<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ending Commission File No. 0-20229
February 28, 1997
RF POWER PRODUCTS, INC.
(Exact name of registrant as specified in its charter)
NEW JERSEY 22-2361086
- - ------------------------------ ----------------
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
1007 Laurel Oak Road, Voorhees, N.J. 08043
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code (609)627-6100
--------------
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
--- ---
As of February 28, 1997, 12,124,078 shares of Common Stock, $.01 par value, were
outstanding.
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
1
<PAGE>
INDEX
<TABLE>
<CAPTION>
PAGE
NUMBER
------
<S> <C>
Part I. Financial Information
Item 1. Consolidated Financial Statements
Balance Sheets - February 28, 1997 and
November 30, 1996 ............................. 3
Statements of Operations - Three Months Ended
February 28, 1997 and February 29, 1996 ....... 4
Statements of Cash Flows - Three Months Ended
February 28, 1997 and February 29, 1996 ....... 5
Notes to Financial Statements ................. 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations .................................... 8
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K .............. 10
</TABLE>
2
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RF POWER PRODUCTS, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
February 28, November 30,
1997 1996
(Unaudited) (Audited)
----------- -----------
<S> <C> <C>
Assets
Cash $ 865,970 $ 546,984
Accounts receivable 4,637,497 4,815,182
Inventories 4,183,224 3,474,689
Prepaid expenses and other 328,870 370,461
Deferred Income Taxes 430,688 410,395
----------- -----------
10,446,249 9,617,711
----------- -----------
Property and equipment, net 3,224,626 2,221,312
Other assets 195,875 208,501
----------- -----------
$13,866,750 $12,047,524
=========== ===========
Liabilities
Current liabilities
Note Payable $ - $ 434,663
Current portion long-term debt 575,000 350,000
Accounts payable 2,655,455 1,163,698
Accrued expenses 458,069 512,323
Accrued payroll 366,312 250,921
----------- -----------
4,054,836 2,711,605
----------- -----------
Long-term debt,less current
portion 1,552,467 904,167
----------- -----------
Shareholders' equity
Common stock - $.01 par value
Authorized - 19,000,000
Issued and outstanding:
1997-12,124,078; 1996-12,123,140 121,241 121,231
Additional paid-in capital 6,373,382 6,372,235
Retained Earnings 1,841,824 2,015,286
Notes receivable from shareholders (77,000) (77,000)
----------- -----------
8,259,447 8,431,752
----------- -----------
$13,866,750 $12,047,524
=========== ===========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
RF POWER PRODUCTS, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
February 28, February 29,
------------- -------------
1997 1996
------------- -------------
<S> <C> <C>
Net Sales $5,434,985 $8,258,864
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Costs and expenses
Cost of products sold 3,630,812 5,033,425
Research and development 755,247 785,966
Selling and administrative 1,308,007 1,341,743
Interest expense 20,697 8,425
---------- ----------
$5,714,763 $7,169,559
---------- ----------
Income (loss) before
income taxes (279,778) 1,089,305
Income tax expense (benefit) (106,316) 411,975
---------- ----------
Net Income (Loss) $(173,462) $677,330
=========== ==========
Per Share Data:
Earnings (Loss) per Share $(.01) $.06
=========== ==========
Weighted average number of
shares outstanding 12,124,078 12,270,024
========== ==========
</TABLE>
See accompanying notes to financial statement
4
<PAGE>
RF POWER PRODUCTS, INC.
