<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 29, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________________ to _______________
COMMISSION FILE NUMBER 0-15277
VERTEX COMMUNICATIONS CORPORATION
(Exact name of Registrant as specified in its charter)
TEXAS 75-1982974
(State or other jurisdiction of (I.R.S. Employer
incorporated or organization) Identification No.)
2600 N. LONGVIEW STREET, KILGORE, TEXAS 75662
(Address of principal executive offices and zip code)
(903) 984-0555
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (of for such shorter period as 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
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
AS OF DECEMBER 29, 1995, THERE WERE 4,425,256 SHARES OUTSTANDING OF THE
REGISTRANT'S COMMON STOCK $.10 PAR VALUE.
================================================================================
<PAGE> 2
VERTEX COMMUNICATIONS CORPORATION
TABLE OF CONTENTS TO FORM 10-Q
FOR THE THREE MONTHS ENDED DECEMBER 29, 1995
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements - (Unaudited)
Condensed Consolidated Balance Sheets - December 29, 1995 and
September 30, 1995
Condensed Consolidated Statements of Income - Three months ended
December 29, 1995 and December 30, 1994
Condensed Consolidated Statements of Cash Flows - Three months
ended December 29, 1995 and December 30, 1994
Notes to Condensed Consolidated Financial Statements - December 29,
1995
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
SIGNATURE
<PAGE> 3
VERTEX COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
<TABLE>
<CAPTION>
December 29 September 30
1995 1995
---------------- ----------------
ASSETS (Unaudited) *
<S> <C> <C>
CURRENT ASSETS
Cash and equivalents $ 11,848 $ 14,870
Accounts receivable, net 17,746 16,295
Inventories (Note B) 16,602 14,324
-------- --------
46,196 45,489
PROPERTY AND EQUIPMENT, at cost 21,475 20,798
Less accumulated depreciation (8,891) (8,400)
--------- ---------
12,584 12,398
GOODWILL, less accumulated amortization of $358 and $268 5,059 5,149
Other assets 838 818
-------- --------
TOTAL ASSETS $ 64,677 $ 63,854
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 2,627 $ 2,883
Accrued compensation 1,113 1,799
Other accrued liabilities 3,986 4,935
Customers' advances 3,637 2,015
Deferred income taxes 746 461
-------- --------
12,109 12,093
ACQUISITION INDEBTEDNESS 875 1,312
DEFERRED INCOME TAXES 763 763
COMMITMENTS AND CONTINGENCIES -------- --------
SHAREHOLDERS' EQUITY
Common stock, ($.10 par value, 20,000,000 shares
authorized, 4,661,402 shares issued) 466 466
Capital in excess of par value 24,940 24,963
Retained earnings 28,151 26,758
Treasury stock, at cost,
(236,146 shares in December; 230,146 shares in September) (2,808) (2,700)
Translation adjustment 181 199
-------- --------
50,930 49,686
-------- --------
TOTAL LIABILITIES AND EQUITY $ 64,677 $ 63,854
======== ========
</TABLE>
* The balance sheet at September 30, 1995 has been taken from audited
financial statements at that date and condensed.
1
<PAGE> 4
VERTEX COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
December 29 December 30
1995 1994
------------- -------------
<S> <C> <C>
NET SALES $ 18,964 $ 14,707
COSTS AND EXPENSES:
Cost of sales 13,983 11,028
Research and development 664 407
Marketing 1,004 714
General and administrative 1,428 979
------------- -------------
17,079 13,128
------------- -------------
OPERATING INCOME 1,885 1,579
OTHER INCOME (EXPENSE):
Income from investments 134 146
Interest expense (26) ---
------------- -------------
INCOME BEFORE INCOME TAXES 1,993 1,725
Provision for income taxes 600 500
------------- -------------
NET INCOME $ 1,393 $ 1,225
============= =============
EARNINGS PER SHARE $ .30 $ .26
============= =============
AVERAGE SHARES AND EQUIVALENT SHARES OUTSTANDING 4,618 4,647
============= =============
</TABLE>
2
<PAGE> 5
VERTEX COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended
December 29 December 30
1995 1994
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES $ (1,776) $ 2,572
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (677) (730)
Payment for business purchased in fiscal 1995 (438) ---
------------- -------------
(1,115) (730)
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of treasury stock (150) (2,264)
Other 19 76
------------- -------------
(131) (2,188)
------------- -------------
DECREASE IN CASH AND EQUIVALENTS (3,022) (346)
CASH AND EQUIVALENTS:
At beginning of period 14,870 20,527
------------- -------------
AT END OF PERIOD $ 11,848 $ 20,181
============= =============
</TABLE>
3
<PAGE> 6
VERTEX COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE A - BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all the adjustments
(consisting of normal recurring accruals) considered necessary for fair
presentation have been included.
