)
Increase in accounts payable and other accruals 4,516 343
----------- -----------
Net cash (used in) provided by continuing operations (849) 24
Net cash provided by (used in) discontinued operations 13,704 (12,414)
----------- -----------
12,855 (12,390)
Cash flows from investing activities:
Additions to property and equipment (228) (109)
----------- -----------
Net cash used in investing activities (228) (109)
Cash flows from financing activities:
(Payments on) issuance of bank debt (11,825) 1,100
Issuance of notes payable -- 8,855
Payments on notes payable (1,875) (603)
Issuance of common stock 299 20
----------- -----------
Net cash (used in) provided by financing activities (13,401) 9,372
----------- -----------
Net decrease in Cash (774) (3,127)
Cash at beginning of period 1,791 4,587
----------- -----------
Cash at end of period $ 1,017 $ 1,460
=========== ===========
</TABLE>
The notes on the following pages are an integral part of these statements
5
<PAGE> 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The interim financial information is unaudited. In the opinion of
management, the financial statements included in this report reflect all normal
recurring adjustments which Microdyne Corporation ("Microdyne" or "the
Company") considers necessary for a fair presentation of the results of
operations for the interim periods covered and of the financial position of the
Company at the date of the interim balance sheet. The results for interim
periods are not necessarily indicative of the results for the entire year.
In addition, preparation of financial statements in conformance with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities as of the date of the financial
statements, and the reported amounts of revenues and expenses for the periods
reported. Actual results could differ from these estimates.
The accompanying unaudited financial statements have been prepared in
accordance with the instructions for Form 10-Q, and therefore footnote
disclosures normally accompanying financial statements have been substantially
omitted. These condensed financial statements should be read in conjunction
with complete disclosures accompanying the financial statements contained in
the Company's most recent Annual Report on Form 10-K.
2. The provision for income taxes presented in the Statements of
Operations is based upon the estimated effective tax rate at fiscal year-end,
and is largely determined by management's estimate as of the interim date of
projected taxable income for the entire fiscal year.
In the third quarter of fiscal 1997, Microdyne accrued for taxes from
continuing operations at a rate of 38%. Those taxes were then shown as a credit
against the Company's loss from discontinued operations. In addition, a
substantial portion of the tax benefit associated with net operating loss
carryforwards has been reserved for in the accompanying financial statements
due to uncertainty as to realization based upon current circumstances. The
accrual of taxes in the fourth quarter will be dependent upon several factors,
including whether the company records additional gains or losses from
discontinued operations. Due to the substantial valuation allowance recorded,
the Company does not expect to accrue taxes on earnings until such time as it
exhausts available net operating loss carryforwards.
3. In the second quarter of fiscal 1997, management restructured its
Networking Products business by reducing the amount of product held by
distributors and realigning its product offerings with a new line of low-cost,
high-performance adapter cards. The realignment of the Company's product lines
included abandoning certain products and technology acquired during 1994
through 1996, resulting in the write-off of capitalized acquisition costs. The
financial statement impact of the above actions was to record a restructuring
charge, which is now reflected in the loss from operations of the discontinued
operations, of $26,607,000, net in tax effect, which was comprised of the
following:
<TABLE>
<S> <C>
Write off of abandoned technology and product rights $ 14,539,000
Write down of inventories 9,394,000
Charges associated with product returns and distribution credits,
net of release of associated reserves 2,674,000
------------
$ 26,607,000
</TABLE>
4. In the third quarter, the Company elected to exit the Networking
Products business and to discontinue its Networking Products Division. In
association with the decision, the Company recorded a charge of $4,222,000
representing the anticipated loss on disposal, net of tax effects, of the
division, and includes anticipated operating losses until the division is
closed or sold. As of August 13, 1997, Microdyne had not signed definitive
agreements for the sale of any assets, but had letters of intent for two such
sales. Negotiations continue on such sales. There can be no assurance, however,
that such negotiations will result in definitive agreements being reached.