STATEMENTS OF CASH FLOWS
( UNAUDITED )
<TABLE>
<CAPTION>
Three Months Ended
-----------------------------------
February 28,1997 February 29, 1996
---------------- -----------------
<S> <C> <C>
Cash flows from operating activities
Net income (Loss) $(173,462) $ 677,330
Adjustments to reconcile net income
to net cash used in operating
activities:
Depreciation and amortization 226,381 114,633
Deferred Income Taxes (Benefit) (20,293) 115,257
Changes in assets and liabilities
(Increase)Decrease in accounts
receivable 177,685 (623,718)
Increase in inventories (708,535) (420,198)
Increase in prepaid expenses
and other 41,591 25,743
Increase in a/p & accr. liabilities 1,552,894 303,575
Other (2,251) 13,940
----------- ------------
Net cash generated from
operating activities 1,094,010 206,562
----------- ------------
Cash flows from investing
activities
Capital expenditures (1,214,818) (508,831)
Net cash used in investing activities (1,214,818) (508,831)
----------- ------------
Cash flows from financing activities
Short term borrowing, net (434,663) (160,000)
Payments of long-term debt (87,500) (29,550)
Borrowing against term loan 960,800 -
Proceeds from issuance of
common stock
under stock option plan 1,157 32,989
----------- ------------
Net cash provided by (used in)
financing activities 439,794 (156,561)
----------- ------------
Net increase (decrease) in cash 318,986 (458,830)
Cash at beginning of period 546,984 689,757
----------- ------------
Cash at end of period $ 865,970 $ 230,927
========== ============
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
RF POWER PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 1997 AND NOVEMBER 30, 1996
Note 1 In the opinion of management, the accompanying financial statements
contain all adjustments (consisting of only normal recurring
adjustments) necessary to present fairly the financial position as of
February 28, 1997 and November 30, 1996, the results of operations for
the three months ended February 28, 1997 and February 29, 1996 and the
statement of cash flows for the three months ended February 28, 1997
and February 29, 1996.
The results of operations for the three months ended February 28, 1997
and February 29, 1996 are not necessarily indicative of results for
the full year.
These financial statements should be read in conjunction with the
financial statements and the notes included in the Company's report on
Form 10K.
Note 2 Inventories
Inventories consist of the following:
<TABLE>
<CAPTION>
February 28, November 30,
1997 1996
------------ ------------
<S> <C> <C>
Raw materials, net $2,190,897 $1,668,762
Work in process 592,131 265,232
Finished goods, net 1,400,196 1,540,695
---------- ----------
$4,183,224 $3,474,689
========== ==========
</TABLE>
6
<PAGE>
Note 3 Property and Equipment
Property and Equipment consists of the following:
<TABLE>
<CAPTION>
February 28, November 30,
1997 1996
----------- -----------
<S> <C> <C>
Property and equipment,
at cost
Machinery and Equipment $4,173,636 $3,524,535
Transportation Equipment 54,641 54,641
Leasehold Improvements 1,002,918 437,201
---------- ----------
5,231,215 4,016,377
---------- ----------
Less accumulated
depreciation
and amortization 2,006,569 1,795,065
---------- ----------
$3,224,626 $2,221,312
========== ==========
</TABLE>
Note 4 The provision (benefit)for income taxes for the three months ended
February 28, 1997 and February 29, 1996, consists of the following:
<TABLE>
<CAPTION>
February 28, February 29,
1997 1996
----------- ----------
<S> <C> <C>
Current-federal and state (86,023) $ 296,718
Deferred-federal & state (20,293) 115,257
----------- ---------
$ (106,316) $ 411,975
=========== =========
</TABLE>
Note 5 Per share data is computed based upon the weighted average number of
shares of common stock, adjusted for the conversion of dilutive common
stock equivalents. The primary earnings per share and the related
common stock and equivalents are presented. The fully dilutive
earnings per share data is not shown since the dilution is not
material.
7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
-------------------------------------------------
Condition and Results of Operations
-----------------------------------
Financial Position, Liquidity and Capital Requirements
- - ------------------------------------------------------
The Company's cash requirements are currently being funded through operations
coupled with the proceeds of bank financing.
In December 1996, the Company entered into a $500,000 loan agreement with the
New Jersey Economic Development Authority to finance certain purchases of
equipment for its new facility, which it had moved into in December 1996. The
loan is for a five year term at an interest rate of 5% with interest and
principal paid monthly. The loan is secured by the equipment purchased with the
proceeds of the loan. As of February 28, 1997, $460,800 of the $500,000 loan
has been drawn down.
The Company has the option to term out a portion of the line of credit with a
local commercial bank, which if exercised, reduces the line of credit by the
amount termed out. In February 1997, the Company exercised this option for a
$1,000,000 term loan. As of February 28, 1997, $500,000 of the $1,000,000 loan
has been drawn down.
