<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For Quarter Ended
September 30, 1996
[ ] 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
1-11916
WIRELESS TELECOM GROUP, INC.
(Exact name of registrant as specified in its charter)
New Jersey 22-2582295
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
East 64 Midland Avenue
Paramus, New Jersey 07652
(Address of principal executive offices) (Zip Code)
(201) 261-8797
Registrant's telephone number, including area code
East 49 Midland Avenue Paramus, NJ 07652
(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
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the most recent practicable date.
Common Stock - Par Value $.01 17,356,658
Class Outstanding Shares
At October 7, 1996
<PAGE>
WIRELESS TELECOM GROUP, INC.
Table of Contents
PART I. FINANCIAL INFORMATION
Page(s)
Item 1 -- Consolidated Financial Statements:
Condensed Balance Sheets as of September 30, 1996
(unaudited) and December 31, 1995 3
Condensed Statements of Operations for the Three
and Nine Months Ended September 30, 1996 and 1995
(unaudited) 4
Condensed Statements of Cash Flows for the Nine
Months Ended September 30, 1996 and 1995 (unaudited) 5
Notes to Interim Condensed Financial Statements
(unaudited) 6 -7
Item 2 -- Management's Discussion and Analysis of Financial
Condition and Results of Operations 8 -10
PART II. OTHER INFORMATION
Item 1 -- Legal Proceedings 11
Item 2 -- Changes in Securities 11
Item 3 -- Defaults upon Senior Securities 11
Item 4 -- Submission of Matters to a Vote of
Security Holders 11
Item 5 -- Other Information 11
Item 6 -- Exhibits and Reports on Form 8-K 11
Signatures 12
Exhibit 11.1 13
Exhibit 27 14
-2-
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - Financial Statements
WIRELESS TELECOM GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
- ASSETS -
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1995
(unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 7,149,693 $ 5,839,865
Accounts receivable -- net of allowance for
doubtful accounts of $71,722 and
$35,610, respectively 4,750,995 3,364,189
Inventories 4,311,104 2,773,925
Prepaid expenses and other current assets 160,531 576,237
---------- ----------
TOTAL CURRENT ASSETS 16,372,323 12,554,216
PROPERTY, PLANT AND EQUIPMENT - NET 771,054 575,149
OTHER ASSETS 458,778 272,988
---------- ----------
$ 17,602,155 $ 13,402,353
=========== ===========
- LIABILITIES AND SHAREHOLDERS' EQUITY -
ACCOUNTS PAYABLE AND OTHER CURRENT LIABILITIES $ 1,333,826 $ 903,242
--------- ----------
DEFERRED INCOME TAXES 62,678 50,696
--------- ----------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY (Note 4):
Preferred stock, $.01 par value, 2,000,000
shares authorized, none issued - -
Common stock, $.01 par value, 30,000,000 shares
authorized, 17,496,658 and 8,713,749 shares
issued, respectively 174,967 87,138
Additional paid-in-capital 6,000,373 5,833,138
Retained earnings 10,095,637 6,593,465
Treasury stock, 140,000 and 70,000 shares,
at cost (65,326) (65,326)
---------- ----------
16,205,651 12,448,415
---------- ----------
$ 17,602,155 $ 13,402,353
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-3-
<PAGE>
WIRELESS TELECOM GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
1996 1995 1996 1995
------- ------- ------- --------
<S> <C> <C> <C> <C>
NET SALES $ 6,058,702 $ 4,537,581 $ 16,437,840 $ 12,024,215
---------- ---------- ---------- ----------
COSTS AND EXPENSES
Cost of sales 1,434,126 1,183,862 4,232,570 3,219,303
Operating expenses 1,442,661 1,053,059 3,824,521 2,825,231
Interest, dividend
and other income (92,865) (76,932) (255,265) (214,275)
--------- --------- --------- ---------
TOTAL COSTS AND EXPENSES 2,783,922 2,159,989 7,801,826 5,830,259
--------- --------- --------- ---------
INCOME FROM OPERATIONS
BEFORE PROVISION FOR
INCOME TAXES 3,274,780 2,377,592 8,636,014 6,193,956
PROVISION FOR
INCOME TAXES 1,212,718 914,655 3,226,537 2,380,826
---------- ---------- ----------- ----------
NET INCOME $ 2,062,062 $ 1,462,937 $ 5,409,477 $ 3,813,130
========== ========== =========== ==========
NET INCOME PER COMMON SHARE (Note 2)
PRIMARY $ .12 $ .08 $ .31 $ .22
--- --- --- ---
FULLY DILUTED $ .12 $ .08 $ .31 $ .22
--- --- --- ---
</TABLE>
The accompanying notes are an integral part of these financial statements.
