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 February 28, 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.
(fka Cabre Corp)
- ------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 75-1907070
- --------------------------------------- ------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
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: 1,813,028 as of March 12,
1998.
ANTENNA PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
February 28, 1998 and May 31, 1997
ASSETS
------
February 28,1998 May 31, 1997
(Unaudited) (Audited)
Current assets:
Cash and cash equivalents $ 139,143 $ 90,461
Accounts receivable:
Trade, net of allowances for
doubtful accounts of $59,822
each year 1,171,922 835,828
United States Government 204,435 196,815
Inventories 3,058,732 2,419,086
Prepaid expenses and other assets 22,566 8,162
Deferred income taxes 162,609 162,609
----------- -----------
Total current assets 4,759,407 3,712,961
Property and equipment, net 3,205,460 3,460,736
----------- -----------
$7,964,867 $7,173,697
=========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities:
Notes payable $1,480,000 $ 615,000
Current portion of long-term debt 195,261 233,796
Accounts payable 662,864 502,733
Accrued expenses 348,202 471,204
Accrued loss on sale of subsidiary 308,167 -
Income taxes payable 18,401 11,225
---------- ------------
Total current liabilities 3,012,895 1,833,958
---------- ------------
Long-term debt, less current portion 1,140,163 1,621,956
Note payable to shareholder, less
current portion 800,000 800,000
Deferred income taxes 432,231 469,644
---------- -----------
Total long-term liabilities 2,372,394 2,891,600
---------- -----------
Total liabilities 5,385,289 4,725,558
---------- -----------
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, 6,000,000
shares authorized 1,813,028 and
1,813,032 shares issued 18,130 18,130
Additional paid in capital 1,921,357 1,921,362
Retained earnings 640,091 508,647
---------- ----------
Total shareholders' equity 2,579,578 2,448,139
---------- ----------
$7,964,867 $7,173,697
========== ==========
See accompanying notes to consolidated financial statements.
ANTENNA PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Nine Months Ended Three Months Ended
Feb 28, 1998 Feb 28, 1997 Feb 28, 1998 Feb 28, 1997
------------ ------------ ------------ ------------
Sales and contract
revenues $6,480,173 $6,357,408 $2,198,926 $1,583,057
Cost of sales and
contracts 5,037,270 5,098,649 1,770,123 1,228,526
---------- ---------- ---------- ----------
Gross profit 1,442,903 1,258,759 428,803 354,531
Sales and
administrative
expenses 639,241 654,266 288,992 203,925
--------- --------- --------- ---------
Operating profit 803,662 604,493 139,811 150,606
--------- --------- --------- ---------
Other income
(expense):
Interest expense (210,036) (174,256) (66,200) (51,234)
Interest income 166 793 98 134
Other 7,282 (6,107) 2,829 (9,337)
--------- -------- --------- --------
Total other income
(expense) (202,588) (179,370) (63,273) (60,437)
--------- --------- --------- --------
Income from
continuing
operations before
income taxes 601,074 424,923 76,538 90,169
Provision for income
taxes 204,400 144,474 25,648 30,664
--------- -------- -------- --------
Income from
continuing
operations 396,674 280,449 50,890 59,505
Discontinued
operations:
Loss from
discontinued
operations net of
income tax benefit
of $ 31,860,
$18,328, $13,108
and $14,814 (61,847) (35,578) (25,446) (28,757)
Loss from sale of
discontinued
operations, net of
income tax benefit
of $104,777 (203,390) - (203,390) -
---------- -------- ---------- --------
Net income (loss) $ 131,437 $ 244,871 $(177,946) $ 30,748
========== ========= ========== ========
Earnings (loss) per
common shares:
Continuing
operations $ .22 $ .15 $ .03 $ .03
Discontinued
operations (.15) (.02) (.13) (.01)
---------- ---------- ----------- ---------
Net income (loss) $ .07 $ .13 $ (.10) $ .02
========== ========== =========== =========
ANTENNA PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
February 28, 1998 February 28, 1997
Cash flows from operating activities:
Net income $ 131,437 $ 244,871
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation 260,268 276,166
Accrued loss on sale of discontinued
operations 308,167 -
Changes in assets and liabilities:
Accounts receivable (343,714) (523,734)
Inventory (639,646) 726,161
Prepaid expenses (14,404) (12,578)
Accounts payable and accrued
expenses 37,136 102,089
Deferred federal income tax (37,413) -
Income taxes payable 7,176 88,448
---------- ---------
Net cash provided (used) by
operating activities (290,993) 901,423
---------- ---------
Cash flows from investing activities:
Purchase of property and equipment (4,992) (5,711)
---------- ---------
Cash flows from financing activities:
Net borrowings (payments) under
bank line of credit 865,000 (775,000)
Purchase of treasury stock (5) (10)
Principal payments on long term debt (520,328) (180,297)
----------- ----------
Net cash provided (used) by
financing activities 344,667 (955,307)
---------- ----------
Net increase (decrease) in cash
and cash equivalents 48,682 (59,595)
Cash and cash equivalents at beginning
of period 90,461 154,363
---------- ----------
Cash and cash equivalents at end
of period $ 139,143 $ 94,768
========== ==========
Supplemental disclosure of cash flow
information:
Cash paid during the period for:
Interest (none capitalized) $ 250,215 $ 220,672
Income taxes 86,745 75,000
See accompanying notes to consolidated financial statements.
