FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
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 0-20227
Tracor, Inc.
(Exact name of registrant as specified in its charter)
Delaware 74-2618088
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6500 Tracor Lane, Austin, Texas
78725-2000
(Address of principal executive offices)
(Zip Code)
512/926-2800
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
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 (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 ___
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a
plan confirmed by a court.
Yes ___ No ___
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the last practicable date.
Common stock 25,061,277 shares
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
TRACOR
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
September 30, December 31,
1997 1996
-------------- --------------
(Unaudited) (Audited)
ASSETS (in thousands, except share data)
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 2,241 $ 36,758
Accounts receivable 256,959 222,899
Inventories 13,062 12,456
Assets held for sale 3,530 3,530
Prepaid expenses and other 22,371 15,792
Restricted cash 5,000 1,750
Deferred income taxes 26,829 26,829
-------- --------
Total current assets 329,992 320,014
Property, plant, and equipment, net 118,342 117,463
Goodwill, net 233,358 236,047
Other intangibles, net 9,246 12,947
Restricted cash 22,693 30,094
Prepaid pension costs 7,848 14,980
Deferred charges and other assets 12,999 13,409
-------- --------
Total assets $734,478 $744,954
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
liabilities $157,332 $154,872
Current portion of long-term debt 5,569 24,712
-------- --------
Total current liabilities 162,901 179,584
Long-term debt, less current portion 287,978 292,172
Deferred revenue 8,493 15,625
Other long-term liabilities 28,725 34,656
Shareholders' equity:
Preferred stock, par value $.01 per
share: 1,000,000 shares authorized;
no shares issued or outstanding -- --
Common stock, par value $.01 per share:
53,000,000 shares authorized;
shares issued and outstanding:
25,010,274 net of 13,459 shares in
treasury in 1997 and 24,754,303 net
of 3,411 shares in treasury in 1996 250 247
Additional capital paid in 127,321 125,839
Retained earnings 118,810 96,831
-------- --------
Total shareholders' equity 246,381 222,917
-------- --------
Total liabilities and shareholders' equity $734,478 $744,954
======== ========
</TABLE>
See notes to unaudited condensed consolidated financial statements.
<PAGE>
TRACOR
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------- -----------------------
1997 1996 1997 1996
---- ---- ---- ----
(in thousands, except per share amounts)
<S> <C> <C> <C> <C>
Net sales $320,791 $255,994 $930,922 $752,413
Cost of sales 265,439 198,408 758,278 596,843
-------- -------- -------- --------
Gross profit 55,352 57,586 172,644 155,570
Selling, administrative, and general expenses 30,942 30,728 96,327 87,555
-------- -------- -------- --------
Earnings before interest, income
taxes, and extraordinary loss 24,410 26,858 76,317 68,015
Interest expense, net 6,052 6,612 19,190 19,422
-------- -------- -------- --------
Income before income taxes and
extraordinary loss 18,358 20,246 57,127 48,593
Income taxes 7,008 8,940 25,002 21,629
-------- -------- -------- --------
Income before extraordinary loss 11,350 11,306 32,125 26,964
Extraordinary loss from early
extinguishment of debt, net of
income tax benefit 161 -- 10,146 --
-------- -------- -------- --------
Net income $ 11,189 $ 11,306 $ 21,979 $ 26,964
======== ======== ======== ========
Net income per common and common equivalent share:
Primary:
Income before extraordinary loss $.42 $.43 $1.20 $1.10
Extraordinary loss (.01) -- (.38) --
---- ---- ----- -----
Net income $.41 $.43 $ .82 $1.10
==== ==== ===== =====
Fully diluted:
Income before extraordinary loss $.42 $.43 $1.19 $1.09
Extraordinary loss (.01) -- (.38) --
---- ---- ----- -----
Net income $.41 $.43 $ .81 $1.09
==== ==== ===== =====
</TABLE>
See notes to unaudited condensed consolidated financial statements.
