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, 2000
[ ] 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(IRS Employer Identification No.)
or organization)
1209 Orange St., Wilmington, Delaware 19801
___________________________________________
(Address of principal executive offices)
(940) 325-3301
________________
(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: 2,166,928 as of November
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
November 30, 2000 and May 31, 2000
Consolidated Statements of Operations 4
Three Months Ended November 30, 2000 and 1999
Six Months Ended November 30, 2000 and 1999
Consolidated Statements of Cash Flows - 5
Six Months Ended November 30, 2000 and 1999
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of 10
Results of Operation and Financial Condition
PART II OTHER INFORMATION 11
SIGNATURE
ANTENNA PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
November 30, 2000 and May 31, 2000
ASSETS
November 30, 2000 May 31, 2000
(Unaudited) (Audited)
_________________ _____________
CURRENT ASSETS:
Cash and cash equivalents $98,847 $337,348
Accounts receivable:
Trade, net of allowances for
doubtful accounts
of $7,021 each
year 2,157,363 1,342,733
United States Government 110,712 207,281
Inventories 2,336,340 2,826,358
Costs and estimated earnings in
excess of billings on
refurbishing contracts in
progress 314,490 293,161
Prepaid expenses and other
assets 80,377 55,872
Income taxes receivable - 30,000
Deferred income taxes 69,528 69,528
____________ __________
Total current assets 5,167,657 5,162,281
Property and equipment, net 2,294,608 2,435,624
Intangible Assets (Goodwill) 516,677 534,912
Identifiable Intangible Assets 1,589,724 1,629,437
_____________ ___________
4,401,009 4,599,973
_____________ ___________
$9,568,666 $9,762,254
============= ===========
The Notes to Consolidated Financial Statements
are an integral part of these statements.
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable $770,000 $1,365,000
Current portion of long-term debt 238,867 238,588
Accounts payable 531,496 468,586
Accrued expenses 568,129 382,390
Billings in excess of costs and
estimated earnings on refurbishing
contracts in progress 287,922 320,689
Income taxes payable 57,959 -
__________ ____________
Total current liabilities 2,454,373 2,775,253
Long-term debt 2,218,238 2,324,387
Note payable to shareholder 800,000 800,000
Deferred income taxes 287,338 287,338
___________ _____________
Total long-term liabilities 3,305,576 3,411,725
___________ _____________
Total liabilities 5,759,949 6,186,978
Commitments and Contingencies - -
MINORITY INTEREST IN SUBSIDIARY 13,271 -
SHAREHOLDERS' EQUITY
Common stock, $0.01 par, 8,000,000
shares authorized. 2,166,928 and
2,135,728 shares issued
and outstanding respectively 21,670 21,358
Additional paid in capital 2,741,154 2,678,766
Retained earnings 1,032,622 875,152
___________ _________
Total shareholders' equity 3,795,446 3,575,276
___________ _________
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $9,568,666 $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 November 30, 2000 and 1999
Unaudited)
Six Months Ended Three Months Ended
Nov 30, 2000 Nov 30, 1999 Nov 30, 2000 Nov 30, 1999
____________ ____________ ____________ ____________
Sales and contract
revenues $7,985,652 $2,818,191 $3,985,419 $1,332,804
Cost of sales and
contracts 6,071,799 2,036,021 2,894,168 998,401
___________ __________ __________ __________
Gross Profit 1,913,853 782,170 1,091,251 334,403
Sales and
administration
expenses 1,442,100 706,931 783,283 309,981
_________ ________ _________ ________
Operating Profit 471,753 75,239 307,968 24,422
_________ ________ _________ ________
Other income (expense):
Interest expense (223,195) (108,262) (109,251) (49,468)
Interest income 82 917 76 892
Other 10,060 5,451 3,660 63
_________ _________ _________ _______
Total other income
(expense) (213,053) (101,894) (105,515) (48,513)
__________ __________ _________ _________
Income (loss) from
operations before
income taxes and
minority interest 258,700 (26,655) 202,453 (24,091)
Income tax provision (87,959) - (68,834) -
________ ________ ________ ______
Income (loss) before
minority interest 170,741 (26,655) 133,619 (24,091)
Minority interest in
subsidiary's
Income (loss) 13,271 - 13,271 -
Net income (loss) $157,470 $(26,655) $120,348 $(24,091)
_________ __________
Earnings (loss)
per common share $ .07 $(.01) $.05 $(.01)
_________ ___________ _________ __________
The Notes to Consolidated Financial Statements
he 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 November 30, 2000 and 1999
(Unaudited)
Six Months Ended
November 30, 2000 November 30, 1999
_________________ __________________
Cash flows from operating
activities:
Net income (loss) $157,470 $(26,655)
Adjustments to reconcile net
income (loss) to net
cash provided by operating
activities:
Stock issued for compensation 2,700 -
Depreciation and Amortization 333,472 143,522
Minority interest in net income 13,271 -
Changes in assets and
liabilities:
Accounts receivable (718,061) 416,035
Cost in excess of billings (21,329) -
Inventory 490,018 (4,190)
Prepaid expenses (24,505) (22,752)
Income taxes receivable 87,959 126,551
