U.S. Securities and Exchange Commission
Washington D.C. 20549
Form 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 31, 1998
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from ______________ to _______________
Commission file number 0-12866
ANTENNA PRODUCTS, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 75-1907070
(State or other jurisdiction of
incorporation or organization) (IRS Employer Identification No.)
1209 Orange St., Wilmington, Delaware 19801
(Address of principal executive offices)
(302) 658-7581
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past
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
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date:
1,862,928 as of September 30, 1998.
ANTENNA PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
August 31, 1998 and May 31, 1998
ASSETS
August 31,1998 May 31, 1998
(Unaudited) (Audited)
Current assets:
Cash and cash equivalents $ 406,308 $ 221,041
Accounts receivable:
Trade, net of allowances
for doubtful accounts
of $7,021 each year 1,307,306 1,009,350
United States Government 287,460 332,230
Inventories 2,583,333 2,695,470
Prepaid expenses and other assets 18,933 9,229
Income taxes receivable - 15,592
Deferred income taxes 199,057 199,057
______________ ______________
Total current assets 4,802,397 4,481,969
______________ ______________
Property and equipment, net 2,602,611 2,640,560
______________ ______________
$ 7,405,008 $ 7,122,529
============== ==============
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Notes payable $ 1,480,000 $ 1,300,000
Current portion of
long-term debt 43,688 43,688
Accounts payable 441,618 436,504
Accrued expenses 572,442 670,295
Income taxes payable 33,414 -
-------------- --------------
Total current liabilities 2,571,162 2,450,487
-------------- --------------
Long-term debt, less current
portion 882,265 890,585
Note payable to shareholder 800,000 800,000
Deferred income taxes 448,617 448,617
-------------- --------------
Total long-term liabilities 2,130,882 2,139,202
-------------- --------------
Total liabilities 4,702,044 4,589,689
-------------- --------------
Commitments and Contingencies - -
Shareholders' equity
Preferred stock, $1.00 par,
2,000,000 shares
authorized, no shares
issued and outstanding - -
Common stock, $0.01 par,
8,000,000 shares
authorized 1,862,928 and
1,812,928 issued and
outstanding 18,630 18,130
Additional paid in capital 1,995,951 1,921,451
Retained earnings 688,383 593,259
-------------- --------------
Total shareholders' equity 2,702,964 2,532,840
-------------- --------------
$ 7,405,008 $ 7,122,529
============== ==============
See accompanying notes to consolidated financial statements.
ANTENNA PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
For the Quarters ended August 31, 1998 and 1997
(Unaudited)
1998 1997
---- ----
Sales and contract revenues $ 2,138,686 $ 1,947,812
Cost of sales and contracts 1,614,705 1,548,796
------------- ---------------
Gross Profit 523,981 399,016
Sales and administration
expenses 309,313 178,315
------------- ---------------
Operating Profit 214,668 220,701
------------- ---------------
Other income (expense):
Interest expense (65,060) (62,645)
Interest income 1,454 19
Other 1,508 (7,022)
------------- ---------------
Total other income (expense) (62,098) (69,648)
------------- ---------------
Income before taxes 152,570 151,053
Provision for income taxes 51,874 52,172
------------- ---------------
Income from continued operations 100,696 98,881
Discontinued operations:
Loss from operations of
discontinued segment net of
taxes of $2,865 and $10,171 (5,561) (19,745)
_____________ ________________
Net income $ 95,135 $ 79,136
============= ================
Earning (loss) per
common shares:
Continued operations $ .05 $ .04
Discontinued operations - (.01)
------------- ---------------
Net income $ .05 $ .03
============= ===============
See accompanying notes to consolidated financial statements.
ANTENNA PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Quarters ended August 31, 1998 and 1997
(Unaudited)
1998 1997
Cash flows from operating
activities:
Net income $ 95,135 $ 79,136
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation 38,216 86,755
Changes in assets and
liabilities:
Accounts receivable (253,186) (449,072)
Inventory 112,137 (275,113)
Prepaid expenses (9,704) 1,159
Accounts payable and
accrued expenses (17,744) 36,383
Income taxes payable 49,009 32,000
--------------- --------------
Net cash provided (used) by
operating activities 13,863 (488,752)
--------------- --------------
Cash flows from investing
activities:
Purchase of property and
equipment (267) (4,992)
_______________ ______________
Cash flows from financing
activities:
Net borrowings (payments)
under bank line of credit 180,000 540,000
Purchase of treasury stock (9) (5)
Principal payments on long
term debt (8,320) (64,262)
---------------- --------------
Net cash provided by financing
activities 171,671 475,733
---------------- --------------
Net increase (decrease) in
cash and cash equivalents 185,267 (18,011)
Cash and cash equivalents at
beginning of period 221,041 90,461
---------------- -------------
Cash and cash equivalents at
end of period $ 406,308 $ 72,450
================ =============
Supplemental disclosure of
cash flow information:
Cash paid during the period
for:
Interest (none capitalized) $ 65,060 $ 62,645
Income taxes - 10,000
See accompanying notes to consolidated financial statements.
