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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
|X| Quarterly report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 For the quarterly period ended March 31, 2000.
OR
|_| Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 For the transition period from ____________________
to ____________________.
Commission File Number: 0-8574
MICROWAVE POWER DEVICES, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-3622306
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
49 Wireless Boulevard
Hauppauge, New York 11788-3935
(Address of principal executive offices, including zip code)
(631) 231-1400
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes |X|. No |_|.
As of April 30, 2000, there were 10,694,208 shares outstanding of the
registrant's Common Stock, $.01 par value.
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<PAGE>
MICROWAVE POWER DEVICES, INC.
INDEX
PART I -- FINANCIAL INFORMATION Page No.
- ------------------------------- --------
ITEM 1. Consolidated Financial Statements
Consolidated Balance Sheets --
March 31, 2000 and December 31, 1999 .......................... 3
Consolidated Statements of Operations --
Three months ended March 31, 2000 and 1999 .................... 4
Consolidated Statements of Cash Flows --
Three months ended March 31, 2000 and 1999 .................... 5
Notes to Consolidated Financial Statements .................... 6
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations ..................................... 8
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk..... 11
PART II -- OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K .............................. 11
SIGNATURES ............................................................. 12
Page 2
<PAGE>
PART I -- FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS.
MICROWAVE POWER DEVICES, INC. and SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
-------- -----------
(unaudited) (audited)
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents ................................................. $ 565 $ 618
Accounts receivable, net of allowance for doubtful accounts of
$98 and $160, respectively ............................................. 10,545 12,167
Inventories, net .......................................................... 16,029 16,062
Prepaid expenses and other current assets ................................. 561 529
Deferred income taxes ..................................................... 1,975 789
-------- --------
Total current assets ................................................. 29,675 30,165
PROPERTY, PLANT AND EQUIPMENT, net ............................................. 9,471 9,614
INTANGIBLE ASSETS, net ......................................................... 276 247
OTHER LONG-TERM ASSETS ......................................................... 449 442
DEFERRED INCOME TAXES .......................................................... 6,683 7,062
-------- --------
$ 46,554 $ 47,530
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt ......................................... $ 1,514 $ 1,418
Accounts payable .......................................................... 7,348 7,528
Accrued liabilities ....................................................... 4,176 3,796
-------- --------
Total current liabilities ............................................ 13,038 12,742
-------- --------
LONG-TERM DEBT ................................................................. 14,001 14,761
-------- --------
SHAREHOLDERS' EQUITY:
Preferred stock, $.01 par value; 5,000,000 shares authorized;
no shares issued or outstanding ........................................ -- --
Common stock, $.01 par value; 25,000,000 shares authorized;
10,692,333 and 10,638,664 shares issued and outstanding, respectively .. 107 106
Additional paid-in capital ................................................ 25,989 25,498
Notes receivable from shareholders ........................................ (123) (123)
Retained earnings (accumulated deficit) ................................... (6,458) (5,454)
-------- --------
Total shareholders' equity ........................................... 19,515 20,027
-------- --------
$ 46,554 $ 47,530
======== ========
</TABLE>
The accompanying notes are an integral part
of these consolidated balance sheets.
Page 3
<PAGE>
MICROWAVE POWER DEVICES, INC. and SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended
--------------------------
March 31, March 31,
2000 1999
-------- --------
<S> <C> <C>
NET SALES ................................................ $ 12,423 $ 17,248
COST OF SALES ............................................ 10,340 11,988
-------- --------
Gross profit ................................... 2,083 5,260
-------- --------
OPERATING EXPENSES:
General and administrative .......................... 931 1,006
Selling ............................................. 899 1,037
Research and development ............................ 1,589 1,610
-------- --------
3,419 3,653
-------- --------
Income (loss) from operations .................. (1,336) 1,607
INTEREST EXPENSE, net .................................... 337 294
OTHER INCOME, net ........................................ -- (1)
-------- --------
Income (loss) before income taxes .............. (1,673) 1,314
PROVISION (BENEFIT) FOR INCOME TAXES ..................... (669) 482
-------- --------
Net income (loss) .............................. $ (1,004) $ 832
======== ========
PER SHARE INFORMATION:
Net income (loss) per common share:
Basic .......................................... $ (0.09) $ 0.08
======== ========
Diluted ........................................ $ (0.09) $ 0.08
======== ========
Common shares used in computing per share amounts:
Basic .......................................... 10,655 10,446
======== ========
Diluted ........................................ 10,655 10,695
======== ========
</TABLE>
The accompanying notes are an integral part
of these consolidated statements.