-4-
<PAGE>
WIRELESS TELECOM GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
For the Nine Months
Ended September 30,
1996 1995
------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 5,409,477 $ 3,813,130
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 119,116 93,095
Deferred income taxes (benefit) 11,982 (5,192)
Provision for losses on accounts receivable 36,112 13,111
Changes in assets and liabilities:
(Increase) in accounts receivable (1,422,918) (1,275,565)
(Increase) in inventories (1,537,179) (934,149)
Decrease in prepaid expenses and other assets 369,761 114,375
Increase in accounts payable and
accrued expenses 430,584 551,075
--------- ---------
Net cash provided by operating activities 3,416,935 2,369,880
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (315,021) (303,393)
Officer's life insurance (139,845) (107,333)
--------- ---------
Net cash (used) for investing activities (454,866) (410,726)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid (1,907,305) (912,130)
Proceeds from exercise of stock options 255,064 268,119
--------- --------
Net cash (used) for financing activities (1,652,241) (644,011)
NET INCREASE IN CASH AND CASH EQUIVALENTS 1,309,828 1,315,143
Cash and cash equivalents, at beginning of year 5,839,865 3,901,481
---------- ----------
CASH AND CASH EQUIVALENTS, AT END OF PERIOD $ 7,149,693 $ 5,216,624
========== =========
SUPPLEMENTAL INFORMATION:
Cash paid during the period for:
Taxes $ 2,607,000 $ 2,293,000
</TABLE>
The accompanying notes are an integral part of these financial statements.
-5-
<PAGE>
WIRELESS TELECOM GROUP, INC.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES AND POLICIES
The condensed consolidated balance sheet as of September 30, 1996 and the
condensed consolidated statements of operations for the three and nine month
periods ended September 30, 1996 and 1995 and the condensed consolidated
statements of cash flows for the nine month periods ended September 30, 1996
and 1995 have been prepared by the Company without audit. The consolidated
financial statements include the accounts of Wireless Telecom Group, Inc. and
its wholly-owned subsidiary WTG Foreign Sales Corporation. WTG Foreign Sales
Corporation began operations as a subsidiary of the Company in February 1996.
In the opinion of management, the accompanying condensed consolidated
financial statements referred to above contain all necessary adjustments,
consisting of normal accruals and recurring entries only, which are necessary
to present fairly the Company's results for the interim periods being
presented.
The accounting policies followed by the Company are set forth in Note 1 to the
Company's financial statements included in its annual report on Form 10-K
for the year ended December 31, 1995, which is incorporated herein by
reference. Specific reference is made to this report for a description of the
Company's securities and the notes to financial statements included therein.
The results of operations for the three and nine month periods ended September
30, 1996 and 1995 are not necessarily indicative of the results to be expected
for the full year.
NOTE 2 - INCOME PER COMMON SHARE
Income per common share is computed by dividing the net income by the
weighted average number of common shares and common equivalent shares
outstanding during each period. See also Note 4 regarding the Company's
Common Stock splits.
NOTE 3 - REVOLVING CREDIT LINE
The Company renewed the agreement with its bank which provides for an
unsecured line of credit in the amount of $3,000,000 at the bank's prime
lending rate. In August 1996, the bank increased the line of credit to
$5,000,000. There are no direct borrowings currently against the line of
credit. This agreement expires on June 30, 1997.
NOTE 4 - DIVIDENDS
On May 13, 1996 the Company announced the declaration of a two-for-one stock
split on the Company's common stock. The split was effective for
shareholders of record on May 22, 1996 and was paid on May 28, 1996. On June
12, 1995 the Company announced the declaration of a three-for-two stock split
on the Company's common stock. The split was effective for shareholders of
record on July 5, 1995 and was paid on July 18, 1995. All share and per
share data have been retroactively adjusted to show the effects of these
splits.
-6-
<PAGE>
WIRELESS TELECOM GROUP, INC.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 4 - DIVIDENDS
On January 29, 1996, May 13, 1996 and August 5, 1996 the Company announced
the declaration of quarterly cash dividends of $.03 per share, $.04 per
share and $.04 per share to shareholders of record on March 22, 1996, June
24, 1996 and September 23,1996, respectively. These cash dividends aggregated
$1,907,305 and were paid by March 31, 1996, June 30, 1996 and September 30,
1996, respectively.
It is the Company's present intention to maintain a quarterly dividend policy.
The Company paid cash dividends aggregating $.08 per share for the year
ending December 31, 1995.
