<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
For the quarterly period ended December 31, 1999 .
-------------------------------------------------
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: 0-19381
---------------------------------------------------------
WESTWOOD CORPORATION
(Exact name of registrant as specified in its charter)
Nevada 87-0430944
- --------------------------------------------------------------------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
5314 South Yale Street, Tulsa, Oklahoma 74135
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (918) 524-0002
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 and 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.
(x) Yes ( ) No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Outstanding at February 14, 2000
- ----------------------------- -------------------------------
Common Stock, $.003 par value 6,891,647
<PAGE>
INDEX
-----
Page No.
-------
Part I Financial Information:
Consolidated Balance Sheets as of
December 31, 1999 and March 31, 1999 1
Consolidated Statements of Operations
for the third quarter and nine months
ended December 31, 1999 and 1998 3
Consolidated Statement of Cash Flows
for the nine months ended December 31,
1999 and 1998 4
Notes to Consolidated Financial Statements 5
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 9
Part II Other Information:
Item 1. Legal Proceedings 13
Item 2. Changes in Securities
(None)
Item 3. Defaults Upon Senior Securities
(None)
Item 4. Submission of Matters to a Vote
of Security Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 15
<PAGE>
WESTWOOD CORPORATION
CONSOLIDATED BALANCE SHEETS
(In Thousands)
<TABLE>
<CAPTION>
December 31 March 31
1999 1999
------------------------
(Unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 55 $ 1,283
Accounts receivable (including retainage
receivable of $14 at December 31, 1999
and $16 at March 31, 1999), net
of allowance for doubtful accounts 4,310 3,696
Income tax receivable - 789
Notes receivable 250 -
Costs and estimated earnings in excess of
billings on uncompleted contracts 791 625
Inventories:
Raw materials and purchased parts 2,087 2,648
Work-in-process 1,365 1,573
-------- --------
3,452 4,221
Prepaid expenses 74 40
Assets held for sale - 402
-------- --------
Total current assets 8,932 11,056
Plant and equipment, at cost:
Leasehold improvements 310 310
Machinery and equipment 4,420 4,275
Patterns and tools 79 195
-------- --------
4,809 4,780
Accumulated depreciation (2,992) (2,937)
-------- --------
1,817 1,843
Goodwill (net) 4,833 6,250
Long-term accounts receivable, retainage 320 533
Note receivable 500 -
Deferred charges & other 1 1
-------- --------
Total Assets $ 16,403 $ 19,683
======== ========
</TABLE>
See accompanying notes
1
<PAGE>
WESTWOOD CORPORATION
CONSOLIDATED BALANCE SHEETS
(In Thousands)
<TABLE>
<CAPTION>
December 31 March 31
1999 1999
------------------------
(Unaudited)
<S> <C> <C>
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 3,003 $ 2,397
Accrued liabilities 1,602 1,489
Billings in excess of costs and estimated
earnings on uncompleted contracts 1,511 501
Current portion of long-term debt:
Payable to bank 1,115 6,533
Other 23 46
Acquisition debt 131 990
------- -------
1,269 7,569
------- -------
Total current liabilities 7,385 11,956
Long-term debt:
Payable to bank 1,580 -
Other 78 77
Acquisition debt 143 480
Convertible debentures 1,000 -
------- -------
2,801 557
Stockholders' equity:
Preferred stock, 5,000,000 shares authorized,
$.001 par value, no shares issued and
outstanding - -
Common stock, 20,000,000 shares authorized,
$.003 par value, 6,891,647 shares issued
and outstanding at December 31, 1999 and
March 31, 1999 21 21
Capital in excess of par value 5,978 5,978
Retained earnings 313 1,171
------- -------
Sub-Total 6,312 7,170
Less: Treasury stock, 127,000 shares at
December 31, 1999 (95) -
------- -------
Total stockholders' equity 6,217 -
Total liabilities and stockholders' equity $16,403 $19,683
======= =======
</TABLE>
See accompanying notes
2
<PAGE>
WESTWOOD CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands)
<TABLE>
<CAPTION>
Third Quarter Ended Nine Months Ended
December 31 December 31
1999 1998 1999 1998
------------------- -------------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Sales $4,133 $7,572 $13,073 $23,795
Cost of sales 3,348 6,681 10,653 20,944
------ ------ ------- -------
Gross profit 785 891 2,420 2,851
Operating expenses:
Selling, general & admin. 1,136 1,300 3,627 3,752
------ ------ ------- -------
Operating loss (351) (409) (1,207) (901)
Other income:
Interest expense (61) (111) (306) (445)