ANTENNA PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATD FINANCIAL STATEMENTS
(Unaudited)
1. Statement of Information Furnished
The accompanying unaudited consolidated financial statements
have been prepared in accordance with Form 10-QSB instructions
and in the opinion of management contain all adjustments
(consisting of only normal recurring accruals) necessary to
present fairly the financial position as of August 31, 1998,
the results of operations for the three months ending August
31, 1998 and 1997, and the cash flows for the three months
ended August 31, 1998 and 1997. These results have been
determined on the basis of generally accepted accounting
principles and practices applied consistently with those used
in the preparation of the Company's audited financial
statements for its fiscal year ended May 31, 1998.
2. Business
Antenna Products Corporation
----------------------------
The Company operates as a "Holding" company with Antenna
Products Corporation and Thirco, Inc. as its subsidiaries.
Antenna Products Corporation is an operating subsidiary with
Thirco serving as an equipment leasing company to Antenna
Products, Inc.'s operating unit.
Antenna Products Corporation designs, manufactures and markets
standard and custom antennas, guyed and self supported towers,
monopoles, support structures, masts and communication
accessories worldwide. Customers include the U.S. Government,
both military and civil agencies, U.S. Government prime
contractors and commercial clients. Examples of Antenna
Products Corporation's U.S. Government supplied products
include ground to air collinear antennas, instrument landing
antennas and towers, fixed system multi-port antenna arrays,
tactical quick erect antennas and masts, shipboard antenna
tilting devices, transport pallets, surveillance antennas,
antenna rotators, positioners and controls, and high power
broadcast baluns. Examples of the company's commercial
products include panel, sector, omnidirectional and closed
loop PCS antennas, automatic meter reading (AMR), cellular,
paging and yagi antennas, guyed towers, self supported towers
and monopoles.
Thirco, Inc.
------------
Thirco, Inc. was formed on November 1, 1993 as a Delaware
company to purchase and lease equipment and facilities to the
other operating units of Antenna Products, Inc. The primary
lease arrangements are with Antenna Products Corporation.
Thirco will occasionally assist in servicing the banking needs
of Antenna Products, Inc.'s operating units. Since all
activity is internal to Antenna Products, Inc. and its
operating subsidiaries, financial data is consolidated with
Antenna Products, Inc. Thirco does not intend to engage in
any outside business transactions.
Seasonality
Antenna Products, Inc.'s businesses are not dependent on
seasonal factors.
Backlog
The backlog of orders on September 30, 1998 at Antenna
Products Corporation amounted to approximately $4.1 million.
About 95% of the current backlog will be delivered in the 1999
fiscal year.
Inventories
The major components of inventories are as follows:
August 31, 1998 May 31, 1998
--------------- ------------
Raw materials $ 597,123 $ 857,014
Work in process 1,454,508 1,085,000
Finished goods 531,702 753,456
--------------- ------------
$ 2,583,333 $ 2,695,470
=============== ============
4. Notes Payable
At August 31, 1998 notes payable consist of a revolving note
payable to a bank, maximum amount $2,000,000, interest payable
monthly at the prime rate plus 1% until September 30, 1998,
when any unpaid principal and interest shall be due.
Prime rate was 8.50% at August 31, 1998 and 1997.
Borrowings under the revolving note payable are collateralized
by accounts receivable and inventories and cannot exceed an
amount determined by a formula based upon the amount of
certain qualified receivables and inventories as defined in
the loan agreement. At August 31, 1998, available borrowings
under this credit facility were limited to the borrowing base
amount of $2,513,010. Borrowings are guaranteed by a
principal shareholder and the Company must maintain a minimum
net worth of $1,500,000 and working capital of $1,000,000.
5. Long-Term Debt
At August 31, 1998 and 1997, long-term debt consists of the
following:
1998 1997
---- ----
Subordinated note payable to a principal
shareholder. In the initial years only
interest (at the prime rate) is payable
with monthly principal payments scheduled
to begin in June 1999 and maturing in
May 2004. $ 800,000 $ 800,000
Note payable to a bank, guaranteed 80%
by a U.S. Government Agency, payable $8,900
per month, including interest at the
prime rate plus 1/2%; collateralized by certain
real estate and fixtures and guaranteed by
a principal shareholder; the Company is
required to maintain $1,500,000 in working
capital and $1,000,000 in equity. 925,953 950,283
Note payable to a finance company
payable in monthly installments
of $12,429, including interest at 9.47%
until March 1999. - 228,166
Note payable to a bank, payable in monthly
installments of $5,820, plus interest at prime
plus 1%, collateralized by all machinery
and equipment, inventory and accounts
receivable of Metal Finishing Corp. - 366,530
--------- ----------
$1,725,953 $2,344,979
========== ==========
ANTENNA PRODUCTS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OPERATION AND FINANCIAL CONDITION
The following is management's discussion and analysis of certain
significant factors which have affected the Company's financial
condition and operating results for the period included in the
accompanying financial statements.