Accounts payable and accrued
expenses 248,649 78,995
Billings in excess of costs (32,767) -
__________ ________
Net cash provided by operating
activities 536,877 711,506
Cash flows from investing
activities:
Purchase of property and
equipment (15,300) -
Proceeds from sale of equipment 12,792 -
________ ________
Net cash used in investing
activities (2,508) -
_________ ________
Cash flows from financing
activities:
Net payments under bank line of
credit (667,000) (745,000)
Principal payments on long term
debt (105,870) (20,473)
__________ ________
Sale of common stock - 52,500
__________ ________
Net cash used by financing
activities (772,870) (712,973)
__________ ________
Net decrease in cash and cash
equivalents (238,501) (1,467)
Cash and cash equivalents at
beginning of period 337,348 270,175
__________ _________
Cash and cash equivalents at end
of period $98,847 $268,708
========== =========
Supplemental disclosure of cash flow
information:
Cash paid during the period for:
Interest (none capitalized) $223,195 $108,262
Income taxes - -
Non cash investing and financing information:
Notes issued for equipment and
intangible assets $ 72,000
Stock issued for non-compete agreement 60,000
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
November 30, 2000, the results of operations for the six months ended and
three months ended November 30, 2000 and 1999, and the cash flows for the
six months ended November 30, 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
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. The telephone number is
(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), instrument scientific medical (ISM),
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 developing domestic
markets 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 $563,962 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 SYSYTEMS 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,
Chameleon?, and pattern information. No real property was included in the
purchase.
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
Chameleon?, 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 25s 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 Phazar? Product
Line. Phazar Antenna Corp. currently leases space at 5 Cuba Hill Road,
Greenlawn, New York 11740. The telephone number is (631) 262-8881.
On November 20, 2000, Phazar Antenna Corp. purchased the non-mobile
wireless antenna systems business unit of Hirschmann Electronics, Inc. The
tangible assets purchased consisted of the tooling, fixtures, radome
molds, test equipment, and office equipment. The intangible assets
purchased included the engineering data, manufacturing drawings, test
procedures, vendor lists, customer lists, product data sheets, and pattern
information. No real property was included in the purchase. The
acquisition was recorded as a purchase transaction and the operations of
Hirschmann have been included in the consolidated financials from the date
of acquisition. Key technical and marketing personnel from the Hirschmann
business unit also joined Phazar Antenna Corp.
The wireless antenna systems business purchased from Hirschmann provides a
complete line of fixed and mobile antennas for ISM (instrument scientific
medical), wireless Internet, wireless LAN, wireless local loop, fixed GPS,
MMDS (fixed wireless) and embedded Bluetooth market applications. This
product line complements the Company's existing product lines of cellular,
PCS, paging, ISM and AMR (automatic meter reading) omni-directional and
panel wireless antennas and is currently being produced at the plant in
Mineral Wells, Texas.
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 at Antenna Products Corporation was $2.8 million on
November 30, 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 $1.3 million on November
30, 2000. This compares to $2.9 million in backlog at the end of fiscal
year 2000. All of the $1.3 million in backlog will be delivered in the
2001 fiscal year.
Phazar Antenna Corp. orders are normally shipped within 2 weeks, hence
Phazar Antenna Corp. backlog of orders was negligible on November 30, 2000.
NOTE 3 INVENTORIES
The major components of inventories are as follows:
November 30, 2000 May 31, 2000
_________________ _____________
Raw materials $ 451,127 $ 399,796
Work in process 1,321,251 1,730,276
Finished goods 563,962 696,286
_____________ ____________
$ 2,336,340 $ 2,826,358
NOTE 4 NOTES PAYABLE
At November 30, 2000 and November 30, 1999, notes payable consist of a
revolving loan payable to a bank, with a maximum loan 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 the period at
November 30, 2000 and 8.5% for the period at November 30, 1999) plus 1%
until September 30, 2001, when any unpaid principal and interest shall be
due. Borrowings under the revolving loan are collateralized by accounts
receivable and inventories as defined in the loan agreement. At November
30, 2000, available borrowings under this credit facility were limited to
the borrowing base amount of $2,223,279. Borrowings are guaranteed by a
principal shareholder and Antenna Products, Inc. must maintain a minimum
net worth of $1,500,000 and working capital of not less than $1,000,000.