-7-
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
INTRODUCTION
Wireless Telecom Group, Inc., formerly Noise Com, Inc., (the "Company")
develops, manufactures and markets a wide variety of electronic noise sources
and test instruments for wireless telecommunications. The Company's products
are used to test the performance and capability of satellite, cellular and
personal (PCS) communications, radio, radar, wireless local area network
(WLAN), high-definition television (HDTV) and other communications systems. To
further address the needs of the ever-evolving wireless telecommunications
industry, the Company has been developing and marketing test instruments
designed to fulfill the requirements of such customers. The Company is
expanding its product offerings to these customers as this emerging industry
is expected to provide an opportunity for substantial growth.
The financial information presented herein includes:
(i) Condensed consolidated balance sheets as of the nine months ended
September 30, 1996 and as of the year ended December 31, 1995 (ii)
Condensed consolidated statements of operations for the three and nine
month periods ended September 30, 1996 and 1995 and (iii) Condensed
consolidated statements of cash flows for the nine month periods ended
September 30, 1996 and 1995.
OPERATIONS
For the nine months ended September 30, 1996 as compared to the corresponding
period of the previous year, net sales increased to $16,437,840 from
$12,024,215 an increase of $4,413,625 or 36.7%. For the quarter ended
September 30, 1996 as compared to the corresponding period of the previous
year, net sales increased to $6,058,702 from $4,537,581 an increase of
$1,521,121 or 33.5%. These volume increases are the result of the continued
growth of commercial applications of the Company's products of which the most
notable are the sales of the Company's wireless telecommunications
instruments.
The Company's gross profit on net sales for the nine months ended September
30, 1996 was $12,205,270 or 74.3% as compared to $8,804,912 or 73.2% for the
nine months ended September 30, 1995. Gross profit on net sales for the
quarter ended September 30, 1996 was $4,624,576 or 76.3% as compared to
$3,353,719 or 73.9% for the three months ended September 30, 1995.
Variations in gross profit are attributed to the mix of product sales. The
Company continues to rigidly monitor costs associated with material
acquisition, manufacturing and production.
Operating expenses for the nine months ended September 30, 1996 were
$3,824,521 or 23.3% of net sales as compared to $2,825,231 or 23.5% of net
sales for the nine months ended September 30, 1995. Operating expenses for
the quarter ended September 30 , 1996 were $1,442,661, or 23.8% of net sales
as compared to $1,053,059 or 23.2% of net sales for the quarter ended
September 30, 1995.
-8-
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
For the nine months ended September 30, 1996 as compared to the same period of
the prior year, operating expenses increased in dollars by $999,290.
Approximately 32% of this increase is due to greater expenditures for research
and development of new products. An additional 31% of the increase is
attributable to greater advertising and selling expenses incurred to generate
sales and to expand customer awareness of the Company's wireless
telecommunications instruments. Also, additional personnel and increased
salaries accounted for 22% of the increase in dollars from 1995.
For the quarter ended September 30, 1996 as compared to the same period of the
prior year, operating expenses increased in dollars by $389,602.
Approximately 56% of the increase is attributable to greater advertising and
selling expenses. An additional 18% of this increase is due to greater
expenditures for research and development of new products. Additional
personnel and increased salaries accounted for 9% of the increase in dollars
from 1995.
Interest, dividend and other income increased by $40,990 for the nine months
ended September 30, 1996 and by $15,933 for the quarter ended September 30,
1996. This increase was due to additional cash generated by operations.
Net income increased to $5,409,477, or $.31 per share, for the nine months
ended September 30, 1996 as compared to $3,813,130, or $.22 per share for the
nine months ended September 30, 1995. Net income for the quarter ended
September 30, 1996 was $2,062,062, or $.12 per share as compared to
$1,462,937, or $.08 per share for the three months ended September 30, 1995.
The explanation of these increases can be derived from the analysis given
above of operations for the three and nine month periods ending September 30,
1996 and 1995, respectively.
LIQUIDITY AND CAPITAL RESOURCES:
The Company's working capital has increased by $3,387,523 to $15,038,497 at
September 30, 1996, from $11,650,974 at December 31, 1995. At September 30,
1996 the Company had a current ratio of 12.3 to 1, and a ratio of debt to net
worth of less than .1 to 1. At December 31, 1995 the Company had a current
ratio of 13.9 to 1, and a ratio of debt to net worth of less than .1 to 1.
Net cash provided from operations has allowed the Company to meet its
liquidity requirements, research and development activities and capital
expenditures. The principal source of cash has been from net income. To
maximize the use of funds, management has been closely monitoring accounts
receivable and inventory.
Management believes that accounts receivable have been increasing commensurate
with the increase in sales. The Company has historically been able to turn
over its accounts receivable approximately every two months. This average
collection period has been sufficient to provide the working capital and
liquidity necessary to operate the Company.