Other income 88 4 135 100
Gain on sale of product lines - - 309 -
------ ------ ------- -------
27 (107) 138 (345)
------ ------ ------- -------
Loss before taxes (324) (516) (1,069) (1,246)
Benefit for income taxes - (178) (211) (428)
------ ------ ------- -------
Net loss $ (324) $ (338) $ (858) $ (818)
====== ====== ======= =======
Basic loss per share $(.047) $(.049) $ (.124) $ (.119)
Weighted average common shares
used in computing basic earnings
per share 6,889 6,892 6,891 6,892
------ ------ ------- -------
Cash dividends per share $ - $ - $ - $ .010
</TABLE>
See accompanying notes
3
<PAGE>
WESTWOOD CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
<TABLE>
<CAPTION>
Nine Months Ended
December 31
1999 1998
--------------------
(Unaudited)
<S> <C> <C>
Operating activities
Net loss $ (858) $ (818)
Adjustments to reconcile net loss
to cash provided by operations:
Depreciation and amortization 681 998
Deferred income taxes -- 11
Gain on sale of product lines (309) --
Cash flows impacted by changes in:
Accounts receivable (464) 58
Costs and estimated earnings in excess
of billings on uncompleted contracts (166) 1,577
Inventories (1,141) 116
Prepaid expenses (34) (13)
Long-term accounts receivable, retainage 213 150
Deferred charges -- 37
Accounts payable 606 (1,332)
Accrued liabilities and rent 113 (559)
Billings in excess of costs and estimated
earnings on uncompleted contracts 1,010 (362)
Income taxes payable/receivable 789 119
Other 16 55
------- -------
Net cash provided by operating activities 456 37
Investing activities
Purchase of plant and equipment (469) (314)
Proceeds from sales of product lines 1,849 --
------- -------
Net cash provided by investing activities 1,380 (314)
Financing activities
Principal payments on debt (7,969) (1,076)
Borrowings on debt 4,000 1,250
Proceeds from issuing convertible debentures 1,000 --
Dividends paid -- (69)
Acquisition of treasury stock (95) --
------- -------
Net cash (used) provided by financing activit (3,064) 105
------- -------
Net decrease in cash (1,228) (172)
Cash at beginning of period 1,283 574
------- -------
Cash at end of period $ 55 $ 402
======= =======
</TABLE>
See accompanying notes
4
<PAGE>
WESTWOOD CORPORATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
Note 1 - Basis of Presentation
- ------------------------------
The accompanying unaudited consolidated financial statements include Westwood
wholly-owned subsidiaries NMP Corp., TANO Corp., and MCII Electric Company.
Consolidated operations for Westwood include Peter Gray Corporation only for
April, 1999, when its operations ceased, and NMP Corp. marine hardware products
only through the four months ended July, 1999, when these hardware-related
assets were sold. These 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.
Management believes that all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the fiscal third quarter and nine months ended December
31, 1999, may not necessarily be indicative of the results that may be expected
for the year ended March 31, 2000. For further information, refer to the
consolidated financial statements and footnotes included in Westwood
Corporation's annual report on Form 10-K for the year ended March 31, 1999.
Note 2 - Sale of Businesses
- ---------------------------
In April, 1999, the Company sold certain Peter Gray inventory and equipment for
$568,000, and Peter Gray operations ceased on April 30, 1999. The Company sold
the remaining equipment at that location for $181,000 in June, 1999. In
connection with this sale, the Company recorded a gain of $294,000 in the first
quarter ended June 30, 1999. Proceeds from this sale were used to reduce debt.
In July, 1999, the Company sold certain marine hardware-related assets of NMP
Corp. which generated operating losses in fiscal 1999 and the first quarter of
fiscal 2000, for a total sales price of $2,000,000. Of the sales price,
$1,100,000 was paid at closing, with $150,000 to be paid within 90 days, and the
remaining balance of $750,000 is to be paid in three annual installments of
$250,000. The Company recorded a $15,000 gain in the second quarter in
connection with the sale, and proceeds were used to reduce debt.
5
<PAGE>
Note 3 - Long-Term Debt
- -----------------------
On August 13, 1999, the Company closed a new bank credit facility for a
$2,000,000 revolving credit line, and a $2,000,000 five-year term note. Proceeds
from this new credit facility were used to repay all amounts outstanding under
the previous bank facility. As part of the new bank commitment, the Company was
required to obtain $1,000,000 of subordinated debt which was accomplished on
December 23, 1999.
