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, 1999
[ ] 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
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 March 1,
1999.
ANTENNA PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
February 28, 1999 and May 31, 1998
ASSETS
February 28, 1999 May 31, 1998
(Unaudited) (Audited)
----------------- ---------------
Current assets:
Cash and cash equivalents $ 238,080 $ 221,041
Accounts receivable:
Trade, net of allowances for
doubtful accounts of $7,021 each year 854,814 1,009,350
United States Government 232,297 332,230
Inventories 2,826,457 2,695,470
Prepaid expenses and other assets 20,991 9,229
Income taxes receivable - 15,592
Deferred income taxes 199,057 199,057
------------ --------------
Total current assets 4,371,696 4,481,969
Property and equipment, net 2,464,332 2,640,560
------------ --------------
$ 6,836,028 $ 7,122,529
============ ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable $ 1,055,000 $ 1,300,000
Current portion of long-term debt 43,688 43,688
Accounts payable 474,439 436,504
Accrued expenses 202,700 670,295
Income taxes payable 6,924 -
------------ -------------
Total current liabilities 1,782,751 2,450,487
------------ -------------
Long-term debt, less current portion 862,216 890,585
Note payable to shareholder, less
current portion 800,000 800,000
Deferred income taxes 448,617 448,617
------------ -------------
Total long-term liabilities 2,110,833 2,139,202
------------ -------------
Total liabilities 3,893,584 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 shares issued and
outstanding respectively 18,630 18,130
Additional paid in capital 1,995,951 1,921,451
Retained earnings 927,863 593,259
Accumulated other comprehensive income - -
------------ ------------
Total shareholders' equity 2,942,444 2,532,840
------------ ------------
$ 6,836,028 $ 7,122,529
See accompanying notes to consolidated financial statements.
ANTENNA PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Nine Months Ended Three Months Ended
Feb 28,1999 Feb 28,1998 Feb 28,1999 Feb 28,1998
----------- ----------- ----------- -----------
Sales and contract
revenues $ 5,887,954 $ 6,480,173 $ 1,737,821 $ 2,198,926
Cost of sales and
contracts 4,318,805 5,037,270 1,265,710 1,770,123
----------- ----------- ----------- -----------
Gross profit 1,569,149 1,442,903 472,111 428,803
Sales and
administrative
expenses 874,371 639,241 312,229 288,992
----------- ----------- ----------- -----------
Operating profit 694,778 803,662 159,882 139,811
----------- ----------- ----------- -----------
Other income (expense):
Interest expense (189,533) (210,036) (57,497) (66,200)
Interest income 3,300 166 1,818 98
Other 6,475 7,282 1,569 2,829
----------- ----------- ----------- ----------
Total other income
(expense) (179,758) (202,588) (54,110) (63,273)
----------- ----------- ----------- ----------
Income from
continuing operations
before income taxes 515,020 601,074 105,772 76,538
Provision for income
taxes 175,200 204,400 35,200 25,648
----------- ---------- --------- ---------
Income from continuing
operations 339,820 396,674 70,572 50,890
Discontinued operations:
Loss from discontinued
operations net of
income tax benefit of
$ 2,685, $31,860,
$180 and $13,108 (5,206) (61,847) - (25,446)
Loss from sale of
discontinued operations,
net of income tax
benefit of $104,777 - (203,390) - (203,390)
---------- ----------- ----------- ---------
Net income (loss) $ 334,614 $ 131,437 $ 70,572 $ (177,946)
========== =========== =========== ===========
Earnings (loss) per
common share:
Continuing operations $ .18 $ .22 $ .04 $ .03
Discontinued operations - (.15) - (.13)
---------- ----------- ----------- -----------
Net income (loss) $ .18 $ .07 $ .04 $ (.10)
========== =========== =========== ===========
ANTENNA PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
February 28, 1999 February 28, 1998
Cash flows from operating activities:
Net income $ 334,614 $ 131,437
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation 187,320 260,268
Accrued loss on sale of
discontinued operations - 308,167
Changes in assets and
liabilities:
Accounts receivable 254,469 (343,714)
Inventory (55,987) (639,646)
Prepaid expenses (11,760) (14,404)
Accounts payable and accrued
expenses (429,662) 37,136
Deferred federal income tax - (37,413)
Income taxes payable 22,515 7,176