The liabilities associated with the discontinued operation of the
accompanying balance sheet at June 30, 1997 includes trade accounts payable of
$3,600,000 and accrued liabilities and other obligations arising as a result of
the disposal of $4,985,000. At the present time, the contemplated
6
<PAGE> 7
transactions involving the sale of the assets or rights of the discontinued
business do not provide for the buyer assuming a substantial portion of these
obligations. However, the Company is also negotiating to reduce certain of its
liabilities, although the outcome of such negotiations is unknown as of this
filing and the relief the Company may be given cannot be estimated. Any relief
will be accorded appropriate accounting treatment in the quarter in which such
an event occurs.
5. As a result of the discontinued operations presentation of the above
disposal, the accompanying 1996 financial statements have been restated.
7
<PAGE> 8
PART 1. - FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
GENERAL
Microdyne Corporation ("the Company" or "Microdyne") has three
businesses: products and systems integration for aerospace telemetry, which is
carried out through the Aerospace Telemetry Division ("ATD"); outsourced
technical services, which is carried out through its SSD Division ("SSD"); and
networking products, which is carried out through its Networking Products
Division ("NPD").
The first two of these business have performed and continue to perform
very well, yielding steady revenue and income growth. The Company believes
demand for ATD's products is strong and that such demand should continue. In
1997, ATD has seen an increasing number of orders from multiple sources,
including government procurements and satellite-based communications, as well
as its largest-ever systems integration contract; with the result that the
year-over-year revenue increase for that division is likely to approach 60%. In
the three months ended June 29, 1997, the division booked $6,204,000 of orders,
an 81% increase from the $3,425,000 booked in the same period of FY1996. A
substantial portion the orders placed in the third quarter of FY1997 are
scheduled for delivery in FY1998.
Microdyne's SSD Division's (formerly called Microdyne Support
Services) revenue continues to meet the Company's revenue and profit
contribution expectations. In January 1997, the Company signed a contract to
handle certain overflow telephone technical support calls and, in March 1997,
SSD opened an independent call center in Carson, California in support of that
contract. In May, 1997, SSD was informed by a customer that it had been
selected to provide services over a four-year period with an estimated annual
value of $4,000,000 to $5,000,000; the Company has negotiated a contract;
expects to begin deriving revenue from that contract in September 1997, and
will open a new call center in Southern California.
In the first and second quarters of fiscal 1997, a series of events
caused the Company to re-evaluate its presence in, and the value of its assets
relating to, the networking products business. These included a February 1997
price war among the industry's largest players that resulted in a 40% decline
in adapter card prices across the industry, together with evidence of a slowing
in industry growth in the form of earnings warnings from several companies that
derive substantial revenues from adapter card sales.
Microdyne restructured NPD in March 1997 to make it more competitive
and restore its profitability. The Company wrote down its existing investments
in adapter card technology, as well as its investment in marketing rights to
the Novell brand name. The Company took a charge of $14,539,000 to effect this
write down of intangible assets. The Company also discontinued certain NPD
product lines in which it is no longer competitive, incurring $2,674,000 in
charges; and wrote down the value of its inventory by $9,394,000.
In the third quarter of fiscal 1997, further events led the Company to
conclude that it should exit the networking products business. These events
included a further decrease in adapter card prices and decreased sales of NPD's
products through distributors, with the result that the division continued to
be unprofitable. On June 16, 1997, the Company announced it would exit the
networking products division and would attempt the sale of the division, its
product lines, or its assets.
Microdyne is treating its networking products business as a
discontinued operation effective with the third quarter of fiscal 1997, and has
restated prior periods accordingly.
RESULTS OF OPERATIONS
QUARTER ENDED JUNE 29, 1997 COMPARED TO QUARTER ENDED JUNE 30, 1996
Revenue from continuing operations for the third quarter of fiscal
year 1997 increased to $12,525,000 from $7,538,000 in the second quarter of
fiscal year 1996, an increase of 66%.
