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 November 30, 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.
(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:
1,902,928 as of November 30, 1999.
ANTENNA PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
November 30, 1999 and May 31, 1999
ASSETS
Nov 30, 1999 May 31, 1999
(Unaudited) (Audited)
------------ ------------
Current assets:
Cash and cash equivalents $ 268,708 $ 270,175
Accounts receivable:
Trade, net of allowances for
doubtful accounts of $7,021 each year 747,752 1,077,917
United States Government 124,490 210,360
Inventories 2,642,362 2,638,172
Prepaid expenses and other assets 56,120 33,368
Income taxes receivable 59,661 186,212
Deferred income taxes 65,880 65,880
----------- -----------
Total current assets 3,964,973 4,482,084
----------- -----------
Property and equipment, net 2,243,396 2,386,918
----------- -----------
$ 6,208,369 $ 6,869,002
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable $ 555,000 $ 1,300,000
Current portion of long-term debt 48,535 48,535
Accounts payable 267,449 247,407
Accrued expenses 382,442 323,489
----------- -----------
Total current liabilities 1,253,426 1,919,431
----------- -----------
Long-term debt, less current portion 826,427 846,900
Note payable to shareholder, less
current portion 800,000 800,000
Deferred income taxes 460,462 460,462
----------- -----------
Total long-term liabilities 2,086,889 2,107,362
----------- -----------
Total liabilities 3,340,315 4,026,793
----------- -----------
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. 1,902,928 and 1,862,928
shares issued and outstanding respectively 19,030 18,630
Additional paid in capital 2,048,051 1,995,951
Retained earnings 800,973 827,628
---------- ----------
Total shareholders' equity 2,868,054 2,842,209
---------- ----------
$6,208,369 $6,869,002
========== ==========
See accompanying notes to consolidated financial statements.
ANTENNA PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Six Months Ended Three Months Ended
Nov 30, 1999 Nov 30, 1998 Nov 30, 1999 Nov 30, 1998
------------ ------------ ------------ ------------
Sales and contract
revenues $ 2,818,191 $ 4,150,133 $ 1,332,804 $ 2,011,447
Cost of sales and
contracts 2,036,021 3,053,095 998,401 1,438,390
----------- ------------ ----------- -----------
Gross Profit 782,170 1,097,038 334,403 573,057
Sales and
administration
expenses 706,931 562,142 309,981 252,829
----------- ------------ ----------- ----------
Operating Profit 75,239 534,896 24,422 320,228
----------- ------------ ----------- ----------
Other income
(expense):
Interest expense (108,262) (132,036) (49,468) (66,976)
Interest income 917 1,482 892 28
Other 5,451 5,261 63 3,753
----------- ----------- ---------- ----------
Total other income
(expense) (101,894) (125,293) (48,513) (63,195)
----------- ----------- ----------- ----------
Income from
continuing
Operations
before income
taxes (26,655) 409,603 (24,091) 257,033
---------- ---------- ----------- ----------
Provision for income
taxes - 140,000 - 88,126
---------- ---------- ----------- ----------
Income from
continuing
operations (26,655) 269,603 (24,091) 168,907
Discontinued
operations:
Loss from
operations of
discontinued
segment, net
of taxes of
2,865
- (5,561) - -
---------- ----------- ------------ ------------
Net income $ (26,655) $ 264,042 $ (24,091) $ 168,907
========== =========== ============ ============
Basic earnings
(loss) per common
share
Continuing
operations $ (.01) $ .14 $ (.01) $ .09
Discontinued
operations - - - -
----------- ---------- ------------ ------------
$ (.01) $ .14 $ (.01) $ .09
=========== ========== ============ ============
See accompanying notes to consolidated financial statements.