At November 30, 2000 and November 1999, note payable to shareholder
consists of a subordinated note to a principal shareholder of Antenna
Products,he prime rate (9.5%
for the period at November 30, 2000 and 8.5% for the period at November 30,
1999) is payable, with monthly principal payments scheduled to begin in
June 2002, and maturing in May 2007.
NOTE 5 LONG TERM DEBT
At November 30, 2000 and 1999, long-term debt consists of the following:
November 30, 2000 November 30,1999
Mortgage note to a bank,
guaranteed 80% by a U.S.
Government Agency, payable in
installments of $10,050 per month,
including interest at the prime
rate (9.5% for the period at
November 30, 2000 and 8.5% for the
period at November 30, 1999) plus 0.5%;
collateralized by certain real estate,
fixtures and assignment
of life insurance policy with a
principal shareholder.
Antenna Products Corp. is also 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. 832,977 874,962
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 (9.5% for the period at November 30, 2000) plus 1%
secured by property and equipment. The note is also
guaranteed by a principal
shareholder. 1,607,947 -
Loan from a credit institution, due February 11, 2004,
Payable in monthly installments of $495, including
Interest at 10.75%, secured by
a utility vehicle. 16,181 -
Less current portion of long-term debt
(238,867) (48,535)
$2,218,238 $ 826,427
=========== ===========
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 Antenna Products, Inc.'s financial condition and
operating results for the period included in the accompanying financial
statements.
Results of Operations
Second Quarter Ended November 30, 2000 Compared to Second Quarter Ended
November 30, 1999
Antenna Products, Inc. consolidated sales from operations were $3,985,419 for
the quarter ended November 30, 2000 compared to sales of $1,332,804 for the
second quarter ended November 30, 1999. Antenna Products, Inc. recorded a
net profit of $120,348 for the second quarter of fiscal year 2001 compared
to a net loss of $24,091 for the second quarter of fiscal year 2001.
The gross profit margin for the second quarter was 27% compared to 25% for the
second quarter of last year. Antenna Products, Inc.'s operating margin for
the second quarter of fiscal year 2001 was 8% compared to 2% in the second
quarter of fiscal year 2000.
Sales and administrative expenses were higher in the second quarter of fiscal
year 2001, $783,283 versus $309,981 in the second quarter of fiscal year 2000.
Sales and administrative expenses as a percent of sales were 20% in the second
quarter of this year compared to 23% in the same period last year.
Interest expense in the second quarter of fiscal year 2001 was $109,251 versus
$49,468 in the same time period of fiscal year 2000.
Antenna Products, Inc.'s backlog totaled $4.1 million on November 30, 2000,
compared to a backlog of $3.7 million on November 30, 1999.
Six Months Ended November 30, 2000 Compared to Six Months Ended November 30,
1999
Antenna Products, Inc. consolidated sales from operations were $7,985,652 in
the first half of fiscal year 2001, compared to $2,818,191 in the first half
of fiscal year 2000. Antenna Products, Inc. recorded a net profit of $157,470
for the six month period ending November 30, 2000 compared to a net loss of
$26,655 for the six month period ending November 30, 1999. The gross profit
margin for the first six months was 24% compared to 28% for the first six
months of last year. Sales and administrative expenses as a percent of sales
were 18% in the first six months of this year compared to 25% in the same
period last year. Antenna Products, Inc.'s operating margin for the first
half of fiscal year 2001 was 6% compared to 3% in the first half of fiscal
year 2000. In the first six months of this year, warranty costs averaged less
than 2% of sales, $30,570 compared to $47,665 in the same period last year.
Discretionary products development spending was $107,172, or 1% of sales,
compared to $71,036, or 3% of sales for the comparable period last year.
Liquidity and Capital Resources
Antenna Products, Inc.'s current assets total $5,167,657 as of November 30,
2000 with $4,604,415 in inventory and accounts receivable. Receivables are
$2,268,075 at the quarter ending November 30, 2000 compared to $1,550,014 at
fiscal 2000 year-end. Net inventories have decreased from $2,826,358 at May
31, 2000 to $$2,336,340. Cash accounts have decreased $238,501 from May 31,
2000. Current liabilities of Antenna Products, Inc. decreased $320,880 from
fiscal year end due to the reduction of the revolving line of credit balance
in the second quarter.
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. Antenna Products, Inc at November 30, 2000 had $1,453,000
remaining in loan availability under its revolving credit line of $3.0 million
that matures September 30, 2001.
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.
s/o/f
Date: January 12, 2001 _________________________
Clark D. Wraight, Vice President
and Principal Financial Officer
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