<PAGE>
TRACOR
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
Nine Months Ended
September 30,
-----------------------
1997 1996
---- ----
(in thousands)
<S> <C> <C>
Operating activities:
Net income $ 21,979 $ 26,964
Adjustments to reconcile net income to net
cash provided by operating activities:
Extraordinary loss from early extinguishment of
debt, net of income tax benefit 10,146 --
Depreciation of property, plant, and
equipment 13,823 13,280
Amortization of goodwill 6,855 4,179
Amortization of other intangibles 3,654 4,246
Decrease in prepaid pension costs 7,132 6,714
Decrease in debt issuance costs 1,107 2,334
Decrease in deferred revenue (7,132) (6,714)
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable (30,800) 8,755
Increase in inventories and prepaid expenses (229) (4,997)
(Increase) decrease in recoverable income taxes (4,065) 52
Increase (decrease) in accounts payable and
accrued expenses 6,176 (15,958)
Increase in other, net (4,811) (519)
------ ------
Net cash provided by operating activities 23,835 38,336
Investing activities:
Purchases of property, plant, and equipment (14,155) (11,172)
Proceeds from sale of property, plant, and equipment 66 13,397
Acquisition of businesses, net of cash acquired (12,639) (166,020)
Other investing activities (413) --
------ -------
Net cash used in investing activities (27,141) (163,795)
Financing activities:
Payments of long-term debt and revolving
credit facility (376,925) (99,735)
Proceeds from issuance of long-term debt and
revolving credit facility 358,805 180,000
Payment of premium to retire long-term debt (7,646) --
Payment of debt issuance costs (6,764) (5,191)
Proceeds from stock offering, net -- 48,224
Exercise of stock options and Series A warrants 1,319 450
------- -------
Net cash provided by (used in)
financing activities (31,211) 123,748
------- -------
Decrease in cash and cash equivalents (34,517) (1,711)
Cash and cash equivalents at beginning of period 36,758 59,478
------- -------
Cash and cash equivalents at end of period $ 2,241 $ 57,767
======== ========
</TABLE>
See notes to unaudited condensed consolidated financial statements.
<PAGE>
TRACOR
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1997
Note A -- Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of
Tracor, Inc. (Tracor or the Company) 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 notes required
by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments, consisting of
normal recurring items, considered necessary for a fair presentation have
been included. Operating results for the quarter and the nine-month period
ended September 30, 1997, are not necessarily indicative of the results
that may be expected for the year ending December 31, 1997. For further
information, refer to the Company's consolidated financial statements and
notes thereto included in the Company's Annual Report on Form 10-K as of
December 31, 1996.
Note B -- Income Taxes
As of September 30, 1997, the expected effective annual rate for federal,
state, and foreign income taxes was lowered to 42.1%, down from 45.9% at June
30, 1997, due to a favorable settlement with taxing authorities and tax
savings realized upon export sales. As a result the effective rate for the
quarter and the nine-month period is 38.2% and 43.8%, respectively. The
effective tax rates for 1997 are also affected by an increase in nondeductible
amortization expense of goodwill related to acquisitions completed in 1996.
Note C -- Net Income Per Common and Common Equivalent Share
Primary and fully diluted net income per share amounts for the quarter and
the nine-month period ended September 30, 1997, are computed in accordance
with the treasury stock method using the weighted average common shares
outstanding and equivalents assuming the exercise of all outstanding
dilutive warrants and options for common shares. The weighted average common
and common equivalent shares used in the fully diluted calculation were
27,110,000 for the quarter and 27,081,000 for the nine-month period ended
September 30, 1997.
Recently Issued Accounting Standards
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, Earnings per Share, which is required to be adopted for financial
statements issued for periods ending after December 15, 1997. At that time,
the Company will be required to change the method currently used to compute
earnings per share and to restate all prior periods. Under the new
requirements, the presentation of primary earnings per share is replaced
with a presentation of basic earnings per share, the calculation of which
excludes the dilutive effect of common stock equivalents. The impact is
expected to result in a basic earnings per share before extraordinary loss
for the quarters ended September 30, 1997, and 1996, of $.46 for both
quarters, or an increase of $.04 and $.03, respectively, over the presently
disclosed primary earnings per share. Basic earnings per share before
extraordinary loss for the nine-month periods ended September 30, 1997, and
1996, are expected to be $1.29 and $1.49, respectively, or an increase of
$.09 and $.39, respectively, over the presently disclosed primary earnings per
share. There is no impact on the fully diluted earnings per share
calculation for the quarters ended September 30, 1997, and 1996; however, the
impact of Statement No. 128 on the nine-month periods ended September 30, 1997,
and 1996, is an increase of $.01 and $.02, respectively.