Note 4 - Income Taxes
- ---------------------
The Company generated net operating loss carryforwards in fiscal 1999 and the
first nine months of fiscal 2000, whereby no deferred tax asset was established
as future taxable income is not certain in fiscal 2000. However, the Company
filed an amended tax return for the fiscal year ended March 31, 1999, which
resulted in a refund of $211,000 and was recorded as a tax benefit for the
quarter ended September 30, 1999.
Note 5 - Comprehensive Income
- -----------------------------
For the third quarter and nine month periods ended December 31, 1999, and 1998,
comprehensive loss and net loss are the same.
Note 6 - Contingencies
- ----------------------
See note under Liquidity and Capital Resources.
6
<PAGE>
<TABLE>
<CAPTION>
Note 7 - Segment Information
- ----------------------------
(In Thousands)
Revenues
------------------------------------
Three Months Ended Inter- Net Income Total
Dec. 31, 1999 External Segment Total (Loss) Assets
- ------------------ -------- ------- ----- ---------- ------
<S> <C> <C> <C> <C> <C>
Marine Switchgear $ 1,719 $ 86 $ 1,805 $ 10 $ 14,062
Mobile Power Systems 839 -- 839 (222) 7,352
Engineered Automation
Controls 1,575 136 1,711 54 4,707
Eliminations -- (222) (222) (166) (9,718)
-------- -------- -------- -------- --------
Total $ 4,133 $ -- $ 4,133 $ (324) $ 16,403
======== ======== ======== ======== ========
Three Months Ended
Dec. 31, 1998
- -------------
Marine Switchgear $ 2,952 $ 211 $ 3,163 $ (106) $ 13,791
Mobile Power Systems 2,915 -- 2,915 (227) 9,038
Engineered Automation
Controls 1,705 -- 1,705 5 3,964
Eliminations -- (211) (211) (10) (4,928)
-------- -------- -------- -------- --------
Total $ 7,572 $ -- $ 7,572 $ (338) $ 21,865
======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Revenues
--------------------------------
Nine Months Ended Inter- Net Income Total
Dec. 31, 1999 External Segment Total (Loss) Assets
- ------------- -------- ------- ----- ----- --------
<S> <C> <C> <C> <C> <C>
Marine Switchgear $ 5,304 $ 351 $ 5,655 $ 118 $ 14,062
Mobile Power Systems 2,549 -- 2,549 (1,458) 7,352
Engineered Automation
Controls 5,220 253 5,473 472 4,707
Eliminations -- (604) (604) 10 (9,718)
-------- -------- -------- -------- --------
Total $ 13,073 $ -- $ 13,073 $ (858) $ 16,403
======== ======== ======== ======== ========
Nine Months Ended
Dec. 31, 1998
- -------------
Marine Switchgear $ 8,836 $ 764 $ 9,600 $ (220) $ 13,791
Mobile Power Systems 10,946 10,946 -- 10,946 (634) 9,038
Engineered Automation
Controls 4,013 -- 4,013 87 3,964
Eliminations -- (764) (764) (51) (4,928)
-------- -------- -------- -------- --------
Total $ 23,795 $ -- $ 23,795 $ (818) $ 21,865
======== ======== ======== ======== ========
</TABLE>
7
<PAGE>
Included in revenues of the marine switchgear segment for the third quarter and
nine months ended December 31, 1998, were revenues of $1,871,000 and $6,470,000,
respectively, that were attributable to Peter Gray and NMP marine hardware
product lines sold in April and July, 1999. Assets attributable to the sold
operations were $4,246,000 at December 31, 1998.
8
<PAGE>
WESTWOOD CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
DECEMBER 31, 1999
GENERAL
Results of Operations - Third Quarter Ended December 31, 1999 and 1998
- -------------------------------------------------------------------------
For the third quarter ended December 31, 1999, the Company had a net loss of
$324,000 compared to a net loss of $338,000 for the same quarter last year. The
net loss per share was $.047 compared to a net loss of $.049 for the prior year.
Consolidated sales for the third quarter decreased 45.4% to $4,133,000 compared
to $7,572,000 for the previous year. Last year's third quarter sales included
$1,871,000 from the Peter Gray and NMP Corp. marine hardware product lines, both
of which have been subsequently sold.
