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, 2000
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[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ______________ to _______________
Commission file number 0-12866
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ANTENNA PRODUCTS, INC.
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(Exact name of small business issuer as specified in its charter)
Delaware 75-1907070
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(State or other jurisdiction of incorporation (IRS EMPLOYER Identification No.)
or organization)
1209 Orange St., Wilmington, Delaware 19801
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(Address of principal executive offices)
(940) 325-3301
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(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: 2,135,728 as of
September 30, 2000.
ANTENNA PRODUCTS, INC. AND SUBSIDIARIES
INDEX TO FORM 10-QSB
PAGE
PART 1 FINANCIAL INFORMATION NUMBER
Item 1. Financial Statements for Antenna Products, Inc.
and Subsidiaries (unaudited)
Consolidated Balance Sheets - 2
August 31, 2000 and May 31, 2000
Consolidated Statements of Income - 4
Three Months Ended August 31, 2000 and August 31, 1999
Consolidated Statements of Cash Flows - 5
Three Months Ended August 31, 2000 and August 31, 1999
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of 10
Financial Condition and Results of Operation
PART II OTHER INFORMATION 11
SIGNATURE
ANTENNA PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
August 31, 2000 and May 31, 2000
ASSETS
August 31, 2000 May 31, 2000
(Unaudited) (Audited)
--------------- ------------
CURRENT ASSETS:
Cash and cash equivalents $187,744 $337,348
Accounts receivable:
Trade, net of allowances for doubtful accounts
of $7,021 each year 1,413,151 1,342,733
United States Government 154,444 207,281
Inventories 2,664,453 2,826,358
Costs and estimated earnings
in excess of billings on
refurbishing contracts in progress
769,149 293,161
Prepaid expenses and other
assets 84,151 55,872
Income taxes receivable 10,874 30,000
Deferred income taxes 69,528 69,528
--------- ---------
Total current assets 5,353,494 5,162,281
Property and equipment, net 2,333,966 2,435,624
Intangible Assets 525,794 534,912
Identifiable Intangible 1,581,560 1,629,457
Assets --------- ---------
$9,794,814 $9,762,254
========== ==========
The notes to Consolidated Financial Statements
are an integral part of these statements.
LIABILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES:
Notes payable $813,771 $1,365,000
Current portion of long-term debt 234,372 238,588
Accounts payable 645,106 468,586
Accrued expenses 542,505 382,390
Billings in excess of costs and estimated
earnings on refurbishing contracts in
progress 586,358 320,689
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Total current liabilities 2,822,112 2,775,253
Long-term debt 2,272,963 2,324,387
Note payable to shareholder 800,000 800,000
Deferred income taxes 287,338 287,338
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Total long-term liabilities 3,360,301 3,411,725
Total liabilities 6,182,413 6,186,978
COMMITMENTS AND CONTINGENCIES - -
MINORITY INTEREST IN SUBSIDIARY
SHAREHOLDER'S EQUITY - -
Common stock, $.01 par, 8,000,000 shares
authorized, 2,135,728 shares issued and out-
standing each year 21,358 21,358
Additional paid-in capital 2,678,766 2,678,766
Retained earnings 912,277 875,152
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Total shareholder's equity 3,612,401 3,575,276
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TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $ 9,794,814 $ 9,762,254
============= =============
The Notes to Consolidated Financial Statements
are an integral part of these statements.
ANTENNA PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Quarters ended August 31, 2000 and 1999
(Unaudited)
2000 1999
---- ----
Sales and contract revenues 4,000,233 1,485,387
Cost of sales and contracts 3,177,631 1,037,621
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Gross profit 822,602 447,766
Sales and administration expenses 658,817 396,949
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Operating Profit 163,785 50,817
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Other income (expense):
Interest expense (113,943) (58,794)
Interest income 7 25
Other
6,404 5,388
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Total other income (expense) (107,532) (53,381)
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Income (loss) from operations before
income taxes and minority
interest 56,253 (2,564)
Income tax provision (benefit) 19,126 -
------ --------
Income (loss) before
minority interest
37,127 (2,564)
Minority interest in
subsidiary's loss - -
-------- ---------
Net income (loss) $ 37,127 $ (2,564)
======== =========
Earnings (loss) per common share $ .02 $ (0.00)
======== =========
The Notes to Consolidated Financial Statements
are an integral part of these statements.