Note D -- Long-term Debt
On February 14, 1997, Tracor commenced a tender offer to purchase
for cash up to the entire $115,947,000 outstanding principal amount of its
10 7/8% Senior Subordinated Notes due 2001 (Old Notes) and a related
solicitation of consents to modify certain other terms of the indentures
under which the Old Notes were issued. On February 17, 1997, the
Company also commenced a private placement offering (Offering) of $250
million aggregate principal amount of 8 1/2% Senior Subordinated Notes
due 2007 (New Notes). The Offering was conditioned upon receipt of consents
and tenders representing at least a majority in aggregate principal amount of
Old Notes outstanding. On March 14, 1997, Tracor consummated the tender
offer and purchased for cash $112,891,000 of Old Notes. On July 14, 1997,
Tracor issued a notice of redemption for the remaining $3,056,000 of Old
Notes and redeemed such notes on August 15, 1997, at a redemption price of
104.661%. Upon completion of the Offering, the Company also refinanced its
outstanding indebtedness under its existing bank agreement and entered into a
new bank credit facility (New Bank Credit Facility) providing for a five-year
revolving credit facility in the initial principal amount of $200 million.
Interest on the New Notes is payable semiannually commencing September 1,
1997. The New Notes are redeemable in whole or in part at the option of the
Company on or after March 1, 2002, at specified redemption prices. In
addition, prior to March 1, 2000, the Company, at its option, may redeem
certain percentages of the aggregate principal amount of the New Notes with
the net cash proceeds of one or more public equity offerings at specified
redemption prices. The New Notes are general unsecured obligations of the
Company and are subordinated in right of payment to all existing and
future senior indebtedness of the Company. The New Notes were issued
subject to a registration rights agreement, pursuant to which Tracor filed a
registration statement on April 1, 1997, and exchanged the New Notes for
identical registered 8 1/2% Senior Subordinated Notes due 2007 (Notes) of
the Company.
The New Bank Credit Facility is subject to commitment reductions of $25
million on February 28, 2000, and $50 million on February 28, 2001.
Revolving borrowings may remain outstanding until the final maturity date
of the facility except for the possibility of repayments being required by
certain mandatory prepayment events. All of Tracor's stock in certain of
its domestic, wholly owned subsidiaries is pledged under the New Bank Credit
Facility, and all borrowings are guaranteed by such subsidiaries.
The New Bank Credit Facility bears interest at Tracor's option either at the
lender's base rate plus up to .75% or the eurodollar rate plus .625% to
1.75% in each case based on certain financial ratios, as defined. Interest
on base rate loans is payable quarterly, and interest on eurodollar loans is
payable at the end of the applicable interest period or every three
months in the case of interest periods in excess of three months. A
commitment fee ranging from .25% to .375% per annum is charged on the unused
revolving loans and is payable quarterly in arrears. Each letter of credit
bears customary fees and administrative charges. At September 30, 1997,
the Company had outstanding letters of credit totaling $39.8 million
relating to commitments for performance on certain contracts with foreign
customers and as collateral on certain insurance policies.
The New Bank Credit Facility and Notes contain covenants which, among
other things, impose limitations and restrictions on the incurrence of
additional indebtedness, capital expenditures, future mergers and acquisitions,
sales of assets, and payment of dividends. In addition, Tracor is required to
satisfy certain financial covenants relating to, among other matters,
interest coverage, working capital, leverage, and net worth.
The purchase of the Old Notes in the first quarter and redemption of the
remaining Old Notes in the third quarter resulted in an extraordinary charge
for the nine-month period of approximately $10.1 million, net of an income
tax benefit of $7.1 million, consisting of $7.6 million premium to retire
the Old Notes and a $9.6 million write-off of unamortized debt issuance
costs.
Note E -- Acquisitions
During the second quarter of 1997, a payment of $5.3 million was made on the
$26.5 million note payable issued as consideration in the acquisition of
Cordant Holdings, Inc. (Cordant). The $21.2 million remaining balance of
this note is payable upon the resolution of a former Cordant minority
shareholder's lawsuit. The $5 million promissory note also issued in the
acquisition is related to indemnification claims and is payable March 26,
1998. Both promissory notes are supported by irrevocable standby letters of
credit which are fully collateralized by cash escrow deposits. The
$5 million promissory note and an equal amount of the restricted cash are
recorded as current portion of long-term debt and current restricted
cash, respectively. The remaining promissory note and restricted cash are
classified as long-term.
For each of the major acquisitions completed in 1996, Tracor recorded
estimated liabilities related to the planned elimination of certain
duplicative corporate functions and the consolidation of operating facilities.
