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Previous: BIO TECHNOLOGY GENERAL CORP, 10-Q, 1998-05-14 |
Next: FIDELITY ADVISOR SERIES I, 13F-E, 1998-05-14 |
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities exchange
Act of 1934
For the quarterly period ended March 31, 1998.
( ) 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 0-13257.
NORTECH SYSTEMS INCORPORATED
------------------------------
(Exact name of registrant as specified in its chapter)
MINNESOTA 41-1681094
- ---------------------------------- -------------------------
(State of other jurisdiction (I.R.S. Employer
of Incorporation or organization) Identification No.)
641 East Lake St. Suite 244, Wayzata, MN 55391
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Codes)
(612) 473-4102
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
None
- --------------------------------------------------------------------------------
Securities registered pursuant to Section 12(b) of the Act:
Common Stock, $.01 per share per value.
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
--------------- ---------------
PAGE 1
<PAGE>
APPLICABLE ONLY TO CORPORATE REGISTRANTS;
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of latest practicable data.
As of April 30, 1998, there were 2,345,262 shares of the Company's $.01
per share par value common stock outstanding.
(The remainder of this page was intentionally left blank.)
PAGE 2
<PAGE>
NORTECH SYSTEMS INCORPORATED
FORM 10-Q
QUARTER ENDED MARCH 31, 1998
INDEX
PAGE
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements 4-7
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II - OTHER INFORMATION
Item 2 - Exhibits and Reports on Form 8-K 9
SIGNATURES 10
PAGE 3
<PAGE>
NORTECH SYSTEMS INCORPORATED
BALANCE SHEETS
MARCH 31, 1998 AND DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARCH 31 DECEMBER 31
ASSETS 1998 1997
(UNAUDITED) (AUDITED)
----------- -----------
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 126,587 $ 714,169
Accounts receivable, net 5,529,548 5,008,689
Inventories:
Finished goods 747,296 1,457,330
Work in process 1,564,618 1,262,361
Raw materials 7,856,191 6,522,775
----------- -----------
Total inventories $ 10,168,105 $ 9,242,466
Prepaid expenses and other 947,774 897,388
----------- -----------
Total current assets $ 16,772,014 $ 15,862,712
----------- -----------
PLANT, Property, and Equipment (at Cost)
Land and Building/leaseholds $ 3,817,489 $ 3,901,461
Manufacturing equipment 5,291,415 4,444,401
Office and other equipment 2,095,032 2,805,557
----------- -----------
$ 11,203,936 $ 11,151,419
Less accumulated depreciation and
amortization (4,056,972) (3,851,810)
----------- -----------
$ 7,146,964 $ 7,299,609
----------- -----------
Other Assets
Goodwill and other intangible assets 790,210 905,359
Deferred tax asset 570,000 570,000
Other assets 57,250 57,250
----------- -----------
Total Other Assets $ 1,417,460 1,532,609
----------- -----------
Total Assets $ 25,336,438 $ 24,694,930
----------- -----------
----------- -----------
</TABLE>
<PAGE>
NORTECH SYSTEMS INCORPORATED
BALANCE SHEETS
MARCH 31, 1998 AND DECEMBER 31, 1997
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
MARCH 31 DECEMBER 31
1998 1997
(UNAUDITED) (AUDITED)
----------- -----------
<S> <C> <C>
Current Lialilities:
Current maturities of long-term debt $ 1,075,404 $ 1,038,397
Line of credit 500,000 500,000
Accounts payable 2,939,683 3,013,131
Accured payrolls and commissions 836,528 1,082,293
Other 685,082 558,666
----------- -----------
Total Current Liabilities $ 6,036,697 $ 6,192,487
----------- -----------
Long-Term Debt
Notes Payable (net of current
maturities shown above) $ 11,041,490 $ 10,388,620
----------- -----------
Redeemable Stock $ 0 $ 300,000
Shareholders' Equity:
preferred stock, $1 par value;
1,000,000 shares authorized; 250,000
shares issued and outstanding $ 250,000 $ 250,000
common stock - $.01 par value; 9,000,000
shares authorized; 2,345,262 and 2,312,362 shares
issued and outstanding, net of redeemable shares
reported above,at March 31, 1998 and
December 31, 1997, respectively 23,454 23,124
additional paid-in capital 12,108,224 11,910,554
accumulated deficit (4,123,427) (4,369,855)
----------- -----------
Total Shareholders' Equity $ 8,258,251 $ 7,813,823
----------- -----------
Total Liabilities, Redeemable Stock and
Shareholders' Equity $ 25,336,438 $ 24,694,930
----------- -----------
----------- -----------
</TABLE>
<PAGE>
NORTECH SYSTEMS INCORPORATED
STATEMENTS OF INCOME (LOSS)
FOR THE THREE MONTHS ENDED
MARCH 31, 1998 AND MARCH 31, 1997
<TABLE>
<CAPTION>
MARCH 31 MARCH 31
1998 1997
(UNAUDITED) (UNAUDITED)
----------- -----------
<S> <C> <C>
Sales $ 10,491,792 $ 8,564,846
Cost of Sales 8,741,376 7,044,357
----------- -----------
Gross Profit $ 1,750,416 $ 1,520,489
16.7% 17.8%
