SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q/A
Amendment No. 1
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File number 0-11685-NY
RADYNE COMSTREAM INC.
(Exact name of registrant as specified in its charter)
New York 11-2569467
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3138 East Elwood Street, Phoenix, AZ 85034
(Address of principal executive offices)
Registrant's telephone number, including area code: (602) 437-9620
Indicate by check mark whether the registrant (1) 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 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 by check mark whether the registrant filed all documents and
reports required to be filed by Section 12, 13 or (15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
YES |X| NO |_|
The registrant had 5,931,346 shares of its common stock, par value $.002,
outstanding as of June 30, 1998.
<PAGE>
Part I, Item 2 of the Form 10-Q for the six-month period ended June 30,
1998 is amended to read as follows:
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations
Results of operations for the three month period ended June 30, 1998
compared to the three month period ended June 30, 1997, were as follows:
The Company's net sales decreased 3% to $2,717,965 during the period ended
June 30, 1998 from $2,811,596 during the period ended June 30, 1997. Meager
shipments to the Southeast Asian markets, due to the current economic crisis in
the region, as partially offset by increased sales to other regions, was the
primary reason for the sales decrease.
The Company's cost of sales increased to $2,669,607 (98% of sales) during
the period ended June 30, 1998 from $1,654,095 (59% of sales) during the period
ended June 30, 1997. During the period ended June 30, 1998, we recorded
adjustments to inventory of approximately $911,000 to write off excess and
obsolete inventory as well as "start-up" costs associated with the introduction
of new products such as set-up fees, expedited product deliveries and low-volume
pricing for purchased parts on initial production runs.
Selling, general and administrative costs decreased to $868,070 (32% of
sales) during the current period from $926,780 (33% of sales) during the period
ended June 30, 1997. The decreased level of expenses for the period was, in
part, a result of lower commission expenses.
Research and development expenditures increased to $708,700 (26% of sales)
during the current period from $572,079 (20% of sales) during the period ended
June 30, 1997. The increased level of expenses for the period was a result of
the Company's redirection of efforts to marketing our newer lines of products,
the result of which was to raise the urgency for finishing the development phase
of the newer lines and to develop new, optional features that could be
incorporated into both new and current product lines.
Net interest expense increased from $162,961 in the period ended June 30,
1997 to $198,217 in the current period due mainly to an increase in the
Company's debt level.
Based on the decreases in margins and higher research and development
costs, the Company experienced a net loss of ($1,726,629) during the period
ended June 30, 1998 as compared with a net loss of ($504,319) during the period
ended June 30, 1997.
The Company's new-orders-booked (Bookings) decreased to $3,118,962 for the
current period from $5,341,368 for the period ended June 30, 1997.
<PAGE>
The Company's level of unfilled-orders-to-ship (Backlog) increased 45% to
$6,202,307 for the current period from $4,269,002 at June 30, 1997 primarily due
to the record level of Bookings received during prior periods. Due to the
continuing nature of the economic crisis in Asia, the Company has eliminated
approximately $990,000 from its December 31, 1997 backlog associated with orders
from the region.
Results of operations for the six month period ended June 30, 1998 compared
to the six-month period ended June 30, 1997, were as follows:
The Company's net sales increased 20% to $6,666,465 during the period ended
June 30, 1998 from $5,552,264 during the six month period ended June 30, 1997 as
a result of the Company's introduction of new products during and after the
prior period. A substantial portion of the sales increase (17% of sales) came
from the new "High-Speed" product lines that have enjoyed tremendous market
acceptance. Other products which contributed to the increase were the RCS-10 and
RCS-20 subsystems with their associated modems, the new DMD-2401 modem and the
RF product lines.
The Company's cost of sales as a percentage of net sales increased to 81%
during the period ended June 30, 1998 from 60% during the six month period ended
June 30, 1997. Start-up costs associated with the delivery of new products to
the market accounted for the major portion of the increase in costs. The Company
expensed $911,000 to revalue inventory including revisions to standard costs and
a provision for obsolescence.