Page 4
<PAGE>
MICROWAVE POWER DEVICES, INC. and SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended
--------------------------
March 31, March 31,
2000 1999
-------- -------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) ............................................... $(1,004) $ 832
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization .............................. 401 375
Provision for doubtful accounts ............................ (62) --
Deferred income taxes ...................................... (680) 471
Changes in operating assets and liabilities:
Accounts receivable ........................................ 1,684 19
Inventories ................................................ 33 (2,259)
Prepaid expenses and other assets .......................... (90) 81
Accounts payable and accrued liabilities ................... 201 1,850
Customer advance payments .................................. -- (921)
------- -------
Net cash provided by operating activities ............. 483 448
------- -------
INVESTING ACTIVITIES:
Purchases of property, plant and equipment ................. (237) (982)
------- -------
Net cash used in investing activities ................. (237) (982)
------- -------
FINANCING ACTIVITIES:
Proceeds from long-term debt ............................... 474 867
Principal payments of long-term debt ....................... (355) (277)
Net repayments on revolving credit loans ................... (783) (387)
Deferred financing costs ................................... -- --
Net proceeds from exercise of common stock options ......... 365 370
------- -------
Net cash provided by (used in) financing activities ... (299) 573
------- -------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ..................... (53) 39
CASH AND CASH EQUIVALENTS, beginning of year ......................... 618 667
------- -------
CASH AND CASH EQUIVALENTS, end of period ............................. $ 565 $ 706
======= =======
SUPPLEMENTAL DATA:
Cash paid for interest .......................................... $ 359 $ 307
======= =======
Cash paid for income taxes ...................................... $ -- $ 3
======= =======
Non-cash tax benefits from exercise of common stock options ..... $ 126 $ --
======= =======
</TABLE>
The accompanying notes are an integral part
of these consolidated statements.
Page 5
<PAGE>
MICROWAVE POWER DEVICES, INC. and SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2000
(in thousands, except per share data)
(unaudited)
1. Reference is made to the Notes to Consolidated Financial Statements
contained in the Company's December 31, 1999 audited consolidated financial
statements included in the Company's 1999 Annual Report and the Company's 1999
Annual Report on Form 10-K filed with the SEC on March 29, 2000. In the opinion
of Management, the interim unaudited financial statements included herein
reflect all adjustments necessary, consisting of normal recurring adjustments,
for a fair presentation of such data on a basis consistent with that of the
audited data presented therein. The consolidated results of operations for
interim periods are not necessarily indicative of the results to be expected for
a full year.
2. The Company accounts for earnings per share pursuant to Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share." Basic net
income (loss) per common share ("Basic EPS") is computed by dividing net income
by the weighted average number of common shares outstanding during the period.
Diluted net income per common share ("Diluted EPS") is computed by dividing net
income (loss) by the weighted average number of common shares and dilutive
common share equivalents outstanding during the period. SFAS No. 128 requires
the presentation of both Basic EPS and Diluted EPS on the face of the
consolidated statement of operations. A reconciliation between the numerator and
denominator of Basic EPS and Diluted EPS is as follows:
<TABLE>
<CAPTION>
Net Income (Loss)
Net Income (Loss) Common Shares Per Common Share
----------------- ------------- ----------------
For the quarter ended March 31, 2000
------------------------------------
<S> <C> <C> <C>
Basic EPS
- ---------
Net loss attributable to common stock $(1,004) 10,655 $(0.09)
Effect of dilutive securities: stock options -- -- --
------- ------ ------
Diluted EPS
- -----------
Net income attributable to common stock and $(1,004) 10,655 $(0.09)
assumed option exercises ======= ====== ======
For the quarter ended March 31, 1999
------------------------------------
Basic EPS
- ---------
Net income attributable to common stock $832 10,446 $0.08
Effect of dilutive securities: stock options -- 249 --
------- ------ ------
Diluted EPS
- -----------
Net income attributable to common stock and $832 10,695 $0.08
assumed option exercises ======= ====== ======
</TABLE>
Diluted EPS, for the three months ended March 31, 2000, does not include
the impact of stock options then outstanding as their inclusion would be
anti-dilutive. Diluted EPS, for the three months ended March 31, 1999, does not
include the impact of other stock options then outstanding as their inclusion
would be anti-dilutive.