ANTENNA PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Quarters ended November 30, 1999 and 1998
(Unaudited)
Six Months Ended
Nov 30, 1999 Nov 30, 1998
------------ ------------
Cash flows from operating activities:
Net income $ (26,655) $ 264,042
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 143,522 112,732
Deferred federal income tax - -
Changes in assets and liabilities:
Accounts receivable 416,035 10,236
Inventory (4,190) 61,343
Prepaid expenses (22,752) (61,382)
Accounts payable and accrued expenses 78,995 (49,500)
Income taxes payable 126,551 37,135
------------ ------------
Net cash provided (used) by operating
activities 711,506 374,606
------------ ------------
Cash flows from investing activities:
Purchase of property and equipment - (267)
------------ ------------
Cash flows from financing activities:
Net borrowings (payments) under
bank line of credit (745,000) (75,000)
Purchase of treasury stock - (9)
Principal payments on long term debt (20,473) (17,918)
Sale of common stock 52,500 -
----------- ------------
Net cash provided (used) by
financing activities (712,973) (92,927)
----------- ------------
Net increase (decrease) in cash and
cash equivalents (1,467) 281,412
Cash and cash equivalents at beginning of
period 270,175 221,041
---------- -----------
Cash and cash equivalents at end of period $ 268,708 $ 502,453
========== ===========
Supplemental disclosure of cash flow
information:
Cash paid during the period for:
Interest (none capitalized) $ 108,262 $ 132,036
Income taxes - 100,000
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
November 30, 1999, the results of operations for the six months ended and
three months ended November 30, 1999 and 1998, and the cash flows for the
six months ended November 30, 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,
1999.
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 telecommunications antennas,
automatic meter reading (AMR), ISM, 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 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 December 31, 1999 at Antenna Products amounted to
approximately $4.4 million.
Inventories
- -----------
The major components of inventories are as follows:
November 30, 1999 May 31, 1999
Raw materials $ 610,247 $ 646,355
Work in process 1,772,485 1,523,201
Finished goods 259,630 468,616
------------- -------------
$ 2,642,362 $ 2,638,172
============= =============
4. Notes Payable
At November 30, 1999 notes payable consist of a revolving note payable to a
bank, maximum amount $3,000,000, interest payable monthly at the prime rate
plus 1% until September 30, 2000, when any unpaid principal and interest
shall be due.
Prime rate was 8.50% at November 30, 1999 and 7.75% at November 30, 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 November 30, 1999,
available borrowings under this credit facility were limited to the
borrowing base amount of $1,924,422. Borrowings are guaranteed by a
principal shareholder and the Company must maintain a minimum tangible net
worth of $2,000,000 and working capital of not less than $1,000,000.
5. Long-Term Debt
At November 30, 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 2002 and maturing in May 2007. $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 plus1/2%; 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. 874,962 916,356
-------- --------
$1,674,962 $1,716,356
========== ==========
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
- ---------------------
Second Quarter Ended November 30, 1999 Compared to Second Quarter Ended
November 30, 1998
- --------------------------------------------------------------------------
The Company recorded a net loss of $24,091 for the quarter ended November
30, 1999 compared to a net profit of $168,907 for the quarter ended November
30, 1998. The loss in the second quarter was the result of the continuation
of the slow-down in orders for military and commercial products that began in
the first quarter. Sales for the second quarter of fiscal year 2000 were
$1.33 million compared to $2.01 million in the second quarter of fiscal year
1999. The gross profit margin for the second quarter was 25% compared to 28%
for the second quarter of last year. The Company's operating margin for the
second quarter of fiscal year 2000 was 2% compared to 16% in the second
quarter of fiscal year 1999.
During the second quarter, Antenna Products Corporation's employment level
remained at 75 employees. Production personnel in some departments continued
to work a 36 hour work week during the months of September and October. All
Antenna Products Corporation personnel returned to a 40 hour work week in
November.
Sales and administrative expenses were $310 thousand in the second quarter of
fiscal year 2000, versus $253 thousand in the second quarter of fiscal
year 1999. Sales and administrative expenses as a ratio to sales were 23% in
the second quarter of this year compared to 13% in the same period last year.
Operating expenses including supplies, utilities, maintenance and premium pay
decreased. Advertising costs and indirect labor charges increased due to the
decrease in production volume.
Interest expense in the second quarter of fiscal year 2000 was
$49 thousand versus $67 thousand in the same time period of fiscal year 1999.
The Company's backlog totaled $3.7 million on November 30, 1999, compared to a
backlog of $3.2 million on November 30, 1998.