----------- ------------
Net cash provided (used) by
operating activities 301,509 (290,993)
----------- ------------
Cash flows from investing activities:
Purchase of property and equipment (11,092) (4,992)
----------- ------------
Cash flows from financing activities:
Net borrowings (payments) under
bank line of credit (245,000) 865,000
Purchase of treasury stock (9) (5)
Principal payments on long term debt (28,369) (520,328)
------------ -------------
Net cash provided (used) by
financing activities (273,378) 344,667
------------ -------------
Net increase in cash and cash
equivalents 17,039 48,682
Cash and cash equivalents at
beginning of period 221,041 90,461
------------ -------------
Cash and cash equivalents at end
of period $ 238,080 $ 139,143
============ =============
Supplemental disclosure of cash flow
information:
Cash paid during the period for:
Interest (none capitalized) $ 189,533 $ 210,036
Income taxes 150,000 86,745
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 (consisting of only normal recurring
accruals) necessary to present fairly the financial position as of February
28, 1999, the results of operations for the nine months ending February 28,
1999 and 1998, and the cash flows for the nine months ended February 28,
1999 and 1998. 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. 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 employ any full time employees and does not intend to employ
any in the foreseeable future. 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, 1999 at Antenna Products amounted to
approximately $4.1 million. About 50% of the current backlog will be
delivered in the remaining three months of the 1999 fiscal year.
3. Inventories
The major components of inventories are as follows:
February 28, 1999 May 31, 1998
Raw materials $ 623,404 $ 857,014
Work in process 1,873,299 1,085,000
Finished goods 329,754 753,456
-------------- -------------
$ 2,826,457 $ 2,695,470
============== =============
4. Notes Payable
At February 28, 1999 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, 1999, when any unpaid principal and interest
shall be due.
Prime rate was 7.75% at February 28, 1999 and 8.50% at February 28, 1998.
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, 1999,
available borrowings under this credit facility were limited to the
borrowing base amount of $2,307,785. 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, 1999 and 1998, long-term debt consists of the following:
1999 1998
---- ----
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. 905,904 941,216
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. 0 229,513
Note payable to a finance company payable in monthly
installments of $12,429, including interest at 9.47%
until March 1999. 0 164,695
---------- ----------
$1,705,904 $2,135,424
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, 1999 Compared to Third Quarter Ended February
- ------------------------------------------------------------------------------
28, 1998
- --------
The Company recorded a net profit of $70,572 for the quarter ended February
28, 1999 compared to a net loss of $(177,946) for the quarter ended February
28, 1998. A comparison of the third quarter net profit of $70,572 to the
income from continuing operations for the 1998 third quarter of $50,890 shows
a small improvement in profit during a period of lower sales. The Company's
operating margin for the third quarter of fiscal year 1999 was 9.2% compared
to 6.4% in the third quarter of fiscal year 1998.
Overall sales were 21% lower this quarter with $1.7 million total deliveries
in the third quarter of fiscal year 1999 compared to $2.2 million of
deliveries for the same time period of fiscal year 1998. Changes in customer
requirements have moved sales that were forecast for the third quarter into
the next fiscal year.
Sales and administrative expenses were higher in the third quarter of fiscal
year 1999, $312 thousand versus $289 thousand in the third quarter of fiscal
year 1998. Interest expense in the third quarter of fiscal year 1999 was
lower, $57 thousand versus $66 thousand in the same time period of fiscal year
1998.
Due to slower sales in both military and commercial markets, the Company's
backlog totaled $4.1million on February 28, 1999, compared to a total backlog
of $5.0 million on February 28, 1998.