Selling, general and administrative costs decreased to $1,737,556 (26% of
sales) during the current period from $1,738,061 (31% of sales) during the six
month period ended June 30, 1997. The reduction as a percentage of sales was
primarily due to the increased level of sales for the period.
Research and development expenditures increased to $1,367,644 (21% of
sales) during the period ended June 30, 1998 from $1,123,721 (20% of sales)
during the six month period ended June 30, 1997. The increased level of expenses
for the period is a result of the Company's continued commitment to invest in
its future through technological advances and its efforts to improve our older
product lines for manufacturability and lower costs.
Net interest expense increased from $335,048 (6% of sales) in the six month
period ended June 30, 1997 to $375,819 (6% of sales) in the current period due
to an increase in the Company's debt level.
Based on the increases in costs and expenses as outlined above, the Company
experienced a net loss of ($2,238,989) during the period ended June 30, 1998 as
compared with a net loss of ($978,472) during the six months ended June 30,
1997.
The Company's new-orders-booked (Bookings) increased 10% to $8,054,709 for
the six month period ended June 30, 1998 from $7,348,001 for the period ended
June 30, 1997. This
<PAGE>
increase was primarily due to the successful introduction of certain new product
lines to the market during and after the period ended June 30, 1997.
The Company's level of unfilled-orders-to-ship (Backlog) increased 45% to
$6,202,307 at June 30, 1998 from $4,269,002 at June 30, 1997 primarily due to
the increased Bookings referred to above and like increases in the previous six
months. Due to the continuing nature of the economic crisis in Asia, the Company
has eliminated approximately $990,000 from its December 31, 1997 backlog
associated with orders from the region.
Year 2000 Issue
The Company is in the process of performing a comprehensive review of its
Year 2000 issues and has completed its review of internal systems. The majority
of the Company's application software programs are purchased from and maintained
by vendors. Therefore, the Company is working with these software vendors to
verify these applications become Year 2000 compliant.
The Company presently believes that with modifications and updates to
existing software, the cost of which is not expected to be material, the Year
2000 problem will not pose significant operational problems for the Company's
internal systems.
As part of the Company's comprehensive review, it is continuing to verify
the Year 2000 readiness of third parties (vendors and customers) with whom the
Company has material relationships. The Company is not able to determine the
effect on the Company's results of operations, liquidity and financial condition
in the event the Company's material vendors and customers are not Year 2000
compliant. The Company will continue to monitor the progress of its material
vendors and customers and formulate a contingency plan at that point in time
when the Company does not believe a material vendor or customer will be
compliant.
Liquidity and Capital Resources
The Company's working capital deficit was ($5,063,050) at June 30, 1998, a
decrease in working capital of ($6,717,907) from $1,654,857 at December 31,
1997. The proceeds of a $5,368,272 short term loan from affiliate ST, were used,
in part, to satisfy the $4,500,000 long term debt to a bank. This action and the
current period loss are the primary reasons for the reduction in working
capital.
Net cash used in operating activities was $389,969 for the current period,
as compared to $2,617,733 used in the six-month period ended June 30, 1997. The
primary reason for the reduction of cash used for operating activities during
the current period was changes in inventory levels and accounts payable to
affiliates.
Cash used in investing activities, consisting of additions to equipment,
was $215,468 for the current period as compared to the prior period amount of
$356,282.
<PAGE>
The Company derived net cash from financing activities of $849,393 and
$3,954,324 during the periods ended June 30, 1998 and 1997, respectively. The
primary reason for the difference in cash generated from financing activities
during the respective periods was the sale of common stock in 1997.
As a result of the foregoing, the Company increased its cash balances by
$243,956 during the current period, compared to an increase in cash balance of
$980,309 for the six-month period ended June 30, 1997.
The Company believes that its working capital, along with borrowings
available from its bank and other commitments from its affiliates, and
anticipated cash flow from operations will provide adequate sources to fund
operations for at least the next twelve months.
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Dated: April 20, 1999
RADYNE CORP.
By: /s/ Robert C. Fitting
-------------------------------------
Robert C. Fitting, Chief Executive
Officer and President
By: /s/ Garry D. Kline
-------------------------------------
Garry D. Kline, Vice President-
Finance (Principal Financial
and Accounting Officer)