Gross profit, as a percentage of sales, was 18.5% for the current quarter
compared to 11.8% for the same period last year. Mobile power system revenues,
which have a lower gross profit, contributed 38.5% of total sales for the third
quarter last year but only 20.3% in the current period. The Company incurred an
operating loss of $351,000 in the current quarter compared to a loss of $409,000
for the same period last year. The improvement was primarily due to reduced SG&A
expense associated with Peter Gray and NMP Corp. hardware product lines. SG&A
expense was reduced $164,000 in the current quarter. Interest expense decreased
45% as a result of lower borrowings.
A breakdown by company segments follows:
. Marine switchgear sales by NMP Corp. were $1,805,000 for the third
quarter compared to $3,163,000 for the same period last year, which
included $1,871,000 attributable to Peter Gray and NMP hardware products.
. Mobile power system revenues by MCII Electric Company were $839,000 for
the quarter compared to $2,915,000 for last year. The third quarter last
year included $1,500,000 in revenues from MEP units, a contract that was
substantially completed in the last fiscal year. A net loss of $222,000
for the quarter compares to a net loss of $227,000 for the same period
last year.
9
<PAGE>
. Engineered automation and control system sales by TANO Corp. were
$1,711,000, compared to $1,705,000 for last year. Net income for the
period was $54,000 compared to a net income of $5,000 for the same period
last year.
Nine Months Ended December 31, 1999 and 1998
- --------------------------------------------
For the nine months ended December 31, 1999, the Company incurred a net loss of
$858,000 compared to a net loss of $818,000 for the same period last year. Net
loss per share was $.124 compared to a net loss of $.119 per share for the prior
year.
Sales for the nine months ended December 31, 1999, were $13,073,000, a 45%
decrease compared to $23,795,000 for the previous year. Last year's revenues
included $6,470,000 for Peter Gray and NMP marine hardware product lines which
have been subsequently sold. In addition, last year's revenues also included
$1,598,000 in connection with the shipment by MCII Electric Company of the TQG
test units, as well as $1,500,000 for MEP shipments.
For the nine months ended December 31, 1999, gross profit was 18.5% compared to
12% for the same period last year. Last year's gross profit margins were
impacted as a result of substantial cost overruns incurred to meet shipping
dates for the TQG test units.
The Company incurred an operating loss of $1,207,000 for the nine months ended
December 31, 1999, compared to an operating loss of $901,000 for the same period
last year. The increased operating loss for the period was primarily the result
of substantially lower sales volume.
Liquidity and Capital Resources
- -------------------------------
Operating activities for the nine months ended December 31, 1999, resulted in
providing net cash flow of $456,000. The major items providing cash were
depreciation and amortization of $681,000, increased accounts payable of
$606,000, billings in excess of costs and estimated earnings on uncompleted
contracts of $1,010,000, and income tax refunds of $789,000. Major use of cash
flow included increased inventories of $1,141,000, increased accounts receivable
of $464,000, and the net loss for the nine months ending December 31, 1999 of
$858,000.
Investing activities, which consisted of the sale of Peter Gray and the Hardware
Product line of NMP Corp. provided cash flow of $1,380,000.
Significant financing activities included cash usage for a reduction in debt of
$3,969,000. Proceeds from issuing convertible debentures provided cash flow of
$1,000,000.
10
<PAGE>
Net cash usage for the nine months ended December 31, 1999, was $1,228,000.
Subsequent to the close of the Company's third quarter, the Company announced
the completion of a $1.0 million convertible subordinated debenture offering.
The private placement was purchased by a small group of outside investors as
well as certain officers and directors of the Company. The Notes bear interest
of 10% per annum and mature on December 23, 2004. The Notes are convertible into
common stock at a price of $1.00 per share. Each $10,000 Note is coupled with a
warrant to purchase 5,000 shares of common stock at $1.00 per share. (See, Part
II, Item 5, at page 14.)
The Company also announced on December 29, 1999 that its subsidiary, MCII
Electric Company, entered into a Settlement Agreement with the seller of MCII
Electric Company to Westwood Corporation. The effect of the settlement amounted
to a note cancellation owed by Westwood Corporation in the amount of $1.5
million, the payment of $100,000, and the creation of a new note payable to the
seller of MCII Corporation in the amount of $300,000, thereby reducing
Westwood's investment in MCII Electric Company in the amount of $1.1 million.
(See, Part II, Item 1, at page 13.)
In connection with this settlement, Westwood Corporation purchased 127,000
shares of its common stock from the seller of MCII Electric Company. This stock
is recorded as treasury stock of Westwood Corporation.