Results of Operations
- ---------------------
First Quarter Ended August 31, 1998 Compared to First Quarter
Ended August 31, 1997
The Company's net profit for the quarter ended August 31, 1998
was $95,135 compared to $79,136 in the quarter ended August 31,
1997. The increased profitability was the result of improved
sales in the first quarter. The Company's operating margin for
the first quarter of fiscal year 1999 was 10% compared to 11% in
the first quarter of fiscal year 1998. Overall sales were 9.8%
higher this year with $2.14 million total deliveries in the first
quarter of fiscal year 1999 compared to $1.95 million of
deliveries for the same time period of fiscal year 1998.
However, due to the nature of long term contracts, individual
quarterly results may vary dramatically and not be indicative of
a trend.
Sales and administrative expenses were higher in the first
quarter of fiscal year 1999, $309 thousand versus $178 thousand
in the first quarter of fiscal year 1998. Interest expense in
the first quarter of fiscal year 1999 was slightly higher, $65
thousand versus $63 thousand in the same time period of fiscal
year 1998.
Due to Antenna Products' continued success in commercial markets,
the Company's backlog totaled $4.1 million on September 30, 1998,
compared to $4.2 million at year-end.
In response to customer antenna requirements, three new AMR
antennas were developed during the first quarter. Two of the new
antennas are unity and 3 dBd gain 900 MHz omni antennas. The
third antenna is a 10 dBd gain 180 degree sector antenna that
operates at 1428 MHz. Initial orders for 50 each of the two AMR
omni antennas and 8 of the new AMR section antennas were received
in September for delivery in October.
More information on new products at Antenna Products is available
on the Internet web page at://www.antennaproducts.com.
Liquidity and Capital Resources
- -------------------------------
The Company's current assets total $4,802,397 as of August 31,
1998 with $4,178,099 in inventory and accounts receivable.
Receivables are $1,594,766 at quarter ending August 31, 1998
compared to $1,341,580 at fiscal 1998 year-end. Net inventories
have decreased slightly from $2,695,470 at May 31, 1998 to
$2,583,333. Cash accounts have increased $185,267 from May 31,
1998. There were nominal capital additions during this period.
Current liabilities of the company increased $120,675 from fiscal
year end as the result of material purchased for work in-
process on contracts at Antenna Products. Approximately 95% of
this work in-process will deliver in FY99.
Management believes that cash flows from operations of the
operating subsidiary and current cash balances, together with
available lines of credit, will be sufficient to fund operations
and expenses for the near and mid term future. The Company at
August 31, 1998 had $520,000 remaining in loan availability
against its revolving credit lines. On September 30, 1998,
Antenna Products renewed its annual working credit line of $2.0
million with loan advances subject to a borrowing base formula
applied to inventory and receivable balances.
Year 2000 Readiness
- -------------------
Antenna Products is currently assessing the potential impact of
the year 2000 (Y2K) on the Company's ability to deliver products
and/or services. To date, vendor implementation plans have been
requested, and internal software and hardware applications are
being tested. The Company has not completed its assessment, but
management believes that the costs of addressing this issue will
not materially affect the financial position or results of
operation of the Company. Antenna Products Corporation plans to
commit the resources required to resolve any significant year
2000 issues by June 1, 1999.
ANTENNA PRODUCTS, INC. AND SUBSIDIARIES
PART II-OTHER INFORMATION
No Applicable Items.
SIGNATURE
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.
Antenna Products, Inc.
Date: October 9, 1998 ------------------------------
s/o/f Clark D. Wraight, Vice President
and Principal Financial Officer
[ARTICLE] 5
[CIK] 0000724267
[NAME] ANTENNA PRODUCTS, INC.
<TABLE>
<S> <C>
[PERIOD-TYPE] 3-MOS
[FISCAL-YEAR-END] MAY-31-1999
[PERIOD-END] AUG-31-1998
[CASH] 406,308
[SECURITIES] 0
[RECEIVABLES] 1,594,766
[ALLOWANCES] 0
[INVENTORY] 2,583,333
[CURRENT-ASSETS] 4,802,397
[PP&E] 2,602,611
[DEPRECIATION] 38,216
[TOTAL-ASSETS] 7,405,008
[CURRENT-LIABILITIES] 2,571,162
[BONDS] 0
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 18,630
[OTHER-SE] 1,995,951
[TOTAL-LIABILITY-AND-EQUITY] 7,405,008
[SALES] 2,138,686
[TOTAL-REVENUES] 2,138,686
[CGS] 1,614,705
[TOTAL-COSTS] 309,313
[OTHER-EXPENSES] 62,098
[LOSS-PROVISION] 51,874
[INTEREST-EXPENSE] 65,060
[INCOME-PRETAX] 152,570
[INCOME-TAX] 51,874
[INCOME-CONTINUING] 100,696
[DISCONTINUED] (5,561)
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 95,135
[EPS-PRIMARY] .05
[EPS-DILUTED] .05
</TABLE>