Aerospace Telemetry Division revenue was $7,873,000 in the third
quarter of fiscal 1997 compared to $3,985,000 in 1996, an increase of 98%. This
increase was due to increased demand for its products and the recognition of
$3,856,000 of revenue from system integration contracts,
8
<PAGE> 9
primarily one with the Italian Ministry of Defense. The division began
recognizing revenue under that contract in December 1996.
SSD revenue was $4,652,000 in the third quarter of fiscal 1997 versus
$3,553,000 in the third quarter of fiscal 1996, an increase of 31%. The revenue
increase was due to increased demand for the division's teleservices and
product repair capabilities, including revenue from the division's new
Torrance, California call center.
Gross profit from continuing operations was 39.0% of revenue, or
$4,890,000 in the third quarter of 1997; compared to $3,310,000, or 43.9% of
revenue, in the third quarter of fiscal 1996. The decline in gross profit as a
percentage of sales was due principally to increased revenue in 1997 from ATD
system integration contracts, which have a lower gross profit contribution than
ATD's traditional products. Gross profit as a percentage of sales at SSD
declined slightly from 1996 to 1997.
SG&A expense was $2,357,000 in the third quarter of fiscal 1997, an
increase of 11.1% from the $2,122,000 reported in the third quarter of fiscal
1996. As a percentage of revenue, however, SG&A fell to 18.8% in 1997 from
28.2% in 1996. This decrease as a percentage of revenue was due principally to
the relative growth rates of revenue and SG&A at ATD. Going forward, Microdyne
will continue its efforts to reduce SG&A expense as a percentage of sales.
Research and Development expense was relatively stable at $409,000 in the third
quarter of fiscal 1997 and $377,000 in the third quarter of fiscal 1996,
reflecting R&D activities at ATD.
Income from continuing operations rose 161.9%, to $2,124,000, in the
third quarter of fiscal 1997 from $811,000 in the third quarter of fiscal 1996.
As a percentage of revenue, income from continuing operations was 17.0% in 1997
versus 10.8% in 1996. The improvement as a percentage of sales reflects the
spreading of corporate and other SG&A expenses over a broader revenue base.
Interest and other expense declined to $197,000 in the third quarter
of fiscal 1997 from $481,000 in the third quarter of fiscal 1996. The decline
reflects lower outstanding borrowing in 1997. The Company recorded an accrual
for income taxes at a rate of 38% in the quarter in both 1997 and 1996.
Net income from continuing operations was $1,195,000, or 9.5% of
revenue, in the third quarter of fiscal 1997, versus $205,000, or 2.7% of
revenue, in the third quarter of fiscal 1996. The year-to-year increase of 483%
reflects higher revenue and improved operating performance.
Microdyne reported a loss from discontinued operations, net of tax
effect, of $947,000 in the third quarter of fiscal 1997, versus a loss of
$1,395,000 in the third quarter of fiscal 1996. The losses in each quarter
reflected the inability of the Networking Products Division to cover operating
costs from gross profits on product sales. NPD product sales reflected in these
results were $9,162,000 in the third quarter of fiscal 1997 versus $17,046,000
in the third quarter of fiscal 1996.
The Company also recorded a loss on disposal of discontinued business,
net of tax effect, of $4,222,000 in the third quarter of fiscal 1997. See Notes
to Consolidated Financial Statements and the Financial Information - General
section, above.
NINE MONTHS ENDED JUNE 29, 1997 COMPARED TO NINE MONTHS ENDED MARCH 31, 1996
Revenue from continuing operations for the first nine months of fiscal
year 1997 increased 40.4%, to $31,952,000 from $22,760,000 in the first nine
months of fiscal year 1996. Aerospace Telemetry Division revenues rose 58.3%,
to $19,292,000 from $12,190,000 on the strength of both hardware revenue, which
rose 10.3% from the first nine months of fiscal 1996, and systems integration
revenue, which contributed $6,299,000 in revenue in fiscal 1997. SSD's revenues
of $12,660,000 showed an increase of 19.8% from the first nine months of fiscal
1996.