3. The following stock options were granted, cancelled or exercised during
the first quarter of 2000 under either the 1995, 1996 or 1999 Stock Option
Plans:
Granted Cancelled Exercised
------- --------- ---------
none 57 @ $2.875 - $10.00 54 @ $2.875 - $10.00
Page 6
<PAGE>
4. Segment Information
The Company follows the provisions of SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information." Reportable operating
segments are determined based on the Company's management approach. The
management approach, as defined by SFAS No. 131, is based on the way that the
chief operating decision maker organizes the segments within an enterprise for
making operating decisions and assessing performance. While the Company's
results of operations are primarily reviewed on a consolidated basis, the chief
operating decision maker also manages the enterprise in two segments: (i)
wireless products and (ii) satellite, medical and military products. The
following represents selected consolidated financial information for the
Company's segments for the quarters ended March 31, 2000 and 1999:
Satellite, Medical
March 31, 2000 Wireless Products and Military Products Total
-------------- ----------------- --------------------- -----
Net sales............... $7,682 $4,741 $12,423
Gross profit............ 1,453 630 2,083
Net loss................ (826) (178) (1,004)
Assets.................. 18,777 27,777 46,554
Satellite, Medical
March 31, 1999 Wireless Products and Military Products Total
-------------- ----------------- --------------------- -----
Net sales............... $8,132 $9,116 $17,248
Gross profit............ 2,170 3,090 5,260
Net income (loss)....... (261) 1,093 832
Assets.................. 17,748 31,460 49,208
5. Comprehensive Income
The Company follows the provisions of SFAS No. 130, "Reporting
Comprehensive Income," which requires companies to report all changes in equity
during a period, except those resulting from investment by owners and
distribution to owners, for the period in which they are recognized.
Comprehensive income is the total of net income and all other nonowner changes
in equity (or other comprehensive income) such as unrealized gains/losses on
securities classified as available-for-sale, foreign currency translation
adjustments and minimum pension liability adjustments. Comprehensive and other
comprehensive income must be reported on the face of annual financial statements
or in the case of interim reporting, the footnote approach may be utilized. The
Company's operations did not give rise to items includible in comprehensive
income which were not already included in net income for the quarters ended
March 31, 2000 and 1999. Accordingly, the Company's comprehensive income is the
same as its net income for all periods presented.
6. Recently Issued Accounting Standards
In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities." The
Statement establishes accounting and reporting standards for derivative
instruments (including certain derivative instruments embedded in other
contracts) and for hedging activities. SFAS No. 133 is effective for fiscal
quarters beginning after June 15, 2000 (as amended by SFAS No. 137) and will not
require retroactive restatement of prior-period financial statements. The
Company currently does not use derivative instruments or engage in hedging
activities and, accordingly, does not expect that this statement will have an
impact on its consolidated statements when adopted.
Page 7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Overview
Microwave Power Devices, Inc. ("Microwave Power Devices" or the "Company")
commenced operations in 1967. During the past 33 years, the Company has
designed, manufactured and marketed high-power, solid-state, radio frequency
("RF") and microwave power amplifiers and related subsystems for military,
medical, satellite and wireless telecommunications applications.
The Company historically has been dependent upon the military market as
its principal source of revenue. In 1992, as the military market was declining,
the Company leveraged its military technological leadership position and
increased the scope of its business by entering the commercial markets serving
medical applications and, following that, satellite applications, thereby
broadening its product offerings. In 1994, the Company started producing power
amplifiers for the wireless telecommunications market. The Company now develops
precision high-power amplifiers for a variety of commercial uses.
Forward-Looking Statements
Certain information contained in this Quarterly Report on Form 10-Q,
including, without limitation, information appearing under Part I, Item 2,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," are forward-looking statements (within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934). Factors set forth in the Company's 1999 Annual Report on Form 10-K, filed
March 29, 2000, under Item 1, "Business - Risk Factors," together with other
factors that appear with the forward-looking statements, or in the Company's
other Securities and Exchange Commission filings, including its Registration
Statement on Form S-1 dated September 29, 1995, could affect the Company's
actual results and could cause the Company's actual results to differ materially
from those expressed in any forward-looking statements made by, or on behalf of,
the Company in this Quarterly Report on Form 10-Q.
Results of Operations --
First Quarters Ended March 31, 2000 and March 31, 1999
Net Sales. Net sales decreased by 28% to $12.4 million in the first
quarter of 2000 from $17.2 million in the first quarter of 1999. This sales
decrease was primarily due to lower shipments of the Company's military
products. Sales of military products decreased by 59% to $3.0 million in the
first quarter of 2000 from $7.2 million in the first quarter of 1999,
representing 24% and 42%, respectively, of net sales in such periods. The
military sales decrease was predominantly due to the completion of a U. S.