Selling, General and Admin. 1,044,518 1,014,805
Engineering/Reseach & Development 68,093 112,495
Misc. (Income) Expense, net (20,845) 8,763
Interest Expense 249,932 183,671
----------- -----------
Net Income (Loss) Before Tax
Provision $ 408,718 $ 200,755
Tax Provision 162,288 68,000
----------- -----------
Net Income $ 246,430 $ 132,755
----------- -----------
----------- -----------
Income (Loss) per Share of Common Stock
Net income $ 0.11 $ 0.06
----------- -----------
----------- -----------
Weighted Average Number of Shares
Outstanding 2,345,262 2,362,262
----------- -----------
----------- -----------
</TABLE>
<PAGE>
NORTECH SYSTEMS INCORPORATED
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED
MARCH 31, 1997 AND MARCH 31, 1998
<TABLE>
<CAPTION>
MARCH 31 MARCH 31
1998 1997
(UNAUDITED) (UNAUDITED)
----------- -----------
<S> <C> <C>
Cash Flows from Operating Activities
Net Income $ 246,430 $ 132,755
Adjustments to reconcile net loss to
net cash used by operating activities:
Depreciation and amortization 205,162 284,346
Changes in Operating Assets and Liabilities:
Accounts receivable (520,859) (834,906)
Inventories (925,639) (271,319)
Prepaid expenses (50,386) (106,019)
Other assets 115,149 207,207
Accounts payable (73,448) (85,875)
Accured payrolls (245,765) 257,753
Other accruals 126,416 677,972
----------- -----------
Net cash used by operating act. (1,122,940) 261,914
Cash Flows from Investing Activities:
Acquistion of equipment (52,517) (328,771)
Acquistion of Comp. assets 0 0
Net Proceeds Under L/C 0 0
Proceeds from Sale of Stock 0 0
Other activities
Payment of Pref. Stock Dividend 0 0
----------- -----------
Net cash used by investing act. (52,517) (328,771)
Cash Flows from Financing Activities:
Net borrowing of L/T debt 760,000 200,000
Payments of long term debt (79,709) (238,415)
Change in current debt (92,416) 52,899
----------- -----------
Net cash provided by financing
activities 587,875 14,484
----------- -----------
Net Increase (Decrease) in Cash (587,582) (52,373)
Cash at Beginning of Period 714,169 1,235,127
----------- -----------
Cash at End of Period $ 126,587 $ 1,182,754
----------- -----------
----------- -----------
</TABLE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS FOR PERIOD ENDED MARCH 31, 1998
For the quarter ended March 31, 1998, the Company had revenues of $10,491,792
compared to revenues of $8,564,846 for the quarter ended March 31, 1997. The
increase in revenues resulted primarily from the additional revenues generated
from internal growth. The net income for the three months ended March 31, 1998
was $246,430 or $.11 per share, compared to a net income of $132,755 or $.06 per
share, for the three months ended March 31, 1997. The net income for the
quarter ended March 31, 1998 was primarily impacted by increased gross margin
from the increased revenue.
Company's 90 day order backlog was $7,900,000 as of March 31, 1998, compared to
$7,687,000 at the beginning of the quarter. Based on the current conditions,
the Company anticipates revenue levels in the second quarter of 1998 to be
slightly higher than the first quarter of 1998.
LIQUIDITY AND CAPITAL RESOURCES.
The Company's working capital increased to $10,735,317 during the first quarter
of 1998, compared to $9,670,225 as of December 31, 1997. The Company believes
that its financial stability will continue to improve during 1998 and would
expect that its operating cash flow and available credit faculities will be
sufficient to fund the expected growth in the near term.
PAGE 8
<PAGE>
PART II - OTHER INFORMATION
ITEM 2. EXHIBITS AND REPORTS ON FORM 8-K.
None
(The remainder of this page was intentionally left blank.)
PAGE 9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: May 11, 1998 NORTECH SYSTEMS INCORPORATED
By: Quentin E. Finkelson
-----------------------------------
Quentin E. Finkelson
Its President and Chief
Executive Officer
By: Garry M. Anderly
-----------------------------------
Garry M. Anderly
Principal Financial
Officer and Principal
Accounting Officer
PAGE 10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 126,587
<SECURITIES> 0
<RECEIVABLES> 5,715,548
<ALLOWANCES> 93,000
<INVENTORY> 10,168,105
<CURRENT-ASSETS> 16,772,014
<PP&E> 11,203,936
<DEPRECIATION> 4,056,972
<TOTAL-ASSETS> 25,336,438
<CURRENT-LIABILITIES> 6,036,697
<BONDS> 0
0
250,000
<COMMON> 23,454
<OTHER-SE> 7,984,797
<TOTAL-LIABILITY-AND-EQUITY> 25,336,438
<SALES> 10,491,792
<TOTAL-REVENUES> 10,491,792
<CGS> 8,741,376
<TOTAL-COSTS> 8,741,376
<OTHER-EXPENSES> 1,091,766
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 249,932
<INCOME-PRETAX> 408,718
<INCOME-TAX> 162,288
<INCOME-CONTINUING> 246,430
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 246,430
<EPS-PRIMARY> .11
<EPS-DILUTED> .11
</TABLE>
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