Estimated liabilities totaling $2.9 million for employee severance and excess
facilities costs were established related to the Cordant acquisition. As of
September 30, 1997, approximately $1.4 million of such costs have been
incurred. Approximately $5.4 million of costs has been incurred related to
the estimated liabilities of $6 million established in conjunction with the
acquisition of AEL Industries, Inc. (AEL). These liabilities were
established for employee severance, relocation costs, facility
closing-related costs, and other miscellaneous liabilities. No adjustments
to these liabilities were recorded during 1997.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Business Environment
Approximately 72% of the products, systems, and services of Tracor, Inc. and
its subsidiaries (Tracor or the Company) are sold to the U.S. Department of
Defense (DOD) through direct contracts or through subcontracts with other U.S.
government contractors. Beginning in the mid-1980s, the defense industry
in general was negatively impacted by the perceived reduction of threats
from the former Soviet Union and eastern European countries and,
more recently, by competing demands upon the federal budget. While this has
resulted in a U.S. defense budget that has decreased in real dollars,
adjusted for inflation, over the last decade, it has recently begun to
stabilize. A substantial portion of the Company's DOD sales are funded by
the operations and maintenance segment of the defense budget in areas
which are among today's top priorities. This segment of the defense budget
has declined less than other segments of the budget as readiness priorities
have emerged. It is now the largest segment of the defense budget and is
projected to comprise more than one-third of the defense budget over the
next decade. The electronics content of the operations and maintenance
segment, as well as the procurement portion of the budget, is expected to
experience a modest increase over this same time frame. Tracor's ability to
benefit from this upturn is enhanced by its substantial positions in the
electronic warfare, imagery, and mission planning markets.
Budget reductions have also driven the DOD and other U.S. government agencies
to pursue products and services which rapidly improve their operating
efficiency. This, in turn, has triggered a substantial increase in the demand
for state-of-the-art computer equipment and software systems and major change
in the government's method for acquiring information technology, moving to
large government-wide acquisition contract vehicles. Following the acquisition
of Cordant, the Company has aligned all of its information technology
business units to form the Tracor Information Systems group to further
strengthen the Company's ability to effectively address the rapidly growing
information technology market for both DOD and nondefense customers.
Information systems has been the fastest growing business area within Tracor.
The contraction of the defense budget in recent years and the resulting excess
capacity and increase in competition for contracts among defense companies have
resulted in a major consolidation in the industry. Through internal growth
and several acquisitions, the Company has substantially increased its revenue
base. It has also reduced combined overhead costs through staff reductions,
facilities consolidations, process improvements, and the elimination of certain
other duplicative costs. These efficiencies and increased revenue base have
enhanced Tracor's cost competitiveness in bidding on new contracts and
recompetes of existing contracts. While acquisition price expectations have
remained at high levels, management believes the ongoing consolidation within
the defense industry will continue to present opportunities for additional
selected acquisitions at prices which meet the Company's objectives.
While the long-term impact of changes in the defense budget and the industry
consolidation cannot be predicted with certainty, management believes the
Company is well positioned to continue to leverage its strengths and
successes in the areas of information systems, aerospace, and systems
engineering for the U.S. defense and intelligence marketplaces and increase its
ongoing diversification efforts into foreign defense markets, nondefense U.S.
government markets, and selected commercial markets.
Financial Condition
Working capital was $167.1 million at September 30, 1997, up from $140.4
million at December 31, 1996, due primarily to the reduction in the
current portion of long-term debt as the result of the debt
refinancing. The ratio of current assets to current liabilities was
2.0 at September 30, 1997, compared to 1.8 at December 31, 1996.
Cash generated from operating activities decreased compared to the same
period in the prior year. The current year increase in accounts
receivable, which include unbilled costs and fees, is expected to be
temporary and is due to the timing of billings and collections, as well as
delay in the production start-up of several U.S. government contracts.
For further discussion of delayed contracts, see Results of Operations.
Investing activities for the nine-month period included the acquisition of
the Visual Information Technology (VITec) division of Connectware, Inc.
for $2.5 million, the acquisition of the Military Products Group of
Calspan SRL Corporation for $9.6 million, and the payment of approximately
$400,000 to complete the 1996 acquisition of Aerial Data Reduction
Associates, Inc. Capital expenditures incurred during the nine-month period
were $14.2 million. The Company's operations typically do not require large
capital expenditures, and there were no material capital commitments at
September 30, 1997.