During the second quarter, two new vehicular mount antennas were developed for
the Instrument, Scientific, Medical (ISM) frequency range of
2.4 - 2.5 GHz. The first antenna is a unity gain omni antenna and the
second antenna is a 9 dBd gain sector antenna. Customer testing of the new
mobile ISM antennas will be conducted in the third quarter.
Also during the second quarter, Antenna Products Corporation began deliveries
of the new 180 degree ISM sector antenna. $21 thousand of ISM sector
antennas were shipped during the second quarter of fiscal year 2000. Orders
for an additional $174 thousand of ISM antennas have been released to
manufacturing and are currently in production.
More information on new products at Antenna Products is available on the
Internet web page at://WWW.antennaproducts.com.
Six Months Ended November 30, 1999 Compared to Six Months Ended November 30,
1998
- ----------------------------------------------------------------------------
The Company recorded a net loss of $26,655 for the six month period ending
November 30, 1999 compared to a net profit of $264,042 in the same six month
period of 1998. Sales were $2.8 million in the first half of fiscal year
2000, compared to $4.15 million of sales in the first half of fiscal year
1999. The gross profit margin for the first six months was 28% compared to
26% for the first six months of last year. Sales and administrative expenses
as a ratio to sales were 25% in the first six months of this year compared to
14% in the same period last year. The Company's operating margin for the
first half of fiscal year 2000 was 3% compared to 13% in the first half of
fiscal year 1999. In the first six months of this year, warranty costs
averaged less than 2% of sales, $47,665 compared to $73,333 in the same period
last year. Discretionary products development spending was $71,036, or 3% of
sales, compared to $150,932, or 4% of sales for the comparable period last
year.
Liquidity and Capital Resources
- -------------------------------
The Company's current assets total $3,964,973 as of November 30, 1999 with
$3,514,604 in inventory and accounts receivable. Receivables are $872,242 at
the quarter ending November 30, 1999 compared to $1,288,277 at fiscal 1999
year-end. Net inventories have increased slightly from $2,638,172 at May 31,
1999 to $2,642,362. Cash accounts have decreased $1,467 from May 31, 1999.
There were nominal capital additions during this period. Current liabilities
of the company decreased $666,005 from fiscal year end due to the reduction of
the revolving line of credit balance in the first quarter.
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 November 30, 1999 had $1,369,000 remaining in loan
availability against its revolving credit line. On September 30, 1999,
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.
Year 2000 Readiness
- --------------------
As of the date of this report, Antenna Products Corporation has not
experienced any problems with computer software or hardware recognizing year
2000 dates. Since none of the products sold by the Company are at risk for
Year 2000 compliance, no problems have been reported and none are expected.
All of the computer numerical controlled (CNC) machines in the manufacturing
areas made the transition to the year 2000 without difficulty. Antenna
Products Corporation is not aware of any vendor difficulties due to problems
associated with the recognition of year 2000 dates.
Management believes that the costs of addressing any future difficulties
associated with this issue will not materially affect the financial position
or results of operation of the Company. Antenna Products plans to commit the
resources required to resolve any significant Year 2000 issues, if they occur,
in a timely manner.
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: January 6, 2000 s/o/f:Clark D. Wraight, Vice President
and Principal Financial Officer
[ARTICLE] 5
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] MAY-31-2000
[PERIOD-END] NOV-30-1999
[CASH] 268,708
[SECURITIES] 0
[RECEIVABLES] 872,242
[ALLOWANCES] (7,021)
[INVENTORY] 2,642,362
[CURRENT-ASSETS] 3,964,973
[PP&E] 2,243,396
[DEPRECIATION] 143,522
[TOTAL-ASSETS] 6,208,369
[CURRENT-LIABILITIES] 1,253,426
[BONDS] 0
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 19,030
[OTHER-SE] 2,849,024
[TOTAL-LIABILITY-AND-EQUITY] 6,208,369
[SALES] 2,818,191
[TOTAL-REVENUES] 2,818,191
[CGS] 2,036,021
[TOTAL-COSTS] 706,931
[OTHER-EXPENSES] (6,368)
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 108,262
[INCOME-PRETAX] (26,655)
[INCOME-TAX] 0
[INCOME-CONTINUING] (26,655)
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] (26,655)
[EPS-BASIC] (.01)
[EPS-DILUTED] (.01)
</TABLE>