Government military program and a domestic military program in 1999, partially
offset by higher shipments on another domestic military program. Sales of
commercial products decreased by 6% to $9.4 million in the first quarter of 2000
from $10.0 million in the first quarter of 1999, representing 76% and 58%,
respectively, of net sales in such periods. The commercial sales decrease was
predominantly due to lower shipments of wireless telecommunications products.
International sales increased by 30% to $3.4 million in the first quarter
of 2000 from $2.6 million in the first quarter of 1999, representing 27% and
15%, respectively, of net sales in such periods. The increase in international
sales was predominantly due to higher market demand for foreign wireless
telecommunications business, partially offset by lower market demand for foreign
military business. In the first quarter of 2000, sales to a domestic commercial
OEM (Customer B), a foreign commercial OEM (Customer E) and a domestic military
OEM (Customer H) accounted for 37%, 21% and 13%, respectively, of the Company's
net sales. In the first quarter of 1999, sales to a domestic commercial OEM
(Customer B) and two domestic military OEMs (Customer F and Customer G)
accounted for 37%, 17% and 12%, respectively, of the Company's net sales.
Page 8
<PAGE>
The Company has entered into arrangements with its major wireless OEM
customer whereby the customer stocks the Company's amplifiers on a consignment
basis until they are consumed in production, at which time revenue is
recognized. Under these arrangements, the Company receives a forecast each week
from the customer reflecting the customer's estimated future product
requirements. These forecasts provide the Company with a one year forward-look
which details the weekly requirements for the first 26 weeks and the monthly
requirements for the remaining six months. The Company's business, financial
condition and results of operations could be a materially adversely affected if
the customer's actual product needs ultimately are less than the customer's
forecasted expectations or, conversely, if the customer's actual product needs
ultimately substantially exceed the customer's forecasted expectations such that
the Company cannot fulfill them.
Gross Profit. Gross profit decreased by 60% to $2.1 million in the first
quarter of 2000 from $5.3 million in the first quarter of 1999. The Company's
gross profit margin (gross profit as a percentage of net sales) also decreased
to 16.8% in the first quarter of 2000 from 30.5% in the first quarter of 1999.
The decrease in gross profit margin was primarily due to the deferment of a
major foreign military program to later in 2000, the reduced first quarter 2000
shipments for military products which for the same period last year produced a
favorable gross profit margin for the Company, lower than anticipated absorption
of overhead expenses which included first quarter 2000 management termination
costs and lower gross profit margins on various wireless telecommunications
programs.
Certain of the Company's inventory costing techniques involve developing a
standard cost which estimates the average, or standard, cost per unit over the
extended life cycle of a product. Such costs include labor, material, other
direct costs and related overheads. If the extended life cycle of a product does
not materialize or if there is no reasonable certainty that product maturation
will take place within the near future, write-offs of work-in-process inventory
would be required. Such write-offs could materially adversely affect the
Company's gross profit and results of operations.
Certain of the purchase orders or contracts comprising backlog at March
31, 2000 set forth product specifications not yet achieved by the Company that
would require the Company to complete additional product development. Failure to
develop products meeting such specifications could lead to the cancellation of
the related purchase orders or contracts. The reduction, delay or cancellation
of orders or contracts from one or more significant customers could materially
adversely affect the Company's business, financial condition and results of
operations.
There can be no assurances that gross profit will improve. If the Company
is not able to reduce its production costs to the extent anticipated, or to
introduce new products with greater gross profit margins, and if average selling
prices decline beyond current expectations, the Company's gross profit and
results of operations could be materially adversely affected. The Company's
gross profit may also be affected by a variety of other factors, including the
mix of systems and equipment sold; technical, production, reliability or quality
problems; and price competition.
General and Administrative Expenses. General and administrative expenses
decreased by 7% to $0.9 million in the first quarter of 2000 from $1.0 million
in the first quarter of 1999, representing 7.5% and 5.8%, respectively, of net
sales. The percentage increase is directly related to the reduced revenue level
experienced in the first quarter of 2000. The reduction in general and
administrative expenses resulted primarily from the termination of consulting
agreements with two directors on January 31, 2000.
Selling Expenses. Selling expenses decreased by 13% to $0.9 million in the
first quarter of 2000 from $1.0 million in the first quarter of 1999,
representing 7.2% and 6.0%, respectively, of net sales. The percentage increase
is directly related to the reduced revenue level experienced in the first
quarter of 2000. The decrease in selling expenses resulted primarily from lower
sales representative commissions, which is the result of product sales mix
variations and the lower overall sales volume.