Gross profit from continuing operations increased to $13,013,000 in
1997 from $9,837,000 in 1996, an increase of 32.3%. Aerospace Telemetry gross
margins rose in dollars but declined as a percentage of sales because of the
inclusion of lower-margin systems revenues in the second and third quarters of
1997. SSD gross margins declined slightly from year to year.
9
<PAGE> 10
SG&A expense increased to $6,519,000 in the first nine months of
fiscal 1997 from $6,311,000 in the comparable period of 1996, but decreased as
a percentage of sales to 20.4% from 27.7% in 1996. The improvement reflects the
spreading of SG&A expense over a increased sales base in 1997. R&D expense was
essentially stable at $1,151,000 in 1997 from $1,065,000 in 1996.
Interest and other expense declined to $835,000 from $1,429,000,
reflecting lower borrowings in 1997; and income taxes were accrued at a rate of
38% in both periods. Net income from continuing operations was $2,792,000 in
the first nine months of fiscal 1997 versus $640,000 in the same period of
fiscal 1996. The improvement is attributable to higher revenue, higher gross
profit, improved expense control, and lower interest expense.
Microdyne reported a loss from discontinued operations, net of tax
effect, of $33,334,000 in the first nine months of fiscal 1997, versus a loss
of $3,932,000 in the same period of fiscal 1996. The losses in each period
reflected the inability of the Networking Products Division to cover operating
costs from gross profits on product sales and the restructuring of NPD in the
second quarter of fiscal 1997. NPD product sales reflected in these results
were $21,963,000 in fiscal 1997 versus $52,388,000 in fiscal 1996.
The Company recorded a $26,607,000 restructuring charge in the second
quarter of 1997 for the Networking Products Division, which is now a
discontinued operation, and a further $4,222,000 in the third quarter for
anticipated loss on disposal of the division's assets. The components of those
charges are detailed above in "Financial Information - General" and "Notes to
Consolidated Financial Statements."
LIQUIDITY AND CAPITAL RESOURCES
From a peak quarter-end bank debt of $25,700,000 at March 31, 1996,
the Company has worked to reduce its indebtedness by producing substantial cash
flow from operations. Through these efforts, bank debt was reduced to
$5,973,000 at June 29, 1997.
The final installment of the company's term note was paid in May 1997,
leaving $5,973,000 in outstanding borrowings under a revolving line of credit
facility. On June 29, 1997, the Company had $1,017,000 of cash and $1,027,000
in unused line of bank credit. The Company's bank waived a requirement that
Microdyne's bank debt be reduced to $5,000,000 by June 30, 1997. At June 30,
1997, the Company's total line of credit was $7,000,000.
In April 1996, the Company utilized cash and notes to purchase from
Novell the exclusive, royalty-free perpetual right to market certain hardware
and related technology which were previously sold by the Company under license
from Novell, and to convert certain accounts payable. As of June 29, 1997,
notes payable due Novell totaled $5,985,000, of which $2,406,000 has been
classified as a short-term obligation and $3,579,000 as a long-term obligation
on the June 29, 1997 Balance Sheet.
During the first nine months of fiscal 1997, net cash provided by
continuing and discontinued operations was $12,855,000, and capital
expenditures were minimal. However, the Company believes that capital
investment of at least $3,000,000 will be required in its aerospace telemetry
and outsourced technical services businesses in order to achieve growth targets
set for those businesses. Accordingly, the Company is prepared to finance such
investments as are required over the next twelve months and is currently
examining various means of financing such investment. The Company's current
line of credit expires on September 29, 1997. The Company is currently
negotiating with its bank for a new credit facility providing up to $12,000,000
in borrowing capacity.