The effect of the debenture offering, and the MCII Electric Company settlement
provides for a net improvement in the Company's working capital. At December 31,
1999, $1,200,000 was available under the Company's revolving credit line.
Year 2000 Compliance
The Company completed the company-wide project to address the year 2000
compliance issues for all technology hardware and software, and has either
purchased or produced external interfaces with customers and suppliers,
operations process controls, account and other information systems and facility
items. The implementation phase of this project as it related to traditional
information technology areas was completed prior to December 31, 1999.
The Company utilized both internal and external resources to complete this
process. Costs incurred for new software and hardware purchases were capitalized
and other costs were expensed as incurred.
The total cost of this project for external costs of hardware and software,
excluding planned system replacements, was approximately
11
<PAGE>
$225,000.
In summary, the Company completed the project and is confident that there are no
issues of year 2000 compliance that will materially effect the ongoing
operations of the businesses.
Statements included in this Form 10-Q constitute "year 2000 readiness
disclosures" subject to the Year 2000 Information and Readiness Disclosure Act
of 1998.
Outlook for Fiscal Year 2000 and Beyond
- ---------------------------------------
Westwood Corporation finished the third quarter of fiscal year 2000 with a
funded backlog of $57 million based primarily on contracts held by NMP Corp. and
MCII Electric Company.
NMP Corp. recently received an award from Avondale Industries, a Litton
Shipbuilding subsidiary, for the power and lighting panels for the LPD17-class
new amphibious assault ship. The current value of all orders received from
Avondale for this program is $2.5 million per ship with anticipated growth to
$3.5/$3.7 million per ship upon completion of engineering requirements by
Avondale. A total of twelve ships are scheduled to be built over the next 5
years. Total revenues to be recognized by Westwood Corporation over the life of
the program is estimated to be $42 million.
Late in the third quarter ending September 30, 1999, NMP Corp. was awarded
requirements contracts for the DDG51-class Aegis destroyer program from Lead
Yard Services, Bath Iron Works and Ingalls Shipbuilding. The total number of
ships to be built is dependent on the progress of the new DD21-class destroyer,
however, best estimates place the number at 17. Revenue value per shipset is
$2.8 million placing the total revenues over the life of the contract at
approximately $27 million.
Westwood Corporation's wholly owned subsidiary, MCII Electric Company, is in the
initial production phase of the U.S. Army's contract for Tactically Quiet
Generators. There are currently 1252 units on conditional release until testing
is completed at a value of $29 million. The current requirements for this
equipment is greater than 12,000 units and therefore, the Company expects
additional production releases in the future.
The total current backlog inclusive of option requirements exercisable over the
next five years stands at $116 million.
The synergy between Westwood Corporation's two marine products subsidiaries
position in the company very well for new business imminent
12
<PAGE>
in the near-term future. These opportunities include the LHD8-class amphibious
assault vessel and the LSD41/49-class upgrade. NMP Corp. and TANO Corp. were
significant equipment suppliers on the first seven ships of the LHD class and
both companies also participated on the LSD class original equipment program.
Management feels that there is significant potential for participation in these
programs as well as the last of the CVN77-class nuclear powered aircraft
carriers and the new twenty-first century destroyer DD21.
Forward Looking Information
- ---------------------------
Certain matters discussed in this report, excluding historical information,
include forward-looking statements. Although the Company believes such
forward-looking statements are based on reasonable assumptions, no assurance can
be given that every objective will be reached. Such statements are made in
reliance on the safe harbor protections provided under the Private Securities
Litigation Reform Act of 1995.
As required by such Act, the Company hereby identifies the following important
factors that could cause actual results to differ materially from any results
projected, forecasted, estimated or budgeted by the Company in forward-looking
statements: (i) risks and uncertainties impacting the Company as a whole relate
to changes in general economic conditions in the United States; the availability
and cost of capital; changes in laws and regulations to which the Company is
subject, including tax, environmental and employment laws and regulations; the
cost and effects of legal and administrative claims and proceedings against the
Company or its subsidiaries or which may be brought against the Company or its
subsidiaries; conditions of the capital markets utilized by the Company to
access capital to finance operations; and, to the extent the Company increases
its investments and activities abroad, such investments and activities will be
subject to foreign economies, laws, and regulations; and (ii) for the Company's
defense-related business, business conditions in the military and commercial
industries served by the Company; Federal Government defense budgeting process;
compliance with Government contract and inspection programs; and other risk
factors listed from time-to-time in the Company's reports with the Securities
and Exchange Commission.