Due to the Company's expanding product line, the volume of items and
accordingly the total dollar value of inventory has increased. As the Company
plans to further expand its product line, inventory is being monitored closely
to balance production requirements while maintaining manageable levels of
goods on hand.
-9-
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
On January 29, 1996, May 13, 1996 and August 5, 1996 the Company announced the
declaration of quarterly cash dividends of $.03 per share, $.04 per share and
$.04 per share payable to shareholders of record on March 22, 1996, June 24,
1996 and September 23, 1996 , respectively. These cash dividends aggregated
$1,907,305 and were paid by March 31, 1996, June 30, 1996 and September 30,
1996, respectively.
In February 1996, the Company established a Foreign Sales Corporation.
On May 13, 1996 the Company announced the declaration of a two-for-one stock
split on the Company's common stock. The split was effective for shareholders
of record on May 22, 1996 and was paid on May 28, 1996. On June 12, 1995 the
Company announced the declaration of a three-for-two stock split on the
Company's common stock. The split was effective for shareholders of record on
July 5, 1995 and was paid on July 18, 1995. All share and per share data have
been retroactively adjusted to show the effects of these splits.
During 1995, the Company declared quarterly cash dividends aggregating
$1,430,755 or $.08 per common share. It is the Company's present intention to
maintain a quarterly dividend policy.
The Company believes that its financial resources from working capital
provided by operations and its bank line of credit are adequate to meet
current requirements.
INFLATION AND SEASONALITY
The Company does not anticipate that inflation will significantly impact its
business nor does it believe that its business is seasonal.
-10-
<PAGE>
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
Not applicable.
Item 2. CHANGES IN SECURITIES
Not applicable.
Item 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
Item 5. OTHER INFORMATION
On August 5, 1996 the Company announced a cash dividend of
$.04 per share to shareholders of record on September 23,
1996. The cash dividend was paid by September 30, 1996.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
11.1 Computation of per share earnings
27 Financial Data Schedule
(b) Reports on Form 8-K:
No reports on Form 8-K were filed by the Registrant during the
quarterly period ended September 30, 1996.
-11-
<PAGE>
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.
WIRELESS TELECOM GROUP, INC.
(Registrant)
Date: October 14, 1996 /S/Dale Sydnor
Dale Sydnor
Chief Executive Officer
Date: October 14, 1996 /S/Eugene Ferrara
Eugene Ferrara
Chief Financial Officer
-12-
<PAGE>
Exhibit 11.1
WIRELESS TELECOM GROUP, INC.
COMPUTATION OF PER SHARE EARNINGS
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
1996 1995 1996 1995
----- ----- ----- -----
<S> <C> <C> <C> <C>
NET INCOME $ 2,062,062 $ 1,462,937 $ 5,409,477 $ 3,813,130
---------- ---------- ---------- ----------
PRIMARY
Weighted average shares 17,354,571 17,159,290 17,325,159 17,044,446
Assumed conversions:
Stock options 400,059 455,598 390,555 430,454
Total weighted average ---------- ----------- ---------- ----------
shares outstanding 17,754,630 17,614,888 17,715,714 17,474,900
========== ========== ========== ==========
Per share amounts $ .12 $ .08 $ .31 $ .22
=== === === ===
FULLY DILUTED
Weighted average shares 17,354,571 17,159,290 17,325,159 17,044,446
Assumed conversions:
Stock options 410,255 455,598 402,977 510,518
Total weighted average ---------- ---------- ---------- ------------
shares outstanding 17,764,826 17,614,888 17,728,136 17,554,964
========== ========== ========== ==========
Per share amounts $ .12 $ .08 $ .31 $ .22
=== === === ===
</TABLE>
-13-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 7149693
<SECURITIES> 0
<RECEIVABLES> 4822717
<ALLOWANCES> 71722
<INVENTORY> 4311104
<CURRENT-ASSETS> 16372323
<PP&E> 1461368
<DEPRECIATION> 690314
<TOTAL-ASSETS> 17602155
<CURRENT-LIABILITIES> 1333826
<BONDS> 0
0
0
<COMMON> 174967
<OTHER-SE> 16030684
<TOTAL-LIABILITY-AND-EQUITY> 17602155
<SALES> 16437840
<TOTAL-REVENUES> 16437840
<CGS> 4232570
<TOTAL-COSTS> 7801826
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 8636014
<INCOME-TAX> 3226537
<INCOME-CONTINUING> 5409477
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5409477
<EPS-PRIMARY> .31
<EPS-DILUTED> .31
</TABLE>