During the first nine months of 1997, the Company repaid a total of
$13,700,000 of debt, including $11,800,000 of bank debt and $1,900,000 of other
debt.
The Company's restructuring had the result of decreasing accounts
receivable (as product was taken back from distributors), inventories (as the
value of inventory held by the Company was written down), and accounts payable
(as less product was built). The Company's decision to exit the Networking
Products business and its charge of $4,222,000 to effect this exit will
represent an expenditure of cash in the fourth quarter of FY1997 and beyond.
The restructuring, coupled with losses incurred in exiting the
Networking Products
10
<PAGE> 11
business, has created a net operating loss (NOL) carryforward of approximately
$32,000,000. Microdyne has recognized $3,603,000 as a deferred tax asset
related to this carryforward as of June 29, 1997, and will recognize additional
amounts as warranted by improvement in net income from continuing operations.
The impact of the NOL is to allow Microdyne to keep as cash funds that would
otherwise be accrued and paid as taxes.
The Company believes its available cash, funds generated from
operations, tax savings due to the NOL, and funds available under its credit
facilities should be sufficient to finance its continuing operations. The
Company may from time to time consider the acquisition of businesses, products,
or technologies that may require additional funds.
BUSINESS ENVIRONMENT AND RISK FACTORS
The statements in this Management's Discussion and Analysis contain
forward-looking information that involves a number of risks and uncertainties,
the possible realization of which could have material adverse effects on the
Company's future operating results. Factors that may cause actual results to
differ materially include: uncertainty associated with operating the
discontinued NPD; the likelihood that NPD's assets will be disposed of in a
timely and economic fashion; dependence upon a limited customer base at SSD;
limited product lines and service offerings relative to other suppliers; the
company's success in identifying, acquiring and incorporating commercially
successful technology, products or businesses, and in identifying and taking
advantage of growth opportunities; contractual agreements between Microdyne and
other companies; NPD's reliance upon distributors to continue to sell
networking products; fluctuations in the Company's quarterly results of
operations and the timing of orders from customers; the Company's relationships
with sources of external financing; and the risk factors listed from time to
time in the Company's SEC filings, including but not limited to the S-3
Registration Statement dated November 9, 1995; the Annual Report on Form 10-K
for the year ended September 29, 1996; and the Quarterly Reports on Form 10-Q
for the quarters ended December 29, 1996 and March 30, 1997.
Any shortfall in revenue or earnings from the levels expected by the
financial community could have an immediate and significant effect of the
trading price of the Company's common stock in any given period. Moreover, as
in the first quarter of fiscal 1996, the Company may not learn of such
shortfalls until late in the fiscal quarter as a result of historical ordering
patterns. Late receipt of this information could result in an even more
immediate and adverse effect on the trading price of the Company's stock.
11
<PAGE> 12
PART II. - OTHER INFORMATION
Item 6. Exhibits and Reports.
(a) No exhibits are enclosed herein.
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.
MICRODYNE CORPORATION
Registrant
Date: August 12, 1997 /s/ Michael E. Jalbert
-------------------------- ----------------------
Michael E. Jalbert
President and Chief Executive Officer
[Duly Authorized Officer]
Date: August 12, 1997 /s/ Massoud Safavi
-------------------------- ----------------------
Massoud Safavi
Vice President and Chief
Financial Officer
[Principal Financial Officer]
12
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-28-1997
<PERIOD-START> MAR-31-1997
<PERIOD-END> JUN-29-1997
<CASH> 1,017
<SECURITIES> 0
<RECEIVABLES> 15,103
<ALLOWANCES> 0
<INVENTORY> 4,546
<CURRENT-ASSETS> 32,456
<PP&E> 5,871
<DEPRECIATION> (3,619)
<TOTAL-ASSETS> 35,113
<CURRENT-LIABILITIES> 24,967
<BONDS> 0
0
0
<COMMON> 1,290
<OTHER-SE> 4,991
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</TABLE>