On March 14, 1997, Tracor completed the Offering of the New Notes and entered
into the New Bank Credit Facility. The Offering resulted in proceeds of $249
million and $42 million was borrowed under the New Bank Credit Facility at the
time of the refinancing. These proceeds were used to retire the Old
Notes plus accrued interest ($114 million), retire the existing bank credit
facility plus accrued interest ($160.3 million), pay a $7.6 million premium
to retire the Old Notes, and pay approximately $6.7 million of debt issuance
costs. The Company repaid the $42 million borrowed under the New Bank
Credit Facility prior to the end of the first quarter. As of September 30,
1997, net borrowings under the Company's revolving credit facility amounted
to $12.3 million.
At September 30, 1997, the Company had outstanding letters of credit
totalling approximately $39.8 million. Existing letters of credit secure
performance commitments on certain contracts with foreign customers and
serve as collateral for certain insurance policies.
At September 30, 1997, Tracor had firm backlog, which includes funded and
unfunded contractual commitments, of $1.0 billion, unchanged compared to
backlog at December 31, 1996. Approximately 78% of firm backlog
represents contracts with agencies of the U.S. government or its prime
contractors, and about 66% is expected to be earned within one year.
In addition, the Company's backlog of unexercised contract options, primarily
on U.S. government contracts, was $2.0 billion at September 30, 1997, up
from $1.6 billion at December 31, 1996.
Cash from continuing operations and amounts available under the $200 million
New Bank Credit Facility will provide the necessary resources to allow the
Company to meet its obligations, fund capital equipment requirements, and
pursue its business strategy. In addition, the long-term debt refinancing
completed in the first quarter has provided the Company with the
financial flexibility to pursue further acquisitions in the ongoing U.S.
defense industry consolidation.
Results of Operations
Quarter and Nine-Month Period Ended September 30, 1997, Versus Quarter and
Nine-Month Period Ended September 30, 1996
Sales increases over the prior year totaled 25% for the quarter and 24% for
the nine-month period. Excluding the sales generated by acquired businesses,
internal sales growth over the comparable periods was 15% for the third
quarter and 10% for the nine-month period. This internal sales growth
resulted primarily from various information systems and services contracts,
a contract to provide special mission aircraft, a foreign sub-scale target
drone contract, and other aerospace related contracts.
Gross margins and operating margins were adversely affected in the third
quarter of 1997 due to the delay in production start-ups in several U.S.
government, DOD contracts listed below. Most of the issues causing the
delays have been resolved, and production has begun in many of these programs.
QF-4 full scale aerial targets. The exercise of the third production
option for up to 36 targets under this previously awarded contract
was delayed because of government funding considerations. Early in the
fourth quarter, the U.S. Air Force awarded the option to Tracor to
produce 24 QF-4s.
Band 9/10 radar jamming transmitters for EA-6B aircraft. The production
award was delayed due to an extended testing period. Testing was
completed in the fourth quarter, and the production go-ahead was
awarded in early November.
MQM-107E sub-scale aerial targets. The production award is expected
during the fourth quarter now that flight qualification testing has
been successfully completed.
AN/ALE-47 countermeasures dispenser systems, Lot IV-VII. Work on the
program to produce countermeasures dispenser systems was halted following
another bidder's protest of the initial award to Tracor. Resolution of
this competitive procurement is expected in the fourth quarter of 1997 or
the first quarter of 1998.
Earnings before interest, income taxes, and extraordinary loss increased
12% for the quarter, excluding the effect of a $2.1 million, or $.08 per
share, nonrecurring gain in the third quarter of 1996 and earnings from
acquired companies. The nonrecurring gain was due to a negotiated increase
of $3.6 million to the price of a U.S. government contract for work
performed prior to 1996. An increase of 18% in earnings before interest,
income taxes, and extraordinary loss was realized in the nine-month period,
excluding the effect of the nonrecurring gain and acquired companies. These
earnings are attributed primarily to the increased sales discussed above.
Interest expense decreased approximately $2.0 million for the quarter and
$2.7 million for the nine-month period primarily as a result of the debt
refinancing completed in the first quarter of 1997. These interest expense
reductions were offset by decreased interest income of $1.5 million for the
quarter and $2.5 million for the nine-month period due to lower amounts of
invested cash.
As of September 30, 1997, the expected effective annual rate for federal,
state, and foreign income taxes was lowered to 42.1%, down from 45.9% at June
30, 1997, due to favorable settlement with taxing authorities and tax savings
realized upon export sales. As a result the effective rate for the quarter
and the nine-month period is 38.2% and 43.8%, respectively. The effective
tax rates for 1997 are also affected by an increase in nondeductible
amortization expense of goodwill related to acquisitions completed in 1996.