ANTENNA PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED 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 for the sale of Metal Finishing
Corporation and normal recurring accruals necessary to present fairly the
financial position as of February 28, 1998, the results of operations for
the nine months ending February 28, 1998 and 1997, and the cash flows for
the nine months ended February 28, 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,
1997.
2. Business
Antenna Products, Inc.
- ----------------------
Antenna Products, Inc. (the Company) was formerly known as Cabre Corp. The
name change was effective close of business January 30, 1998.
Antenna Products Corporation
- ----------------------------
The Company now operates as a "Holding" company with Antenna Products
Corporation and Thirco, Inc. as its subsidiaries. Antenna Products is the
operating subsidiary with Thirco serving as an equipment leasing company to
Antenna Products Corporation.
Antenna Products 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' 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.
Metal Finishing Corp
- --------------------
Metal Finishing Corporation is a metal finishing and plating operation that
was sold effective February 28, 1998 and has been accounted for in the
accompanying financials as a discontinued operation.
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. 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 February 28, 1998 at Antenna Products amounted to
approximately $5.0 million. About 50% of the current backlog will be
delivered in the remaining three months of the 1998 fiscal year.
3. Inventories
The major components of inventories are as follows:
February 28, 1998 May 31, 1997
Raw materials $ 666,909 $ 975,492
Work in process 2,030,398 792,471
Finished goods 361,425 651,123
-------------- -------------
$ 3,058,732 $ 2,419,086
============== =============
4. Notes Payable
At February 28, 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 February 28, 1998 and 8.25% at February 28, 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 February 28, 1998,
available borrowings under this credit facility were limited to the
borrowing base amount of $2,718,708. 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 February 28, 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 $1,100,000 in working capital
and $1,000,000 in equity. 941,216 979,177
Note payable to an individual payable in monthly
installments of $2,833 plus interest at prime plus 1%,
collateralized by a first lien deed of trust on land
and buildings. 229,513 263,509
Note payable to a finance company payable in monthly
installments of $12,429, including interest at 9.47%
until March 1999. 164,695 287,065
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. 0 383,355
-------- ---------
$2,135,424 $2,713,106
6. Stock Split
The Company's Board of Directors has authorized a 2 for 1 split of the
Company's common stock effective February 12, 1998. All share and per share
amounts have been retroactively restated to reflect the split. The
par value of the preferred stock was changed to $1.00 per share and the par
value of the common stock was changed to $.01 per share and retroactively
stated at this time as well.
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
Third Quarter Ended February 28, 1998 Compared to Third Quarter Ended February
28, 1997
The Company recorded a net loss of $(177,946) for the quarter ended February
28, 1998 compared to a net profit of $30,748 in the quarter ended February 28,
1997. The loss was the result of continued poor performance at Metal
Finishing Corporation and the sale of Metal Finishing Corporation effective
February 28, 1998 to a company owned by Edd McCary, the founder of Metal
Finishing Corporation. The losses associated with Metal Finishing Corporation
are identified in the accompanying financials as a discontinued operation.
Overall sales were 39% higher this quarter with $2.2 million total deliveries
in the third quarter of fiscal year 1998 compared to $1.58 million of
deliveries for the same time period of fiscal year 1997. 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 third quarter of fiscal
year 1998, $289 thousand versus $204 thousand in the third quarter of fiscal
year 1997. Wages, supplies and utilities increased to support the additional
sales volume. Interest expense in the third quarter of fiscal year 1998 was
also higher, $66 thousand versus $51 thousand in the same time period of
fiscal year 1997.
Due to Antenna Products' continued success in commercial markets, the
Company's backlog totaled $5.0 million on February 28, 1998, compared to a
total backlog of $3.1 million on February 28, 1997.