PART II OTHER INFORMATION:
Item 1. Legal Proceedings
- -------
The action styled Westwood Corporation and MCII Electric Company, Inc. v.
Herschel P. McCullough, District Court of Tulsa County, State of Oklahoma, Case
No. CJ-98-0876, filed in February, 1998, has been resolved
13
<PAGE>
by way of a settlement agreement dated December 28, 1999. Pursuant to the
settlement agreement, the claims by the Company and its subsidiary, MCII
Electric Company, as well as counterclaims against the Company and MCII Electric
Company are to be dismissed without prejudice upon consummation of the terms of
the settlement agreement, including (i) the elimination of $1.5 million in
unsecured indebtedness from the Company to the former shareholder of MCII
Electric Company; (ii) the Company's purchase of 127,000 shares of its common
stock from MCII Electric Company's former shareholder for a purchase price of
$.75 per share; and (iii) $400,000 of which $100,000 was paid to MCII Electric
Company's former shareholder on December 28, 1999, and the balance to be paid in
quarterly installments of $37,500 from April 1, 2000 through December 1, 2001.
Item 4. Submission of Matters to a Vote of Security Holders
- -------
The annual meeting of the shareholders of the Company was held on December 29,
1999. By the vote of a majority of the shareholders entitled to vote at the
meeting, directors were elected as follows:
For Against Abstain
--- ------- -------
Ernest H. McKee 3,780,078 313,642 6,195
Paul R. Carolus 3,780,078 313,642 6,195
Richard E. Minshall 4,047,664 46,056 6,195
Anthony Pantaleoni 3,966,991 126,729 6,195
John H. Williams 3,780,078 313,642 6,195
William J. Preston 4,001,564 92,156 6,195
In addition, the shareholders approved the amendment of the 1992 Directors'
Stock Option Plan to increase the number of shares available from 562,820 to
612,820 by casting 3,633,806 votes for the proposal and 460,550 votes against
the proposal, with 5,559 abstentions.
Item 5. Other Information
- -------
On December 23, 1999, the Company completed the offer and sale of $1,000,000 of
10% Convertible Subordinated Notes in the principal amount of $1,000,000,
convertible into 1,000,000 shares of the common stock of the Company at a
purchase price of $1.00 per share, and Warrants to purchase up to 500,000 shares
of the common stock of the Company at a price of $1.00 per share. Both the
maturity date of each 10% Convertible Subordinated Note and the expiration date
of each Warrant will occur on December 23, 2004. The Notes are callable at the
Company's option after December 15, 2001 upon thirty (30) days notice in the
event the Company's common stock closing price is in excess of $2.50 per share
for thirty (30) consecutive trading days, within sixty (60) days of notice of
14
<PAGE>
redemption.
The proceeds of the Note Offering are to be used as operating capital and also
satisfies a requirement of the Company's commercial lender.
Item 6.
- ------
(a) The following document is filed as an exhibit to this Form 10-Q:
Exhibit 27 - Financial Data Schedule.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
DATE: February 14, 2000 WESTWOOD CORPORATION
By: /s/ Ernest H. McKee
-------------------
Ernest H. McKee, Director
President and
Chief Executive Officer
By: /s/ Paul R. Carolus
-------------------------------
Paul R. Carolus, Director
Secretary/Treasurer and
Chief Financial Officer
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE WESTWOOD
CORPORATION CONSOLIDATED BALANCE SHEET (UNAUDITED) FOR DECEMBER 31, 1999, AND
THE RELATED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) FOR THE NINE MONTHS
ENDED DECEMBER 31, 1999, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-END> DEC-31-1999
<CASH> 55
<SECURITIES> 0
<RECEIVABLES> 4,345
<ALLOWANCES> 35
<INVENTORY> 3,452
<CURRENT-ASSETS> 8,932
<PP&E> 4,809
<DEPRECIATION> 2,992
<TOTAL-ASSETS> 16,403
<CURRENT-LIABILITIES> 7,385
<BONDS> 2,801
0
0
<COMMON> 21
<OTHER-SE> 6,196
<TOTAL-LIABILITY-AND-EQUITY> 16,403
<SALES> 13,073
<TOTAL-REVENUES> 13,073
<CGS> 10,653
<TOTAL-COSTS> 14,280
<OTHER-EXPENSES> (444)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 306
<INCOME-PRETAX> (1,069)
<INCOME-TAX> (211)
<INCOME-CONTINUING> (858)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (858)
<EPS-BASIC> (.124)
<EPS-DILUTED> (.124)
</TABLE>