Operating activities provided $1,094,000 in cash for the three month period
ending February 28, 1997 versus $207,000 in cash flows for the comparable period
in 1996. This was primarily due to a decrease in accounts receivable of
$178,000 and an increase in accounts payable and accrued liabilities of
$1,553,000, offset by an increase in inventories of $709,000.
Net cash used in investing activities for the three month period ending February
28, 1997 was $1,215,000, which was for capital expenditures for the Company's
new facility.
For the three months ended February 28, 1997, approximately $961,000 of cash was
provided by bank and state financing, as noted above, to finance the capital
expenditures for the new facility. In addition, the Company repaid $435,000 on
its line of credit and $87,000 of its long term debt.
The Company requires substantial capital for research and development and
inventories. Although there were significant capital expenditures during the
Company's 1997 first quarter for its new facility, there will not be substantial
expenditures for the balance of the year. Management of the Company believes
that based on its current available bank credit facility, coupled with working
capital generated by operations, it has sufficient funding to meet the Company's
capital requirements for the immediate future.
8
<PAGE>
RESULTS OF OPERATIONS
Net revenues for the three months ended February 28, 1997 decreased 34% as
compared to the same period in fiscal 1996. The decrease is the result of the
slow down to semiconductor capital equipment manufacturers which represented 48%
and 60% of the Company's sales for the comparable three month period of fiscal
1997 and 1996, respectively. The Company's sales this year, in the semiconductor
market decreased 48% over the comparable three month period last year.
Cost of products sold amounted to 67% and 61% of sales for the three month
period ending February 28, 1997 and February 29, 1996, respectively. The
decrease in gross profit is the result of the decline in sales in the
semiconductor market which resulted in under absorbed labor and overhead costs
which were expensed.
Research and development expenses were 14% and 10% of sales for the three month
period ending February 28,1997 and February 29, 1996, respectively. Research and
development expenses decreased 4% to $755,000 compared to $786,000 last year.
Expenses have been kept relatively constant with the Company investing in the
development of new products for the next generation of semiconductor and flat
panel display manufacturing equipment, as well as for new applications of radio
frequency technology in medical devices, food and material processing.
Selling and administrative expenses decreased from $1,342,000 to $1,308,000 for
the three month period ending February 28,1997 compared to the same period in
1996. This is a result of continued tight cost controls due to the current
business environment.
The Company's effective tax rate has remained relatively constant at 38% sales
for the three month period ending February 28, 1997 and February 29, 1996
respectively. The Company recorded an income tax benefit based on anticipated
earnings for fiscal year 1997.
9
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits ............................ N/A
(b) No reports on Form 8-K were filed during the
first quarter of fiscal 1997.
10
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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.
RF POWER PRODUCTS, INC.
Dated: March 21, 1997 /s/Joseph Stach
---------------------------------
Joseph Stach, Chairman and
President
/s/Domenic N. Golato
---------------------------------
Domenic N. Golato, Chief Financial
Officer and Treasurer
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-START> DEC-01-1996
<PERIOD-END> FEB-28-1997
<CASH> 865,970
<SECURITIES> 0
<RECEIVABLES> 4,757,165
<ALLOWANCES> 119,668
<INVENTORY> 4,183,224
<CURRENT-ASSETS> 10,446,249
<PP&E> 5,231,215
<DEPRECIATION> 2,006,569
<TOTAL-ASSETS> 13,866,750
<CURRENT-LIABILITIES> 4,054,836
<BONDS> 0
0
0
<COMMON> 121,241
<OTHER-SE> 8,138,206
<TOTAL-LIABILITY-AND-EQUITY> 13,866,750
<SALES> 5,434,985
<TOTAL-REVENUES> 5,434,985
<CGS> 3,630,812
<TOTAL-COSTS> 2,040,754
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 22,500
<INTEREST-EXPENSE> 20,697
<INCOME-PRETAX> (279,778)
<INCOME-TAX> (106,316)
<INCOME-CONTINUING> (173,462)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (173,462)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