For further information, refer to the consolidated financial statements and
footnotes thereto included in the Company's Annual Report on Form 10-K for the
year ended September 30, 1995.
NOTE B - INVENTORIES (IN THOUSANDS)
The components of inventory consist of the following:
<TABLE>
<CAPTION>
December 29 September 30
1995 1995
------------- -------------
<S> <C> <C>
Raw Materials $ 5,219 $ 4,476
Work-In-Process 10,101 8,661
Finished Goods 1,282 1,187
------------- -------------
$ 16,602 $ 14,324
============= =============
</TABLE>
NOTE C - ACQUISITION
On January 25, 1995 (effective January 1, 1995), the Company acquired all of
the outstanding common stock of Maxtech, Inc. by purchase. Below are the
unaudited pro forma results of operations prepared by management, as if the
acquisition had occurred on October 1, 1994.
<TABLE>
<CAPTION>
Three Months Ended
December 30, 1994
-----------------
<S> <C>
Net Sales $ 16,073,000
Net Income $ 1,033,000
Earnings Per Share $ .22
</TABLE>
4
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
RESULTS OF OPERATIONS
Net sales for the three months ended December 29, 1995 increased by 28.9
percent when compared to the same period one year earlier. Approximately 50
percent of the sales increase is attributable to the acquisition of Maxtech and
the balance was primarily a result of increased product demand.
Research and development expenses of $664,000 increased by 63.1 percent in the
first quarter of fiscal 1996 over the same quarter last year due to continued
work on the new 9.3-meter bolt-together antenna design and the inclusion of
Maxtech. Marketing spending combined with general and administrative expenses
were $2.4 million during the three months ended December 29, 1995 or 43.7
percent higher than the comparable period. This spending increase was
principally caused by the Maxtech acquisition and the start-up of two new
operating divisions.
The effective tax rate for fiscal 1996 is lower than the prescribed statutory
rates mainly due to the effect of tax incentives available from export
shipments and certain investment income that is not taxable.
Net income for the first quarter was $1.4 million or 13.7 percent greater than
the comparable period due to the factors discussed above. The Company received
$19.5 million of new orders to push unfilled order backlog to a record high of
$44.7 million at the close of business at the end of the quarter.
FINANCIAL CONDITION AS OF DECEMBER 29, 1995
The Company's operating activities consumed $1.8 million in the first quarter
of fiscal 1996 compared to same quarter last year when operating activities
generated $2.6 million. The favorable impact of strong net income was more
than offset as the balances of inventories and accounts receivable increased by
$2.3 million and $1.5 million, respectively, since September 30, 1995. These
working capital accounts increased mainly due to stepped-up sales and orders
volume.
Management believes that forecasted cash flows combined with the Company's
favorable financial condition will be sufficient to fund the Company's
operations and planned capital investments for the foreseeable future.
Management is not aware of any demands which are likely to impact liquidity in
an adverse manner.
5
<PAGE> 8
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit 27 - Financial Data Schedule
(b) Form 8-K:
The Company filed no reports on Form 8-K and none
were required to be filed during the three months
ended December 29, 1995.
6
<PAGE> 9
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.
VERTEX COMMUNICATIONS CORPORATION
---------------------------------
(Registrant)
Date: January 31, 1996 /s/ J. D. Carter
------------------------- --------------------------------------
J. D. Carter
Vice President - Finance
(Duly Authorized Officer and Principal
Financial Officer)
7
<PAGE> 10
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED DECEMBER 29, 1995 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> DEC-29-1995
<CASH> 11,848
<SECURITIES> 0
<RECEIVABLES> 17,987
<ALLOWANCES> 241
<INVENTORY> 16,602
<CURRENT-ASSETS> 46,196
<PP&E> 21,475
<DEPRECIATION> 8,891
<TOTAL-ASSETS> 64,677
<CURRENT-LIABILITIES> 12,109
<BONDS> 0
<COMMON> 466
0
0
<OTHER-SE> 50,464
<TOTAL-LIABILITY-AND-EQUITY> 64,677
<SALES> 18,964
<TOTAL-REVENUES> 18,964
<CGS> 13,983
<TOTAL-COSTS> 13,983
<OTHER-EXPENSES> 3,096
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 26
<INCOME-PRETAX> 1,993
<INCOME-TAX> 600
<INCOME-CONTINUING> 1,393
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,393
<EPS-PRIMARY> .30
<EPS-DILUTED> .30
</TABLE>