Research and Development Expenses. Research and development expenses
remained relatively stable at $1.6 million in both the first quarters of 2000
and 1999, but represented 12.8% and 9.4%, respectively, of net sales. The
percentage increase is directly related to the reduced revenue level experienced
in the first quarter of 2000. The Company believes that the continued
introduction of new products is essential to its competitiveness, especially in
the wireless telecommunications market, and is committed to continued investment
in research and development.
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<PAGE>
Interest Expense. Interest expense remained relatively stable at $0.3
million in both the first quarters of 2000 and 1999 but represented 2.7% and
1.7%, respectively, of net sales. The percentage increase is directly related to
the reduced revenue level experienced in the first quarter of 2000.
Provision for Income Taxes. The Company's effective tax rate increased to
a 40.0% benefit in the first quarter of 2000 from 36.7% in the first quarter of
1999. The effective tax rate for the first quarter of 1999 was favorably
impacted by the partial recovery of previously reserved deferred tax assets.
Without the benefit of this change in the valuation allowance, the effective tax
rate for the first quarter of 1999 would have been 40.0%. There can be no
assurances that the Company will achieve taxable income in the future.
Liquidity and Capital Resources
Since the Company successfully completed its IPO in 1995, the Company has
financed its operations and met its capital requirements through the following
two sources: (i) a credit facility and/or (ii) cash provided by operating
activities.
In March 2000, the Company amended its loan agreement with IBJ Whitehall
Business Credit Corporation ("IBJ"). The loan agreement now provides for a $18.9
million credit facility consisting of a revolving line of credit in the amount
of $13.7 million, a term loan in the amount of $0.9 million and two capital
equipment ("Capex") loan facilities, Capex #1 and Capex #2, in the amounts of
$2.0 million and $2.3 million, respectively. The revolving line of credit and
both the term loan and Capex loans bear interest at annual rates equal to the
prime rate plus 0.50% and the prime rate plus 0.75%, respectively. The credit
facility matures in February 2002 and automatically renews for one-year periods
thereafter, unless terminated by either the Company or IBJ. Aggregate borrowings
under the revolving line of credit are limited by a borrowing base, which is
calculated as the sum of 85% of eligible accounts receivable and 40% of eligible
raw materials and work-in-process inventories (with borrowings based on
aggregate eligible inventory limited to $7.0 million). The term loan requires a
monthly principal payment of $0.05 million. The Capex loans require monthly
principal payments that are recalculated each month based on the prior month's
Capex borrowings, if any, amortized over 60 months. Capex #2 loan borrowings
must occur prior to December 31, 2000. At March 31, 2000, credit facility
borrowings totaled $11.0 million which consisted of a term loan balance of $0.9
million, a Capex #1 loan balance of $2.0 million, a Capex #2 loan balance of
$1.1 million (with $1.3 million of the $2.3 million utilized) and revolving line
of credit borrowings of $7.0 million. In addition, $2.7 million of the revolving
line of credit is committed to the Company's outstanding letters of credit. The
credit facility is subject to customary covenants, including, among other
things, limitations with respect to incurring indebtedness, payment of dividends
and affiliate advances, and a provision for maintaining a certain fixed charge
coverage ratio.
Operating activities provided net cash of $0.48 million and $0.45 million
in the first three months of 2000 and 1999, respectively. From December 31, 1999
to March 31, 2000, accounts receivable decreased by $1.7 million, accounts
payable and accrued liabilities increased by $0.2 million and inventories
remained stable. The decrease in accounts receivable was primarily due to the
$5.6 million drop in revenue experienced in the first quarter of 2000 versus the
fourth quarter of 1999. The increase in accounts payable and accrued liabilities
was primarily the result of accruals for employee termination costs. Investing
activities, which consisted of equipment acquisitions, used net cash of $0.2
million and $1.0 million in the first three months of 2000 and 1999,
respectively. Financing activities, which consisted primarily of proceeds from
long-term debt, principal payments of long-term debt, net repayments made on the
revolving line of credit and net proceeds from the issuance of common stock
(upon the exercise of stock options), used net cash and provided net cash of $
0.3 million and $0.6 million in the first three months of 2000 and 1999,
respectively.