Nine Months Ended February 28, 1999 Compared to Nine Months Ended February 28,
- ------------------------------------------------------------------------------
1998
- ----
For the nine month period ending February 28, 1999 the net profit was $334,614
compared to a net profit of $131,437 in the same nine month period of 1998. A
comparison of the income from continuing operations for the nine month period
ending February 28, 1999 of $339,820 to the income from continuing operations
for the nine month period ending February 28, 1998 of $396,674 clearly shows
the decrease in income that has resulted during a period of lower sales.
Sales were $5.89 million in the first nine months of fiscal year 1999, 9%
lower than the $6.48 million of sales in the first nine months of fiscal year
1998. The gross profit margin for the first nine months was 27% compared to
22% for the first nine months of last year. Sales and administrative expenses
as a ratio to sales were 15% in the first nine months of this year compared to
9.9% in the same period last year. The Company's operating margin for the
first nine months of fiscal year 1999 was 11.8% compared to 12.4% for the
first nine months of last year. Warranty charges of $84,592 were higher than
last year's rate of $52,586 for the same time period, but averaged less than
2% of sales. Discretionary products development spending was $218,313, or 4%
of sales, 1% higher than the comparable period last year.
Marketing of the new line of commercial antennas for the wireless
telecommunications industry continues with small sales to license holders in
the "C", "E", and "F" frequency blocks. In response to customer
requirements, a new 2.4 GHz ISM Panel antenna was developed during the third
quarter. This antenna will be mounted on subway cars and will provide
location information as the car progresses through the tunnel network.
Initial orders for the new ISM panel antenna are expected during the fourth
quarter.
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 $ 4,371,696 as of February 28, 1999 with
$3,913,568 in inventory and accounts receivable. Receivables are $1,087,111
at the quarter ending February 28, 1999 compared to $1,341,580 at fiscal 1998
year-end. Net inventories have increased from $2,695,470 at May 31, 1998 to
$2,826,457. Cash accounts have increased $17,039 from May 31, 1998. There
were nominal capital additions during this period. Current liabilities of the
Company decreased $667,736 from fiscal year end due to the reduction of the
revolving line of credit balance and the payment of accrued expenses at year
end. Approximately 50% of the current work in process at Antenna Products
will deliver in FY99.
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, 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. The Company at
February 28, 1999 had $945,000 remaining in loan availability against this
revolving credit line.
Year 2000 Readiness
- -------------------
Antenna Products has completed a product line assessment and none of the
products sold by the Company are at risk for Year 2000 compliance. The
computer system at Antenna Products has been tested and it will accurately
recognize Year 2000 dates. All required internal process software upgrades
are scheduled to be installed and tested by June 1, 1999. Assessment of all
vendors continues. Approximately 95% of the vendors surveyed have responded.
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, 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: April 13, 1999 s/o/f:Clark D. Wraight, Vice President
and Principal Financial Officer
[ARTICLE] 5
<TABLE>
<S> <C>
[PERIOD-TYPE] 9-MOS
[FISCAL-YEAR-END] MAY-31-1999
[PERIOD-END] FEB-28-1999
[CASH] 238,080
[SECURITIES] 0
[RECEIVABLES] 1,087,111
[ALLOWANCES] (7,021)
[INVENTORY] 2,826,457
[CURRENT-ASSETS] 20,991
[PP&E] 2,464,332
[DEPRECIATION] 187,320
[TOTAL-ASSETS] 4,371,696
[CURRENT-LIABILITIES] 1,782,751
[BONDS] 0
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 18,630
[OTHER-SE] 2,923,814
[TOTAL-LIABILITY-AND-EQUITY] 6,836,028
[SALES] 5,887,954
[TOTAL-REVENUES] 5,887,954
[CGS] 4,318,805
[TOTAL-COSTS] 874,371
[OTHER-EXPENSES] (9,775)
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 189,533
[INCOME-PRETAX] 515,020
[INCOME-TAX] 175,200
[INCOME-CONTINUING] 339,820
[DISCONTINUED] (5,206)
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 334,614
[EPS-PRIMARY] .18
[EPS-DILUTED] .18
</TABLE>