ANTENNA PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Quarters ended August 31, 2000 and 1999
(Unaudited)
2000 1999
---- ----
Cash flows from operating activities:
Net income (loss) $ 37,127 $ (2,564)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and Amortization 158,651 71,761
Changes in assets and liabilities:
Accounts receivable (17,581) 522,196
Cost in excess of billings (475,988) -
Inventory 161,905 45,661
Prepaid expenses (28,279) (25,237)
Income taxes receivable 19,126 -
Accounts payable and accrued expenses 336,635 19,804
Billings in excess of costs 265,669 -
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Net cash provided by operating activities 457,265 631,621
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Cash flows from investing activities:
Purchase of property and equipment - -
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Net cash used in investing activities - -
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Cash flows from financing activities:
Net borrowings (payments) under bank line
of credit (551,229) (795,000)
Purchase of treasury stock - -
Principal payments on long term debt (55,640) (10,336)
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Net cash provided (used) by financing
activities (606,869) (805,336)
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Net increase (decrease) in cash and cash
equivalents (149,604) (173,715)
Cash and cash equivalents at beginning
of period 337,348 270,175
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Cash and cash equivalents at end of
period $187,744 $96,460
============ ==========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest (none capitalized) $113,943 $58,794
Income taxes - -
The Notes to Consolidated Financial Statements
are an integral part of these statements.
ANTENNA PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 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, 2000, the results of operations for the three months ending
August 31, 2000 and 1999, and the cash flows for the three months
ended August 31, 2000 and 1999. 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, 2000.
NOTE 2 BUSINESS
General
Antenna Products, Inc. operates as a holding company with Antenna Products
Corporation, API Acquisition Corp. (dba "The Upholstery Shop"), Phazar
Antenna Corp. and Thirco, Inc. as its current subsidiaries. Antenna
Products Corporation, API Acquisition Corp. and Phazar Antenna Corp. are
are operating subsidiaries. Thirco, Inc.serves as an equipment leasing
company to Antenna Products, Inc.'s operating units. Antenna Products, Inc.
has no other business activity. Antenna Products, Inc.'s address is 1209
Orange Street, Wilmington, Delaware 19801. Telephone number, (940) 325-3301.
Product information is available from the Internet web page at:
//www.antennaproducts.com and at: //www.phazar.com.
Antenna Products Corporation
Antenna Products Corporation was incorporated in Texas in 1984 and operated
as a closely held "C" corporation until January 24,1992. Thereafter,
Antenna Products Corporation has operated as a wholly owned
subsidiary of Antenna Products, Inc. Antenna Products Corporation's address
is 101 S.E. 25th Avenue, Mineral Wells, Texas 76067. The telephone number
is (940) 325-3301.
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 telecommunications antennas,
automatic meter reading (AMR), cellular, paging and yagi antennas, guyed
towers, self supported towers and monopoles.
Antenna Products Corporation's customer base is primarily government and
government prime contractor focused, but this is slowly changing as Antenna
Products Corporation continues to develop and market new commercial
products. Antenna Products Corporation's market is international in scope.
Antenna Products Corporation currently focuses on exploiting the domestic
market and has a limited amount of foreign sales. The specialized need
of Antenna Products Corporation's customers and the technology required to
meet those needs change constantly. Accordingly, Antenna Products
Corporation stresses its engineering, installation, service and other
support capabilities. Antenna Products Corporation uses its own sales and
engineering staff to service its principal markets.
Antenna Products Corporation is one of many suppliers of antennas and related
manufacturing services to the government and government prime contractors.
Antenna Products Corporation competes on the basis of cost defined contract
specifications prevalent within this market, Antenna Products Corporation
competes primarily on the basis of its ability to provide state-
of-the-art solutions in the technologically demanding market place while
maintaining its competitive pricing.
Antenna Products Corporation is primarily a build to order company and most
manufacturing requirements are established on a contract basis. For this
reason, the majority of the inventory is work in process. Less than 22% of
total inventory, approximately $583,411 is currently maintained in stock for
delivery to customers. Some raw materials are also inventoried to support
customer delivery schedules. Antenna Products Corporation performs work
for the United States Government primarily under fixed price prime contracts
and subcontracts. Under fixed price contracts, Antenna Products Corporation
realizes any benefit or detriment occasioned by lower or higher costs of
performance.
On May 1, 2000, Antenna Products Corporation purchased the complete product
line of commercial telecommunications antennas known as the PhazarTM product
line from BAE SYSTEMS AEROSPACE INC. Advanced Systems. The tangible assets
purchased consisted of the inventory, tooling, fixtures, radome molds, test
equipment, and demonstration equipment. The intangible assets purchased
included the patents, copyrights, trademarks, engineering data, manufacturing
drawings, manufacturing method sheets, test procedures, quality program
plans, vendor lists, customer lists, product data sheets, ChameleonTM, and
pattern information. No real property was included in the sale.