Capital expenditures were $0.2 million and $1.0 million in the first three
months of 2000 and 1999, respectively. These expenditures were funded primarily
through the Company's credit facility. Principal expenditures for the first
three months of 2000 included engineering and manufacturing test equipment, and
other equipment used in the production process. The Company anticipates making
additional capital expenditures of approximately $1.5 million during the
remainder of 2000, including the purchase of additional engineering and
manufacturing test equipment and production process equipment, computer
equipment upgrades and enhancements
Page 10
<PAGE>
to its CAE/CAD. It is anticipated that capital expenditures for 2000 will be
financed by the Company's credit facility, cash provided by operating activities
and/or third party financing sources.
As of March 31, 2000, the Company had working capital of approximately
$16.6 million, compared to approximately $17.4 million as of December 31, 1999.
Working capital as of March 31, 2000 included approximately $10.5 million and
$16.0 million in accounts receivable and inventory, respectively compared to
December 31, 1999 working capital which included approximately $12.2 million and
$16.1 million in accounts receivable and inventory, respectively. The Company's
current ratio (ratio of current assets to current liabilities) as of March 31,
2000 and December 31, 1999 was 2.3:1 and 2.4:1, respectively. As of both March
31, 2000 and December 31, 1999, the Company's debt to equity ratio was 0.8:1.
The Company believes that cash generated from operations, amounts
available under its credit facility, and/or other third party financing will be
sufficient to fund necessary capital expenditures and to provide adequate
working capital for at least the next 12 months. There can be no assurance,
however, that the Company will not require additional financing prior to such
date to fund its operations, and, if required, that such financing will be
available on commercially reasonable terms. In addition, the Company may require
additional financing after such date to fund its operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Company's principal financial instrument is long-term debt under a
credit facility (consisting of a revolving line of credit, term loan and two
Capex loan facilities) that provides for interest at the prime rate plus 0.50%
or the prime rate plus 0.75%. The Company is affected by market risk exposure
primarily through the effect of changes in interest rates on amounts payable by
the Company under this credit facility. A significant rise in the prime rate
could materially adversely affect the Company's business, financial condition
and results of operations. At March 31, 2000, an aggregate principal amount of
$11.0 million was outstanding under the Company's credit facility and
represented a weighted average annual interest rate of 9.3%. If principal
amounts outstanding under the Company's credit facility remained at this level
for an entire year and the prime rate increased or decreased, respectively, by
0.9%, the Company would pay or save, respectively, an additional $0.1 million in
interest in that year. The Company does not utilize derivative financial
instruments to hedge against changes in interest rates or for any other purpose.
Where appropriate, the Company requires that letters of credit be provided
on foreign sales. In addition, all transactions by the Company are denominated
in U.S. dollars. As such, the Company has shifted foreign currency exposure onto
its foreign customers. As a result, if exchange rates move against foreign
customers, the Company could experience difficulty collecting unsecured accounts
receivable, the cancellation of existing orders or the loss of future orders.
The foregoing could materially adversely affect the Company's business,
financial condition and results of operations.
PART II -- OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K.
(a) Exhibit 27.1 Financial Data Schedule.
(b) No reports on Form 8-K were filed during the quarter ending March
31, 1999.
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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.
MICROWAVE POWER DEVICES, INC.
(Registrant)
Dated: May 10, 2000 /s/ Alfred Weber
------------------ --------------------------------------
By: Alfred Weber
Chairman, President and CEO
Dated: May 10, 2000 /s/ William J. Moore
------------------ --------------------------------------
By: William J. Moore
Corporate Controller
(Principal Financial and
Accounting Officer)
Page 12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from consolidated
financial statements found on the Quarterly Report on Form 10-Q, March 31, 2000,
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 565
<SECURITIES> 0
<RECEIVABLES> 10,643
<ALLOWANCES> 98
<INVENTORY> 16,029
<CURRENT-ASSETS> 29,675
<PP&E> 17,249
<DEPRECIATION> 7,778
<TOTAL-ASSETS> 46,554
<CURRENT-LIABILITIES> 13,038
<BONDS> 14,001
0
0
<COMMON> 107
<OTHER-SE> 19,408
<TOTAL-LIABILITY-AND-EQUITY> 46,554
<SALES> 12,423
<TOTAL-REVENUES> 12,423
<CGS> 10,340
<TOTAL-COSTS> 10,340
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 337
<INCOME-PRETAX> (1,673)
<INCOME-TAX> (669)
<INCOME-CONTINUING> (1,004)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,004)
<EPS-BASIC> (0.09)
<EPS-DILUTED> (0.09)
</TABLE>