The extraordinary losses recorded in the first and third quarters of 1997 are
charges related to early retirement of long-term debt and are comprised of a
$9.6 million write-off of unamortized debt issuance costs and a $7.6 million
premium to retire the Old Notes, net of an income tax benefit of $7.1 million.
Fully diluted earnings per share before an extraordinary loss increased 20%
over the third quarter of 1996, excluding the effect of the $2.1 million, or
$.08 per share, nonrecurring gain in the third quarter of 1996. The
extraordinary loss per share in the third quarter and nine-month period of 1997
of $.01 and $.38, respectively, relate to the redemption of the remaining
Old Notes on August 15, 1997, and the Company's debt restructuring completed
on March 14, 1997.
Cautionary Statement
Any statements contained in this report which are forward-looking statements
rather than historical facts are subject to risks and uncertainties that could
cause actual results to differ materially from those stated or implied. These
risks and uncertainties include the competitive nature of the government
contracting environment, dependence on continued funding of government
contracts, government contract procurement and termination risks, restrictions
imposed by terms of the Company's indebtedness, the effect of changing
political or economic conditions, and other risks described in the Company's
Securities and Exchange Commission filings, including the Company's Form 8-K,
dated July 22, 1997.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits.
11. Statement regarding computation of net income per common and
common equivalent share.
SIGNATURES
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.
Tracor, Inc.
Date: November 14, 1997 By: /s/Robert K. Floyd
-------------------
Robert K. Floyd
Vice President and
Chief Financial Officer
Exhibit 11
TRACOR
COMPUTATION OF NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE
(in thousands, except per share amounts)
<TABLE>
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------- -------------------
1997 1996 1997 1996
---- ---- ---- ----
Primary:
<S> <C> <C> <C> <C>
Income before extraordinary loss $11,350 $11,306 $32,125 $26,964
Interest expense adjustment, net of
income taxes -- -- -- 424
------- ------- ------- -------
Adjusted net income before
extraordinary loss 11,350 11,306 32,125 27,388
Extraordinary loss (161) -- (10,146) --
------- ------- ------- -------
Adjusted net income $11,189 $11,306 $21,979 $27,388
======= ======= ======= =======
Weighted average common shares outstanding 24,933 24,345 24,849 18,062
Weighted average common share equivalents:
Assumed exercise of warrants 1,128 1,228 1,183 7,723
Assumed exercise of options 1,969 1,719 1,932 1,645
Assumed purchase of common shares for treasury (1,004) (1,022) (1,095) (2,521)
------- ------- ------- -------
Net weighted average additional shares issuable 2,093 1,925 2,020 6,847
------- ------- ------- -------
Common and common equivalent shares 27,026 26,270 26,869 24,909
======= ======= ======= =======
Income per common and common equivalent share:
Income before extraordinary loss $.42 $.43 $1.20 $1.10
Extraordinary loss (.01) -- (.38) --
---- ---- ---- ----
Net income $.41 $.43 $.82 $1.10
==== ==== ==== ====
Fully diluted:
Income before extraordinary loss $11,350 $11,306 $32,125 $26,964
Interest expense adjustment, net of income taxes -- -- -- 360
------- ------- ------- -------
Adjusted net income before extraordinary loss 11,350 11,306 32,125 27,324
Extraordinary loss (161) -- (10,146) --
------- ------- ------- -------
Adjusted net income $11,189 $11,306 $21,979 $27,324
======= ======= ======= =======
Weighted average common shares outstanding 29,933 24,345 24,849 18,062
Weighted average common share equivalents:
Assumed exercise of warrants 1,128 1,228 1,183 7,723
Assumed exercise of options 1,969 1,719 1,932 1,645
Assumed purchase of common shares for treasury (920) (929) (882) (2,490)
------- ------- ------- -------
Net weighted average additional shares issuable 2,177 2,018 2,233 6,878
------- ------- ------- -------
Common and common equivalent shares 27,110 26,363 27,081 24,940
======= ======= ======= =======
Income per common and common equivalent share:
Income before extraordinary loss $.42 $.43 $1.19 $1.09
Extraordinary loss (.01) -- (.38) --
---- ---- ----- -----
Net income $.41 $.43 $.81 $1.09
==== ==== ==== =====
</TABLE>
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<PERIOD-END> SEP-30-1997 SEP-30-1997
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