The product line purchased consists of eighteen models of planar single beam
(PSB) cellular antennas, two models of intelligent antenna systems (IAS),
fifteen U.S. Patents, one pending U.S. Patent Application, and
multiple corresponding Foreign Patents and pending Patent Applications. A
camouflaging system for environmental concealment of the antennas called
ChameleonTM, was also included in the sale. This product line compliments
Antenna Products Corporation's existing commercial antenna product lines and
is currently being produced at the plant in Mineral Wells, Texas.
API Acquisition Corp. (dba "The Upholstery Shop")
API Acquisition Corp. is an 80% owned subsidiary of Antenna Products, Inc.
It was formed on January 24, 2000 as a Texas corporation. API Acquisition
Corp. purchased the assets and business of The Upholstery Shop,
Inc. on January 27, 2000. The assets purchased included the machinery and
equipment. No land or buildings were included as part of this acquisition.
The acquisition was recorded as a purchase transaction and the
operations of the Upholstery Shop have been included in the financials from
the date of acquisition. API Acquisition Corp. currently does business as
The Upholstery Shop at a leased facility at 326 N. Highway 377, Roanoke,
Texas 76262.The telephone number is (817)430-2306.
The Upholstery Shop provides complete refurbishment for a full range of
corporate and executive aircraft interiors. The range and scope of these
services include design and fabrication of seats, side panels, headliners,
galleys and cabinets, as well as the design and installation of custom
lighting, entertainment systems and cabin management systems.
The Upholstery Shop removes existing interiors of aircraft and installs new
interiors designed to customer specifications and coordinates the
refurbishment of exteriors for customers when required. The Upholstery
Shop provides this service on virtually all executive and corporate class
aircraft, including, but not limited to: Lear, Cessna, Gulfstream, Galaxy,
Dassault, and Bombardier. The refurbishments are diverse with the lower
range being a minor upgrading of Lear 25's to total interior upgrading of the
larger aircraft of the Gulfstream and Falcon family.
Phazar Antenna Corp.
Phazar Antenna Corp. is a wholly owned subsidiary of Antenna Products, Inc.
It was formed as a Delaware Corporation and activated on June 1, 2000.
Phazar Antenna Corp. operates as a marketing, research and development unit.
Phazar Antenna Corp. personnel are applying the engineering designs, data and
patents purchased from BAE SYSTEMS Advanced Systems to continue the
development of new products to compliment the existing PhazarTM Product
Line. Phazar Antenna Corp. currently leases space at 5 Cuba Hill Road,
Greenlawn, New York 11740. The telephone number
is (631) 262-8881.
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 at Antenna Products Corporation was $3.6 million on
August 31, 2000. This compares to $3.9 million in backlog at the end of
fiscal year 2000. Over 90% of this backlog will be delivered in the balance
of the 2001 fiscal year.
The backlog of orders at API Acquisition Corp was $1.8 million on August 31,
2000. All of the $1.8 million in backlog will be delivered in the 2001
fiscal year.
Phazar Antenna Corp. orders at Antenna Products Corporation are normally
shipped within 2 weeks, hence Phazar Antenna Corp.'s backlog of orders was
negligible on August 31, 2000.
NOTE 3 INVENTORIES
The major components of inventories are as follows:
August 31, 2000 May 31, 2000
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Raw materials $ 452,799 399,796
Work in process 1,628,243 1,730,276
Finished Goods 583,411 696,286
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$ 2,664,453 $ 2,826,358
=============== ==============
NOTE 4 NOTES PAYABLE
At August 31, 2000 and May 31, 2000 notes payable consist of a revolving note
payable to a bank, with a maximum amount not to exceed the lesser of
3,000,000, or a calculated borrowing base determined by a formula based upon
the amount of certain qualified receivable and inventories as defined in the
loan agreement.
Interest is payable monthly at the prime rate (9.5% for both periods at
August 31, 2000 and and May 31, 2000) plus 1% until September 30, 2000,
when any unpaid principal and interest shall be due. Borrowings under the
revolving note payable are collateralized by accounts receivable and
inventories as defined in the loan agreement. At August 31, 2000, available
borrowings under this credit facility were limited to the borrowing base
amount of $2,466,904. Borrowings are guaranteed by a principal shareholder and
under the agreement, the Company must maintain a minimum net worth of
$1,500,000 and working capital of $1,000,000.