Nine Months Ended February 28, 1998 Compared to Nine Months Ended February 28,
1997
For the nine month period ending February 28, 1998 the income from continuing
operations was $396,674 compared to an income of $280,449 in the same nine
month period of 1997. Inclusion of the losses associated with Metal Finishing
Corporation resulted in a net profit for the first nine months of fiscal year
1998 of $131,437 compared to a net profit of $244,871 in the same nine month
period of 1997.
Sales were $6.48 million in the first nine months of fiscal year 1998, 2%
higher than the $6.36 million of sales in the first nine months of fiscal year
1997. The gross profit margin for the first nine months was 22% compared to
20% for the first nine months of last year. Sales and administrative expenses
as a ratio to sales were 9.9% in the first nine months of this year compared
to 10.3% in the same period last year. Warranty charges of $52,586 were
slightly higher than last year's rate of $46,063 for the same time period, but
averaged less than 1% of sales. Discretionary products development spending
was $178,191, or 3% of sales, unchanged from 3% of sales during the comparable
period last year.
The new line of commercial antennas has been expanded to include PCS omni
antennas with shaped patterns that are tilted down from 1 to 6 degrees
electrically to provide improved coverage in problem areas. The PCS panel
antennas have also been improved with higher gain and improved patterns that
reduce backlobes that can cause interference with antennas in adjacent cell
sites.
Marketing of the new line of commercial antennas for the wireless
telecommunications industry continues with limited success. Antenna Products
has signed distributor agreements with five companies for the sale of PCS, AMR
and Paging antennas. Antenna Products also continues to work directly with
wireless telecommunication companies and small sales of PCS and paging
antennas have resulted from these efforts. The AMR antennas are being sold in
small numbers directly to electric utility companies that are starting to
implement automatic meter reading systems.
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 $ 4,759,407 as of February 28, 1998 with
$4,435,089 in inventory and accounts receivable. Receivables are $1,376,357
at the quarter ending February 28, 1998 compared to $1,032,643 at fiscal 1997
year-end. Net inventories have increased from $2,419,086 at May 31, 1997 to
$3,058,732. Cash accounts have increased $48,682 from May 31, 1997. There
were nominal capital additions during this period. Current liabilities of the
company increased $1,152,537 from fiscal year end as the result of material
purchased for work in- process on contracts at Antenna Products.
Approximately 50% of this work in-process will deliver in FY98.
Management believes that cash flows from operations of the operating
subsidiaries 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. On September 30, 1997, 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. The Company at
February 28, 1998 had $520,000 remaining in loan availability against this
revolving credit line.
ANTENNA PRODUCTS, INC. AND SUBSIDIARIES
PART II-OTHER INFORMATION
Item 4. Submission of Matters To A Vote of Security Holders
By consents of shareholders owning in excess of 50% of the outstanding
common stock, the Company amended its Articles of Incorporation, changing
its name to Antenna Products, Inc. and reducing the par value of its
common stock to $0.01 per share, and of the preferred stock to $1.00 per
share, effective February 12, 1998. There was no meeting of shareholders
and no proxies solicited from shareholders.
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: April 8, 1998 S/O/F: Clark D. Wraight
----------------
Clark D. Wraight, Vice President
and Principal Financial Officer
[ARTICLE] 5
<TABLE>
<S> <C>
[PERIOD-TYPE] 9-MOS
[FISCAL-YEAR-END] MAY-31-1998
[PERIOD-END] FEB-28-1998
[CASH] 139,143
[SECURITIES] 0
[RECEIVABLES] 1,376,357
[ALLOWANCES] 0
[INVENTORY] 3,058,732
[CURRENT-ASSETS] 4,759,407
[PP&E] 3,205,460
[DEPRECIATION] 260,268
[TOTAL-ASSETS] 7,964,867
[CURRENT-LIABILITIES] 3,012,895
[BONDS] 0
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 18,130
[OTHER-SE] 2,561,628
[TOTAL-LIABILITY-AND-EQUITY] 7,964,867
[SALES] 6,480,173
[TOTAL-REVENUES] 6,480,173
[CGS] 5,037,270
[TOTAL-COSTS] 639,241
[OTHER-EXPENSES] (7,448)
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 210,036
[INCOME-PRETAX] 601,074
[INCOME-TAX] 204,400
[INCOME-CONTINUING] 396,674
[DISCONTINUED] (265,237)
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 131,437
[EPS-PRIMARY] .07
[EPS-DILUTED] .07
</TABLE>