At August 31, 2000 and May 31, 2000, note payable to shareholder consists
of a subordinated note to a principal shareholder of the Company. In the
initial years, only interest at the prime rate (9.5% for both periods at
August 31, 2000 and May 31, 2000) is payable, with monthly principal
payments scheduled to begin in June 2002 and maturing in May 2007.
NOTE 5 LONG TERM DEBT
At August 31, 2000 and May 31, 2000, long-term debt consists of
the following:
August 31, 2000 May 31,2000
--------------- -----------
Mortgage note to a bank, guaranteed 80% by a U.S.
Government agency, payable $10,050 per month,
including interest at the prime rate
(9.5% for both periods at August 31, 2000
and May 31, 2000) plus 1/2%; collateralized by
certain real estate, fixtures and assignment of
life insurance policy with a principal shareholder
and the Company is required to maintain certain
covenants including $1,000,000 in working capital
and a ratio of maximum debt to net worth of
seven to one. $ 843,123 $ 853,586
Note payable to a bank, payable in installments
of $28,724 per month until maturity date of
January 26, 2007, when remaining balance is due,
including interest at the prime rate (9.50% for
both periods at August 31, 2000 and May 31, 2000)
plus 1% secured by property and
equipment. The note is also guaranteed by a
principal shareholder. 1,650,498 1,691,458
____________ ____________
Loan to credit institution, due
February 11, 2004, payable in monthly
installments of $495, including interest
at 10.75%, secured by a utility vehicle. 13,714 17,931
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Less current portion of long-term debt 234,372 248,588
$ 2,272,963 $ 2,248,588
============= ===========
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 that 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, 2000 Compared to First Quarter Ended
August 31, 1999
Antenna Products, Inc. consolidated sales from operations were $4,000,233 for
the quarter ended August 31, 2000 compared to sales of $1,485,387 for the first
quarter ended August 31, 1999. Antenna Products, Inc. recorded a net
profit of $37,127 for the first quarter of fiscal year 2001 compared to a net
loss of $2,564 for the first quarter of fiscal year 2000.
The gross profit margin for the first quarter was 21% compared to 30% for the
first quarter of last year. Antenna Products, Inc.'s operating margin for
the first quarter of fiscal year 2001 was 4% compared to 3% in the first
quarter of fiscal year 2000.
Sales and administrative expenses were higher in the first quarter of fiscal
year 2001, $658,817 versus $396,949 in the first quarter of fiscal year 2000.
Sales and administrative expenses as a ratio to sales were 16% in the first
quarter of this year compared to 27% in the same period last year.
Interest expense in the first quarter of fiscal year 2001 was $113,943 versus
$58,794 in the same time period of fiscal year 2000.
Antenna Products, Inc.'s backlog totaled $5.4 million on August 31, 2000.
This included $3.6 million at Antenna Products Corporation and $1.8 million at
API Acquisition Corp. Antenna Products, Inc.'s backlog totaled $3.9 million
on August 31, 1999.
Liquidity and Capital Resources
Antenna Products, Inc.'s current assets total $5,353,494 as of August 31, 2000
with $4,232,048 in inventory and accounts receivable. Receivables are
$1,567,595 at quarter ending August 31, 2000 compared to $1,550,014 at
fiscal 2000 year-end. Net inventories have decreased slightly from
$2,826,358 at May 31, 2000 to $2,664,453. Cash accounts have decreased
$149,604 from May 31, 2000. Current liabilities of the Company increased $46,859
from fiscal year end due to the increase in accounts payable and accrued
expenses.
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. The Company at August 31, 2000 had $1,656,904 remaining in loan
availability against its revolving credit lines. On September 30, 2000, Antenna
Products renewed its annual working credit line of $3.0 million with loan
advances subject to a borrowing base formula applied to inventory and
receivable balances.
ANTENNA PRODUCTS, INC. AND SUBSIDIARIES
PART II-OTHER INFORMATION
Item 6.
(b) Reports on Form 8-K
On June 6, 2000 the registrant filed a form 8-K for the purpose of disclosing
the resignation of William Poulin and the election of Gary W. HAvener, the
principal shareholder, as President and CEO of Antenna Products, Inc.
SIGNATURE
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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.
s/o/f
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Date: October 10, 2000
Clark D. Wraight, Vice President
and Principal Financial Officer
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